2013-07-25 07:30:00 CEST
2013-07-25 07:30:35 CEST
REGULATED INFORMATION
Oriola-KD Oyj - Interim report (Q1 and Q3)
Oriola-KD Corporation's Interim Report for 1 January-30 June 2013
Oriola-KD Corporation Stock Exchange Release 25 July 2013 at 8.30 a.m.
Financial performance April-June 2013
* Net sales increased by 10.6 per cent to EUR 652.1 (589.7) million.
* EBITDA excluding non-recurring items increased by 8.7 per cent to EUR 9.3
(8.5) million.
* Operating profit excluding non-recurring items was EUR 3.7 (4.0) million.
* Operating profit was EUR -0.3 (4.0) million.
* Profit for the period came to EUR -2.8 (1.5) million and earnings per share
were EUR -0.02 (EUR 0.01).
Financial performance January-June 2013
* Net sales increased by 7.1 per cent to EUR 1,264.5 (1,180.6) million.
* EBITDA excluding non-recurring items decreased by 7.9 per cent to EUR 16.7
(18.1) million.
* Operating profit excluding non-recurring items was EUR 6.0 (9.2) million.
* Operating profit was EUR 2.0 (9.2) million.
* Net cash flow from operations was EUR -1.5 (-8.1) million.
* Profit for the period came to EUR -2.1 (2.8) million and earnings per share
were EUR -0.01 (EUR 0.02).
* Return on equity was -1.4 (1.9) per cent.
Key figures 2013 2012 Change 2013 2012 Change 2012
EUR million 4-6 4-6 % 1- 6 1- 6 % 1- 12
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Net sales 652.1 589.7 10.6% 1,264.5 1,180.6 7.1% 2,474.4
EBITDA excluding non-
recurring items 9.3 8.5 8.7% 16.7 18.1 -7.9% 45.6
EBITDA 5.2 8.5 -38.5% 12.7 18.1 -30.1% 44.5
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Operating profit excluding
non-recurring items 3.7 4.0 -7.5% 6.0 9.2 -34.5% 26.8
Operating profit -0.3 4.0 2.0 9.2 -78.4% 25.8
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Profit for the period -2.8 1.5 -2.1 2.8 16.4
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Earnings per share, EUR -0.02 0.01 -0.01 0.02 0.11
Net cash flow from
operations -1.5 -8.1 46.1
Return on equity (ROE), % -1.4 1.9 5.4
Gearing ratio, end of
period, % 71.4 18.0 2.1
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Outlook for 2013
* Oriola-KD estimates that net sales and operating profit excluding non-
recurring items will increase from the 2012 level. Pharmaceutical Trade
Russia's operating profit is estimated to be lower than the 2012 level.
Previous outlook of 25 April 2013
* Oriola-KD estimates that net sales and operating profit excluding non-
recurring items will increase from the 2012 level. Growth of the net sales
of Pharmaceutical Trade Russia will slow down in the first part of the year
and operating profit will be weaker than the previous year, as a result of
challenges related to the implementation of the warehouse management system
started in January 2013.
President and CEO Eero Hautaniemi's comments regarding the interim report:"Oriola-KD's net sales increased by 7.1 per cent to EUR 1,264.5 million and
operating profit excluding non-recurring items came to EUR 6.0 million in
January-June 2013, compared to EUR 9.2 million a year earlier. The operating
profit excluding non-recurring items includes project costs totalling EUR 2.7
million relating to the transformation of the Swedish pharmacy market.
Pharmaceutical Trade Sweden's operating profit excluding non-recurring items
increased from EUR 6.8 million to EUR 9.1 million. The operating loss of
Pharmaceutical Trade Russia grew from EUR 3.3 million to EUR 7.0 million. The
operating profit of the business in Finland and Baltics totalled EUR 10.5
million, compared with EUR 9.4 million in the previous year. The improvement was
mainly the result of more efficient wholesaling. In both Russia and Sweden,
retail business posted higher operating profits, mainly due to more efficient
operations and improved sales of OTC pharmaceuticals and traded goods. The
second-quarter operating profit of the Swedish wholesale business improved
according to plan as the operations of the purchasing and logistics services for
the five pharmacy chains stabilized. The Group's operating profit for the first
half of the year was significantly weakened by the increase in the operating
loss of the Russian wholesale business. The operating loss increased as a result
of delivery problems in the Moscow area which occurred after the implementation
of the warehouse management system. Operations were stabilised at the main
distribution centre in Moscow during the second quarter.
The acquisition of Medstop was finalised at the end of May, as planned. We have
started the integration process of operations, with the aim of achieving annual
synergies in the value of EUR 8-10 million annually from 2015 onwards. Our
Russian wholesale company signed a ten-year lease agreement at the end of June
to establish a new fully automated main logistic center in the Domodedovo
district of Moscow. The total investment is approximately EUR 12 million and the
aim of the relocation of operations and automation is to increase the capacity
of the main logistic center in Moscow, improve delivery quality and increase the
picking efficiency. According to our plan, full production capacity will be
achieved by the end of the first quarter of 2015."
Oriola-KD Corporation's Interim Report for 1 January-30 June 2013
The text section of this financial statements release focuses on the January-
June result. Unless otherwise stated, the figures have been checked against the
data for the corresponding period in 2012 in accordance with the International
Financial Reporting Standards (IFRS). The figures in this interim report are
unaudited. The figures in the tables have been rounded independently.
Changes in the Group structure in 2013
Oriola-KD Holding Sverige AB, which is part of the Oriola-KD Group (hereinafter
referred to as Oriola-KD) acquired the entire capital stock of Medstop Group
Holding AB. As of 1 June 2013, the company has been included in the
Pharmaceutical Trade Sweden reporting segment.
The Group's net sales and result for April-June 2013
Second-quarter net sales came to EUR 652.1 (589.7) million and operating profit
excluding non-recurring items to EUR 3.7 (4.0) million. The operating profit of
Pharmaceutical Trade Finland and Baltics grew from EUR 4.8 million to EUR 5.7
million. Pharmaceutical Trade Sweden's operating profit excluding non-recurring
items increased from EUR 3.4 million to EUR 5.4 million and Pharmaceutical Trade
Russia's operating loss from EUR 2.2 million to EUR 3.4 million. Profit after
financial items was EUR -4.0 (2.0) million. The profit for the period of April-
June was EUR -2.8 (1.5) million and earnings per share came to EUR -0.02 (EUR
0.01).
The Group's net sales and result January-June 2013
Oriola-KD's net sales in January-June 2013 increased by 7.1 per cent to EUR
1,264.5 (1,180.6) million. The net sales of Pharmaceutical Trade Finland and
Baltics decreased by 5.7 per cent to EUR 220.0 (233.4) million, the net sales of
Pharmaceutical Trade Sweden increased by 12.3 per cent to EUR 578.2 (514.8)
million and the net sales of Pharmaceutical Trade Russia increased by 7.8 per
cent to EUR 466.2 (432.5) million.
Oriola-KD's operating profit excluding non-recurring items in January-June
decreased by 34.5 per cent to EUR 6.0 (9.2) million. The operating profit of
Pharmaceutical Trade Finland and Baltics increased by 10.7 per cent to EUR 10.5
(9.4) million, the operating profit of Pharmaceutical Trade Sweden excluding
non-recurring items increased by 33.2 per cent to EUR 9.1 (6.8) million and the
operating loss of Pharmaceutical Trade Russia increased to EUR 7.0 (operating
loss 3.3) million.
The Group's operating profit excluding non-recurring items during the first half
of the year decreased as a result of project costs totalling EUR 2.7 million
relating to the transformation of the Swedish pharmacy market.
Profit after financial items was EUR -3.0 (4.5) million and the profit for the
period EUR -2.1 (2.8) million. Oriola-KD's financial expenses increased to EUR
5.0 (4.7) million. The financial expenses increased as a result of higher
interest rate costs resulting from the acquisition of Medstop and the accrued
foreign exchange loss of EUR 0.8 million from the group-internal loan granted to
a Russian subsidiary. Earnings per share were EUR -0.01 (EUR 0.02).
