2015-02-06 07:30:00 CET
2015-02-06 07:30:51 CET
REGLERAD INFORMATION
Oriola-KD Oyj - Financial Statement Release
Oriola-KD Corporation's Financial Statements Release 2014
Oriola-KD Corporation Stock Exchange Release 6 February 2015 at 8.30 a.m.
Oriola-KD Corporation's Financial Statements Release 2014
Financial performance October-December 2014 for continuing operations
* Net sales increased by 1.9 per cent to EUR 417.7 (409.8) million
* EBITDA excluding non-recurring items increased by 19.3 per cent to EUR 20.8
(17.4) million
* EBITDA was EUR 27.7 (17.1) million
* Operating profit excluding non-recurring items was EUR 15.1 (11.6) million
* Operating profit was EUR 22.1 (9.9) million
* Net cash flow from operations including discontinued operations was EUR 8.4
(50.8) million
* Profit for the period totalled EUR 18.0 (6.6) million and earnings per share
were EUR 0.12 (0.04)
Financial performance January-December 2014 for continuing operations
* Net sales decreased by 0.5 per cent to EUR 1,612.3 (1,619.7) million
* EBITDA excluding non-recurring items increased by 45.3 per cent to EUR 81.3
(55.9) million
* EBITDA was EUR 87.2 (49.7) million
* Operating profit excluding non-recurring items was EUR 59.1 (37.0) million
* Operating profit was EUR 65.0 (29.3) million
* Net cash flow from operations including discontinued operations was EUR
-10.8 (29.8) million
* Profit for the period totalled EUR 46.5 (17.1) million and earnings per
share were EUR 0.29 (0.11)
Key figures from continuing
operations 2014 2013 Change 2014 2013 Change
EUR million 10-12 10-12 % 1-12 1-12 %
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Net sales 417.7 409.8 1.9 1,612.3 1,619.7 -0.5
EBITDA excluding non-recurring items 20.8 17.4 19.3 81.3 55.9 45.3
EBITDA 27.7 17.1 61.6 87.2 49.7 75.6
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Operating profit excluding non-
recurring items 15.1 11.6 30.7 59.1 37.0 59.5
Operating profit 22.1 9.9 123.5 65.0 29.3 121.7
Operating profit % excluding non-
recurring items 3.6 2.8 3.7 2.3
Operating profit % 5.3 2.4 4.0 1.8
Profit for the period 18.0 6.6 172.6 46.5 17.1 171.3
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Earnings per share, EUR 0.12 0.04 164.2 0.29 0.11 160.1
Net cash flow from operating
activities 8.4 50.8 -10.8 29.8
Return on equity (ROE), % 23.7 2.0
Gearing, % 90.1 65.3
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Outlook for 2015
Oriola-KD estimates its full-year net sales to remain at the 2014 level.
Operating profit excluding non-recurring items is estimated to increase from the
2014 level. Full-year net sales for continuing operations were EUR 1,612.3
million and operating profit excluding non-recurring items was EUR 59.1 million.
President and CEO Eero Hautaniemi's comments regarding the financial statements
release:"Profitability improved in both operating segments in Pharmaceutical Trade
Sweden. In the Swedish retail business we continued to develop our product
portfolio and customer loyalty programme. In October Kronans Apotek pharmacy
chain's loyalty programme celebrated its millionth member. The fourth quarter
profitability of the Swedish retail business was negatively affected by price
reductions of certain prescription medicines. The profitability of the Swedish
wholesale business was strengthened by the increased volume as well as the
efficiency program carried out according to our plan. In accordance of our
strategy we will continue the efficiency measures to improve the performance of
the Swedish businesses in 2015.
In Finland we renewed major agreements with Roche and AbbVie and continued to
improve our online services. In September the product portfolio of our online
shop increased significantly when Orion's traded goods products moved over to
Oriolashop.fi . In Baltics we strengthened our position in pharmaceutical retail
business by acquiring "SIA Rigas Elizabetes aptieka", a pharmacy in Riga city
centre.
On December 8(th) we entered into an agreement to sell all our Russian
businesses to the Russian pharmacy chain CJSC Apteki 36.6. The Russian
businesses have fallen behind set goals for several years. The decision to sale
the Russian businesses was based on our estimates on the outlook of the Russian
pharmaceutical markets, on the competitive environment and the further
development of profitability of the Russian businesses. Profit for the period
for Russian businesses in 2014 was EUR -111.1 (-11.4) million, impairment loss,
accumulated translation differences, foreign exchange differences and cost of
disposal recognised on sale of the Russian businesses totalled EUR -147.7
million. Profit for the period from discontinued operations was EUR -258.8 (-
11.4) million.
Going forward, we will focus on developing our businesses in Finland, Sweden
and Baltic countries in accordance with our strategy. We want to be the leading
pharmaceutical retail operator and pharmaceutical distributor and service
provider for pharmaceutical companies and consumers."
Oriola-KD Corporation's financial statements release 1 January-31 December 2014
The commentary for this financial statements release comprises of the continuing
operations of the Company unless otherwise stated. The results for the Russian
businesses sold in December 2014 are presented as discontinued operations
separately from the results from continuing operations in 2014 and 2013 results
have been revised accordingly. The consolidated statement of financial position
for 2013 includes the assets and liabilities of discontinued operations. The
figures in the tables have been rounded independently.
2014 2013
Key Figures (1)) 1-12 1-12
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Goodwill, EUR million 250.9 379.0
Equity, EUR million 113.6 278.1
Interest-bearing debt, EUR million 193.9 318.8
Net interest-bearing debt, EUR million 102.4 181.5
Total assets, EUR million 874.0 1,500.1
Equity ratio, % 13.3 19.2
Return on equity (ROE), % 23.7 2.0
Return on capital employed (ROCE), % 14.4 4.2
Gearing, % 90.1 65.3
Net debt / 12-month EBITDA from continuing
operations 1.2 3.7
Equity per share, EUR 0.75 1.84
Earnings per share, continuing operations, EUR 0.29 0.11
Earnings per share, incl. Discontinued operations,
EUR -1.42 0.04
Average number of shares, 1000 pcs (2)) 151,130 151,157
Average number of personnel, continuing operations 2,377 2,156
Number of personnel at the end of the period,
continuing operations 2,356 2,375
Gross investments, continuing operations, EUR
million 25.7 189.6
(1)) Comparative balance sheet items include discontinued operations unless
otherwise stated.
(2)) Treasury shares held by the company not included
Changes in the Group Structure in 2014
On 21(st) of November 2014 Oriola-KD sold share capital of Oriola-KD Holding
Sverige AB to Oriola-KD Holding Russia Oy as an intra-group share transaction.
Oriola-KD Russia Holding Oy name was changed to Oriola-KD Holding Oy in December
2014.
On 1(st) of December 2014 Oriola-KD Group company Oriola Oy acquired the share
capital of "SIA Rigas Elizabetes aptieka" a pharmacy in Latvia in Riga city
centre.
On 8 December 2014 Oriola-KD Group company Oriola-KD Holding Russia Oy sold the
share capital of its Russian subsidiaries to CJSC Apteki 36.6. Oriola-KD
classifies Russian businesses as discontinued operations.
The Group's net sales and result for October-December 2014 for continuing
operations
Oriola-KD's fourth quarter net sales were EUR 417.7 (409.8) million. Operating
profit excluding non-recurring items was EUR 15.1 (11.6) and operating profit
was EUR 22.1 (9.9) million. Oriola-KD recognised a non-recurring capital gain of
EUR 7.5 million for the fourth quarter 2014 regarding the sale and leaseback
agreement of Mölnlycke central warehouse in Sweden.
Profit after financial items was EUR 20.3 (6.7) million. Oriola-KD's net
financial expenses were EUR 1.8 (3.2) million and profit for the period was EUR
18.0 (6.6) million. Earnings per share were EUR 0.12 (0.04).
