2012-04-27 08:30:00 CEST
2012-04-27 08:30:43 CEST
BIRTINGARSKYLDAR UPPLÝSNINGAR
Rapala VMC - Interim report (Q1 and Q3)
RAPALA'S INTERIM REPORT FOR JANUARY TO MARCH 2012: CHALLENGING WINTER IN NORDIC COUNTRIES DEPRESSED SALES AND PROFITS. FULL YEAR OUTLOOK POSITIVE.
Rapala VMC Corporation
Stock Exchange Release
April 27, 2012 at 9:30 a.m.
* Net sales for the first quarter decreased 2% from last year to 73.5 MEUR
(I/11: 74.7 MEUR), affected by the divestment of gift business and
challenging winter business conditions. Excluding the impact of the gift
business divestment net sales increased 1% from last year.
* Comparable operating profit totaled 10.3 MEUR (12.1 MEUR). It was negatively
impacted by the divestment of the gift business, stock clearance campaigns,
establishment of new manufacturing units, foreign exchange rates and
declined sales of winter sports equipment. Comparable operating margin was
14.0% (16.2%). Reported operating profit for the first quarter was 10.4 MEUR
(12.1 MEUR).
* Net profit for the quarter reduced to 7.5 MEUR (7.9 MEUR). Earnings per
share were 0.16 EUR (0.18 EUR).
* Cash flow from operating activities in the first quarter improved
significantly to -9.3 MEUR (-15.5 MEUR) following the positive development
in working capital. Gearing decreased to 75.9% (79.5%) reaching all time
first quarter record.
* During the first quarter Rapala concluded three major strategic initiatives
relating to ice fishing business: Acquisition of the assets of Strike Master
Corporation in the United States, acquisition of Swedish Mora ICE brand and
entering into an exclusive supply agreement with Mora of Sweden AB well as
entering into an exclusive supply agreement with Marcum Electronics in the
US.
* In April Rapala refinanced its bank loan facilities and extended its
commercial paper program. This will provide flexibility to arrange Group's
seasonal and long term funding and strengthens Rapala's capabilities to
finance its strategy of profitable growth.
* The outlook for the full year is positive. It is expected that in 2012 the
net sales will increase from 2011 and the comparable operating profit is
targeted to improve.
The attachment presents the interim review by the Board of Directors as well as
the accounts.
A conference call on the first quarter result will be arranged today at 2.00
p.m. Finnish time (1.00 p.m. CET). Please dial +44 (0)20 3147 4971 or
+1 212 444 0889 or +358 (0)9 2310 1667 (pin code: 379106#) five minutes before
the beginning of the event. A replay facility will be available for 14 days
following the teleconference. The number to dial is +44 (0)20 7111 1244 (pin
code: 379106#). Financial information and teleconference replay facility are
available at www.rapala.com.
For further information, please contact:
Jorma Kasslin, President and Chief Executive Officer, +358 9 7562 540
Jussi Ristimäki, Chief Financial Officer, +358 9 7562 540
Olli Aho, Investor Relations, +358 9 7562 540
Distribution: NASDAQ OMX Helsinki and Main Media
Market Situation and Sales
Early spring and warm weather advanced the beginning of season in main markets
of Europe and North America, although the main summer fishing season has not yet
fully started. Summer season's presales were good in several markets. The US
economy is showing signs of improvement and overall retail environment is
picking up. In Eastern Europe, the sales continued to grow strongly. Sales were
growing in Asia and Southern Hemisphere. Due to a late and short winter in the
Nordic countries, following two preceding good winter seasons, the market for
winter sports equipment was very slow. Certain European countries are also still
hurt by the economical uncertainties.
Net sales for the first quarter decreased 2% from last year to 73.5 MEUR (I/11:
74.7 MEUR). New units contributed 0.3 MEUR net sales and changes in currency
exchange rates increased sales by 0.5 MEUR compared to last year. With
comparable exchange rates and organizational structure, including divestment of
the gift business, net sales were at last year's level.
Net sales of Group Products decreased by 2% from last year to 45.8 MEUR (46.8
MEUR), affected by the impact from gift business divestment and slow winter
sports equipment sales. Excluding gift and winter sports, Group Product sales
increased 4%. Sales of Third Party Products were down 1% to 27.7 MEUR (27.9
MEUR), with decreased sales of winter sports and hunting equipment. Excluding
the impact of winter sports, the Third Party Products sales were up 1%.