Return on equity was -1.4 (1.9) per cent in January-June 2013.
The figures for the comparison year have been adjusted due to a revision of the
calculation method for pension liabilities (IAS 19R (revision) Employee
benefits). The impact has been itemised under Revision of the IAS 19 standard
Employee benefits.
Reporting segments
Oriola-KD's reporting segments are Pharmaceutical Trade Finland and Baltics,
Pharmaceutical Trade Sweden and Pharmaceutical Trade Russia. Oriola-KD has
formed its reporting segments by combining its operating segments. The
Pharmaceutical Trade Finland and Baltics reporting segment comprises the Finnish
pharmaceutical wholesale business, the Consumer Health and the Pharmaceutical
Trade Baltics operating segments. The Pharmaceutical Trade Sweden reporting
segment comprises the Swedish pharmaceutical retail and Swedish pharmaceutical
wholesale operating segments. The Pharmaceutical Trade Russia reporting segment
comprises the Russian pharmaceutical retail and Russian pharmaceutical wholesale
operating segments.
Pharmaceutical Trade Finland and Baltics
Key figures 2013 2012 Change 2013 2012 Change 2012
EUR million 4-6 4-6 % 1- 6 1- 6 % 1- 12
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Net sales 112.5 116.6 -3.6% 220.0 233.4 -5.7% 460.5
Finnish wholesale 91.8 97.0 -5.4% 178.2 193.6 -8.0% 380.7
Baltics wholesale 9.9 8.4 17.2% 20.3 17.3 17.4% 36.1
Consumer Health 10.9 11.3 -3.4% 21.8 22.8 -4.4% 44.2
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EBITDA 6.5 5.6 16.4% 12.1 10.9 10.7% 23.9
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Operating profit 5.7 4.8 17.5% 10.5 9.4 10.7% 20.8
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Personnel at the end of the period 535 523 476
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April-June 2013
The net sales of Pharmaceutical Trade Finland and Baltics in the second quarter
of 2013 came to EUR 112.5 (116.6) million and operating profit to EUR 5.7 (4.8)
million. Invoicing of the wholesale business in Finland came to EUR 264.8
(262.0) million and net sales came to EUR 91.8 (97.0) million. The net sales of
the wholesale business in the Baltic countries came to EUR 9.9 (8.4) million and
the net sales of the Consumer Health business came to EUR 10.9 (11.3) million.
January-June 2013
The net sales of Pharmaceutical Trade Finland and Baltics in January-June 2013
came to EUR 220.0 (233.4) million and the operating profit to EUR 10.5 (9.4)
million. Invoicing of the Finnish wholesale business came to EUR 519.9 (518.2)
million and the net sales to EUR 178.2 (193.6) million. The net sales of the
wholesale business in the Baltics totalled EUR 20.3 (17.3) million and the sales
of the Consumer Health business, i.e. consumer health products sold under
Oriola-KD's own brands or exclusive sales rights, totalled EUR 21.8 (22.8)
million. In the wholesale business in Finland and the Baltics, focus is on the
development of principal management and on the services offered to principals
and pharmacies. More efficient operations, increased sales of services and
improved customer profitability improved the profitability of the Finnish
wholesale business. During the first half of the year, the profitability of the
Consumer Health business was negatively affected by the challenging competitive
environment and inputs into the development of the product assortment. Oriola-
KD's business in the Baltics grew positively during the period under review.
Cooperation between Oriola-KD and Merck Sharp & Dohme (MSD) in pharmaceutical
marketing started as planned in the second quarter of the year. Oriola-KD's
warehouse in Lithuania will start distributing MSD's pharmaceuticals to all
Baltic countries in September 2013.
The Finnish pharmaceutical market grew by 1.0 (3.4) per cent in January-June
2013 (source: IMS Health). The decrease in pharmaceutical reimbursements and the
5 per cent cut in the wholesale prices of patented pharmaceuticals in February
2013 had a negative impact on the growth of the pharmaceutical market in
Finland. Oriola-KD's share of the Finnish pharmaceutical wholesale market was
47.7 (47.2) per cent in January-June 2013 (source: IMS Health). The distribution
of AstraZeneca's products by Oriola-KD ended at the end of the second quarter of
2013.
Pharmaceutical Trade Finland and Baltics had 535 (523) employees at the end of
June 2013.
Pharmaceutical Trade Sweden
Key figures 2013 2012 Change 2013 2012 Change 2012
EUR million 4-6 4-6 % 1- 6 1- 6 % 1- 12
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Net sales 304.5 255.9 19.0% 578.2 514.8 12.3% 1,061.3
Retail 155.2 124.6 24.6% 287.1 249.3 15.1% 502.5
Wholesale 199.2 144.8 37.6% 382.2 292.2 30.8% 636.7
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EBITDA excluding non-recurring
items 8.7 5.8 49.2% 15.2 11.5 32.4% 26.4
EBITDA 4.6 5.8 -20.1% 11.2 11.5 -2.5% 25.3
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Operating profit excluding non-
recurring items 5.4 3.4 56.9% 9.1 6.8 33.2% 16.2
Operating profit 1.3 3.4 -60.9% 5.1 6.8 -25.5% 15.1
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Personnel at the end of the
period 1,870 1,246 1,324
Retail 1,593 994 1,064
Wholesale 277 252 260
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April-June 2013
The second-quarter net sales of Pharmaceutical Trade Sweden in 2013 came to EUR
304.5 (255.9) million and the operating profit excluding non-recurring items to
EUR 5.4 (3.4) million. The profitability of operations strengthened in both
businesses in the segment. The net sales of the retail business totalled EUR
155.2 (124.6) million. The invoicing of the wholesale business came to EUR
392.2 (341.4) million and the net sales of the wholesale business came to EUR
199.2 (144.8) million. The Medstop pharmacy chain has been consolidated in the
figures of Oriola-KD as of 1 June 2013. The acquisition of Medstop increased the
net sales of the retail business by EUR 20.9 million.
January-June 2013
The net sales of Pharmaceutical Trade Sweden in January-June 2013 totalled EUR
578.2 (514.8) million and operating profit excluding non-recurring items was EUR
9.1 (6.8) million. The net sales of the retail business totalled EUR 287.1
(249.3) million. The invoicing of the wholesale business came to EUR 775.1
(679.9) million and the net sales of the wholesale business came to EUR 382.2
(292.2) million. The Medstop pharmacy chain has been consolidated in the figures
of Oriola-KD as of 1 June 2013. The acquisition of Medstop increased the net
sales of the retail business by EUR 20.9 million. The purchasing and logistics
services launched for the five pharmacy chains have boosted the net sales of the
wholesale business.
The operating profit of the retail business grew, particularly as a result of
more efficient operations and increased sales of OTC pharmaceuticals and traded
goods. At the end of June 2013, Oriola-KD had a total of 293 (216) pharmacies in
Sweden. Of them, 226 (216) operated under the Kronans Droghandel brand and 67
under the Medstop brand. Oriola-KD opened a total of 9 (7) new pharmacies during
the first half of the year. In the period under review, a total of 16 (12) new
pharmacies were established in the Swedish pharmacy market. In January-June
2013, Oriola-KD had a market share of 20.1 per cent in the retail business
(source: Oriola-KD).
Oriola-KD finalised the acquisition of Medstop by 31 May 2013 and from 1 June
2013 Medstop has been reported in the Pharmaceutical Trade Sweden reporting
segment. The acquisition is estimated to create synergies of EUR 8-10 million
annually in value. The full effect of the synergies is estimated to be realized
from 2015 onwards. Oriola-KD has started the integration of the operations and
the preliminary estimates of the acquired assets and liabilities have been
presented in the 'Acquired businesses 2013' notes.
