2013-11-06 07:00:00 CET
2013-11-06 07:00:05 CET
REGULATED INFORMATION
HKScan Oyj - Interim report (Q1 and Q3)
HKScan Group’s interim report 1 January — 30 September 2013: Modest recovery in sales - margins lagging behind
HKScan Corporation INTERIM REPORT
6 November 2013, at 08:00 am
HKScan Group's interim report 1 January — 30 September 2013: Modest recovery in
sales - margins lagging behind
* Net sales were EUR 1 838.0 (1 840.7) million in January-September, and EUR
623.5 (612.2) million in the third quarter.
* In January-September, reported EBIT was EUR 15.3 (21.2) million, and the EBIT
margin was 0.8 (1.1) per cent. Comparable EBIT excluding non-recurring items
for the period was EUR 18.8 (21.2) million, and the corresponding EBIT margin
was 1.0 (1.1) per cent.
For the third quarter, reported EBIT was EUR 10.5 (15.4) million, and the EBIT
margin was 1.7 (2.5) per cent. Comparable EBIT excluding non-recurring items
for the quarter was EUR 11.0 (15.4) million, and the corresponding EBIT margin
was 1.8 (2.5) per cent.
* Cash flow before debt service was EUR 13.8 (26.1) million in
January-September, and EUR 14.6 (23.7) million in the third quarter.
* Profit/loss before taxes was EUR 1.1 (-1.2) million in January-September, and
EUR 5.9 (7.3) million in the third quarter.
* EPS was EUR 0.06 (0.03) in January-September, and EUR 0.12 (0.11) in the
third quarter.
* Net financial expenses were EUR -16.7 (-24.4) millionin January-September,
and EUR -5.3 (-8.5) million in the third quarter.
* Net debt was EUR 445.3 (474.1) million, and net gearing was 111.0 (122.2) per
cent in January-September.
* Outlook for 2013 (amended on 25 September): The comparable EBIT for 2013,
excluding non-recurring items, will fall short of 2012.
Hannu Kottonen, HKScan's CEO, comments on the third quarter:
- Demand in both consumer and away-from-home businesses remained at a lower
level compared to the previous year. Price competition was tough.In general,
consumers' purchasing behaviour has shifted towards lower priced-products. The
increase in animal purchasing prices has stopped or turned towards a decrease
as grain and feed costs have declined.
- Net sales for the third quarter increased compared to the same period in the
previous year. Even though the Group EBIT decreased during the quarter compared
to 2012, the market area Baltics recovered and showed improvement. Of the other
market areas, Sweden also continued to improve, though from a low level, and
Poland kept up its good performance.
- The good development in Sweden, Poland and the Baltics could not compensate
for the negative impact of declined sales margins in Finland and Denmark. In
addition, the margins were also hit due to extraordinary actions taken to
decrease excess frozen stock in other market areas except Poland and the
Baltics. However, despite the poor margin development, the Group's profit
before taxes was ahead of the previous year as net financial expenses kept
decreasing.
- Another positive development was the development programme launched in 2012,
which has met the targets for reducing the annualised costs by more than EUR 20
million and a significant reduction in capital employed. The improvements will
reach their full effect from the beginning of 2014. At the end of September, a
new development programme was launched. The new programme will run until the
end of 2014 and it targets an annual cost reduction exceeding EUR 20 million
and a reduction of over EUR 50 million in net debt. The main objectives are
building a unified Group, materialising Group synergies further, and building
demand-driven management of operations.
- The Group was further strengthened by founding a Group Marketing function to
enhance long-term group-level brand management and offering development.
Product innovation exchange between the home markets is to be increased
further.
HKSCAN GROUP Q3 and Q1-3 in 2013 / 2012
(EUR million) Q3/2013 Q3/2012*) Q1-Q3/ Q1-Q3/ 2012*)
2013 2012*)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net sales 623.5 612.2 1 838.0 1 840.7 2 503.1
--------------------------------------------------------------------------------
EBIT 10.5 15.4 15.3 21.2 43.1
--------------------------------------------------------------------------------
- EBIT margin, % 1.7 2.5 0.8 1.1 1.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EBIT excluding non-recurring 11.0 15.4 18.8 21.2 36.7
items
--------------------------------------------------------------------------------
- EBIT margin, % 1.8 2.5 1.0 1.1 1.5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flow before debt service 14.6 23.7 13.8 26.1 65.8
--------------------------------------------------------------------------------
Profit/loss before taxes 5.9 7.3 1.1 -1.2 14.3
--------------------------------------------------------------------------------
Earnings per share, EUR 0.12 0.11 0.06 0.03 0.30
--------------------------------------------------------------------------------
Net financial expenses -5.3 -8.5 -16.7 -24.4 -31.7
--------------------------------------------------------------------------------
Net debt 445.3 474.1 440.9
---------------------------------- -------------------------------------
Net gearing, % 111.0 122.2 109.2
--------------------------------------------------------------------------------
*) The 2012 figures have been restated in accordance with the revised IAS 19
standard for employment benefit plans and the changed reporting principle for
marketing support expenses.
JULY-SEPTEMBER 2013
Profitability in the third quarter was lower than expected as the business
environment remained unfavourable. Demand and consumers' purchasing power were
still somewhat low and the price competition was tough.
The positive exceptions were the Baltics and Poland, which showed strong
financial performance. The animal purchasing prices for beef stayed high. For
pork and poultry, the purchase prices decreased during the quarter. The decline
was not enough to offset the impact of the unfavourable mix and the low sales
price level, which was further deteriorated by extraordinary sales of excess
frozen stock. Export sales prices showed at best a modest recovery in the
period.
The Group-wide operational efficiency improvements, such as consolidation of
purchases continued successfully. In animal sourcing, producer collaboration
moved forward in Finland and was implemented further in Sweden.
One of the Away from Home's targets is to efficiently utilise the potential of
group-wide manufacturing and know-how. During the quarter, the first
cross-border product portfolio was launched in AfH Sweden. Additionally, the
by-products business was developed in a more systematic way. The Swedish
HoReCa market, especially restaurants, grew. In Finland, the demand showed some
growth after the decrease during the first half of 2013. Due to the global
meat surplus, export sales prices were poor, hitting the margins in the third
quarter, when the stock was more actively sold to export.