The Group's net sales and result for January-December 2014 for continuing
operations
Oriola-KD's net sales decreased by 0.5 per cent to EUR 1,612.3 (1,619.7) million
and operating profit excluding non-recurring items increased by 59.5 per cent to
EUR 59.1 (37.0) million. Operating profit was EUR 65.0 (29.3) million. The
positive development of Oriola-KD's operating profit was supported by the
improved profitability in Swedish operating segments. Oriola-KD recognized a
non-recurring capital gain of EUR 7.5 million for the fourth quarter 2014
regarding the sale and leaseback agreement of Mölnlycke central warehouse in
Sweden. The comparative period operating profit includes EUR 2.7 million
expenses associated with a business acquisition in Sweden.
Profit after financial items was EUR 57.1 (20.9) million and profit for the
period was EUR 46.5 (17.1) million. Oriola-KD's net financial expenses
decreased to EUR 7.8 (8.4) million. Earnings per share were EUR 0.29 (0.11).
Return on equity was 23.7 (2.0) per cent in 2014. Return on equity is calculated
based on continuing operations in year 2014 and include discontinued operations
in year 2013.
Reportable segments
Oriola-KD's reportable segments are Pharmaceutical Trade Finland and Baltics and
Pharmaceutical Trade Sweden. Oriola-KD has formed its reportable 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.
On 8 December 2014 Oriola-KD sold its Russian businesses to CJSC Apteki 36.6.
Oriola-KD classifies Russian businesses as discontinued operations.
Reporting segment results in the Oriola-KD management reports include management
fee. Segment information for 2013 has been revised to correspond with the
current presentation.
Pharmaceutical Trade Finland and Baltics
Key Figures 2014 2013 Change 2014 2013 Change
EUR million 10-12 10-12 % 1-12 1-12 %
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Net Sales 119.6 109.4 9.3 435.9 425.3 2.5
Pharmaceutical wholesale in Finland 95.9 88.2 8.7 348.7 342.1 1.9
Pharmaceutical wholesale in Baltics 12.9 10.8 19.9 46.6 41.0 13.7
Consumer Health 10.9 10.5 3.4 40.9 42.7 -4.1
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Operating profit % excluding non-
recurring items 4.9 4.2 16.9 19.6 18.8 4.3
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Operating profit 4.4 4.2 6.1 19.2 18.8 1.9
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Operating profit % excluding non- 4.1 3.8 4.5 4.4
recurring items
-------------------------------------------------------------------------------
Operating profit % 3.7 3.8 4.4 4.4
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Number of personnel at the end of period 523 501
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October-December 2014
The net sales of Pharmaceutical Trade Finland and Baltics in the fourth quarter
of 2014 were EUR 119.6 (109.4) million. Operating profit excluding non-recurring
items was EUR 4.9 (4.2) million and operating profit was EUR 4.4 (4.2) million.
Net sales of the wholesale business in Finland were EUR 95.9 (88.2) million and
invoicing was EUR 274.1 (257.9) million. The net sales of the wholesale business
in the Baltic countries were EUR 12.9 (10.8) million and net sales of the
Consumer Health business totalled EUR 10.9 (10.5) million.
January-December 2014
The net sales of Pharmaceutical Trade Finland and Baltics increased by 2.5 per
cent to EUR 435.9 (425.3) million. Operating profit excluding non-recurring
items was increased by 4.3 per cent to EUR 19.6 (18.8) million. Operating profit
increased by 1.9 per cent to EUR 19.2 (18.8) million.
The net sales of the wholesale business in Finland was EUR 348.7 (342.1) million
and invoicing totalled EUR 1,015.7 (1,022.6) million. Net sales of the wholesale
business in the Baltic countries increased due to broadened service portfolio
and were EUR 46.6 (41.0) million. Net sales of the Consumer Health business were
EUR 40.9 (42.7) million.
The EBITDA excluding non-recurring items of Pharmaceutical Trade Finland and
Baltics was EUR 23.7 (22.2) million and EBITDA was EUR 23.2 (22.2) million.
Profitability of Pharmaceutical Trade Finland and Baltics remained at the level
of the comparative period. During the last quarter of 2014 Oriola-KD renewed
agreements with Roche, Novo and AbbVie in Finnish wholesale business. In
Finland, a co-operation agreement with Orion Corporation strengthened the
product portfolio of the Oriolashop.fi online shop targeted to the healthcare
professionals. Orion's traded goods products moved over to Oriolashop.fi from
the beginning of September. Sales of the main Consumer Health brands, such as
Avène, Lysi, Gefilus and Pharmacare increased in 2014.
Oriola-KD started delivering pharmaceutical re-packing services from Baltics. In
Baltics Oriola-KD strengthened its position in pharmaceutical retail business by
acquiring "SIA Rigas Elizabetes aptieka", a pharmacy in Riga city centre.
The Finnish pharmaceutical market grew by 4.7 (1.8) per cent in 2014 (source:
IMS Health).
Oriola-KD's share of the Finnish pharmaceutical wholesale market was 46 (46) per
cent in 2014 (source: ATY).
Pharmaceutical Trade Sweden
Key Figures 2014 2013 Change 2014 2013 Change
EUR million 10-12 10-12 % 1-12 1-12 %
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Net Sales 298.1 300.5 -0.8 1,176.4 1,194.4 -1.5
Retail business 187.9 192.8 -2.6 744.2 669.6 11.1
Wholesale business 191.2 174.0 9.9 761.2 743.4 2.4
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Operating profit excluding non-
recurring items 10.2 7.9 30.0 44.0 24.1 82.6
Retail business 7.7 5.8 33.0 33.8 20.3 66.6
Wholesale business 2.5 2.2 12.5 10.4 4.2 148.5
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Operating profit 17.7 6.2 187.7 50.5 16.4 208.4
Retail business 7.7 3.9 97.5 32.8 12.9 153.0
Wholesale business 10.0 2.4 315.4 17.9 3.8 370.6
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Operating profit % excluding non-
recurring items 3.4 2.6 3.7 2.0
Retail business 4.1 3.0 4.5 3.0
Wholesale business 1.3 1.3 1.4 0.6
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Operating profit % 6.0 2.1 4.3 1.4
Retail business 4.1 2.0 4.4 1.9
Wholesale business 5.2 1.4 2.4 0.5
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Number of personnel at the end of
period 1,792 1,836
Retail business 1,524 1,562
Wholesale business 268 275
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October-December 2014
The fourth quarter net sales of Pharmaceutical Trade Sweden in 2014 were EUR
298.1 (300.5) million. Operating profit excluding non-recurring items was EUR
10.2 (7.9) million and operating profit was EUR 17.7 (6.2) million. The net
sales of the retail business were EUR 187.9 (192.8) million. Operating profit
excluding non-recurring items for the retail business totalled EUR 7.7 (5.8)
million and operating profit was EUR 7.7 (3.9) million. The net sales of the
wholesale business totalled EUR 191.2 (174.0) million. Operating profit
excluding non-recurring items for the wholesale business was EUR 2.5 (2.2)
million and operating profit was EUR 10.0 (2.4) million. Invoicing for the
wholesale business was EUR 405.0 (373.2) million. Oriola-KD recognized a non-
recurring capital gain of EUR 7.5 million for the fourth quarter 2014 regarding
the sale and leaseback agreement of Mölnlycke central warehouse in Sweden.
January-December 2014
The net sales of Pharmaceutical Trade Sweden in 2014 decreased by 1.5 per cent
to EUR 1,176.4 (1,194.4) million, and on a constant currency basis, net sales
increased by 3.6 (11.9) per cent. Retail business net sales in 2014 were EUR
744.2 (669.6) million, wholesale business net sales totalled EUR 761.2 (743.4)
million. Invoicing for the Swedish wholesale business was EUR 1,526.6 (1,509.3)
million. 2014 net sales of Swedish retail business strengthened due to ongoing
development of the businesses and the acquisition of Medstop in June 2013.
The Swedish retail business' EBITDA excluding non-recurring items was EUR 49.4
(33.2) million and EBITDA was EUR 48.4 (27.3) million in 2014. The EBITDA
percentage excluding non-recurring items and the management fee for the retail
business was 6.9 (5.0) per cent.