The relative share of parallel imports and generic pharmaceuticals has remained
high in the Swedish pharmaceutical market, which has decreased net sales and
weakened operating profit in the wholesale business. The OTC pharmaceuticals and
traded goods purchasing and logistics services for five pharmacy chains boosted
the net sales of the wholesale business during the first half of the year. The
purchasing and logistics services stabilised as part of Oriola-KD's business
during the second quarter, as planned, which improved the operating profit in
the quarter in relation to the comparison period. The purchasing and logistics
services contract with Vårdapoteket AB was terminated in the second quarter and
Vårdapoteket will leave the service scheme by the end of 2013. Oriola-KD's share
of the wholesale market was 34.7 (36.3) per cent in January-June 2013 (source:
IMS Health).
The pharmaceutical market in Sweden decreased by 2.7 (increased 4.1) per cent
(source: IMS Health), while the retail market of OTC products and traded goods
increased by 6.0 (3.9) per cent (source: Nielsen) in January-June 2013.
Pharmaceutical Trade Sweden had 1,870 (1,246) employees at the end of June
2013, of whom 1,593 (994) were employed in the retail and 277 (252) in the
wholesale business. The acquisition of Medstop increased the number of personnel
in the pharmaceutical retail business by 561.
Pharmaceutical Trade Russia
Key figures 2013 2012 Change 2013 2012 Change 2012
EUR million 4-6 4-6 % 1- 6 1- 6 % 1- 12
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Net sales 235.2 217.3 8.2% 466.2 432.5 7.8% 952.7
Retail 35.4 35.8 -1.0% 75.2 73.0 2.9% 148.6
Wholesale 204.1 187.1 9.1% 398.8 371.6 7.3% 831.1
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EBITDA -1.9 -0.8 132.0% -4.1 -0.5 688.4% 3.1
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Operating profit -3.4 -2.2 52.2% -7.0 -3.3 111.6% -2.3
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Personnel at the end of the period 3,008 3,007 3,056
Retail 1,298 1,306 1,309
Wholesale 1,710 1,701 1,747
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April-June 2013
The net sales of Pharmaceutical Trade Russia in the second quarter of 2013 came
to EUR 235.2 (217.3) million and the operating profit came to EUR -3.4 (-2.2)
million. The net sales of the retail business totalled EUR 35.4 (35.8) million
and the net sales of the wholesale business came to EUR 204.1 (187.1) million.
The profitability in April-June was negatively affected by the delivery problems
in the Moscow region associated with the implementation of the warehouse
management system.
January-June 2013
The net sales of Pharmaceutical Trade Russia in January-June 2013 came to EUR
466.2 (432.5) million and the operating profit to EUR -7.0 (-3.3) million. The
net sales of the retail business in Russia totalled EUR 75.2 (73.0) million and
the net sales of the wholesale business came to EUR 398.8 (371.6) million.
Oriola-KD has booked EUR 0.4 million in accelerated depreciation from the
current main logistic centre in Moscow in the first half of the year.
The retail business in Russia grew and posted positive operating profit as a
result of more effective operations and increasing sales of OTC pharmaceuticals
and traded goods. At the end of June 2013, Oriola-KD had 242 (235) pharmacies in
the Moscow region.
The growth of net sales in the wholesale business slowed down and the operating
loss increased as a result of the delivery problems in the Moscow region
following the implementation of the warehouse management system as well as due
to the challenging market conditions. Oriola-KD was able to resolve the problems
concerning the logistic delivery capacity in the Moscow region during the second
quarter of the year. The net sales of the distribution centres located outside
Moscow continued to increase in January-June 2013. A total of EUR 0.2 (0.7)
million credit loss write-offs relating to the trade receivables have been
booked in January-June 2013.
On 26 June 2013, Oriola-KD signed a lease agreement on a new main logistic
centre, located in the Moscow region. The total investment is approximately EUR
12 million including automation solution, warehouse machinery and equipment. As
a result of the logistics centre investment decision, Oriola-KD will book a
total of EUR 0.8 million in 2013 and EUR 0.5 million in 2014 in accelerated
depreciation relating to the current main logistic centre. According to the
investment plan the operations will be transferred and the full capacity will be
achieved by the end of the first quarter in 2015.
The ruble-denominated growth in the Russian pharmaceutical market was 15.6 (8.9)
per cent in January-June 2013 (source: IMS Health). The net sales of Oriola-KD's
retail business increased by 5.7 (11.1) per cent while the growth in the
wholesale business was 10.1 (31.2) per cent in Russian rubles in January-June
2013.
Pharmaceutical Trade Russia had 3,008 (3,007) employees at the end of June
2013, of whom 1,298 (1,306) were employed in the retail business and 1,710
(1,701) were employed in the wholesale business.
Non-recurring items
A non-recurring item is an income or expense arising from non-recurring or rare
events. Gains or losses from the sale of business operations or assets, gains or
losses from discontinuing or restructuring business operations as well as
impairment losses of goodwill and other assets are recognised as non-recurring
items.
Non-recurring items 2013 2012 2013 2012
EUR million 4-6 4-6 1- 6 1- 6
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Pharmaceutical Trade Sweden
Restructuring expenses -0.8 - -0.8 -
Write-off of contract-based accrual -3.2 - -3.2 -
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Non-recurring items included in the operating profit -4.0 - -4.0 -
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The non-recurring items in April-June 2013 concerned the restructuring expenses
as a result of the acquisition of Medstop and the write-off of the contract-
based accrual entered in the books in 2009 on the basis of the investment
agreement between Oriola-KD and Kooperativa Förbundet in the Swedish retail
business.
In January-June 2013 Oriola-KD has booked a total of EUR 2.7 million in project
costs relating to the transformation of the Swedish pharmacy market. These
expenses have not been treated as non-recurring items.
Balance sheet, financing and cash flow
Oriola-KD's balance sheet total on 30 June 2013 stood at EUR 1,466.5 (1,194.5)
million. Cash assets totalled EUR 130.2 (72.8) million and equity was EUR 279.7
(289.2) million. The equity ratio was 19.5 (24.8) per cent.
Oriola-KD's group goodwill of EUR 389.3 million has been allocated in impairment
testing to the cash-generating units consisting of the Group's operating
segments. A total of EUR 240.1 million of the goodwill has been allocated to the
Swedish pharmaceutical retail business, EUR 27.1 million to the Swedish
pharmaceutical wholesale business, EUR 81.8 million to the Russian
pharmaceutical wholesale business and EUR 40.3 million to the Russian
pharmaceutical retail business. The acquisition of Medstop increased the
goodwill allocated to the Swedish pharmaceutical retail business by EUR 128.8
million at the date of the acquisition.
At the end of June 2013, interest-bearing debt totalled EUR 330.0 (EUR 124.8)
million and interest-bearing net debt was EUR 199.8 (52.0) million. The gearing
ratio was 71.4 (18.0) per cent. Interest-bearing long-term debt mainly consists
of the long-term bank loan taken out for the acquisition of Medstop and the
discounted conditional earn-out payment relating to the Medstop acquisition.
Interest-bearing short-term debts mainly consist of the use of the commercial
paper programme issued by Oriola-KD Corporation, advance payments by pharmacies
in Finland and the bond of SEK 700 million issued by Medstop. The bond was
redeemed on 2 July 2013 using existing credit facilities. Factoring programs
related to monthly trade receivables from Swedish county councils and Apoteket
AB were continued in the retail and wholesale businesses in Sweden. By the end
of June 2013, the sales of the trade receivables totalled EUR 80.6 (52.8)
million. This sum includes the EUR 11.1 million of the receivables sales
programme of the Medstop pharmacy chain acquired by Oriola-KD.
Oriola-KD secured refinancing for its existing financing solution by signing a
new approximately EUR 280 million financing agreement on 15 May 2013 with four
banks. The financing agreement includes re-agreed financial covenants based on
the ratio between Oriola-KD's net debt and EBITDA and its gearing ratio. Oriola-
KD's committed long-term credit facilities of EUR 196.3 million and EUR 42.8
million in short-term credit account facilities with banks were unused at the
end of June 2013. Oriola-KD increased the value of its commercial paper
programme to EUR 200 million in the second quarter of the year. A total of EUR
122.0 (82.7) million of the commercial paper programme was in use at the end of
the review period.