In a stock exchange release published in early July, HKScan introduced the
first steps of the Group's sharpened brand strategy: company names will be
harmonised, and country-of-origin promises were reaffirmed for its key brands
in Finland and Sweden, among other things. The Group additionally announced
that it will increase the volume of meat raw material sourced from its own
slaughterhouses in its home markets.
At the beginning of August, HKScan issued a stock exchange release on its
updated long-term financial targets as follows: an EBIT (operating profit) of
more than 4%, return on capital employed greater than 12%, and net gearing less
than 100%. The dividend policy of at least 30% of net profit remains unchanged.
At the end of September HKScan lowered its outlook for 2013. According to the
new guidance, the comparable EBIT for 2013, excluding non-recurring items, will
fall short of last year. In the previous outlook, EBIT was estimated to improve
from 2012.
MARKET AREA: FINLAND
--------------------------------------------------------------------------------
(EUR million) Q3/2013 Q3/2012* Q1-Q3/201 Q1-Q3/2012 2012*)
) 3 *)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net sales 200.4 198.5 593.9 594.6 813.8
--------------------------------------------------------------------------------
EBIT 2.0 5.6 1.2 11.0 18.4
--------------------------------------------------------------------------------
- EBIT margin, % 1.0 2.8 0.2 1.9 2.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EBIT excluding non-recurring 2.5 5.6 4.8 11.0 18.4
items
--------------------------------------------------------------------------------
- EBIT margin, % 1.2 2.8 0.8 1.9 2.3
--------------------------------------------------------------------------------
*) The 2012 figures have been restated in accordance with the changed reporting
principle for marketing support expenses.
In Finland, net sales in the third quarter amounted to EUR 200.4 (198.5)
million. EBIT for the period was EUR 2.0 (5.6) million.
Although the net sales were on the same level as the previous year, the quarter
was affected especially by lower volumes and sales prices of seasonal products.
In other products the sales volume was kept and increased, but due to the
tough price competition in both domestic and export markets the average sales
price development was modest. Demand for lower priced products remained high
and kept the product mix unfavourable. In the third quarter systematic actions
to reduce stock were taken. The extraordinary sales of the frozen stock
lowered the margins.
The production rationalisation and efficiency improvement actions continued.
During the transition phase production capacity and production efficiency were
partly restricted. The rationalisation programme between the Vantaa, Mikkeli
and Säkylä plants is planned to be completed by the end of 2013. The
restructuring actions are to reduce costs by approximately EUR 5 million
annually from the end of 2013 onwards. At the plants, the focus on preventive
maintenance is being enhanced by changing the service partner.
At the beginning of September, HKScan's Finnish organisation, roles and
responsibilities were updated and streamlined in line with the Group's
operating model. The targets are improved operational efficiency as well as
customer interface performance, strengthened internal cooperation and
successful change management and implementation.
In September, a new range of organic meat products were launched on the market.
The products are developed in cooperation with local producers and retailers.
In August, a renewed HK-brand web site was launched. The site focuses on
opening up the meat value chain to different stakeholders, and it also
introduced a “Meat School” for consumers.
The 100-years anniversary activities continued with personnel events in all the
Group's locations in Finland. Farm visits have also been arranged for consumers
and media representatives. The documentary film about the 100 years of HKScan,
received two gold awards at the Aurora Awards international film competition in
the United States.
MARKET AREA: BALTICS
--------------------------
(EUR million) Q3/2013 Q3/2012 Q1-Q3/2013 Q1-Q3/2012 2012
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 44.7 44.3 130.4 131.6 176.7
-----------------------------------------------------------------
EBIT 4.2 3.6 6.3 7.4 8.9
-----------------------------------------------------------------
- EBIT margin, % 9.5 8.1 4.8 5.7 5.1
-----------------------------------------------------------------
In the Baltics, net sales in the third quarter were EUR 44.7 (44.3) million.
EBIT was EUR 4.2 (3.6) million.
A clear recovery could be seen in the market area compared to the first half of
the year. The third quarter result was very positive, which can be noted in an
excellent EBIT margin for the quarter.
New product launches and sales of branded products in the Baltics brought
results, although the net sales improved only slightly. Overall demand and the
sales price level also normalized after a weaker first half of the year. This
together with the decreased primary production costs contributed to the good
profit development during the third quarter.
HKScan is centralising its Baltic poultry production at its renovated Tabasalu
facility in Estonia. The facility was opened on 23 September 2013. From the
beginning of 2014, the facility will be responsible for slaughtering, cutting,
deboning and processing poultry for the entire Baltic region in HKScan Group.
All poultry product manufacturing at the Loo facility near Tallinn will move to
Tabasalu.
The “Estonian pig“ web site on Rakvere's pork production received an award at
the Estonian Design Awards 2013 competition.
MARKET AREA: SWEDEN
---------------------------------------
(EUR million) Q3/2013 Q3/2012* Q1-Q3/201 Q1-Q3/2012 2012*)
) 3 *)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net sales 238.8 245.0 709.5 751.3 1 025.7
--------------------------------------------------------------------------------
EBIT 5.2 3.6 4.6 -5.2 -5.9
--------------------------------------------------------------------------------
- EBIT margin, % 2.2 1.5 0.6 -0.7 -0.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EBIT excluding non-recurring 5.2 3.6 4.6 -5.2 1.5
items
--------------------------------------------------------------------------------
- EBIT margin, % 2.2 1.5 0.6 -0.7 0.1
--------------------------------------------------------------------------------
*) The 2012 figures have been restated in accordance with the revised IAS 19
standard for employment benefit plans and the changed reporting principle for
marketing support expenses.
In Sweden, net sales in the third quarter were EUR 238.8 (245.0) million. EBIT
was EUR 5.2 (3.6) million.