External net sales in North America were up by 8% compared to last year as a
result of improved market sentiment, early spring and strengthening of the US
Dollar. In Nordic countries net sales were down by 16% due to challenging winter
business conditions, especially in Finland, and restructuring of the business in
Norway. Net sales in Rest of Europe increased by 3% following strong performance
in Eastern Europe and France whereas Hungary, Spain and Switzerland are still
hurt by the economical uncertainties. In Rest of the World net sales decreased
by 9% as a result of the divestment of the gift business. Excluding gift
business divestment net sales of Rest of the World were up 16%, as sales
increased in all markets.
Financial Results and Profitability
Comparable operating profit, excluding non-recurring items, totaled 10.3 MEUR
(12.1 MEUR). Compared to last year, comparable operating profit was negatively
impacted by the divestment of the gift business, stock clearance campaigns,
establishment of new manufacturing units, foreign exchange rates and declined
sales of winter sports equipment. Comparable operating margin was 14.0% (16.2%).
Reported operating profit for the first quarter was 10.4 MEUR (12.1 MEUR), and
included net gain of non-recurring items of 0.1 MEUR (0.0 MEUR).
Key figures I I I-IV
MEUR 2012 2011 2011
------------------------------------------------------
Net sales 73.5 74.7 279.5
EBITDA as reported 12.0 13.7 37.7
EBITDA excl. one-off items 12.0 13.7 37.1
Operating profit (EBIT) 10.4 12.1 30.7
EBIT excl. one-off items 10.3 12.1 30.5
------------------------------------------------------
Operating profit for Group Products decreased compared to last year and amounted
to 7.0 MEUR (9.0 MEUR). Operating profit was negatively impacted by the
divestment of the gift business, declined sales of winter sports equipment and
reduced margins in hooks and fishing accessories. Group Products' operating
profit was also burdened by stock clearance sales and establishment of new
manufacturing units. Operating profit of Third Party Products increased to 3.4
MEUR (3.1 MEUR), with main contribution coming from fishing products.
Financial (net) expenses were 0.0 MEUR (1.0 MEUR), with major change in (net)
currency exchange gain of 1.0 MEUR (loss 0.2 MEUR). Net interest and other
financing expenses increased slightly from last year level to 1.0 MEUR (0.8
MEUR).
Following the improvement in financial items net profit for the quarter was only
slightly behind last year at 7.5 MEUR (7.9 MEUR). Earnings per share for the
first quarter reached 0.16 EUR (0.18 EUR) impacted by increased share of non-
controlling interest in net result.
Cash Flow and Financial Position
Following the positive development in working capital cash flow from operations
improved significantly from last year to -9.3 MEUR (-15.5 MEUR). During first
quarter inventories and payables developed more favorably compared to last year
and net change in working capital was -18.9 MEUR (-26.6 MEUR). Working capital
was up from December as inventories and trade receivables increased seasonally.
Group's inventories increased 4.8 MEUR from last March to 125.0 MEUR (120.2
MEUR) of which 3.2 MEUR is from net impact of currency movements, new units,
business acquisitions and gift divestment.
In the first quarter net cash used in investing activities amounted to 8.3 MEUR
(1.7 MEUR). Normal operative capital expenditure was 2.3 MEUR (1.8 MEUR),
increased mainly by establishment of the manufacturing units in Batam. Investing
activities also include acquisition the assets of Strike Master Corporation and
Mora ICE brand with total of 6.4 MEUR and proceeds from the sale of a real
estate in Finland of 0.3 MEUR.
Net interest bearing debt increased seasonally from December and was 107.7 MEUR
(106.7 MEUR) in the end of March. The liquidity of the Group remained good and
is further secured in the future following the finalization of new bank loan
facilities in April. In the end of March equity-to-assets ratio was down 40
basis points to 40.8% (41.2%) compared to last year. Gearing decreased to 75.9%
(79.5%) reaching all time first quarter record.
Strategy Implementation
Implementation of Rapala's strategy of profitable growth continued during the
first quarter by acquiring assets of Strike Master Corporation, the leading
supplier of ice augers in the US. Rapala also acquired the Mora ICE brand, which
is Europe's leading and premium brand of ice augers and auger cutting blades,
together with all intellectual property rights relating to the Mora ICE-
products, from Mora of Sweden AB. Rapala and Mora of Sweden AB concluded also
exclusive supply agreements for supply of ice augers and auger cutting blades.