Net cash flow from operations in January-June 2013 was EUR -1.5 (-8.1) million,
of which changes in working capital accounted for EUR -5.6 (-19.2) million. Net
cash flow from operations was EUR -83.1 (-10.7) million.
Investments
Gross investments in January-June 2013 totalled EUR 178.4 (9.4) million. They
consisted of the acquisition of the Medstop pharmacy chain EUR 165.9 million,
the establishment of new pharmacies, information technology investments and
investments aimed at improving the efficiency of logistics. Oriola-KD has booked
EUR 0.4 (0.0) million in accelerated depreciations due to the investment plan
relating to the logistic centre in Moscow in the first half of 2013.
Personnel
On 30 June 2013, Oriola-KD had a payroll of 5,414 (4,776) employees, 10 (11) per
cent of whom worked in Finland and the Baltics, 34 (26) per cent in Sweden, and
55 (63) per cent in Russia. Personnel numbers include the members of staff in
active employment.
Administration
The Annual General Meeting (AGM) of Oriola-KD Corporation held on 20 March 2013
elected the following persons as members of the company's Board of Directors:
Jukka Alho (Chair), Harry Brade, Per Båtelson, Outi Raitasuo and Mika Vidgrén,
and as a new member Karsten Slotte. At its constitutive meeting held immediately
after the AGM, the Board of Oriola-KD Corporation elected Outi Raitasuo as Vice
Chairman of the Board. The Board of Directors appointed the following from among
its members: Outi Raitasuo (Chairman), Harry Brade, Karsten Slotte and Mika
Vidgrén to the Board's Audit Committee, and Jukka Alho (Chairman), Per Båtelson
and Harry Brade to the Board's Remuneration Committee.
The Board of Directors has assessed the independence of its members and
determined that all members are independent of both the company and its major
shareholders.
The AGM elected PricewaterhouseCoopers Oy as the auditor for the company.
Oriola-KD's Group Management Team as of 30 June 2013:
* Eero Hautaniemi, President and CEO
* Lars Birkeland, Vice President, pharmaceutical retail, Sweden
* Henry Fogels, Vice President, pharmaceutical wholesale, Russia
* Tuomas Itkonen, CFO
* Konstantin Minin, Vice President, pharmaceutical retail, Russia
* Jukka Mäkelä, Vice President, Development (as of 1 April 2013)
* Teija Silver, Vice President, HR
* Kimmo Virtanen, Executive Vice President and Vice President, Pharmaceutical
Wholesale, Finland, Sweden and the Baltics
Oriola-KD applies the Finnish Corporate Governance Code which was issued by the
Securities Market Association on 15 June 2010 and which entered into force on 1
October 2010, with the exception that the company's Nomination Committee may
also have members which are not members of the company's Board of Directors. The
purpose of this deviation from Recommendation 22 of the Corporate Governance
Code (Appointment of members to the committees) is to allow the election of
major shareholders in the company to the Nomination Committee and thus to ensure
that their opinions are heard well before the Annual General Meeting. The
Nomination Committee is a body established by the Board for the purpose of
preparing and presenting to the Board a recommendation for the proposal to be
put to the Annual General Meeting concerning the composition and remuneration of
the Board. The Corporate Governance Statement and the Remuneration Statement for
2012 can be viewed at the company's website at: http://www.oriola-
kd.com/en/Corporate-Governance/.
Board authorisations
The AGM, held on 20 March 2013, authorised the Board to decide on repurchasing
up to fifteen million of the company's own class B shares. Shares may be
repurchased also in a proportion other than in which shares are owned by the
shareholders. The authorisation is in force for eighteen months following the
decision of the AGM.
The AGM, held on 20 March 2013, authorised the Board to decide on a share issue
against payment in one or more issues, including the right to issue new class B
shares or to assign class B treasury shares held by the company. The
authorisation covers a combined maximum of thirty million class B shares of the
company and includes the right to derogate from the shareholders' pre-emptive
subscription right. The authorisation is in force for eighteen months following
the decision of the AGM.
The Board was on 20 March 2013 also authorised to decide on a bonus issue of
class B shares to the company in one or more issues, and on a directed issue of
class B shares to implement the new share incentive scheme of the Oriola-KD
Group's management and the share savings plan for its key employees. The maximum
amount of the company's new B class shares issued under this authorisation is
1,715,000, which is 1.13 per cent of the company's total shares. The
authorisation will remain in force for a maximum of five years following the
decision of the AGM.
Dividend distribution
In accordance with a Board proposal, the AGM decided to distribute EUR 0.05 per
share in dividend from the 2012 financial year and EUR 0.04 per share in
repayment of equity, coming to a total of EUR 13.6 (12.1) million. The dividend
and repayment of equity was paid to those who, on the record date of 25 March
2013, were entered as shareholders of Oriola-KD Corporation in the company's
shareholder register maintained by Euroclear Finland Ltd.
Related parties
Related parties in the Oriola-KD Group are deemed to comprise the members of the
Board of Directors and the President and CEO of Oriola-KD Corporation, the other
members of the Group Management Team of the Oriola-KD Group, the immediate
family of the aforementioned persons, the companies controlled by the
aforementioned persons, and the Oriola Pension Fund. The Group has no
significant business transactions with related parties, except for pension
expenses arising from defined benefit plans with the Oriola Pension Fund.
Oriola-KD Corporation shares
Trading volume of Oriola-KD Corporation's class A and B shares in January-June
2013:
Trading volume January-June 2013 January-June 2012
class A class B class A class B
--------------------------------------------------------------------------
Trading volume, million shares 1.4 15.1 3.7 20.1
Trading volume, EUR million 3.3 35.7 7.2 38.3
Highest price, EUR 2.69 2.73 2.44 2.15
Lowest price, EUR 2.24 2.18 1.77 1.70
Closing quotation, end of period, EUR 2.30 2.28 2.03 1.94
--------------------------------------------------------------------------
Oriola-KD Corporation's market capitalisation on 30 June 2013 was EUR 345.8
(297.7) million.
In the review period, the traded volume of Oriola-KD Corporation shares,
excluding treasury shares, corresponded to 10.9 (15.7) per cent of the total
number of shares. The traded volume of class A shares amounted to 2.9 (7.8) per
cent of the average stock, and that of class B shares, excluding treasury
shares, 14.6 (19.3) per cent of the average stock.
At the end of June 2013, the company had a total of 151,257,828 (151,257,828)
shares of which 47,148,710 (47,148,710) were class A shares and 104,109,118
(104,109,118) class B shares. The company has 96,822 treasury shares, all of
which are class B shares. These account for 0.06 per cent of the company's
shares and 0.009 per cent of the votes.
Under Article 3 of the Articles of Association, a shareholder may demand
conversion of class A shares into class B shares. During the period 1 January-
30 June 2013, 0 (0) class A shares were converted into class B shares.
On 19 December 2012, Oriola-KD Corporation's Board of Directors decided on a new
share incentive scheme for the Group's senior management for the years
2013-2015. The company's Board of Directors will determine the earnings criteria
for the earning period and the targets to be set for these at the start of each
earning period. The bonus for the 2013 earning period is based on the Oriola-KD
Group's earnings per share (EPS) and return on capital employed (ROCE). The
Board of Oriola-KD Corporation approved the terms and conditions of the key
employees' share savings plan on 28 May 2013. The programme will be offered to
about 70 of the Group's key employees. The savings period will start on 1
October 2013 and end on 30 September 2014. The maximum and minimum monthly
savings amount to 10 and 2 per cent, respectively, of each participant's fixed
gross monthly salary. The accumulated savings will be used for purchasing
Oriola-KD's class B shares for the participants at market prices.
Liquidity guarantee
There is no liquidity guarantee in effect for the share of Oriola-KD
Corporation.