The decrease in net sales was caused by discontinuing non-profitable sales and
lower volumes. The growth in sales value supported the positive profit
development together with the cost saving and production efficiency improvement
actions along the restructuring programme. The programme aiming at annual cost
reductions by EUR 10 million is running in full effect.
Branded products, such as Svensk Rapsgris® (Swedish rapeseed pork), and Pärsons
fresh chicken products performed and developed well. However, the share of new
launches is still relatively low of the total business volume.
The decreased level of Swedish primary production resulted in intensified
competition of the domestic meat raw material thus keeping prices at a high
level. The import of beef increased further and put pressure on sales prices.
As for pork, the high volumes of imported meat continued to enter the Swedish
market during the third quarter as a result of the European market situation.
The private label continues to take market share.
HKScan Sweden's target is to reduce climate emissions by 50% up till 2020. The
greenhouse gas emissions disclosure was published together with the other
companies in “the Haga Initiative” climate network. During the quarter the
Kristianstad production plant was connected to the municipality's district
heating. The change from using only LPG (Liquefied petroleum gas) to district
heating will result in a sizable annual decrease of carbon dioxide emissions.
MARKET AREA: DENMARK
--------------------------------------------
(EUR million) Q3/2013 Q3/2012 Q1-Q3/ Q1-Q3/ 2012
2013 2012
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net sales 56.7 51.6 173.4 160.8 211.7
---------------------------------------------------------------------------
EBIT -1.4 0.9 -1.5 2.6 15.4
---------------------------------------------------------------------------
- EBIT margin, % -2.5 1.8 -0.9 1.6 7.3
---------------------------------------------------------------------------
---------------------------------------------------------------------------
EBIT excluding non-recurring items -1.4 0.9 -1.5 2.6 1.5
---------------------------------------------------------------------------
- EBIT margin, % -2.5 1.8 -0.9 1.6 0.7
---------------------------------------------------------------------------
For Denmark, net sales in the third quarter were EUR 56.7 (51.6) million. EBIT
was EUR -1.4 (0.9) million.
Sales volume was higher in the third quarter compared to the corresponding
quarter in 2012, when the fire at the Vinderup plant interrupted sales
development. The operations and the rebuilt production lines are now in full
use. Price competition remained tough in both domestic and export markets, and
it was seen in frozen poultry products in particular. The extraordinary sales
of excess frozen stock caused a negative impact on sales margins. The good
sales development of fresh chicken in Sweden continued.
Both volumes and prices for poultry sourcing continued to show a slightly
positive trend, but the purchase prices were still higher than in the rest of
continental Europe and the realised sales prices did not fully reflect the cost
level. Despite the good progress, the post-fire operational efficiency was
still behind plan. Operational efficiency improvement actions and related
investments will continue.
The insurance case related to the fire is still in progress. The insurance is
estimated to cover both the property damage and the loss of profit, as well as
the additional costs caused by the business interruption. The accumulated
posted capital expenditure related to the fire amounted to EUR 23.2 million by
the end of September 2013.
MARKET AREA: POLAND *)
--------------------------
(EUR million) Q3/2013 Q3/2012 Q1-Q3/2013 Q1-Q3/2012 2012
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 99.2 88.7 280.7 256.0 343.7
-----------------------------------------------------------------
EBIT 3.3 3.6 14.5 11.5 15.8
-----------------------------------------------------------------
- EBIT margin, % 3.3 4.0 5.2 4.5 4.6
-----------------------------------------------------------------
*) Represents HKScan's 50% share of Sokolów.
In Poland, net sales for the third quarter totalled EUR 99.2 (88.7) million.
EBIT for the period was EUR 3.3 (3.6) million.
Sales growth was strong, although pork meat raw material prices rose and price
competition was fierce. Sales of processed and barbecue products increased
thanks to the expanded product range. Furthermore, the high recognition of the
Sokolów brand continued to contribute to the positive development.
An improved level in beef supply in Poland was accompanied by a decrease in
prices. The slaughtering volumes of Sokolów grew and enabled larger export
volumes. Polish consumer demand for beef increased. Additionally, exports of
processed products could be increased during the third quarter.
Responding to the market situation, Sokolów launched a new line of products
using “Mylar Cook” technology for convenience food during the quarter.
In September, at the International Polagra Fair in Poznań, four Sokolów
products were awarded with gold medals for up-to-date, innovative and highest
technology products.
INVESTMENTS
The Group's investments in the third quarter were EUR 16.1 (7.1) million and
divided by market area as follows:
(EUR million) Q3/2013 Q3/2012 Q1-Q3/2013 Q1-Q3/2012 2012
--------------------------------------------------------------------------------
Finland 6.4 0.6 10.8 7.1 11.8
--------------------------------------------------------------------------------
Baltics 1.5 3.6 7.5 8.3 10.5
--------------------------------------------------------------------------------
Sweden 1.6 0.2 3.5 5.2 7.4
--------------------------------------------------------------------------------
Denmark 1) 4.3 0.6 5.3 8.4 33.0
--------------------------------------------------------------------------------
Poland 2) 2.3 2.2 7.8 11.9 14.0
--------------------------------------------------------------------------------
Total 16.1 7.1 35.0 40.7 76.6
--------------------------------------------------------------------------------
1) The investments for full year 2012 (EUR 19.3 million) and all quarters in
2013 (EUR
3.9 million) include rebuilding of the Vinderup plant.
2) HKScan's share (50%) of Sokolów investments.
A substantial share of the investments planned and executed focused on
improvements in operational efficiency, which has been identified as a
strategic focus area.
The main investments during 2013 have been the following. In Finland, transfers
of production lines between the Vantaa, Mikkeli and Säkylä plants continued,
supported by the production line and infrastructure investment for processed
meat products in Mikkeli, as well as investments in poultry production in Eura
plant. In the Baltics market area, the consolidation of poultry production to
the renewed Tabasalu plant continued, as well as enhancement of capacity in
primary production at Pärnjõe farm in Estonia. In Sweden, the main investments
were made at the Skara plant to improve energy efficiency. In Poland, the most
important investments were made in meat processing at Jarosław and Robakowo
facilities as well as in power supply and cooling systems at Kolo facility.