The Swedish wholesale business' EBITDA excluding non-recurring items was EUR
12.8 (6.8) million and EBITDA was EUR 20.3 (6.4) million.
Pharmaceutical Trade Sweden's operating profit excluding non-recurring items
increased by 82.6 per cent to EUR 44.0 (24.1) million and operating profit
increased by 208.4 per cent and was EUR 50.5 (16.4) million. Operating profit
excluding non-recurring items for the Swedish retail business totalled EUR 33.8
(20.3) million and operating profit was EUR 32.8 (12.9) million. Operating
profit excluding non-recurring items for the Swedish wholesale business was EUR
10.4 (4.2) million and operating profit was EUR 17.9 (3.8) million. Oriola-KD
recognized a non-recurring capital gain of EUR 7.5 million for the fourth
quarter 2014 regarding the sale and leaseback agreement of Mölnlycke central
warehouse in Sweden. The Medstop pharmacy chain has been consolidated in the
figures of Oriola-KD as of 1 June 2013.
Profitability of the Swedish retail business improved during the reporting
period. The fourth quarter profitability of the Swedish retail business was
negatively affected by price reductions of certain prescription medicines such
as asthma medicine Symbicort. Pharmacy and product portfolios were developed
according to the plan. The share of OTC and traded goods increased to 26.9
(25.9) per cent in 2014. Oriola-KD has opened 8 new pharmacies, operating under
the Kronans Apotek brand in 2014. At the end of December 2014, Oriola-KD had a
total of 304 (296) pharmacies in Sweden. Oriola-KD's market share of the
pharmaceutical retail market in 2014 was 19 (20) per cent (source:
Apoteksföreningen).
Strong increase in Swedish wholesale business' net sales and operating profit
was driven by increased volume and profitability program carried out. In Swedish
wholesale business Oriola-KD made several new small and medium size agreements
with pharmaceutical companies in 2014. The relative share of parallel imports in
the Swedish pharmaceutical market has decreased during the reporting period.
Parallel imports share of the Swedish pharmaceutical market was approximately
13 (21) per cent at the end of 2014 (source: IMS Health), Oriola-KD estimates
that its share of the Swedish pharmaceutical wholesale market was 39 (37) per
cent in 2014.
The pharmaceutical market in Sweden grew by 4.2 (declined 1.4) per cent in
Swedish krona (source: IMS Health) and the retail market for OTC products and
traded goods grew by 4.0 (6.1) per cent in Swedish krona (source: Nielsen) in
2014. Based on Oriola-KD's estimate 32 new pharmacies were established in Sweden
in 2014, at the end of December there was 1,336 pharmacies in Sweden.
Non-recurring items
A non-recurring item is an income or expense arising from non-recurring or rare
events. Gains or losses from the sale or discontinuation of business operations
or assets, gains or losses from restructuring business operations, and
impairment losses of goodwill and other non-current assets are recognised by
Oriola-KD as non-recurring items.
Non-recurring items included in Operating Profit 2014 2013 2014 2013
EUR million 10-12 10-12 1-12 1-12
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Pharmaceutical Trade Finland and Baltics
Service award arrangement -0.5 - -0.5 -
Pharmaceutical Trade Sweden
Restructuring costs - -1.7 -1.0 -4.6
Write-off of contract-based accrual - - - -3.1
Gain on sale of property 7.5 - 7.5 -
Group items
Service award arrangement -0.1 - -0.1 -
-------------------------------------------------------------------------
Total 6.9 -1.7 5.9 -7.7
-------------------------------------------------------------------------
Non-recurring items reported in 2014 relate to restructuring charges in
Pharmaceutical Trade Sweden, the sale and leaseback agreement of Mölnlycke
central warehouse in Sweden and service award arrangement recognised in
accordance with IAS 19 in Pharmaceutical Trade Finland and Baltics and in group
functions.
Balance sheet, financing and cash flow
Oriola-KD's total assets at 31 December 2014 were EUR 874.0 (1,500.1) million.
Cash and cash equivalents totalled EUR 91.5 (137.3) million and equity was EUR
113.6 (278.1) million. The equity ratio was 13.3 (19.2) per cent and gearing was
90.1 (65.3) per cent.
Oriola-KD's goodwill of EUR 250.9 (379.0) million has been allocated in
impairment testing to the cash-generating units consisting of the Group's
operating segments. Oriola-KD has prepared goodwill impairment testing twice a
year, in accordance with the timetable of its strategy and planning process. At
the end of December 2014, EUR 225.3 (238.9) millions of the goodwill was
allocated to the Swedish pharmaceutical retail business, EUR 25.4 (26.9) million
to the Swedish pharmaceutical wholesale business and EUR 0.2 (-) million to the
Pharmaceutical Trade Baltics.
At the end of December, interest-bearing debt was EUR 193.9 (318.8) million of
which syndicated bank loans totalled EUR 102.2 (172.4) million, commercial
papers EUR 51.8 (83.1) million, advance payments from pharmacies EUR 20.6 (47.8)
million, a contingent consideration related to Medstop-acquisition EUR 14.7
(14.6) million and finance lease liabilities EUR 4.5 (0.8) million. Long-term
interest bearing-liabilities were EUR 98.5 (176.2) million and short-term
interest-bearing liabilities were EUR 95.4 (142.6) million. Interest-bearing net
debt was EUR 102.4 (181.5) million. The non-recourse trade receivables sales
programmes were continued in the Pharmaceutical Trade Sweden in 2014. At the end
of December 2014, a total of EUR 100.1 (76.8) million in trade receivables had
been sold.
Oriola-KD's committed long-term credit facility of EUR 100.0 million and EUR
55.6 million of short-term credit account limits with banks were unused at the
end of December 2014. Oriola-KD signed a financing agreement of approximately
EUR 280 million during the second quarter of 2013. The financial covenants
contained in the financing agreement are based on the ratio between the Group's
net debt and rolling 12-month EBITDA and gearing ratio. The ratio between the
Group's net debt and the 12-month rolling EBITDA was 1.17 and the adjusted ratio
in accordance with the terms and conditions of the financing agreement, stood at
1.01 at the end of December 2014, the covenant limit in the agreement being
3.50. In connection with sale of Oriola-KD's Russian businesses the financing
agreement was amended, gearing covenant was not tested on 31(st) of December
2014.
Financial covenants contained 31 Dec 2014 31 Mar 2015 30 Jun 2015 30 Sep 2015
in the financing agreement
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Ratio between net debt and
rolling 12-month EBITDA 3.50 3.00 3.00 3.00
Gearing ratio 100% 100% 100% 100%
On 20 February 2014 Oriola-KD issued a EUR 40 million hybrid bond. The bond
bears a fixed interest rate of 7.0 per cent per annum until 20 February 2017 and
a floating interest rate thereafter. The hybrid bond has no maturity date but
the issuer is entitled to redeem the hybrid bond after three years. Interest on
the hybrid bond will be paid providing dividend is paid in accordance with the
annual general meeting resolution. If dividends are not paid, the Group will
make a separate decision regarding interest payment on the hybrid bond. Unpaid
interest is accrued and taken into consideration in the calculation of earnings
per share.
Income taxes for continuing operations in 2014 were EUR 10.7 (3.8) million.
Net cash flow from operations including discontinued operations in 2014 was EUR
-10.8 (29.8) million, of which changes in working capital accounted for EUR
-42.5 (3.5) million. Net cash flow from investing activities was EUR 40.3 (-
97.8) million.
Investments
Gross investments for continuing operations in 2014 totalled EUR 25.7 (189.6)
million and consisted of investments related to the opening of new pharmacies,
information systems and improvements in logistics efficiency, and in 2013 the
acquisition of Medstop.
Personnel
At the end of year 2014, Oriola-KD had a payroll of 2,356 (2,375) employees,
23.9 (22.7) per cent of whom worked in Finland and the Baltics and 76.1 (77.3)
per cent in Sweden. Personnel numbers consist of members of staff in active
employment.