Normark Corporation, Rapala's US distribution company concluded an exclusive
supply agreement with Marcum Electronics Corporation having its offices in
Minnesota. Marcum Electronics is known as a premier supplier of ice fishing
electronics such as under water cameras and fish finders used on ice.
These strategic initiatives will give Rapala the global leadership position in
the ice fishing category. Rapala is well equipped to exploit this position as it
is having strong distribution companies in all main arctic markets: US, Canada,
Russia, East European and Nordic countries, Japan and China.
Implementation of the Group's strategy also continued by further developing the
newly established distribution units in Mexico, Indonesia and Kazakhstan.
Group's new lure and hook manufacturing units on Batam Island in Indonesia
started their operations during the first quarter and are gradually ramping up
the production volumes and improving the operational efficiencies. Group has
decided to expand the Batam lure manufacturing, and the size of the operation is
expected to triple during the next 12 months.
The special performance improvement initiative in Rapala's Norwegian
distribution company continued.
Working capital and cash flow management was still one of the top priorities of
the Group and the Group continues to work to reduce the inventory levels and
develop the Group's internal supply chain.
Group's loan facilities were refinanced in April. The new 5-year bank loan
facilities are in total of 150 MEUR and together with the commercial paper
program, which was simultaneously increased from 25 MEUR to 40 MEUR, they will
provide flexibility to arrange Group's seasonal and long term funding, and
strengthens Rapala's capabilities to finance its strategy of profitable growth.
Discussions and negotiations regarding acquisitions and business combinations
continued during the first quarter.
Short-term Outlook
Despite the lower than last year first quarter sales and operating profit,
mainly caused by the divestment of the gift business, startup costs of the new
manufacturing units and difficult winter business conditions, the outlook for
the full year is positive.
Early spring is supporting the beginning of main summer fishing season in
several major markets. Summer season's presales have been good in several
markets and the Group is well positioned to serve the customers when the main
season starts.
US economy is showing signs of improvement and overall retail environment is
picking up. The growth in East Europe and Asia is expected to continue, while in
Europe some uncertainty concerning retail and consumer demand is still present
in certain markets.
The divestment of the gift business will have some reducing impact on the
Group's net sales and the continuing inventory cleaning initiatives may pressure
the profitability, while at same time performance improvement initiatives in
various units are expected to show results. The new acquisitions and
distribution agreements relating to winter fishing business are expected to
impact positively on the Group's sales and operating profit during the second
half of the year.
It is expected that in 2012 the net sales will increase from 2011 and the
comparable operating profit is targeted to improve.
Second quarter interim report will be published on July 24.
Helsinki, April 27, 2012
Board of Directors of Rapala VMC Corporation
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
STATEMENT OF INCOME I I I-IV
MEUR 2012 2011 2011
-----------------------------------------------------------------------------
Net sales 73.5 74.7 279.5
Other operating income 0.3 0.1 2.9
Materials and services 32.2 32.0 129.0
Personnel expenses 15.7 15.5 62.4
Other costs and expenses 13.8 13.6 53.3
Share of results in associates and joint ventures -0.1 0.0 -0.1
---------------------------
EBITDA 12.0 13.7 37.7
Depreciation, amortization and impairments 1.6 1.6 7.0
---------------------------
Operating profit (EBIT) 10.4 12.1 30.7
Financial income and expenses 0.0 1.0 5.5
---------------------------
Profit before taxes 10.4 11.1 25.2
Income taxes 2.9 3.1 8.0
---------------------------
Net profit for the period 7.5 7.9 17.2
---------------------------
Attributable to:
Equity holders of the Company 6.2 7.0 14.0
Non-controlling interests 1.3 0.9 3.2
Earnings per share for profit attributable
to the equity holders of the Company
Earnings per share, EUR (diluted = non-diluted) 0.16 0.18 0.36
STATEMENT OF COMPREHENSIVE INCOME I I I-IV
MEUR 2012 2011 2011