The investments in improving operational efficiency, the rationalisation of the
operational footprint and the consolidation of production are expected to
continue during 2013 and beyond.
FINANCING AND TAXES
Group interest-bearing debt at the end of September stood at EUR 483.6 (524.4)
million, of which current interest-bearing debts amounted to EUR 332.3 (166.5)
million. Negotiations concerning the refinancing of loans maturing in June 2014
are currently being conducted. At year end, gross interest-bearing debts were
EUR 499.7 million. At the end of September, net debt was EUR 445.3 (474.1)
million, thus it decreased compared to the previous year by EUR 28.8 million,
but increased from year end by EUR 4.4 million.
The Group's liquidity was good during the third quarter. Undrawn committed
credit facilities on 30 September were EUR 175.9 (180.0) million. In addition,
the Group had other undrawn overdraft and other facilities of EUR 34.2 (35.1)
million. The EUR 200 million commercial paper programme had been drawn to the
amount of EUR 149.0 (135.0) million. Net financial expenses were EUR -5.3
(-8.5) million in the third quarter, and EUR -16.7 (-24.4) million in
January-September. The decrease is attributable to the lower loan amount and
lower interest level. Additionally, costs in the previous year include one-time
refinancing arrangement expenses.
Group taxes were EUR 1.1 (-0.5) million in the third quarter and EUR 2.2 (3.5)
million positive in January-September.
SHARES
At the end of September, the HKScan Group's share capital stood at EUR 66 820
528. The Group's total number of shares issued, 55 026 522, was divided into
two share series as follows: A Shares, 49 626 522 (90.19% of the total number
of shares) and K Shares, 5 400 000 (9.81%). The A Shares are quoted on the
NASDAQ OMX Helsinki. The K Shares are held by LSO Osuuskunta (4 735 000 shares)
and Sveriges Djurbönder ek.för. (665 000 shares) and are not listed. The
company held 1 053 734 A Shares as treasury shares corresponding 1.9 per cent
of the company's total number of shares and 0.7 per cent of the total number of
votes.
HKScan's market capitalization at the end of September stood at EUR 188.2
(197.5) million. It breaks down as follows: Series A shares had a market value
of EUR 169.7 (178.2) million, and the unlisted Series K shares a calculational
market value of EUR 18.5 (19.4) million.
In January-September, a total of 4 960 555 (6 615 237) of the company's shares
with a total value of EUR 18 913 516 (31 186 607) were traded. The highest
price quoted in the period under review was EUR 4.28 (6.40), and the lowest was
EUR 3.38 (3.17). The average price was EUR 3.81 (4.64). At the end of
September, the closing price was EUR 3.42 (3.59).
HKScan has in place a market-making agreement with FIM Pankkiiriliike Oy which
meets the requirements of NASDAQ OMX's Liquidity Providing (LP) operation.
ANNUAL GENERAL MEETING AND BOARD OF DIRECTORS' AUTHORISATIONS
The Annual General Meeting of HKScan Corporation was held on 24 April 2013 in
Turku. The resolutions of the AGM, including authorisations given to the Board,
are reported in full in a stock release the same day. The Board has not
exercised the authorisations given by the AGM.
PERSONNEL
In January-September, HKScan, excluding Sokolów in Poland, had an average of 7
751 (8 137) personnel.
The personnel decreased in Finland, the Baltics and Sweden due to the on-going
efficiency programmes.
The average number of personnel in each market area was as follows:
Q1-Q3/2013 Q1-Q3/2012 2012
-------------------------------------------------------------------
Finland 2 730 2 846 2 794
-------------------------------------------------------------------
Baltics 1 668 1 772 1 742
-------------------------------------------------------------------
Sweden 2 468 2 683 2 428
-------------------------------------------------------------------
Denmark 885 872 872
-------------------------------------------------------------------
Total 7 751 8 173 7 836
-------------------------------------------------------------------
In addition, during the period the Sokolów Group employed an average of 6 326
(6 213) persons, and in 2012 the average number of personnel was 6 310.
Division of personnel by market area at end September is as follows:
30.9.2013 30.9.2012 31.12.2012
-----------------------------------------
Finland 2 510 2 610 2 592
-----------------------------------------
Baltics 1 650 1 746 1 700
-----------------------------------------
Sweden 2 377 2 358 2 339
-----------------------------------------
Denmark 799 840 893
-----------------------------------------
Total 7 336 7 554 7 524
-----------------------------------------
Additionally, the Sokolów Group had 6 309 (6 228) employees at the end of the
period under review and 6 491 employees at the end of 2012.
CHANGES IN THE GROUP SENIOR MANAGEMENT
In the middle of August HKScan Group announced changes in its senior management
when the Group Management Team was strengthened with a new post of Chief
Marketing Officer.
Anne Mere was appointed Chief Marketing Officer of HKScan Group. As CMO, Mere
is responsible for HKScan's marketing and brand strategy development,
collaborating closely with HKScan's Business Areas, Product Development and
Group Communications. Samuli Eskola was appointed, as Anne Mere's successor,
Executive Vice President of HKScan's Consumer Business in Finland and the
Baltics, as General Manager of HKScan Finland, and as a member of the
Management Team. Eskola previously held the responsibility for Group Strategy
and Strategic Projects. Juhan Matt was named to hold the responsibility for
Group Strategy and Strategic Projects. All the above mentioned persons report
to the CEO, Hannu Kottonen.
CHANGES IN THE GROUP STRUCTURE
In order to minimize administration and promote internal process harmonization,
HKScan continued streamlining and clarifying its corporate structure.
In Sweden, Pärsons Sverige AB's business was merged with HKScan Sweden at the
beginning of September 2013.
In Finland, HK Agri Oy—the HK Ruokatalo Oy's wholly owned subsidiary
responsible for meat procurement and producer services—is planned to be merged
with HK Ruokatalo Oy. HKScan Corporation submitted the merger for registration
in the Finnish Trade Register on 23 August 2013. The merger is to be completed
by 31 December 2013.