Flagging announcements
After the purchasing of shares by Ilmarinen Mutual Pension Insurance Company on
25 April 2013, its portion of the votes conferred by the shares of Oriola-KD
Corporation exceeded the 1/20 limit referred to in Chapter 9, section 5 of the
Securities Markets Act. On 25 April 2013, the direct shareholding of Ilmarinen
Mutual Pension Insurance Company totalled 4.14 per cent of Oriola-KD
Corporation's shares and 5.07 per cent of the votes conferred by the shares.
Risks
Oriola-KD's Board of Directors has approved the company's risk management policy
in which the risk management operating model, principles, responsibilities and
reporting are specified. The Group's risk management seeks to identify, measure
and manage risks that may threaten Oriola-KD's operations and the achievement of
goals set. The roles and responsibilities relating to risk management have been
determined in the Group.
Oriola-KD's risks are classified as strategic, operational and financial. Risk
management is a key element of the strategic process, operational planning and
daily decision-making at Oriola-KD.
Oriola-KD has identified the following principal strategic and operational risks
in its business:
* Amendments to pharmaceutical market regulations may weaken Oriola-KD's
profitability.
* In the Swedish retail business, the free establishment of pharmacies has led
to an increase in the number of pharmacies. The number of pharmacies may
continue to grow, which could further increase the fierce competition.
* In the Russian retail business, tough competition resulting from the large
number of pharmacies may lead to a further decrease in the gross margin and
a rapid turnover rate of key personnel.
* Extra capacity ensuing from a change in the Swedish wholesale market will
intensify competition, which may weaken the profitability of operations. The
share of single channel distribution in the pharmaceutical wholesale market
may decline rapidly, which may weaken the profitability of operations and
lead to the restructuring of wholesale operations.
* As a result of the tough competition in the Russian wholesale business, the
gross margin may decline further, which will lead to a continued need to
intensify operations and restructure wholesale operations over the long
term. The payment behaviour that is typical to the Russian market, combined
with the regional expansion of operations may increase credit risks.
* Strategic development projects involve operational risks.
The major financial risks for Oriola-KD involve currency rate, liquidity,
interest rate and credit risks. Currency risks are the most significant
financial risks in Russia and Sweden, as any changes in the value of the Russian
ruble and the Swedish krona will have an impact on Oriola-KD's earnings and
equity.
Goodwill and intangible rights are subject to impairment testing at least once
every year. Changes in cash flow forecasts based on strategic plans, or in the
discount rate or perpetuity growth rate, can cause a goodwill write-off, which
would weaken Oriola-KD's result. The impairment test of the goodwill of the
Russian cash-generating units, in particular, is sensitive to changes in the
discount rate or cash-flow forecasts.
Near-term risks and uncertainty factors
A decrease in gross margin resulting from intense competition and an increase in
credit risks concerning customers may have an impact on the profitability of the
wholesale business in Russia. Oriola-KD's strategic development projects in the
wholesale business in Russia and the operations in Sweden involve operational
risks which may have an effect on Oriola-KD's profitability.
Outlook
Oriola-KD's outlook for 2013 is based on external market forecasts, agreements
with pharmaceutical companies and pharmacies, and management assessments. In the
period 2012-2016, the pharmaceutical market is expected to grow on average per
year by 0.3 per cent in Finland, 0.5 per cent in Sweden, and 11.1 per cent in
Russia, measured in local currencies (source: IMS Health).
Outlook for 2013
Oriola-KD estimates that net sales and operating profit excluding non-recurring
items will increase from the 2012 level. Pharmaceutical Trade Russia's operating
profit is estimated to be lower than the 2012 level.
Previous outlook of 25 April 2013
Oriola-KD estimates that net sales and operating profit excluding non-recurring
items will increase from the 2012 level. Growth of the net sales of
Pharmaceutical Trade Russia will slow down in the first part of the year and
operating profit will be weaker than the previous year, as a result of
challenges related to the implementation of the warehouse management system
started in January 2013.
Events after the review period
On 2 July 2013 Oriola-KD redeemed the bond issued by Medstop as planned using
its existing credit facilities.
Next interim report
Oriola-KD Corporation will publish its results for the third quarter of 2013 on
Thursday 24 October 2013 at 8.30 am.
Tables
Consolidated
Statement of
Comprehensive 1 Apr - 1 Apr - 1 Jan - 30 1 Jan - 30 1 Jan - 31
Income (IFRS), 30 June 30 June June June Dec
EUR million 2013 2012 2013 2012 2012
-------------------------------------------------------------------------------
Net sales 652.1 589.7 1,264.5 1,180.6 2,474.4
Cost of goods sold -555.6 -504.2 -1,080.4 -1,009.0 -2,117.8
-------------------------------------------------------------------------------
Gross profit 96.6 85.6 184.1 171.6 356.6
Other operating
income 0.7 0.5 2.7 1.0 2.3
Selling and
distribution
expenses -72.6 -65.1 -141.0 -129.5 -263.9
Administrative
expenses -15.4 -12.5 -29.0 -25.0 -49.3
-------------------------------------------------------------------------------
EBITDA excluding
non-recurring
items 9.3 8.5 16.7 18.1 45.6
Depreciation -5.6 -4.5 -10.7 -8.9 -18.8
-------------------------------------------------------------------------------
Operating Profit
before Non-
recurring items 3.7 4.0 6.0 9.2 26.8
Non-recurring
items* -4.0 - -4.0 - -1.1
-------------------------------------------------------------------------------
Operating Profit -0.3 4.0 2.0 9.2 25.8
Financial income 1.4 2.1 5.2 4.2 22.7
Financial expenses -5.0 -4.2 -10.2 -8.9 -28.0
-------------------------------------------------------------------------------
Profit before
taxes -4.0 2.0 -3.0 4.5 20.5
Income taxes ** 1.2 -0.4 0.9 -1.6 -4.1
-------------------------------------------------------------------------------
Profit for the
period -2.8 1.5 -2.1 2.8 16.4
Other
comprehensive
income
Cash flow hedge 0.5 - 1.0 0.0 -0.9
Actuarial
gains/losses on
defined benefit
plan - - - - 1.6
Income tax
relating to
other
comprehensive
income 0.3 -0.9 0.1 -0.1 -0.6
Translation
difference -22.6 -9.5 -16.3 3.9 11.4
-------------------------------------------------------------------------------
Total
comprehensive
income
for the period -24.5 -8.8 -17.3 6.6 27.9
Attribution of
Profit for the
period
-------------------------------------------------------------------------------
To parent company
shareholders -2.8 1.5 -2.1 2.8 16.4
-------------------------------------------------------------------------------
Attribution of
total
comprehensive
income for the
period
-------------------------------------------------------------------------------
To parent company
shareholders -24.5 -8.8 -17.3 6.6 27.9
-------------------------------------------------------------------------------
Earnings per share
for the period
Basic earnings per
share, EUR -0.02 0.01 -0.01 0.02 0.11
Diluted earnings
per share, EUR -0.02 0.01 -0.01 0.02 0.11
*) Restructuring
expenses EUR -0.8
million and a
write-off of
contract-based
accrual
EUR -3.2 million
in Sweden Q2/2013
and a receivable
write-off EUR -1.1
million in Sweden
Q3/2012 -4.0 - -4.0 - -1.1
**) The tax
expense for the
period corresponds
to the taxes
calculated from
the profit for the
financial period
Consolidated Balance Sheet (IFRS),
EUR million
ASSETS 30 June 2013 30 June 2012 31 Dec 2012
-------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 91.9 76.3 81.4
Goodwill 389.3 270.0 276.7
Other intangible assets 77.0 52.0 52.3
Other shares and shareholdings 0.0 0.0 0.0
Other non-current assets 6.4 4.1 6.6
Deferred tax assets 10.7 8.0 6.1
-------------------------------------------------------------------------------
Non-current assets total 575.4 410.4 423.1
Current assets
Inventories 350.0 345.7 389.8
Trade and other receivables 410.9 365.6 415.2
Cash and cash equivalents 130.2 72.8 88.1
-------------------------------------------------------------------------------
891.1 784.1 893.1