-------------------------------------------------------------------------
Net profit for the period 7.5 7.9 17.2
---------------------------
Other comprehensive income, net of tax
Change in translation differences -1.8 -4.3 2.0
Gains and losses on cash flow hedges 0.1 0.6 -0.1
Gains and losses on hedges of net investments 0.3 0.7 -0.4
---------------------------
Total other comprehensive income, net of tax -1.4 -3.0 1.5
---------------------------
Total comprehensive income for the period 6.1 4.9 18.7 ---------------------------
Total comprehensive income attributable to:
Equity holders of the Company 4.6 4.1 15.8
Non-controlling interests 1.5 0.8 2.9
STATEMENT OF FINANCIAL POSITION Mar 31 Mar 31 Dec 31
MEUR 2012 2011 2011
-------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 71.8 65.7 68.0
Property, plant and equipment 28.9 28.2 28.5
Non-current financial assets
Interest-bearing 7.6 1.7 7.6
Non-interest-bearing 9.5 9.1 9.1
------------------------------
117.7 104.7 113.2
Current assets
Inventories 125.0 120.2 115.5
Current financial assets
Interest-bearing 1.4 0.0 1.6
Non-interest-bearing 74.1 75.4 55.0
Cash and cash equivalents 29.3 26.0 28.9
------------------------------
229.8 221.6 201.0
Assets classified as held-for-sale 0.3 - 0.3
Total assets 347.8 326.3 314.5
------------------------------
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders of the
Company 133.1 125.9 128.6
Non-controlling interests 8.6 8.2 7.2
------------------------------
141.8 134.1 135.8
Non-current liabilities
Interest-bearing 12.0 25.1 12.7
Non-interest-bearing 14.4 13.7 13.5
------------------------------
26.4 38.8 26.2
Current liabilities
Interest-bearing* 133.9 109.4 116.6
Non-interest-bearing 45.7 44.0 35.9
------------------------------
179.6 153.4 152.5
Total equity and liabilities 347.8 326.3 314.5
------------------------------
* As of April 2012 the revolving credit facilities of the new bank loan
agreements will be classified as non-current liabilities to the extent banks'
commitment is valid for longer than 12 months.
I I I-IV
KEY FIGURES 2012 2011 2011
----------------------------------------------------------------------------
EBITDA margin, % 16.4% 18.4% 13.5%
Operating profit margin, % 14.1% 16.2% 11.0%
Return on capital employed, % 17.4% 21.0% 13.7%
Capital employed at end of period, MEUR 249.4 240.8 227.0
Net interest-bearing debt at end of period, MEUR 107.7 106.7 91.2
Equity-to-assets ratio at end of period, % 40.8% 41.2% 43.2%
Debt-to-equity ratio at end of period, % 75.9% 79.5% 67.2%
Earnings per share, EUR 0.16 0.18 0.36
Fully diluted earnings per share, EUR 0.16 0.18 0.36
Equity per share at end of period, EUR 3.42 3.23 3.30
Average personnel for the period 1 991 2 257 2 208
----------------------------------------------------------------------------
Definitions of key figures in the interim report are consistent with those in
the Annual Report 2011.
STATEMENT OF CASH FLOWS I I I-IV
MEUR 2012 2011 2011
-------------------------------------------------------------------------------
Net profit for the period 7.5 7.9 17.2
Adjustments to net profit for the period * 4.6 6.0 17.6
Financial items and taxes paid and received -2.5 -2.9 -12.3
Change in working capital -18.9 -26.6 -7.3
-------------------------------------------------------------------------------
Net cash generated from operating activities -9.3 -15.5 15.2
Investments -2.3 -1.8 -8.4
Proceeds from sales of assets 0.4 0.2 0.7
Acquisition of joint venture Shimano Normark UK - - -1.5
Dynamite Baits acquisition, net of cash - - -0.1
Sufix brand acquisition - - -0.7
Strikemaster and Mora ICE acquisitions -6.4 - -
Acquisition of other subsidiaries, net of cash - - 0.0
Proceeds from disposal of subsidiaries, net of cash - - 0.6
Change in interest-bearing receivables 0.0 0.0 0.0
-------------------------------------------------------------------------------
Net cash used in investing activities -8.3 -1.7 -9.6
Dividends paid to parent company's shareholders - - -9.0
Dividends paid to non-controlling interest - - -2.9
Net funding 18.3 16.3 6.7
Purchase of own shares -0.1 0.0 -0.1
-------------------------------------------------------------------------------
Net cash generated from financing activities 18.3 16.3 -5.2
Adjustments 0.2 0.0 0.4
Change in cash and cash equivalents 0.9 -0.9 0.8
Cash & cash equivalents at the beginning of the period 28.9 27.9 27.9
Foreign exchange rate effect -0.6 -1.0 0.2
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 29.3 26.0 28.9
* Includes reversal of non-cash items, income taxes and financial income and
expenses.
STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of
the Company
-------------------------------------------------
Fund for
Cumul. invested Non-
Share Fair trans- non- Re- contr-
pre- value lation rest- Own tained olling
Share mium re- diffe- ricted sha- earn- inte- Total
MEUR capital fund serve rences equity res ings rests equity
-------------------------------------------------------------------------------
Equity on Jan
1, 2011 3.6 16.7 -1.5 -6.0 4.9 -2.5 106.7 7.4 129.2
-------------------------------------------------------------------------------
Comprehensive
income* - - 0.6 -3.5 - - 7.0 0.8 4.9
Purchase of
own shares - - - - - 0.0 - - 0.0
Other changes - - - - - - - 0.0 0.0
-------------------------------------------------------------------------------
Equity on Mar
31, 2011 3.6 16.7 -0.9 -9.5 4.9 -2.5 113.7 8.2 134.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity on Jan
1, 2012 3.6 16.7 -1.6 -4.1 4.9 -2.6 111.8 7.2 135.8
-------------------------------------------------------------------------------
Comprehensive
income* - - 0.1 -1.7 - - 6.2 1.5 6.1
Purchase of
own shares - - - - - -0.1 - - -0.1
-------------------------------------------------------------------------------
Equity on Mar
31, 2012 3.6 16.7 -1.5 -5.8 4.9 -2.7 118.0 8.6 141.8
-------------------------------------------------------------------------------
* For the period (net of tax).
SEGMENT INFORMATION*
MEUR I I I-IV
Net Sales by Operating Segment 2012 2011 2011
-----------------------------------------------------------------
Group Products 45.8 46.8 174.5
Third Party Products 27.7 27.9 105.0
-----------------------------------------------------------------
Total 73.5 74.7 279.5
Operating Profit by Operating Segment
-----------------------------------------------------------------
Group Products 7.0 9.0 22.4
Third Party Products 3.4 3.1 8.4
-----------------------------------------------------------------
Total 10.4 12.1 30.7
Mar 31 Mar 31 Dec 31
Assets by Operating Segment 2012 2011 2011
--------------------------------------------------------------------------
Group Products 225.6 213.4 207.7
Third Party Products 84.0 85.2 68.8
--------------------------------------------------------------------------
Non-interest-bearing assets total 309.6 298.6 276.5
Unallocated interest-bearing assets 38.2 27.7 38.1
--------------------------------------------------------------------------
Total assets 347.8 326.3 314.5
Liabilities by Operating Segment
--------------------------------------------------------------------------
Group Products 40.9 38.7 35.0
Third Party Products 19.2 19.1 14.5
--------------------------------------------------------------------------
Non-interest-bearing liabilities total 60.1 57.8 49.5
Unallocated interest-bearing liabilities 145.9 134.4 129.3
--------------------------------------------------------------------------
Total liabilities 206.0 192.2 178.8
I I I-IV
External Net Sales by Area** 2012 2011 2011
--------------------------------------------------------
North America 20.5 18.9 69.1
Nordic 15.2 18.0 65.3
Rest of Europe 29.7 28.9 102.7
Rest of the world 8.1 8.9 42.4
--------------------------------------------------------
Total 73.5 74.7 279.5
* As of January 1, 2012 the reportable operating segments include the following
product lines: Group Products include Group Fishing Products, such as Lures,
Fishing Hooks, Fishing Lines and Fishing Accessories, as well as Other Group
Products, mainly Winter Sports and some other non-fishing related business
manufactured and/or sourced by the Group and sold under the Group's brands.
Third Party Products include non-Group branded fishing products and third party
products for hunting, outdoor and winter sports distributed by the Group.
** Geographical information has been prepared on source basis i.e. based on the
location of the business unit. As of January 1, 2012 the net sales is presented
excluding intra-Group transactions, i.e. including only Group's external sales.
KEY FIGURES BY QUARTERS I II III IV I-IV I
MEUR 2011 2011 2011 2011 2011 2012
--------------------------------------------------------------
Net sales 74.7 80.9 63.0 60.8 279.5 73.5
EBITDA 13.7 14.4 4.1 5.5 37.7 12.0
Operating profit 12.1 12.8 2.3 3.5 30.7 10.4
Profit before taxes 11.1 11.3 0.3 2.5 25.2 10.4
Net profit for the period 7.9 8.0 0.2 1.1 17.2 7.5
--------------------------------------------------------------
NOTES TO THE INCOME STATEMENT AND FINANCIAL POSITION
The financial statement figures included in this release are unaudited.