Administration
The Annual General Meeting (AGM) of Oriola-KD Corporation held on 24 March 2014
elected the following persons as members of the company's Board of Directors: Mr
Jukka Alho (Chair), Mr Harry Brade and Mr Per Båtelson, and elected Ms Anja
Korhonen, Mr Kuisma Niemelä and Mr Matti Rihko as new members. At its
constitutive meeting, convening immediately after the AGM, the Board of
Directors of Oriola-KD Corporation elected Mr Matti Rihko as Vice Chairman of
the Board of Directors. The Board appointed the following from among its
members: Ms Anja Korhonen (Chairman), Mr Harry Brade and Mr Matti Rihko to the
Board's Audit Committee, and Mr Jukka Alho (Chairman), Mr Per Båtelson and Mr
Kuisma Niemelä to the Board's Remuneration Committee.
The Board of Directors has assessed the independence of the members of the
Board, and determined that all members of the Board are independent of the
company and its major shareholders.
The AGM elected PricewaterhouseCoopers Oy as the auditor for the company.
Oriola-KD's Group Management Team:
* Eero Hautaniemi, President and CEO
* Lars Birkeland, Vice President, pharmaceutical retail, Sweden
* Tuomas Itkonen, CFO
* Jukka Mäkelä, Vice President, Development
* Teija Silver, Vice President, HR
* Kimmo Virtanen, Executive Vice President, pharmaceutical wholesale, Finland,
Sweden and the Baltics
* Konstantin Minin, Vice President, pharmaceutical wholesale and retail,
Russia (until December 8, 2014)
Oriola-KD applies the Finnish Corporate Governance Code which was issued by the
Securities Market Association on 15 June 2010 and which entered into force on 1
October 2010, with the exception that the company's Nomination Committee may
also have members who are not members of the company's Board of Directors. The
purpose of this deviation from Recommendation 22 of the Corporate Governance
Code (Appointment of members to the committees) is to allow the election of
major shareholders in the company to the Nomination Committee and thus to ensure
that their opinions are heard well before the Annual General Meeting. The
Nomination Committee is a body established by the Board for the purpose of
preparing and presenting to the Board a recommendation for the proposal to be
put to the Annual General Meeting concerning the composition and remuneration of
the Board. The Corporate Governance Statement and the Remuneration Statement
for 2014 can be viewed on the company's website at: http://www.oriola-
kd.com/en/Corporate-Governance/.
Board authorisations
The Annual General Meeting, held on 24 March 2014, authorised the Board of
Directors to decide on a share issue against payment in one or more issues. The
authorisation comprises the right to issue new shares or assign treasury shares
held by the company. The authorisation covers a maximum of 9,500,000 Class A
shares and 21,000,000 Class B shares and includes the right to derogate from the
shareholders' pre-emptive subscription right. Pursuant to the authorisation,
shares held by the company as treasury shares may also be sold through trading
on a regulated market organised by NASDAQ OMX Helsinki Ltd. The authorisation
is in effect for a period of eighteen months from the decision of the Annual
General Meeting.
The Annual General Meeting, held on 24 March 2014, authorised the Board of
Directors to decide on a share issue against payment in one or more issues. The
authorisation comprises the right to issue new class B shares or assign class B
treasury shares held by the company. The authorisation covers a combined maximum
of 15,000,000 class B shares of the company and includes the right to derogate
from the shareholders' pre-emptive subscription right. Pursuant to the
authorisation, class B shares held by the Company as treasury shares may also be
sold on regulated market organised by NASDAQ OMX Helsinki Ltd. The authorisation
is in effect for a period of eighteen months from the decision of the Annual
General Meeting.
The authorisation revokes all previous share issue authorisations given to the
Board of Directors apart from the authorisation given to the Board of Directors
by the Annual General Meeting held on 20 March 2013, pursuant to which the Board
of Directors may decide upon directed share issues against or without a payment
concerning no more than 1,715,000 class B shares in order to execute the share-
based incentive plan for the Oriola-KD Group's executives and the share savings
plan for the Oriola-KD Group's key personnel.
The Annual General Meeting, held on 24 March 2014, also authorised the Board of
Directors to decide on repurchasing of the company's own class B shares. The
authorisation entitles the Board of Directors to decide on the repurchase of no
more than 15,000,000 of the company's own class B shares in a proportion other
than in which shares are owned by the shareholders. The authorisation to
repurchase own shares is in force for a period of not more than eighteen months
from the decision of the Annual General Meeting. Shares may be repurchased to
develop the company's capital structure, to execute corporate transactions or
other business arrangements, to finance investments, to be used as a part of the
company's incentive schemes or to be otherwise relinquished, held by the company
or cancelled.
Oriola-KD Corporation shares
Trading volume of the Oriola-KD Corporation's class A and B shares in 2014:
January-December 2014 January-December 2013
Trading volume class A class B class A class B
-------------------------------------------------------------------------------
Trading volume, million 7.4 38.8 3.2 28.6
Trading volume, EUR million 18.6 101.5 7.7 68.3
Highest price, EUR 3.51 3.50 2.69 2.73
Lowest price, EUR 2.00 2.10 2.24 2.18
Closing quotation, end of
period, EUR 3.46 3.47 2.60 2.55
-------------------------------------------------------------------------------
Oriola-KD Corporation's market capitalisation on 31 December 2014 was EUR 524.4
(388.1) million.
In the review period, the traded volume of Oriola-KD Corporation shares,
excluding treasury shares, corresponded to 30.6 (21.1) per cent of the total
number of shares. The traded volume of class A shares amounted to 15.7 (6.8) per
cent of the average stock, and that of class B shares, excluding treasury
shares, to 37.3 (27.5) per cent of the average stock.
At the end of December 2014, 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) were class B shares. The company has 139,752 (115,902)
treasury shares (including treasury shares held by third-party service
provider), all of which are class B shares. They account for 0.09 (0.08) per
cent of the company's shares and 0.013 (0.011) per cent of the votes.
Under Article 3 of the Articles of Association, a shareholder may demand
conversion of class A shares into class B shares. During the period 1 January -
31 December 2014, no class A shares were converted into class B shares (0
shares).
On 19 December 2012, Oriola-KD Corporation's Board of Directors decided on a
share incentive scheme for the Group's senior management for the years
2013-2015. The scheme covers seven persons. The company's Board of Directors
will determine the earnings criteria for the earning period and the targets to
be set for these at the start of each earning period. The bonus for the 2014
earning period is based on the Oriola-KD Group's earnings per share (EPS). There
will be no payment based on the performance period 2014 since the performance
criterion was not met.
The Board of Oriola-KD Corporation approved the terms and conditions of the key
employees' share savings plan on 28 May 2013. A total of about 50 key employees
are participating in the plan. The savings period started on 1 October 2013 and
end on 30 September 2014. In addition the Board of Oriola-KD Corporation
approved on 27 August 2014 the terms and conditions of the key employees' share
savings plan. A total of about 49 key employees are participating in the plan.
The savings period started on 1 October 2014 and end on 30 September 2015. For
both savings plans the maximum and minimum monthly savings amount to 10 and 2
per cent, respectively, of each participant's fixed gross monthly salary. The
accumulated savings will be used for purchasing Oriola-KD's class B shares for
the participants at market prices. About two years after the start of the
programme, the company will give the participants two class B shares for every
three shares purchased as part of the programme. The shares given to the
participants will be partially used for paying taxes. Oriola-KD Corporation has
an agreement with a third-party service provider concerning administration of
the share-based incentive program. At the end of the reporting period, the
amount of treasury shares held by the third-party service provider was 42,930
(19,080).
Liquidity guarantee
There is no liquidity guarantee in effect for the shares of Oriola-KD
Corporation.
Flagging announcements
On 7 May 2014 Norges Bank (The Central Bank of Norway) portion of the shares of
Oriola-KD Corporation exceeded the 1/20 limit referred to in Chapter 9, Section
5 of the Securities Markets Act. On 7 May 2014, the direct shareholding of
Norges Bank totalled 5.76 per cent of Oriola-KD Corporation's shares and 1.49
per cent of the votes conferred by the shares.