CLAIM BY OY PRIMULA AB'S BANKCRUPTY ESTATE
According to a stock exchange release on 7 September 2012, HKScan Corporation
and HK Ruokatalo Oy were notified that Oy Primula Ab's bankruptcy estate has
submitted an action for damages to the District Court of Finland Proper
concerning the companies. The claim amounts to about EUR 16.3 million, plus
claims related to interest and legal process costs.
HKScan and HK Ruokatalo find the action to be unjustified, and the companies
have disputed the claim in its entirety in the pending trial. Therefore, the
action did not give rise to any provisions in the consolidated financial
statements.
SHORT-TERM RISKS AND UNCERTAINTY FACTORS
The most significant uncertainty factors in the HKScan Group's business are
connected—through price increases for feed raw material in particular and other
production inputs related to primary production—to price development and the
availability of local meat raw material, as well as to the adequacy of
increases in the sales prices for the products in relation to cost development.
The risks of animal diseases in the food industry's raw meat supplies or
eventual international or regional food scandals impacting on the overall
consumption outlook can never be fully excluded.
EVENTS AFTER THE REPORTING PERIOD
On 2 October the Group issued a stock exchange release on using English and
Finnish in all HKScan Group's financial reporting and stock exchange releases,as well as in the investor sections on the web as of 14 October 2013. In
future, HKScan will not publish its financial communications in Swedish as
specified above.
OUTLOOK FOR 2013
On 25 September HKScan lowered its outlook for 2013. According to the new
guidance, the comparable EBIT for 2013, excluding non-recurring items, will
fall short of last year. In the previous outlook, EBIT was estimated to improve
from 2012.
The outlook has deteriorated mainly due to longer-than-foreseen export
challenges and continuing low price levels in export sales. In addition,
consumption of lower-priced meat products has increased significantly relative
to products made of higher-grade meat on all home markets, especially in
Finland.
CONSOLIDATED INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2013
CONSOLIDATED INCOME
STATEMENT
(EUR million) Note Q3/2013 Q3/2012 Q1-Q3/ Q1-Q3/ 2 012
2013 2012
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NET SALES 623.5 612.2 1 838.0 1 840.7 2 503.1
--------------------------------------------------------------------------------
Operating income and 1. -595.8 -578.6 -1 769.3 -1 759.4 -2 374.1
expenses
--------------------------------------------------------------------------------
Share of associates' 0.1 -0.3 -0.2 -0.6 -0.1
results
--------------------------------------------------------------------------------
Depreciation and 1. -17.3 -17.9 -53.3 -59.6 -85.9
amortization
--------------------------------------------------------------------------------
EBIT 10.5 15.4 15.3 21.2 43.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial income 1.4 1.1 4.1 4.4 5.4
--------------------------------------------------------------------------------
Financial expenses -6.7 -9.6 -20.7 -28.9 -37.1
--------------------------------------------------------------------------------
Share of associates' 0.7 0.4 2.5 2.1 3.0
results
-----------------------------------------------
PROFIT/LOSS BEFORE TAXES 5.9 7.3 1.1 -1.2 14.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income tax 1.1 -0.5 2.2 3.5 3.4
--------------------------------------------------------------------------------
PROFIT/LOSS FOR THE PERIOD 7.0 6.8 3.3 2.4 17.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROFIT/LOSS FOR THE PERIOD
ATTRIBUTABLE TO:
--------------------------------------------------------------------------------
Equity holders of the 6.7 6.1 3.1 1.7 16.4
parent
--------------------------------------------------------------------------------
Non-controlling interests 0.3 0.7 0.2 0.7 1.3
--------------------------------------------------------------------------------
Total 7.0 6.8 3.3 2.4 17.7
--------------------------------------------------------------------------------
Earnings per share calculated on profit attributable to equity holders of the
parent:
--------------------------------------------------------------------------------
-
EPS, undiluted, continuing 0.12 0.11 0.06 0.03 0.30
operations,
EUR/share
--------------------------------------------------------------------------------
EPS, diluted, continuing 0.12 0.11 0.06 0.03 0.30
operations,
EUR/share
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
---------------------------------------------------------------------------
(EUR million) Q3/201 Q3/201 Q1-Q3/201 Q1-Q3/201 2012
3 2 3 2
--------------------------------------------------------------------------------
Profit/loss for the period 7.0 6.8 3.3 2.4 17.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME (after
taxes):
--------------------------------------------------------------------------------
Exchange differences on translating 3.3 3.9 -3.1 7.5 7.6
foreign
operations
--------------------------------------------------------------------------------
Cash flow hedging 1.3 -0.3 4.1 -0.7 0.2
--------------------------------------------------------------------------------
Revaluation - 0.1 - 0.3 0.0
--------------------------------------------------------------------------------
Actuarial gains or losses - - - - 1.2
--------------------------------------------------------------------------------
TOTAL OTHER COMPREHENSIVE INCOME 4.6 3.7 1.1 7.1 8.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR 11.6 10.5 4.4 9.5 26.6
THE PERIOD
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD ATTRIBUTABLE TO:
--------------------------------------------------------------------------------
Equity holders of the parent 11.3 10.1 4.1 9.0 25.2
--------------------------------------------------------------------------------
Non-controlling interests 0.3 0.4 0.2 0.5 1.4
--------------------------------------------------------------------------------
Total 11.6 10.5 4.4 9.5 26.7
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(EUR million) Note 30.9.2013 30.9.2012 31.12.2012
--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-CURRENT ASSETS
--------------------------------------------------------------------------------
Intangible assets 2. 75.4 78.7 77.7
--------------------------------------------------------------------------------
Goodwill 3. 101.1 102.0 101.5
--------------------------------------------------------------------------------
Tangible assets 4. 482.8 500.3 504.6
--------------------------------------------------------------------------------
Shares in associates 34.9 35.3 34.7
--------------------------------------------------------------------------------
Trade and other receivables 5.6 6.5 6.0
--------------------------------------------------------------------------------
Available-for-sale investments 12.7 13.5 12.9
--------------------------------------------------------------------------------
Deferred tax asset 33.8 27.6 28.9
--------------------------------------------------------------------------------