This report has been prepared in accordance with IAS 34. Accounting principles
adopted in the preparation of this report are consistent with those used in the
preparation of the Annual Report 2011, except for the adoption of the new or
amended standards and interpretations. Adoption of amendment of IFRS 7 did not
result in any changes in the accounting principles that would have affected the
information presented in this interim report.
Rapala changed its reportable operating segments from January 1, 2012. Rapala's
reportable operating segments are Group Products consisting of Group Fishing
Products and Other Group Products, and Third Party Products.
Use of estimates and rounding of figures
Complying with IFRS in preparing financial statements requires the management to
make estimates and assumptions. Such estimates affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the amounts of revenues and expenses. Although these estimates are based on the
management's best knowledge of current events and actions, actual results may
differ from these estimates.
All figures in these accounts have been rounded. Consequently, the sum of
individual figures can deviate from the presented sum figure. Key figures have
been calculated using exact figures.
Events after the end of the interim period
The Group has no knowledge of any significant events after the end of the
interim period that would have a material impact on the financial statements for
January-March 2012. Material events after the end of the interim period, if any,
have been discussed in the interim review by the Board of Directors.
Inventories
On March 31, 2012, the book value of inventories included a provision for net
realizable value of 3.1 MEUR (2.9 MEUR at March 31, 2011 and 3.2 MEUR at
December 31, 2011).
Assets held for sale
As part of the relocation of Finnish distribution operations, an office and
warehouse building in Korpilahti, Finland, was classified as held for sale
during the fourth quarter in 2011.
Impact of business acquisitions on the consolidated financial statements
Rapala acquired the assets, including Mora trademark in North America, of
Minnesota based Strike Master Corporation ("Strike Master"), the leading
supplier of ice augers in the US. Rapala also acquired 100% of the share capital
of Swedish Mora Ice Ab including the Mora ICE brand, together with all
intellectual property rights relating to the Mora ICE products. Mora ICE is
Europe's leading and premium brand of ice augers and auger cutting blades. Both
of the acquisitions were completed in February. The total consideration of 6.8
MEUR is subject to finalization of the closing accounts. Fair values of the
acquired assets are provisional.
These strategic initiatives will give Rapala the global leadership position in
the ice fishing category. Rapala is well equipped to exploit this position as it
is having strong distribution companies in all main arctic markets: US, Canada,
Russia, East European and Nordic countries, Japan and China.
The transaction costs of 0.0 MEUR have been expensed and are included in the
other operating expenses in the income statement and treated as a non-recurring
item.
The goodwill of 0.7 MEUR is justified by expansion of product assortment and
market coverage as well as utilization of economies of scale in sourcing and
distribution. None of the goodwill is expected to be deductible for income tax
purposes. The goodwill will be tested for impairment.
The business combinations are accounted for by applying the acquisition method.
The fair value of intellectual property rights is established using the relief
from royalty method. The fair value of customer relationships is established
with the income approach based on the future economic returns from the customers
over their useful lives.
MEUR 2012
--------------------------------------------------------
Inventories 1.8
Trade and other non-interest-bearing receivables 0.4
Intangible assets 4.4
Tangible assets 0.1
Trade and other non-interest-bearing payables 0.0
Deferred tax liability (net) -0.6
--------------------------------------------------------
Fair value of acquired net assets 6.1
--------------------------------------------------------
MEUR 2012
--------------------------------------------------------
Cash paid upon closing 6.4
Cash to be paid later 0.4
--------------------------------------------------------
Total purchase consideration 6.8
--------------------------------------------------------
Goodwill 0.7
--------------------------------------------------------
Cash paid for the acquisitions 6.4
Cash and cash equivalents acquired -
--------------------------------------------------------
Net cash flow 6.4
--------------------------------------------------------
Non-recurring income and expenses included in operating
profit I I I-IV
MEUR 2012 2011 2011
-------------------------------------------------------------------------------
Costs related to business acquisitions 0.0 - -0.3
Restructuring of Hungarian operations - - 0.1
Relocation of Finnish operations - - -0.3
Net gain from sale of gift manufacturing unit in China* - - 1.5
Other restructuring costs - 0.0 -0.4
Gain on disposal of real estate in Finland 0.1 - -
Other non-recurring items 0.0 - -
-------------------------------------------------------------------------------
Total included in EBITDA 0.1 0.0 0.6
-------------------------------------------------------------------------------
Impairment of non-current assets relating to relocation of
Finnish operations - - -0.4
Other non-recurring impairments - - 0.0
-------------------------------------------------------------------------------
Total included in operating profit 0.1 0.0 0.2
-------------------------------------------------------------------------------
* I-IV 2011: Including a gain of 1.9 MEUR and costs related to divestment.