On 18 September 2014 Mariatorp Oy portion of the shares of Oriola-KD Corporation
exceeded the 1/20 limit referred to in Chapter 9, Section 5 of the Securities
Markets Act. On 19 September 2014, the direct shareholding of Mariatorp Oy
totalled 5.01 per cent of Oriola-KD Corporation's shares and 5.002 per cent of
the votes conferred by the shares.
On 10 December 2014 Norges Bank (The Central Bank of Norway) portion of the
shares of Oriola-KD Corporation fall below the 1/20 limit referred to in Chapter
9, Section 5 of the Securities Markets Act. On 10 December 2014, the direct
shareholding of Norges Bank totalled 3.76 per cent of Oriola-KD Corporation's
shares and 0.54 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 net
sales and 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.
* 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.
* Changes in share of parallel imports in Swedish pharmaceutical market may
affect profitability of the Swedish wholesale and retail businesses.
* Strategic development projects involve operational risks.
The main financial risks for Oriola-KD involve currency rate, liquidity,
interest rate and credit risks. Currency risk is the most significant financial
risks in Sweden, as any changes in the value of the Swedish krona will have an
impact on Oriola-KD's net sales, earnings and equity.
Oriola-KD has prepared goodwill impairment testing twice a year, in accordance
with the timetable of its strategy and planning process. Changes in cash flow
forecasts based on strategic plans, or in the discount rate or perpetuity growth
rate, can cause a goodwill write-off, which would weaken Oriola-KD's result.
Near-term risks and uncertainty factors
Oriola-KD's strategic development projects involve operational risks which may
have an effect on Oriola-KD's profitability.
Oriola-KD's long-term financing agreement contains financial covenants
concerning the ratio between Oriola-KD's net debt and rolling 12-month EBITDA
and the group's gearing ratio. Weakening profitability of Oriola-KD's business
operations may affect Oriola-KD's ability to meet the financial covenants
contained in the financing agreement.
Outlook
Oriola-KD's outlook for 2015 is based on external market forecasts, agreements
with pharmaceutical companies and pharmacies, and management assessments. During
the five-year period from 2013-2018, the Finnish pharmaceutical market is
expected to grow at an annual rate of 2.6 per cent and Swedish pharmaceutical
market is expected to change an average of 0 per cent per year in the local
currencies (source: IMS Health Prognosis 2014-2018, September 2014).
Outlook for 2015
Oriola-KD estimates its full-year net sales to remain at the 2014 level.
Operating profit excluding non-recurring items is estimated to increase from the
2014 level. Full-year net sales for continuing operations were EUR 1,612.3
million and operating profit excluding non-recurring items was EUR 59.1 million.
Events after the review period
Oriola-KD begin co-operation negotiations in Finland on 28 January 2015.The
negotiations concern the planned efficiency programme of Oriola-KD Corporation
and Oriola Oy and possible impacts on personnel due to the restructuring of
operations in accordance with the planned programme as well as production-
related reasons. Approximately 500 people fall within the scope of the
negotiations. According to the company's preliminary estimate, the negotiations
could result in a need to reduce the workforce by 50-65 people in Finland, which
would be equivalent to an annual cost saving of approximately 2 million euros.
On January 20, 2015 Oriola-KD Corporation renewed the agreement to provide
centralised sourcing services for Apoteksgruppen and Lloyds Apotek pharmacy
chains in Sweden. The renewed contract has been agreed to be valid until end of
2017.
On 28 January 2015 the Nomination Committee of Oriola-KD presented to the Board
of Directors its recommendation on the proposal to the 2015 Annual General
Meeting concerning the composition of the Board of Directors as follows:
· The number of members of the Board of Directors would be eight
· The present members of the Board of Directors Jukka Alho, Per Båtelson,
Anja Korhonen, Kuisma Niemelä and Matti Rihko would be re-elected
· Eva Nilsson Bågenholm, Staffan Simberg and Anssi Vanjoki would be
elected new members of the Board of Directors
· Anssi Vanjoki would be elected as Chairman of the Board of Directors
Member of the Board of Directors Harry Brade will leave the office of Board of
Directors after the 2015 Annual General Meeting.
Distribution proposal
Oriola-KD's parent company is Oriola-KD Corporation, whose distributable assets
based on the balance sheet on 31 December 2014 were EUR 253.2 (226.7) million.
Oriola-KD Corporation's net profit in 2014 was EUR 26.6 (15.7) million.
The Board proposes to the Annual General Meeting that no dividend be distributed
on 2014 (no dividend distributed on 2013) and that no funds from the invested
non-restricted equity fund be distributed as repayment of equity (no repayment
of equity 2013).
Annual General Meeting
Oriola-KD Corporation's Annual General Meeting will be held on 30 March 2015 at
5.00 p.m. at the Helsinki Fair Centre. The matters specified in article 10 of
the Articles of Association and other proposals of the Board of Directors, if
any, will be dealt with at the meeting. The Board of Directors will decide on
the notice of the Annual General Meeting and the proposals contained in it at a
later date. The full notice of the Annual General Meeting will be published on
6 March 2015.
Publication of the annual report
Oriola-KD Corporation will publish its 2014 annual summary on 6 February 2015.
The financial statements in their entirety will be published by 9 March 2015.
Next interim report
Oriola-KD Corporation will publish its results for the first quarter of 2015 on
23 April 2015 at about 8.30 am.
Oriola-KD's Financial Statements Release January - December 2014
Consolidated Statement
of
Comprehensive Income
(IFRS), 2014 2013 2014 2013
EUR million 10-12 10-12 1- 12 1- 12
Revised (1) 2)) Revised (1) 2))
------------------------------------------------------------------------------
Continuing operations
Net sales 417.7 409.8 1,612.3 1,619.7
Other operating income 14.2 1.4 21.0 3.7
Cost of goods sold -336.0 -324.9 -1,287.9 -1,319.9
Employee benefit
expenses -36.2 -36.6 -143.8 -136.8
Other operating expenses -32.1 -32.5 -114.5 -117.0
------------------------------------------------------------------------------
Gross profit 27.7 17.1 87.2 49.7
Depreciation and
impairment -5.6 -7.3 -22.2 -20.4
------------------------------------------------------------------------------
Operating profit 22.1 9.9 65.0 29.3
Financial income and
expenses -1.8 -3.2 -7.8 -8.4
------------------------------------------------------------------------------
Profit before taxes 20.3 6.7 57.1 20.9
Income taxes (3)) -2.2 -0.1 -10.7 -3.8
------------------------------------------------------------------------------
Profit for the period
from continuing
operations 18.0 6.6 46.5 17.1
Profit for the period
from discontinued
operations -149.2 -1.0 -258.8 -11.4
------------------------------------------------------------------------------
Profit for the period -131.1 5.6 -212.3 5.8
Other comprehensive
income
Items which may be
reclassified
subsequently to profit
or loss:
Translation differences
recognised in
comprehensive income
during the reporting
period -42.2 -9.8 -52.1 -29.7
Translation differences
transferred to Profit
for the period from
discontinued operations 74.3 - 74.3 -
Cash flow hedge -0.4 -0.3 -1.4 0.8
Income tax relating to
other comprehensive
income 0.2 0.1 0.3 0.3
------------------------------------------------------------------------------
31.9 -10.0 21.1 -28.6
Items which will not be
reclassified to profit
or loss:
Actuarial gains/losses
on
defined benefit plan -16.5 5.9 -16.5 5.9
Income tax relating to
other comprehensive
income 3.3 -1.3 3.3 -1.3
------------------------------------------------------------------------------
-13.1 4.6 -13.1 4.6
Total comprehensive
income for the period -112.4 0.2 -204.3 -18.3
Profit attributable to
------------------------------------------------------------------------------
Parent company
shareholders -131.1 5.6 -212.3 5.8
------------------------------------------------------------------------------
Total comprehensive
income attributable to
------------------------------------------------------------------------------
Parent company
shareholders -112.4 0.2 -204.3 -18.3
------------------------------------------------------------------------------
Earnings per share
attributable to parent
company shareholders:
Basic earnings per
share, EUR
------------------------------------------------------------------------------
Continued operations 0.12 0.04 0.29 0.11
Discontinued operations -0.99 -0.01 -1.71 -0.08
From profit of the year -0.87 0.04 -1.42 0.04
------------------------------------------------------------------------------
Diluted earnings per
share, EUR
------------------------------------------------------------------------------
Continued operations 0.12 0.04 0.29 0.11
Discontinued operations -0.99 -0.01 -1.71 -0.08
From profit of the year -0.87 0.04 -1.42 0.04
------------------------------------------------------------------------------
(1) )The 2013 figures have been revised as a result of the sale of the
Russia business in year 2014.