Non-current assets held for sale 0.0 0.0 0.0
-------------------------------------------------------------------------------
Current assets total 891.1 784.1 893.1
ASSETS TOTAL 1,466.5 1,194.5 1,316.2
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
-------------------------------------------------------------------------------
Equity of the parent
company shareholders
Share capital 36.2 36.2 36.2
Funds 20.7 26.7 26.0
Other equity 222.8 226.3 248.4
-------------------------------------------------------------------------------
Equity total 279.7 289.2 310.5
Non-current liabilities
Deferred tax liabilities 18.8 13.6 14.1
Pension obligations 9.6 7.9 9.7
Borrowings 92.1 15.6 0.4
Other non-current liabilities - - 1.0
-------------------------------------------------------------------------------
Non-current liabilities total 120.4 37.1 25.2
Current liabilities
Trade payables and other current
liabilities 828.5 758.9 886.1
Borrowings 237.9 109.2 94.3
-------------------------------------------------------------------------------
Current liabilities total 1,066.4 868.2 980.5
EQUITY AND LIABILITIES TOTAL 1,466.5 1,194.5 1,316.2
-------------------------------------------------------------------------------
Consolidated
Statement
of Changes in
Equity (IFRS)
Equity of the parent
company shareholders
Trans- Actu- Re-
Contin- lation arial tained
Share Hedge gency Other diffe- gains/ earn- Equity
EUR million capital fund fund funds rences losses ings total
-------------------------------------------------------------------------------
Equity
31 Dec 2011 36.2 -0.0 30.0 1.2 -7.2 - 239.1 299.3
-------------------------------------------------------------------------------
Change in
accounting
policy (IAS19) - - - - - -4.8 - -4.8
-------------------------------------------------------------------------------
Equity
1 Jan 2012 36.2 -0.0 30.0 1.2 -7.2 -4.8 239.1 294.5
-------------------------------------------------------------------------------
Comprehensive
income for the
period
Net profit for
the period - - - - - - 2.8 2.8
Other
comprehensive
income:
Cash flow
hedge - 0.0 - - - - - 0.0
Income tax
relating to
other
comprehensive
income - - - - -0.1 - - -0.1
Translation
difference - - - - 3.9 - - 3.9
-------------------------------------------------------------------------------
Comprehensive
income for the
period total - 0.0 - - 3.8 - 2.8 6.6
-------------------------------------------------------------------------------
Owners related
transactions
Dividends paid
and return of
equity - - -4.5 - - - -7.6 -12.1
Share-based
payments - - - - - - 0.1 0.1
-------------------------------------------------------------------------------
Owners related
transactions
total - - -4.5 - - - -7.4 -12.0
-------------------------------------------------------------------------------
Equity
30 June 2012 36.2 - 25.5 1.2 -3.4 -4.8 234.5 289.2
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity
31 Dec 2012 36.2 -0.7 25.5 1.2 3.9 - 248.9 314.9
-------------------------------------------------------------------------------
Change in
accounting
policy (IAS19) - - - - -0.0 -3.6 -0.8 -4.4
-------------------------------------------------------------------------------
Equity
1 Jan 2013 36.2 -0.7 25.5 1.2 3.8 -3.6 248.1 310.5
-------------------------------------------------------------------------------
Comprehensive
income for the
period
Net profit for
the period - - - - - - -2.1 -2.1
Other
comprehensive
income:
Cash flow
hedge - 1.0 - - - - - 1.0
Income tax
relating to
other
comprehensive
income - -0.3 - - 0.4 - - 0.1
Translation
difference - 0.0 - - -16.3 - - -16.3
-------------------------------------------------------------------------------
Comprehensive
income for the
period total - 0.8 - - -16.0 - -2.1 -17.3
-------------------------------------------------------------------------------
Owners related
transactions
Dividends paid
and return of
equity - - -6.0 - - - -7.6 -13.6
Share-based
payments - - - - - - 0.0 0.0
-------------------------------------------------------------------------------
Owners related
transactions
total - - -6.0 - - - -7.5 -13.6
-------------------------------------------------------------------------------
Equity
30 June 2013 36.2 0.1 19.4 1.2 -12.1 -3.6 238.5 279.7
-------------------------------------------------------------------------------
Consolidated Cash Flow
Statement 1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
(IFRS), EUR million 2013 2012 2012
-------------------------------------------------------------------------------
Operating profit 2.0 9.2 25.8
Depreciation 10.7 8.9 18.8
Change in working capital -5.6 -19.2 23.1
Cash flow from financial
items and taxes -6.2 -5.9 -20.3
Other adjustments -2.4 -1.2 -1.2
Net cash flow from operating
activities -1.5 -8.1 46.1
Net cash flow from investing
activities -83.1 -10.7 -34.9
Net cash flow from financing
activities 127.3 -62.4 -77.3
Net change in cash and cash
equivalents 42.7 -81.2 -66.2
Cash and cash equivalents
at the beginning of the period 88.1 153.8 153.8
Foreign exchange rate
differences -0.6 0.1 0.4
Net change in cash and cash
equivalents 42.7 -81.2 -66.2
Cash and cash equivalents
at the end of the period 130.2 72.8 88.1
-------------------------------------------------------------------------------
Principal accounting policies as of 1 January 2013 (IFRS)
This interim report has been prepared in accordance with IFRS standards (IAS
34). The accounting policies and calculation methods applied in the interim
report are the same as those in the 31 December 2012 annual financial
statements, excluding the standards and interpretation applied as of 1 January
2013 and presented below. However, the interim report does not include all of
the information and notes present in the annual financial statements.
Consequently, the interim report should be read with the company's financial
statements for 2012. The accounting policies of the 2012 and 2013 financial
years are comparable. The company has not discontinued any operations in 2012 or
2013 that it should report.
The same principles of calculation have been used for the indicators in this
interim report as for those of the annual financial statements.
The figures in the interim report have been rounded independently.
New amendments that have been applied since 1 January 2013:
* Amendment to the standard IAS 12 Income Taxes (effective in financial years
beginning on or after 1 January 2013).
* Amendment to the standard IAS 19R (revised) Employee Benefits (effective in
financial years beginning on or after 1 January 2013).
* IFRS 13 Fair Value Measurement (effective in financial years beginning on or
after 1 January 2013).
The impact of the amendment of standard IAS 19 Employee benefits on the
consolidated result has been itemised below. The amendments of the other new
standards referred to above have had minor impact on the Group.
Two new indicators have been introduced in the second quarter of 2013: EBITDA
excluding non-recurring items and EBITDA. EBITDA excluding non-recurring items
is calculated as follows: operating profit excluding non-recurring items plus
depreciation and impairment excluding non-recurring items. EBITDA is calculated
as follows: operating profit plus depreciation and impairment. The quarterly
indicator for return on investment (ROI) and return on equity (ROE) is
annualised as follows: ((1+quarterly earnings)^4)-1).
The figures in this interim review are unaudited.
Amendment of the IAS 19 standard Employee benefits
The Oriola-KD Group has applied the standard IAS 19 Employee benefits as of 1
January 2013. The amendment impacts the Oriola-KD Group's pension costs and
result and the pension assets and obligations and equity on the balance sheet.
As a consequence of the amendment, the 2012 consolidated profit and loss account
and balance sheet have been updated as required by the revised standard.
The key amendments of the standards IAS 19R (revised) Employee benefits are that
all actuarial gains and losses must be recognised immediately in other
comprehensive income and that expected yield from assets no longer depends on
investment distribution. The discount rate used in the calculation of pension
debt is used as the expected yield of investments. The corridor method will no
longer be used and financing expenditure will be the sum of net interest rates.
The net interest rate is the difference between the interest rate costs of
pension debt and the interest rate income from assets. Despite the amendment,
the Group has decided to recognise the sum of net interest rate in personnel
expenses.