NON-CURRENT ASSETS 746.2 763.9 766.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CURRENT ASSETS
--------------------------------------------------------------------------------
Inventories 5. 195.4 180.3 176.3
--------------------------------------------------------------------------------
Trade and other receivables 203.9 226.7 216.5
--------------------------------------------------------------------------------
Income tax receivable 0.5 7.9 0.9
--------------------------------------------------------------------------------
Other financial assets - 0.3 -
--------------------------------------------------------------------------------
Cash and bank 38.3 50.0 58.9
--------------------------------------------------------------------------------
CURRENT ASSETS 438.2 465.3 452.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ASSETS 1 184.5 1 229.2 1 218.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY
--------------------------------------------------------------------------------
Share capital 6. 66.8 66.8 66.8
--------------------------------------------------------------------------------
Share premium reserve 73.4 73.4 73.4
--------------------------------------------------------------------------------
Treasury shares 0.0 0.0 0.0
--------------------------------------------------------------------------------
Fair value reserve and other reserves 164.6 154.4 155.0
--------------------------------------------------------------------------------
Translation differences 2.4 5.8 5.5
--------------------------------------------------------------------------------
Retained earnings 85.8 79.5 93.7
--------------------------------------------------------------------------------
Equity attributable to equity holders of 392.9 379.9 394.4
the
parent
--------------------------------------------------------------------------------
Non-controlling interests 8.2 8.0 8.6
--------------------------------------------------------------------------------
EQUITY 401.1 387.9 403.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
--------------------------------------------------------------------------------
Deferred tax liability 28.8 29.6 27.6
--------------------------------------------------------------------------------
Non-current interest-bearing liabilities 151.3 357.8 312.9
--------------------------------------------------------------------------------
Non-current non-interest bearing 2.2 2.3 2.0
liabilities
--------------------------------------------------------------------------------
Non-current provisions 0.1 0.1 0.1
--------------------------------------------------------------------------------
Pension obligations 4.9 12.8 10.4
--------------------------------------------------------------------------------
NON-CURRENT LIABILITIES 187.3 402.5 352.9
--------------------------------------------------------------------------------
-----------
----------------------
CURRENT LIABILITIES
--------------------------------------------------------------------------------
Current interest-bearing liabilities 332.3 166.5 186.8
--------------------------------------------------------------------------------
Trade and other payables 260.2 271.1 275.0
--------------------------------------------------------------------------------
Income tax liability 1.7 0.2 0.5
--------------------------------------------------------------------------------
Current provisions 1.8 0.9 0.7
--------------------------------------------------------------------------------
CURRENT LIABILITIES 596.1 438.8 463.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES 1 184.5 1 229.2 1 218.9
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN CONSOLIDATED EQUITY
(EUR 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
million)
--------------------------------------------------------------------------------
EQUITY AT 66.8 73.4 -13.7 143.5 25.2 5.5 0.0 93.7 394.4 8.6 403.0
1.1.2013
--------------------------------------------------------------------------------
Result for - - - - - - - 3.1 3.1 0.2 3.3
the
financial
period
--------------------------------------------------------------------------------
Other
comprehensi
ve
income (+)/
expense
(-)
--------------------------------------------------------------------------------
Transl. - - - - - -3.1 - - -3.1 - -3.1
diff.
--------------------------------------------------------------------------------
Cash flow - - 4.1 - - - - - 4.1 - 4.1
hedging
--------------------------------------------------------------------------------
Revaluat. - - - - - - - - 0.0 - 0.0
--------------------------------------------------------------------------------
Actuarial - - - - - - - - 0.0 - 0.0
gains or
losses
--------------------------------------------------------------------------------
Total - - 4.1 - - -3.1 - 3.1 4.1 0.2 4.4
compreh.
income for
the
period
--------------------------------------------------------------------------------
Direct - - - - - - - 0.1 0.1 - 0.1
recognit.
in
retained
earnings
--------------------------------------------------------------------------------
Increase in - - - - - - - 0.1 0.1 -0.1 0.0
holdings
in subsid.
--------------------------------------------------------------------------------
Transfers - - - - 5.4 - - -5.4 0.0 - 0.0
between
items
--------------------------------------------------------------------------------
Dividend - - - - - - - -5.8 -5.8 -0.5 -6.3
distribut.
--------------------------------------------------------------------------------
EQUITY AT 66.8 73.4 -9.6 143.5 30.7 2.4 0.0 85.8 392.9 8.2 401.1
30.9.2013
--------------------------------------------------------------------------------
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
--------------------------------------------------------------------------------
EQUITY AT 66.8 73.4 -13.9 143.5 23.5 -1.9 0.0 88.7 380.0 12.2 392.2
1.1.2012
--------------------------------------------------------------------------------
Result for - - - - - - - 1.7 1.7 0.7 2.4
the
financial
period
--------------------------------------------------------------------------------
Other
comprehensi
ve
income (+)
/
expense (-)
--------------------------------------------------------------------------------
Transl. - - - - - 7.7 - - 7.7 -0.2 7.5
diff.
--------------------------------------------------------------------------------
Cash flow - - -0.7 - - - - - -0.7 - -0.7
hedging
--------------------------------------------------------------------------------
Revaluat. - - - - 0.3 - - - 0.3 - 0.3
--------------------------------------------------------------------------------
Actuarial - - - - - - - - 0.0 - 0.0
gains or
losses
--------------------------------------------------------------------------------
Total - - -0.7 - 0.3 7.7 - 1.7 9.0 0.5 9.5
compreh.
income for
the
period
--------------------------------------------------------------------------------
Direct - - - - - - - 0.2 0.2 - 0.2
recognit.
in
retained
earnings
--------------------------------------------------------------------------------
Transfers - - - - 1.7 - - -1.7 0.0 - 0.0
between
items
--------------------------------------------------------------------------------
Dividend - - - - - - - -9.3 -9.3 -0.9 -10.2
distribut.