Commitments Mar 31 Mar 31 Mar 31
MEUR 2012 2011 2011
-------------------------------------------------------------------------------
On own behalf
Business mortgage 16.1 16.1 16.1
Guarantees 0.1 0.1 0.1
Minimum future lease payments on operating
leases 14.2 10.5 15.2
-------------------------------------------------------------------------------
Related party Sales and
transactions other Pur- Rents Other Recei- Paya-
MEUR income chases paid expen-ses vables bles
-------------------------------------------------------------------------------
I 2012
Joint venture
Shimano Normark
UK Ltd 0.7 - - - 0.4 0.0
Associated
company Lanimo
Oü - 0.0 - - 0.0 -
Entity with
significant
influence over
the Group* - - 0.0 0.0 0.0 -
Management - - 0.1 - 0.0 0.0
I 2011
Associated
company Lanimo
Oü - 0.1 - - 0.0 -
Entity with
significant
influence over
the Group* - - 0.0 0.0 0.0 -
Management - - 0.1 - 0.0 0.0
I-IV 2011
Joint venture
Shimano Normark
UK Ltd 1.6 - - - 0.1 -
Associated
company Lanimo
Oü - 0.1 - - 0.0 -
Entity with
significant
influence over
the Group* - - 0.2 0.1 0.0 0.0
Management - - 0.3 - 0.0 0.0
-------------------------------------------------------------------------------
* Lease agreement for the real estate for the consolidated operations in France
and a service fee.
Open derivatives Nominal Positive fair Negative Net fair
MEUR amount values fair values values
-------------------------------------------------------------------------------
March 31, 2012
Foreign currency options
and forwards 4.5 0.1 0.0 0.1
Interest rate swaps 67.2 - 2.0 -2.0
-------------------------------------------------------------------------------
Total 71.7 0.1 2.1 -1.9
March 31, 2011
Foreign currency options
and forwards 8.1 0.0 0.5 -0.5
Interest rate swaps 84.7 - 1.2 -1.2
-------------------------------------------------------------------------------
Total 92.8 0.0 1.7 -1.7
December 31, 2011
Foreign currency options 3.4 0.2 - 0.2
Interest rate swaps 67.9 - 2.1 -2.1
-------------------------------------------------------------------------------
Total 71.3 0.2 2.1 -1.9
-------------------------------------------------------------------------------
The Group's financial risks and hedging principles are described in detail in
the Annual Report 2011.
Shares and share capital
In April 2012, the Annual General Meeting (AGM) authorized the Board to decide
on the issuance of new shares, transfer of the Company's own shares and the
issuance of options and special rights entitling to shares referred to in
Chapter 10 Section 1 of the Companies Act. The amount of new shares which may be
issued or transferred by the Board of Directors by one or several decision shall
not exceed 10 000 000 shares. The Board of Directors is furthermore authorized
to issue options and special rights referred to in Chapter 10 Section 1 of the
Companies Act for the holder to receive new shares or the Company's own shares
against payment. The new shares and the options and special rights referred to
in Chapter 10 Section 1 of the Companies Act may be issued and the Company's own
shares transferred to the shareholders in proportion to their current
shareholdings in the Company or in deviation from the shareholders' pre-emptive
rights by way of a directed issue if there is a weighty financial reason for the
Company to do so. The authorization is effective until 31 March 2017.
The Board is also authorized to resolve to repurchase a maximum of 2 000 000
shares by using funds in the unrestricted equity. This amount of shares
corresponds to less than 10% of all shares of the company. The shares will be
repurchased through public trading arranged by NASDAQ OMX Helsinki at the market
price of the acquisition date. The shares will be acquired and paid in pursuance
of the rules of NASDAQ OMX Helsinki and applicable rules regarding the payment
period and other terms of the payment. This authorization is effective until the
end of the next AGM. A separate stock exchange release on the decisions of the
AGM was sent on April 11, 2012.
On March 31, 2012, the share capital fully paid and reported in the Trade
Register was 3.6 MEUR and the total number of shares was 39 468 449. The average
number of shares in January-March 2012 was 39 468 449. On February 8, 2012, the
Board decided to continue buying back own shares in accordance with the
authorization granted by the AGM on April 5, 2011. At the end of March 2012,
Rapala held 563 235 own shares, representing 1.4% of the total number and the
total voting rights of Rapala shares. The average share price of all repurchased
own shares held by Rapala was EUR 4.75.