With the implementation of the revised standard IAS 19 Employee benefits, the
Oriola-KD Group's operating profit excluding non-recurring items, operating
profit and profit for the financial year 2012 and, on the balance sheet, the
pension assets and equity are smaller and pension obligation is larger than when
calculated in accordance with the standard in force up to 31 December 2012. The
impact of the implementation on consolidated operating profit excluding non-
recurring items and operating profit for 2012 is EUR 1.0 million. The impact on
Group equity on the 2012 opening balance sheet is EUR -4.8 million and EUR -4.4
million on the 31 December 2012 balance sheet due to the recognition of
actuarial gains and losses and their tax effect on equity on the consolidated
balance sheet. The following tables present a summary of the key figures
following the amendment of the accounting policy.
1 Jan- 1 Jan- 1 Jan- 1 Jan-
EUR million 31 Mar 2012 30 Jun 2012 30 Sep 2012 31 Dec 2012
-------------------------------------------------------------------------------
Operating profit excluding
non-recurring items 5.2 9.2 16.4 26.8
Operating profit 5.2 9.2 15.3 25.8
Profit before taxes 2.5 4.5 8.4 20.5
Profit for the period 1.3 2.8 5.0 16.4
Comprehensive profit for the
period 15.5 6.6 17.8 27.9
Earnings per share to
shareholders of
the parent company on the
profit for the period, EUR
Diluted, EUR 0.01 0.02 0.03 0.11
Adjusted for the dilution
effect, EUR 0.01 0.02 0.03 0.11
1 Jan- 1 Apr- 1 July- 1 Oct- 1 Jan-
31 Dec 31 Dec
EUR million 31 Mar 2012 30 Jun 2012 30 Sep 2012 2012 2012
-------------------------------------------------------------------------------
Operating profit
excluding non-
recurring items 5.2 4.0 7.2 10.5 26.8
Operating profit 5.2 4.0 6.2 10.5 25.8
Profit before taxes 2.5 2.0 4.0 12.0 20.5
Profit for the
period 1.3 1.5 2.1 11.4 16.4
Comprehensive profit
for the period 15.5 -8.8 11.2 10.1 27.9
Earnings per share
for shareholders of
the parent company
on the profit for
the period, EUR
Diluted, EUR 0.01 0.01 0.01 0.08 0.11
Adjusted for the
dilution effect, EUR 0.01 0.01 0.01 0.08 0.11
EUR million 31 Mar 2012 30 Jun 2012 30 Sep 2012 31 Dec 2012
-------------------------------------------------------------------------------
Non-current pension assets 4.3 4.1 3.8 6.6
Non-current pension
obligations 7.8 7.9 8.3 9.7
Equity of the parent company's
shareholders 297.9 289.2 300.4 310.5
Notes
Change in Property,
Plant and Equipment, 1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
EUR million 2013 2012 2012
-------------------------------------------------------------------------------
Carrying amount at the
beginning of the
period 81.4 74.0 74.0
Increases through
acquisitions of
subsidiary shares 9.0 - -
Increases 9.4 6.6 16.6
Decreases -0.1 -0.4 -0.5
Depreciation -6.1 -5.3 -11.1
Foreign exchange rate
differences -1.6 1.3 2.4
-------------------------------------------------------------------------------
Carrying amount at the
end of the period 91.9 76.3 81.4
-------------------------------------------------------------------------------
1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
Key Figures 2013 2012 2012
-------------------------------------------------------------------------------
Equity ratio, % 19.5 24.8 24.5
Equity per share, EUR 1.85 1.91 2.05
Return on capital
employed (ROCE), % 0.8 4.2 5.9
Return on equity
(ROE), % -1.4 1.9 5.4
Net interest-bearing
debt, EUR million 199.8 52.0 6.7
Gearing, % 71.4 18.0 2.1
Earnings per share,
EUR -0.01 0.02 0.11
Average number of
shares, 1000 pcs 151,161 151,161 151,248
Derivatives,
Commitments
and Contingent
Liabilities
30 June 2013
Positive fair Negative fair Nominal values of
EUR million value value contracts
Derivatives recognised
as cash flow hedges
Interest rate swaps 0.1 - 45.6
Derivatives measured
at
fair value through
profit and loss
Foreign currency
forward and swap
contracts 4.0 - 194.5
30 June 2012
Positive fair Negative fair Nominal values of
EUR million value value contracts
Derivatives measured
at
fair value through
profit and loss
Foreign currency
forward and swap
contracts - 0.4 191.3
Interest rate swaps - 0.1 114.0
Derivatives measured at fair value through profit and loss are mainly related
to hedging of group's internal transactions. Fair values of the derivatives
have been booked to balance sheet in gross amount as the
derivatives contracts are related to credit events and
cannot be netted in financial statements. The Group has
not given nor received collateral to/from derivatives
counterparties.
Fair value hierarchy
EUR million
30 Jun 2013 Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Assets
Derivatives measured at
fair value through profit
and loss - 4.0 - 4.0
Derivatives designated as
hedges - 0.1 - 0.1
Liabilities
Contingent consideration - - 14.3 14.3
-------------------------------------------------------------------------------
EUR million
30 Jun 2012 Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Assets
Derivatives measured at
fair value through profit
and loss - - - -
Liabilities
Derivatives measured at
fair value through profit
and loss - 0.5 - 0.5
-------------------------------------------------------------------------------
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are
not based on observable market data (i.e.
unobservable inputs).
Reconciliation of financial liabilities recognised at fair value through
profit and loss according to the level 3 in the year 2013
EUR million
Carrying amount 31 Dec 2012 -
Booking from contingent consideration 14.2
Bookings to financial expenses 0.1
-------------------------------------------------------------------------------
Carrying amount 30 Jun 2013 14.3
-------------------------------------------------------------------------------
Financial liabilities recognised at fair value through profit and loss (level
3) include estimated discounted fair value of a contingent consideration
related to the Medstop acquisition. Payment of the contingent consideration is
based on the estimate on Oriola-KD's combined Swedish retail businesses 2015
EBITDA made by the management. The contingent consideration will be paid in
first quarter of 2016. The fair
value of the contingent consideration has been calculated using discounted
cash flow method.
The discount rate used in the valuation is determined using the weighted
average cost of capital of the Group.
Contingencies for Own Liabilities
EUR million 30 June 2013 30 June 2012 31 Dec 2012
-------------------------------------------------------------------------------
Guarantees given 18.9 9.7 23.4
Mortgages on land and buildings - 2.0 2.0
Mortgages on company assets 2.4 2.4 2.4
Other guarantees and liabilities 0.8 0.7 0.8
-------------------------------------------------------------------------------
Total 22.2 14.8 28.7
-------------------------------------------------------------------------------
Leasing liabilities (operating
liabilities) 2.6 3.2 2.8
Rent liabilities 84.2 67.1 66.9
The most significant guarantees are bank
guarantees against trade payables in
wholesale companies in Russia and
Sweden.
Oriola-KD Oyj has also granted parent
company guarantees of EUR 24.8 (21.0)
million against subsidiaries' trade
payables and EUR 77.7 million
(0.0) against external loan in Oriola-KD
Holding Sverige AB.