(2)) The presentation of consolidated statement of comprehensive income has
been changed from the "function of expense" method to the "nature of
expense" method in 2014. The 2013 figures have been revised to correspond
with the new presentation.
(3)) The tax expense for the period corresponds to the
taxes calculated from the profit for the financial
period
Consolidated Statement of Financial Position (IFRS),
EUR million
ASSETS 31 Dec 2014 31 Dec 2013 (1))
-------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 75.2 93.2
Goodwill 250.9 379.0
Other intangible assets 61.3 72.0
Pension assets - 9.3
Other non-current assets 0.0 0.0
Deferred tax assets 3.3 8.3
-------------------------------------------------------------------------------
Non-current assets total 390.8 561.8
Current assets
Inventories 185.0 391.4
Trade receivables 178.4 337.9
Other receivables 28.4 71.8
Cash and cash equivalents 91.5 137.3
-------------------------------------------------------------------------------
Current assets total 483.2 938.3
ASSETS TOTAL 874.0 1,500.1
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
-------------------------------------------------------------------------------
Equity
Share capital 36.2 36.2
Hedging reserve -1.3 -0.2
Contingency fund 19.4 19.4
Hybrid bond 39.6 -
Other reserves 1.2 1.2
Translation differences -3.1 -25.3
Retained earnings 21.6 246.8
-------------------------------------------------------------------------------
Equity attributable to the parent company
shareholders 113.6 278.1
Non-current liabilities
Deferred tax liabilities 12.7 17.7
Pension obligations 14.9 7.6
Borrowings 98.5 176.2
Other non-current liabilities 2.2 0.3
-------------------------------------------------------------------------------
Non-current liabilities total 128.3 201.7
Current liabilities
Trade payables and other current liabilities 536.1 874.7
Provisions 0.6 3.0
Borrowings 95.4 142.6
-------------------------------------------------------------------------------
Current liabilities total 632.1 1,020.3
EQUITY AND LIABILITIES TOTAL 874.0 1,500.1
-------------------------------------------------------------------------------
(1)) Includes the assets and liabilities of the Russian businesses sold in
December 2014
Consolidated Statement
of Changes in Equity
(IFRS)
Equity attributable to the parent
company shareholders
Trans- Re-
lation tained
Share diffe- earn- Hybrid Equity
EUR million capital Funds rences ings bond total
-------------------------------------------------------------------------------
Equity
1 Jan 2013 36.2 26.0 3.8 244.5 - 310.5
-------------------------------------------------------------------------------
Comprehensive income for
the period
Net profit for the
period - - - 5.8 - 5.8
Other comprehensive
income:
Cash flow hedge - 0.8 - - - 0.8
Actuarial gains and
losses - - - 5.9 - 5.9
Income tax relating to
other comprehensive
income - -0.3 0.6 -1.3 - -1.0
Translation difference - 0.0 -29.7 - - -29.7
-------------------------------------------------------------------------------
Comprehensive income for
the period total - 0.5 -29.1 10.4 - -18.3
-------------------------------------------------------------------------------
Transactions with owners
Dividends paid and
repayment of equity - -6.0 - -7.6 - -13.6
Share-based payments - - - 0.2 - 0.2
Purchase of treasury
shares - - - -0.7 - -0.7
-------------------------------------------------------------------------------
Transactions with owners
total - -6.0 - -8.1 - -14.2
-------------------------------------------------------------------------------
Equity
31 Dec 2013 36.2 20.4 -25.3 246.8 - 278.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity
1 Jan 2014 36.2 20.4 -25.3 246.8 - 278.1
-------------------------------------------------------------------------------
Comprehensive income for
the period
Net profit for the
period - - - -212.3 - -212.3
Other comprehensive income:
Cash flow hedge - -1.4 - - - -1.4
Actuarial gains and
losses - - - -16.5 - -16.5
Income tax relating to
other comprehensive
income - 0.3 - 3.3 - 3.6
Translation difference - 0.0 22.2 - - 22.2
-------------------------------------------------------------------------------
Comprehensive income for
the period total - -1.1 22.2 -225.4 - -204.3
-------------------------------------------------------------------------------
Transactions with owners
Hybrid bond - - - - 39.6 39.6
Share-based incentive - - - 0.2 - 0.2
Purchase of own shares - - - -0.1 - -0.1
-------------------------------------------------------------------------------
Transactions with owners
total - - - 0.1 39.6 39.8
-------------------------------------------------------------------------------
Equity
31 Dec 2014 36.2 19.3 -3.1 21.6 39.6 113.6
-------------------------------------------------------------------------------
Condensed Consolidated Statement of Cash Flows (IFRS),
2014 2013
EUR million (1)) 1- 12 1- 12
-------------------------------------------------------------------------------
Operating profit -42.4 21.0
Depreciation and amortisation 26.2 25.7
Impairment 71.1 -
Change in working capital -42.5 3.5
Cash flow from financial
items and taxes -13.5 -13.8
Other adjustments -9.7 -6.7
-------------------------------------------------------------------------------
Net cash flow from operating activities -10.8 29.8
Net cash flow from investing activities 40.3 -97.8
Net cash flow from financing activities -80.3 118.4
Net change in cash and cash equivalents -50.8 50.4
Cash and cash equivalents
at the beginning of the period 137.3 88.1
Foreign exchange rate differences 5.0 -1.2
Net change in cash and cash equivalents -50.8 50.4
-------------------------------------------------------------------------------
Cash and cash equivalents
at the end of the period 91.5 137.3
-------------------------------------------------------------------------------
(1) )Includes the net cash flow from the Russian businesses until
30 November 2014.
Notes to financial statements
Principal accounting policies as of 1 January 2014 (IFRS)
This financial statements release 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 2013 annual
financial statements, excluding the standards and interpretation applied as of
1 January 2014 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 2013.
On 8 December 2014 Oriola-KD sold its Russian businesses to CJSC Apteki 36.6 and
reports the results of the Russian businesses as a discontinued operation for
2014 separately from results from continuing operations in 2014. The comparative
financial information for 2013 has been revised accordingly. The consolidated
statement of financial position for 2013 includes the assets and liabilities of
discontinued operations.
The calculation principles of key figures in this interim report are the same as
for the annual financial statements, except for the calculation of earnings per
share (EPS) whereby the profit attributable to equity owners of the parent has
been adjusted with the unpaid hybrid loan interest including tax impact.
The presentation of consolidated statement of comprehensive income has been
changed from the "function of expense" method to the "nature of expense" method.
The comparable figures have been revised to correspond with the current
presentation.
The figures in the interim report have been rounded independently.
New standards or amendments to the existing ones that have been applied as of 1
January 2014:
* IFRS 10 Consolidated Financial Statements
* IFRS 11 Joint Arrangements
* IFRS 12 Disclosure of Interests in Other Entities
* IAS 27 (revised in 2011) Separate Financial Statements
* IAS 28 (revised in 2011) Investments in Associates
The new standards have not had a material impact on the Group's financial
position.
On 20 February 2014 Oriola-KD issued a hybrid bond, classified as equity.
Interest on the hybrid bond is paid in accordance with a decision made by the
Board of Directors. Unpaid interest is accrued and reported on the balance sheet
upon the interest payment decision. Unpaid interest is taken into consideration
in the calculation of earnings per share.