--------------------------------------------------------------------------------
Other - - - - - - - - - -3.8 -3.8
change
--------------------------------------------------------------------------------
EQUITY AT 66.8 73.4 -14.6 143.5 25.5 5.8 0.0 79.5 379.9 8.0 387.9
30.9.2012
--------------------------------------------------------------------------------
COLUMNS: 1. Share capital, 2. Share premium reserve, 3. Revaluation reserve, 4.
Reserve for invested unrestricted equity (RIUE), 5. Other reserves, 6.
Translation differences, 7. Treasury shares, 8. Retained earnings, 9. Equity
holders of the parent, 10. Non-controlling interests, 11. Total
CASH FLOW STATEMENT
(EUR million) Q1-Q3/2013 Q1-Q3/2012 2012
-------------------------------------------------------------------------------
Operating activities
-------------------------------------------------------------------------------
Cash flow from operating activities 45.7 69.5 140.5
-------------------------------------------------------------------------------
Financial items and taxes -14.3 -35.6 -33.7
-------------------------------------------------------------------------------
Net cash flow from operating activities 31.4 33.9 106.8
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Investments
-------------------------------
Gross investments in property, plant and -35.0 -39.8 -76.9
equipment
-------------------------------------------------------------------------------
Disposals of property, plant and equipment 3.6 1.1 1.5
-------------------------------------------------------------------------------
Investments in subsidiary - - -
-------------------------------------------------------------------------------
Shares in associates purchased - -0.1 -0.2
-------------------------------------------------------------------------------
Shares in associates sold 0.4 0.6 3.9
-------------------------------------------------------------------------------
Loans granted -0.2 -1.8 -1.9
-------------------------------------------------------------------------------
Repayments of loans receivable 0.6 0.4 0.5
-------------------------------------------------------------------------------
Net cash flow from investing activities -30.6 -39.7 -73.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash flow before financing activities 0.8 -5.8 33.8
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Financing activities
-------------------------------------------------------------------------------
Current borrowings raised 37.4 29.3 25.5
-------------------------------------------------------------------------------
Current borrowings repaid -39.9 -34.2 -52.7
-------------------------------------------------------------------------------
Non-current borrowings raised 0.8 124.3 125.0
-------------------------------------------------------------------------------
Non-current borrowings repaid -10.3 -102.2 -102.7
-------------------------------------------------------------------------------
Dividends paid -6.0 -9.9 -9.9
-------------------------------------------------------------------------------
Repurchase of own shares - - -8.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net cash flow from financing activities -18.0 7.4 -22.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Change in cash and cash equivalents -17.2 1.6 11.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash and cash equivalents at 1.1. 58.9 48.4 48.4
-------------------------------------------------------------------------------
Effect of changes in exchange rates on cash and -3.3 0.3 -0.6
cash equivalents
-------------------------------------------------------------------------------
Cash and cash equivalents at 30.9. 38.3 50.3 58.9
-------------------------------------------------------------------------------
FINANCIAL INDICATORS
30.9.2013 30.9.2012 31.12.2012
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Earnings per share (EPS), undiluted, EUR 0.06 0.03 0.30
-----------------------------------------------------------------------------
Earnings per share (EPS), diluted, EUR 0.06 0.03 0.30
-----------------------------------------------------------------------------
Equity per share, EUR 7.28 7.04 7.31
-----------------------------------------------------------------------------
Equity ratio, % 33.9 31.6 33.1
-----------------------------------------------------------------------------
Adjusted average number of shares, mill. 54.0 54.0 54.6
-----------------------------------------------------------------------------
Gross capital expenditure on PPE, EUR mill. 35.0 40.7 76.6
-----------------------------------------------------------------------------
Employees, end of month average 7 751 8 173 7 836
-----------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED INTERIM REPORT
ACCOUNTING POLICIES
HKScan Corporation's interim report for 1 January - 30 September 2013 has been
prepared in compliance with IAS 34 Interim Financial Reporting standards. The
same accounting principles have been applied in the interim report as in the
annual financial statements for 2012, with the exception of the revised IAS 19
Employee Benefits standard (effective as of 1 January 2013). In addition, the
Group has changed the accounting principles for marketing support. The Group's
financial reporting in 2013 will be in line with these changes. The quarterly
Group and market area information for 2012 has been restated accordingly. Due
to the rounding of the figures to the nearest million euros in the interim
report, some totals may not agree with the sum of their constituent parts.
These accounting principles are explained in the financial statements for 2012.
The interim report is unaudited.