1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
Number of personnel 2013 2012 2012
-------------------------------------------------------------------------------
Average number of personnel 4,943 4,795 4,818
Number of personnel at the end
of the period 5,414 4,776 4,856
SEGMENT INFORMATION
1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
Net Sales, EUR million 2013 2012 2012
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 220.0 233.4 460.5
Pharmaceutical Trade Sweden 578.2 514.8 1,061.3
Pharmaceutical Trade Russia 466.2 432.5 952.7
Net sales to other segments -0.0 -0.2 -0.0
-------------------------------------------------------------------------------
Group total 1,264.5 1,180.6 2,474.4
1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
Operating Profit, EUR million 2013 2012 2012
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 10.5 9.4 20.8
Pharmaceutical Trade Sweden 5.1 6.8 15.1
Pharmaceutical Trade Russia -7.0 -3.3 -2.3
Group Administration and Others -6.6 -3.8 -7.8
-------------------------------------------------------------------------------
Group total 2.0 9.2 25.8
Operating Profit excl. non-
recurring items, 1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
EUR million 2013 2012 2012
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 10.5 9.4 20.8
Pharmaceutical Trade Sweden 9.1 6.8 16.2
Pharmaceutical Trade Russia -7.0 -3.3 -2.3
Group Administration and Others -6.6 -3.8 -7.8
-------------------------------------------------------------------------------
Operating Profit excl. non
recurring items 6.0 9.2 26.8
Non-recurring items * -4.0 - -1.1
-------------------------------------------------------------------------------
Group total 2.0 9.2 25.8
*) Restructuring expenses EUR
-0.8 million and a write-off of
contract-based accrual EUR -3.2
million in Pharmaceutical Trade
Sweden Q2/2013 and a receivable
write-off EUR -1.1 million in
Pharmaceutical Trade Sweden
Q3/2012
Quarterly Net Sales, EUR
million Q2/2013 Q1/2013 Q4/2012 Q3/2012 Q2/2012 Q1/2012
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 112.5 107.5 118.3 108.7 116.6 116.8
Pharmaceutical Trade Sweden 304.5 273.7 292.4 254.1 255.9 258.9
Pharmaceutical Trade Russia 235.2 231.1 296.9 223.3 217.3 215.2
Net sales to other segments -0.0 -0.0 0.2 -0.0 -0.1 -0.0
-------------------------------------------------------------------------------
Group total 652.1 612.3 707.8 586.1 589.7 590.8
Quarterly Operating Profit,
EUR million Q2/2013 Q1/2013 Q4/2012 Q3/2012 Q2/2012 Q1/2012
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 5.7 4.8 5.2 6.1 4.8 4.6
Pharmaceutical Trade Sweden 1.3 3.8 4.6 3.7 3.4 3.4
Pharmaceutical Trade Russia -3.4 -3.6 3.1 -2.0 -2.2 -1.1
Group Administration and
Others -4.0 -2.6 -2.4 -1.6 -2.0 -1.8
-------------------------------------------------------------------------------
Group total -0.3 2.3 10.5 6.2 4.0 5.2
Quarterly Operating Profit,
excl. non-recurring items, EUR
million Q2/2013 Q1/2013 Q4/2012 Q3/2012 Q2/2012 Q1/2012
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 5.7 4.8 5.2 6.1 4.8 4.6
Pharmaceutical Trade Sweden 5.4 3.8 4.6 4.8 3.4 3.4
Pharmaceutical Trade Russia -3.4 -3.6 3.1 -2.0 -2.2 -1.1
Group Administration and
Others -4.0 -2.6 -2.4 -1.6 -2.0 -1.8
-------------------------------------------------------------------------------
Group total excl. non-
recurring items 3.7 2.3 10.5 7.2 4.0 5.2
Non-recurring items * -4.0 - - -1.1 - -
-------------------------------------------------------------------------------
Group total -0.3 2.3 10.5 6.2 4.0 5.2
*) Restructuring expenses EUR
-0.8 million and a write-off
of contract-based accrual EUR
-3.2 million in Pharmaceutical
Trade Sweden Q2/2013 and a
receivable write-off EUR -1.1
million in Pharmaceutical
Trade Sweden Q3/2012
1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
Net Sales by Market, EUR
million 2013 2012 2012
-------------------------------------------------------------------------------
Finland 199.4 215.0 422.4
Sweden 548.6 501.5 1,028.8
Russia 466.2 432.5 952.7
Baltic countries 19.6 16.6 34.6
Other countries 30.7 14.9 35.9
-------------------------------------------------------------------------------
Group total 1,264.5 1,180.6 2,474.4
Quarterly Net Sales by Market,
EUR million Q2/2013 Q1/2013 Q4/2012 Q3/2012 Q2/2012 Q1/2012
-------------------------------------------------------------------------------
Finland 102.5 96.8 107.8 99.7 107.6 107.4
Sweden 289.5 259.0 282.6 244.7 249.3 252.2
Russia 235.2 231.1 296.9 223.3 217.3 215.2
Baltic countries 9.6 10.0 9.4 8.6 8.1 8.4
Other countries 15.3 15.4 11.0 10.0 7.4 7.5
-------------------------------------------------------------------------------
Group total 652.1 612.3 707.8 586.1 589.7 590.8
ACQUIRED BUSINESSES 2013
Medstop pharmacy chain
Oriola-KD acquired the entire capital stock of Medstop Group Holding AB,
Sweden's fifth biggest pharmacy chain, on 3 June 2013. The Medstop pharmacy
chain had a total of 67 pharmacies located in shopping centres and city centre
locations in Stockholm, Gothenburg and Malmö. The business operations of the
pharmacy chain acquired by Oriola-KD only involve pharmaceutical retail business
and they are reported in the Pharmaceutical Trade Sweden segment.
The acquisition cost calculation is based on the company's preliminary balance
sheet on 31 May 2013, the essential parts of which have prepared in accordance
with the IFRS's accounting principles.
The acquisition has been entered in the books on a preliminary basis, as
permitted under IFRS 3R (revised). Oriola-KD will make the necessary adjustments
to these preliminary assessments during the 12 months following the acquisition
date.
The preliminary goodwill of the acquisition entered in the books is EUR 128.8
million. The euro-denominated goodwill is the value of Medstop's experienced
personnel, synergy benefits that can be achieved in purchasing operations,
storage and pharmacy distribution and growth expectations. The goodwill entered
in the books is not tax-deductible.
The original acquisition cost calculation made in Swedish krona (SEK) has been
converted into euros on the basis of the exchange rate of 31 May 2013. The
results and balance sheet of Medstop have been consolidated into Oriola-KD as of
1 June 2013.
The table below provides a summary of the consideration paid for the pharmacy
chain and the fair values of the assets and liabilities entered in the books on
the acquisition date.
Acquisition cost, EUR million
Cash 79.2
Contingent consideration 14.5
---------------------------------------------------------
Total acquisition cost 93.7
Recognized amounts of identifiable assets
acquired and liabilities assumed, EUR million Fair value
Property, plant and equipment 9.0
Intangible assets 28.1
Deferred tax assets 2.4
Inventories 18.3
Trade and other receivables 18.4
Cash and cash equivalents 8.9
---------------------------------------------------------
Assets total 85.1
Deferred tax liabilities 6.2
Trade payables and other current liabilities 30.3
Borrowings 83.8
---------------------------------------------------------
Liabilities total 120.2
Total identifiable net assets -35.1
Goodwill 128.8
Total 93.7
Acquisition-related costs are included in administrative expenses in the 2013
consolidated income statement.
The contingent consideration will be paid in the first quarter of 2016. Payment
of the contingent consideration is based on the estimate on Oriola-KD's combined
Swedish retail businesses 2015 EBITDA made by the management. The contingent
consideration has been booked in the balance sheet as financial liability
recognised at fair value through profit and loss and the fair value of the
contingent consideration has been calculated using discounted cash flow method.
The discount rate used in the valuation is determined using the weighted average
cost of capital of the Group.
The estimated net sales of the Group in the period 1 January-30 June 2013 would
have been EUR 1,374.0 million (reported EUR 1,264.5 million) and the operating
profit excluding non-recurring items EUR 10.1 million (reported EUR 6.0 million)
if the acquisition had been made at the start of 2013.
The impact of the acquired business on the Group's net sales in the period 1
June - 30 June 2013 is EUR 20.9 (0.0) million and on the operating profit EUR
0.6 (0.0) million.
Espoo 24 July 2013
Board of Directors of Oriola-KD Corporation
Oriola-KD Corporation
Eero Hautaniemi
President and CEO
Tuomas Itkonen
CFO
Further information:
Eero Hautaniemi
President and CEO
tel.+358 10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Tuomas Itkonen
CFO
tel. +358 46 876 5207
e-mail: tuomas.itkonen@oriola-kd.com
Joni Ihantola
Vice President, Treasury and IR
tel.+358 10 429 4386
e-mail: joni.ihantola@oriola-kd.com
Distribution:
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Released by:
Oriola-KD Corporation
Corporate Communications
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FI-02200 Espoo
www.oriola-kd.com
[HUG#1718463]
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