Reporting segment results reported to Oriola-KD management include management
fee. Segment information for 2013 has been revised to correspond with the
current presentation.
The 2014 financial information in this financial statement release is based on
audited 2014 financial statements.
Earnings per share
2014 2013 2014 2013
EUR million 10-12 10-12 1- 12 1- 12
-------------------------------------------------------------------------------
Profit attributable to equity owners of the
parent from continuing operations 18.0 6.6 46.5 17.1
Accumulated interest on hybrid bond net of tax -0.6 - -1.9 -
-------------------------------------------------------------------------------
Adjusted profit for the period from continuing
operations 17.5 6.6 44.6 17.1
2014 2013 2014 2013
EUR million 10-12 10-12 1- 12 1- 12
-------------------------------------------------------------------------------
Profit incl. discontinued operations
attributable to equity owners of the parent -131.1 5.6 -212.3 5.8
Accumulated interest on hybrid bond net of tax -0.6 - -1.9 -
-------------------------------------------------------------------------------
Adjusted profit for the period including
discontinued operations -131.7 5.6 -214.2 5.8
Average number of outstanding shares (1000
shares)
Basic 151,130 151,157 151,130 151,157
Diluted 151,130 151,157 151,130 151,157
Earnings per share (EUR)
Basic
Continuing operations 0.12 0.04 0.29 0.11
Discontinuing operations -0.99 -0.01 -1.71 -0.08
Total -0.87 0.04 -1.42 0.04
Diluted
Continuing operations 0.12 0.04 0.29 0.11
Discontinuing operations -0.99 -0.01 -1.71 -0.08
Total -0.87 0.04 -1.42 0.04
Discontinued operations
On 8th of December 2014 Oriola-KD sold its Russian businesses to CJSC Apteki
36.6. The cash and debt free selling price was EUR 56.4 million. The decision to
sale the Russian businesses was based on our estimates on the outlook of the
Russian pharmaceutical markets, on the competitive environment and the further
development of profitability of the Russian businesses
The Russian businesses are classified as a discontinued operation. The 2014
profit for the period from discontinuing operations was EUR -258.8 million, of
which the impairment loss resulting from re-measurement the assets at fair
value, cumulative translation differences recognised differences through income
statement and cost of disposal totaled EUR -147.7 million. The profit for the
period from discontinued operations is shown separately from the continuing
operations for all periods presented. Operative results for the Russian
businesses are consolidated to the Group up until 30 November 2014.
As the sale of Russian businesses closed on 8 December 2014, the financial
results of the discontinued operations are not comparable to the financial
results of the discontinued operations in previous periods.
Profit for the period from discontinued operations
EUR million 2014 2013
--------------------------------------------------------------------------
Net sales 677.8 978.8
Other operating income 0.8 2.0
Cost of goods sold -632.8 -879.5
Employee benefit expenses -34.6 -49.7
Other operating expenses -43.5 -54.5
--------------------------------------------------------------------------
Gross profit -32.4 -3.0
Depreciation and impairment -4.0 -5.3
Impairment -71.1 -
--------------------------------------------------------------------------
Operating profit -107.4 -8.3
Financial income and expenses -4.9 -5.2
--------------------------------------------------------------------------
Profit before taxes -112.3 -13.5
Income taxes 1.2 2.1
--------------------------------------------------------------------------
Profit for the period -111.1 -11.4
Impairment loss resulting from re-measurement of assets -64.7 -
Translation differences recognised through income statement -74.3 -
Foreign exchange differences -4.8 -
Cost of disposal -3.8 -
--------------------------------------------------------------------------
Profit for the period from discontinued operations -258.8 -11.4
Cash flows from discontinued operations
EUR million 2014 2013
----------------------------------------------------
Net cash flow from operating activities -79.0 -15.7
Net cash flow from investing activities -8.3 -4.1
Net cash flow from financing activities 80.0 28.1
----------------------------------------------------
Total cash flows -7.3 8.3
Cash consideration received 56.4
Cash and cash equivalents disposed of -7.3
-----------------------------------------------
Impact on cash flows 49.1
Tangible and intangible assets
Impairment loss in relation to Russian pharmaceutical wholesale operating
segment
Following a revised business plan developed by the new Russian pharmaceutical
wholesale operational management, the Group assessed the recoverable amount of
the Russian pharmaceutical wholesale operating segment during the second quarter
of 2014. Based on the business plan, the growth in future net sales and
profitability are expected to be below those of the earlier plans. The Group's
revised outlook on the growth of Russian pharmaceutical wholesale operations is
consistent with the weakening view of external information sources regarding the
future development of the Russian markets.
Based on the assessment, the carrying amount of the cash generating unit was
determined to be higher than its recoverable amount and an impairment loss of
EUR 77.2 million was recognised. The impairment charge consists of goodwill EUR
70.2 million, intangible assets EUR 0.9 million and deferred tax assets EUR 6.1
million. After the impairment no goodwill is allocated to the Russian wholesale
business. The impairment charge is included within "depreciation and
impairments" and "income taxes" in the consolidated statement of comprehensive
income.
The recoverable amount of the cash generating unit was based on value in use and
was determined on the basis of discounted cash flows (DCF-model). The cash flow
forecasts are based on five-year strategic plans approved by the management,
which are consistent with the current business structure. The cash flows of
2020-2024 are based on the assumption that the net sales growth percentage and
the operating profit percentage will gradually normalise at the level of
terminal growth. Value in use was determined similarly to the 31 December 2013
goodwill impairment test.
The key parameters applied in the value-in-use calculation of the Russian
pharmaceutical wholesale (31 December 2013) were as follows:
· Post-tax discount rate 11.8 (10.1) per cent
· Operating profit 0.2 (0.8) per cent. Operating profit percentage in
the value-in-use calculation is the average operating profit percentage over a
ten year period.
· Terminal growth 2.0 (1.0) per cent. Terminal growth rate is applied
from the beginning of year 2025.
· Net sales growth 5.0 (8.4) per cent. Net sales growth rate is the
average growth rate over a ten-year period
Changes in Property, Plant and Equipment, 2014 2013
EUR million 1- 12 1- 12
------------------------------------------------------------------
Carrying amount at the beginning of the period 93.2 81.4
Increases through acquisitions of subsidiary shares 0.0 8.0
Increases 27.0 22.4
Decreases -13.2 -1.4
Divestment of business -11.3 -
Reclassifications 0.2 -
Depreciation, Continuing operations -15.0 -13.1
Depreciation, Discontinued operations -1.3 -1.7
Foreign exchange rate differences -4.4 -2.4
------------------------------------------------------------------
Carrying amount at the end of the period 75.2 93.2
------------------------------------------------------------------
Changes in Intangible assets, 2014 2013
EUR million 1- 12 1- 12
------------------------------------------------------------------
Carrying amount at the beginning of the period 451.0 329.0
Increases through acquisitions of subsidiary shares 0.2 157.8
Increases 6.8 5.4
Decreases -0.2 -0.0
Divestment of business -24.5 -
Reclassifications -0.2 -
Amortisation, Continuing operations -7.2 -7.2
Impairments and amortisation, Discontinued operations -73.8 -3.6
Foreign exchange rate differences -39.8 -30.4
------------------------------------------------------------------
Carrying amount at the end of the period 312.3 451.0
------------------------------------------------------------------
Derivatives
31 Dec 2014 Positive fair Negative fair Nominal values of
EUR million value value contracts
-------------------------------------------------------------------------
Derivatives recognised
as cash flow hedges
Interest rate swaps - 1.7 55.4
Derivatives measured at
fair value through profit and
loss
Foreign currency forward and
swap contracts 1.0 - 154.7
-------------------------------------------------------------------------
31 Dec 2013 Positive fair Negative fair Nominal values of
EUR million value value contracts
-------------------------------------------------------------------------
Derivatives recognised
as cash flow hedges
Interest rate swaps - 0.3 45.2
Derivatives measured at
fair value through profit and
loss
Foreign currency forward and
swap contracts 0.8 - 159.3
-------------------------------------------------------------------------
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
31 Dec 2014 Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Assets
Derivatives measured at fair value through
profit and loss - 1.4 - 1.4
Liabilities
Derivatives designated as hedges - 1.7 - 1.7
Derivatives measured at fair value through
profit and loss - 0.3 - 0.3
Contingent consideration - - 14.7 14.7
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EUR million
31 Dec 2013 Level 1 Level 2 Level 3 Total
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Assets
Derivatives measured at fair value through
profit and loss - 1.1 - 1.1
Liabilities
Derivatives designated as hedges - 0.3 - 0.3
Derivatives measured at fair value through
profit and loss - 0.4 - 0.4
Contingent consideration - - 14.6 14.6
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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
EUR million
---------------------------------------
Book value 31 Dec 2013 14.6
---------------------------------------
Recognised in financial expenses 1.0
Translation differences -0.9
---------------------------------------
Book value 30 Sep 2014 14.7
---------------------------------------
Financial liabilities recognised at fair value through profit and loss (level
3) include estimated discounted fair value of a contingent consideration related
to the Medstop acquisition. Payment of the contingent consideration will be
based on 2015 EBITDA of Oriola-KD's combined Swedish retail businesses and will
be paid in first quarter of 2016. The fair value of the contingent consideration
has been calculated using discounted cash flow method. The discount rate used in
the valuation is determined using the weighted average cost of capital of the
Group.