During the first quarter, 1 848 949 shares (5 085 153) were traded at a high of
6.50 EUR and a low of 5.41 EUR. The closing share price at the end of the period
was 6.05 EUR.
Short term risks and uncertainties
The objective of Rapala's risk management is to support the implementation of
the Group's strategy and execution of business targets. The importance of risk
management has increased as Rapala has continued to expand its operations.
Accordingly, Group management continues to develop risk management practices and
internal controls during 2012. Detailed descriptions of the Group's strategic,
operative and financial risks as well as risk management principles are included
in the Annual Report 2011.
Due to the nature of the fishing tackle business and the geographical scope of
the Group's operations, the business has traditionally been seasonally stronger
in the first half of the year compared to the second half. In 2011, 56% of net
sales and 81% of operating profit was generated in the first half of the year.
The biggest deliveries for both summer and winter seasons are concentrated into
relatively short time periods, and hence a well functioning supply chain is
required. The Group's sales are to some extent affected by weather as it impacts
consumer demand and the timing and length of the seasons. The 2011/2012 winter
season in the Nordics was challenging and consequently retailers may be left
with excess inventories. This together with general cautiousness may affect ski
business in the next winter season. Difficult winter season may also increase
some retailers credit risk and thereby decrease the Group's sales.
A major supply chain and logistics initiative to improve the Group's inventory
turnovers and shorten the factory lead-times continues in 2012, including
planning of new initiatives. Before fully implemented, these initiatives may
temporarily have negative impact on the Group's inventory levels. The possible
product life-cycle initiatives as well as inventory clearance sales supporting
the inventory reduction targets may have some short-term negative impacts on
sales and profitability of some product groups. The ramp-up phase of the new
production facility in Batam, Indonesia, may increase certain production and
supply chain risks temporarily. The Group successfully refinanced its credit
facilities in April, 2012. This has decreased the Group's liquidity and
refinancing risks. The new credit facilities include some financial covenants,
which are actively monitored.
The fishing tackle business has not traditionally been strongly influenced by
the increased uncertainties and downturns in the general economic climate. They
may however influence, at least for a short while, the sales of fishing tackle,
when retailers reduce their inventory levels and face financial challenges. Also
quick and strong increases in living expenses, such as gasoline price,
uncertainties concerning employment and governmental austerity measures may
temporarily affect consumer spending also in the fishing tackle business. The
major global sporting events of summer 2012 might have some effect on the end
consumer demand. However the underlying consumer demand has historically proven
to be fairly solid.
The truly global nature of the Group's sales and operations spreads the market
risks caused by the current uncertainties in the global economy. The Group is
cautiously monitoring the development both in the global macro economy as well
as in the various local markets it operates in. The uncertainties in future
demand as well as the length of the Group's supply chain increases the
importance of supply chain management. Strong and rapid increases in consumer
demand may put challenges on Group's supply chain to meet the demand. Management
balances between risk of shortages and risk of excess production and purchasing,
which would lead to excess inventories in the Group. Cash collection and credit
risk management is high on the agenda of local management and this may affect
sales to some customers. Quality of the accounts receivables is monitored
closely and write-downs are initiated if needed.
The Group's sales and profitability are impacted by the changes in foreign
exchange rates, especially US dollar and other currencies connected to it. The
disturbances in global economy may cause heavy and unexpected fluctuations in
foreign exchange rates. The Group monitors actively its currency position and
risks and uses e.g. foreign currency denominated loans to generate natural
hedges. In order to fix the exchange rates of some of the future USD-denominated
purchases, the Group has entered into currency hedging agreements. As the Group
is not applying hedge accounting to currency hedging agreements in accordance to
IAS 39, the change in fair value of these unrealized currency hedging agreements
has an impact on the Group's operating profit. Development of oil price may
impact value of Russian rouble, which has become a significant inflow currency
to the Group. The continuing strengthening of the Chinese yuan coupled with the
possible strengthening of the US dollar increases cost pressures. Additionally,
certain inflationary trends increase this pressure. The Group is closely
monitoring market development and cost structure and considering possibility and
feasibility of price increases, hedging actions and cost rationalization.
No significant changes are identified in the Group's strategic risks or business
environment.
[HUG#1606435]
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