Commitments and Contingent Liabilities
EUR million 31 Dec 2014 31 Dec 2013
--------------------------------------------------------------------
Commitments for own liabilities
Guarantees on behalf of own companies 8.1 21.3
Guarantees on behalf of other companies 22.0 -
Mortgages on company assets 2.2 2.4
Other guarantees and liabilities 1.1 0.9
Accumulated interest on hybrid bond 2.4 -
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Total 35.8 24.6
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Leasing liabilities (operating liabilities) 0.8 2.6
Rent liabilities 44.3 77.0
Guarantees on behalf of other companies include parent company guarantees given
to third parties on behalf of sold Russian entities commercial agreements and
rent contracts. In accordance of framework agreement the buyer undertakes to
compensate Oriola-KD for any claim against the guarantees. In addition the
buyer's bank has given Oriola-KD in aggregate EUR 20.7 million counter-guarantee
mainly subject to parent company guarantees of the commercial agreements.
Majority of the guarantees on behalf of other companies will expire in 2015.
The most significant guarantees are bank guarantees against trade payables in
wholesale company in Sweden. In addition, Oriola-KD Corporation has granted
parent company guarantees of EUR 4.7 (26.4) million against subsidiaries' trade
payables and EUR 82.8 (153.6) million against Oriola-KD Holding Sverige AB's
external loan.
Provisions
On 31 December 2014 Oriola-KD had restructuring provisions totalling EUR 0.2
(3.0) million related to restructuring costs incurred by Pharmaceutical Trade
Sweden in connection with the integration of the Medstop acquisition and an
efficiency program. In addition, group items include a provision of EUR 0.4 (-)
million related to the sale of Russian businesses included within profit for the
period from discontinued operations.
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.
Segment information, continuing operations
2014 2013
Net Sales, EUR million 1- 12 1- 12
------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 435.9 425.3
Pharmaceutical Trade Sweden 1,176.4 1,194.4
Net sales to other segments -0.0 -0.0
------------------------------------------------------------
Continuing operations total 1,612.3 1,619.7
2014 2013
Operating Profit, EUR million 1- 12 1- 12
------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 19.2 18.8
Pharmaceutical Trade Sweden 50.5 16.4
Group Administration and Others -4.6 -5.9
------------------------------------------------------------
Continuing operations total 65.0 29.3
Operating Profit excl. Non-recurring items, 2014 2013
EUR million 1- 12 1- 12
------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 19.6 18.8
Pharmaceutical Trade Sweden 44.0 24.1
Group Administration and Others -4.5 -5.9
------------------------------------------------------------
Operating Profit excl. non-recurring items 59.1 37.0
------------------------------------------------------------
Non-recurring items 5.9 -7.7
------------------------------------------------------------
Operating Profit, Continuing operations 65.0 29.3
2014 2014 2014 2014 2013 2013 2013 2013
Quarterly Net Sales, EUR
million 10-12 7-9 4-6 1-3 10-12 7-9 4-6 1-3
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Pharmaceutical Trade
Finland and Baltics 119.6 108.5 107.0 100.8 109.4 96.0 112.5 107.5
Pharmaceutical Trade Sweden 298.1 281.3 298.5 298.5 300.5 315.7 304.5 273.7
Net sales to other segments 0.0 -0.0 -0.0 -0.0 -0.0 0.0 -0.0 -0.0
-------------------------------------------------------------------------------
Continuing operations total 417.7 389.8 405.5 399.3 409.8 411.6 416.9 381.3
2014 2014 2014 2014 2013 2013 2013 2013
Quarterly Operating Profit,
EUR million 10-12 7-9 4-6 1-3 10-12 7-9 4-6 1-3
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 4.4 5.5 4.4 4.8 4.2 5.3 5.2 4.2
Pharmaceutical Trade Sweden 17.7 12.3 11.0 9.4 6.2 6.2 0.8 3.2
Group Administration and
Others -0.1 -1.6 -1.5 -1.3 -0.5 -1.0 -3.0 -1.4
-------------------------------------------------------------------------------
Continuing operations total 22.1 16.3 13.8 12.8 9.9 10.5 3.0 5.9
Quarterly Operating Profit, 2014 2014 2014 2014 2013 2013 2013 2013
excl. non-recurring items, EUR
million 10-12 7-9 4-6 1-3 10-12 7-9 4-6 1-3
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 4.9 5.5 4.4 4.8 4.2 5.3 5.2 4.2
Pharmaceutical Trade Sweden 10.2 12.4 11.3 10.0 7.9 8.2 4.9 3.2
Group Administration and
Others -0.0 -1.6 -1.5 -1.3 -0.5 -1.0 -3.0 -1.4
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Group total excl. Non-
recurring items 15.1 16.3 14.2 13.5 11.6 12.5 7.1 5.9
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Non-recurring items 6.9 -0.1 -0.3 -0.6 -1.7 -2.0 -4.0 -
-------------------------------------------------------------------------------
Quarterly Operating Profit,
Continuing operations 22.1 16.3 13.8 12.8 9.9 10.5 3.0 5.9
2014 2013
Net Sales by Market, EUR
million 1- 12 1- 12
--------------------------------------------
Finland 388.3 382.9
Sweden 1,114.8 1,135.0
Baltic countries 43.5 38.8
Other countries 65.7 63.0
--------------------------------------------
Continuing operations
total 1,612.3 1,619.7
2014 2014 2014 2014 2013 2013 2013 2013
Quarterly Net Sales by
Market, EUR million 10-12 7-9 4-6 1-3 10-12 7-9 4-6 1-3
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Finland 106.1 97.1 95.9 89.2 98.2 85.3 102.5 96.8
Sweden 280.9 265.8 283.7 284.4 283.0 303.5 289.5 259.0
Baltic countries 11.8 11.1 9.8 10.9 10.0 9.1 9.6 10.0
Other countries 19.0 15.9 16.1 14.8 18.7 13.7 15.3 15.4
-------------------------------------------------------------------------------
Continuing operations
total 417.7 389.8 405.5 399.3 409.8 411.6 416.9 381.3
Espoo, 6 February 2015
Board of Directors of Oriola-KD Corporation
Further information:
Eero Hautaniemi
President and CEO
tel. +358 (0)10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Tuomas Itkonen
CFO
tel. +358 (0)40 5964 004
e-mail: tuomas.itkonen@oriola-kd.com
Distribution:
NASDAQ OMX Helsinki Ltd
Key media
Released by:
Oriola-KD Corporation
Corporate Communications
Orionintie 5
02200 Espoo
www.oriola-kd.com
[HUG#1892225]
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