ANALYSIS BY SEGMENT
Net sales and EBIT by market area
------------------------------------
(EUR million) Q3/2013 Q3/2012 Q1-Q3/2013 Q1-Q3/2012 2012
-----------------------------------------------------------------------------
NET SALES
-----------------------------------------------------------------------------
- Finland 200.4 198.5 593.9 594.6 813.8
-----------------------------------------------------------------------------
- Baltics 44.7 44.3 130.4 131.6 176.7
-----------------------------------------------------------------------------
- Sweden 238.8 245.0 709.5 751.3 1 025.7
-----------------------------------------------------------------------------
- Denmark 56.7 51.6 173.4 160.8 211.7
-----------------------------------------------------------------------------
- Poland 99.2 88.7 280.7 256.0 343.7
-----------------------------------------------------------------------------
- Between segments -16.3 -15.9 -50.0 -53.6 -68.5
-----------------------------------------------------------------------------
Group total 623.5 612.2 1 838.0 1 840.7 2 503.1
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
EBIT
-----------------------------------------------------------------------------
- Finland 2.0 5.6 1.2 11.0 18.4
-----------------------------------------------------------------------------
- Baltics 4.2 3.6 6.3 7.4 8.9
-----------------------------------------------------------------------------
- Sweden 5.2 3.6 4.6 -5.2 -5.9
-----------------------------------------------------------------------------
- Denmark -1.4 0.9 -1.5 2.6 15.4
-----------------------------------------------------------------------------
- Poland 3.3 3.6 14.5 11.5 15.8
-----------------------------------------------------------------------------
- Between segments - - - - -
-----------------------------------------------------------------------------
Segments total 13.4 17.3 25.1 27.4 52.5
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Group administration costs -2.9 -1.9 -9.8 -6.2 -9.5
-----------------------------------------------------------------------------
Group total 10.5 15.4 15.3 21.2 43.1
-----------------------------------------------------------------------------
NOTES TO THE INCOME STATEMENT
1. NON-RECURRING ITEMS
(EUR million) Q3/2013 Q3/2012 Q1-Q3/2013 Q1-Q3/2012 2012
--------------------------------------------------------------------------------
Restructuring redundancy -0.5 - -2.5 - -
expenses,
Finland 1)
--------------------------------------------------------------------------------
Restructuring expenses for - - -1.0 - -
production setup, Finland 1)
--------------------------------------------------------------------------------
Restructuring redundancy - - - - -4.0
expenses,
Sweden 1)
--------------------------------------------------------------------------------
Restructuring expenses for - - - - -3.4
closed
operations, Sweden 1)
--------------------------------------------------------------------------------
Property insurance compensation, - 0.1 - 5.5 19.3
Denmark 1)
--------------------------------------------------------------------------------
Impairment of fixed assets - -0.1 - -5.5 -5.5
destroyed
in the fire, Denmark 2)
--------------------------------------------------------------------------------
Non-recurring items Total -0.5 0.0 -3.6 0.0 6.4
--------------------------------------------------------------------------------
1) Included in the Income Statement in the item ”Operating income and expenses”
2) Included in the Income Statement in the item ”Depreciation and amortization”
NOTES TO THE STATEMENT OF FINANCIAL POSITION
2. CHANGES IN INTANGIBLE ASSETS
(EUR million) Q1-Q3/2013 Q1-Q3/2012 2012
---------------------------------------------------------------------
Carrying amount at beginning of period 77.7 76.6 76.6
---------------------------------------------------------------------
Translation differences -0.6 3.5 2.5
---------------------------------------------------------------------
Increase 0.7 0.9 1.9
---------------------------------------------------------------------
Increase (acquisitions) - - -
---------------------------------------------------------------------
Decrease 0.0 0.0 -0.2
---------------------------------------------------------------------
Depreciation and impairment -2.6 -3.2 -4.5
---------------------------------------------------------------------
Transfer to other balance sheet item 0.2 1.0 1.4
---------------------------------------------------------------------
Carrying amount at end of period 75.4 78.7 77.7
---------------------------------------------------------------------
3. CHANGES IN GOODWILL
(EUR million) Q1-Q3/2013 Q1-Q3/2012 2012
---------------------------------------------------------------------
Carrying amount at beginning of period 101.5 101.0 101.0
---------------------------------------------------------------------
Translation differences -0.4 1.9 1.3
---------------------------------------------------------------------
Increase - - -
---------------------------------------------------------------------
Increase (acquisitions) - - -
---------------------------------------------------------------------
Decrease - -0.9 -0.9
---------------------------------------------------------------------
Depreciation and impairment - - -
---------------------------------------------------------------------
Transfer to other balance sheet item - - -
---------------------------------------------------------------------
Carrying amount at end of period 101.1 102.0 101.5
---------------------------------------------------------------------
4. CHANGES IN PROPERTY, PLANT AND EQUIPMENT
(EUR million) Q1-Q3/2013 Q1-Q3/2012 2012
---------------------------------------------------------------------
Carrying amount at beginning of period 504.6 516.5 516.5
---------------------------------------------------------------------
Translation differences -3.3 12.6 10.8
---------------------------------------------------------------------
Increase 56.7 40.1 72.7
---------------------------------------------------------------------
Increase (acquisitions) 0.0 0.1 -
---------------------------------------------------------------------
Decrease -24.2 -10.5 -11.5
---------------------------------------------------------------------
Depreciation and impairment -50.9 -57.4 -82.5
---------------------------------------------------------------------
Transfer to other balance sheet item -0.2 -1.0 -1.4
---------------------------------------------------------------------
Carrying amount at end of period 482.8 500.3 504.6
---------------------------------------------------------------------
5. INVENTORIES
(EUR million) Q1-Q3/2013 Q1-Q3/2012 2012
---------------------------------------------------------------------
Materials and supplies 93.6 80.6 82.6
---------------------------------------------------------------------
Unfinished products 11.2 11.2 13.3
---------------------------------------------------------------------
Finished products 59.4 67.3 55.7
---------------------------------------------------------------------
Goods - 0.0 0.0
---------------------------------------------------------------------
Other inventories 16.7 8.0 7.7
---------------------------------------------------------------------
Prepayments for inventories 1.1 3.2 8.0
---------------------------------------------------------------------
Live animals, IFRS 41 13.4 10.0 9.0
---------------------------------------------------------------------
Total inventories 195.4 180.3 176.3
---------------------------------------------------------------------
6. NOTES TO EQUITY
Share capital Number of Share Share Reserve for Treasu Total
and share outstanding capit premium invested ry
premium shares al reserve unrestricted
reserve equity
--------------------------------------------------------------------------------
1.1.2013 53 972 788 66.8 72.9 143.5 0.0 283.1
--------------------------------------------------------------------------------
30.9.2013 53 972 788 66.8 72.9 143.5 0.0 283.1
--------------------------------------------------------------------------------
DERIVATIVE INSTRUMENT LIABILITIES
--------------------------------------------------------------------------
(EUR million) 30.9.2013 30.9.2012 31.12.2012
--------------------------------------------------------------------------
Nominal values of derivative instruments
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Foreign exchange derivatives 69.4 96.5 67.3
--------------------------------------------------------------------------
Interest rate derivatives 271.5 288.8 275.3
--------------------------------------------------------------------------
Electricity derivatives 9.6 10.7 10.7
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Fair values of derivative instruments
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Foreign exchange derivatives 0.0 -0.9 -1.1
--------------------------------------------------------------------------
Interest rate derivatives -17.5 -25.1 -24.9
--------------------------------------------------------------------------
Electricity derivatives -1.2 -1.3 -1.3
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
CONSOLIDATED OTHER CONTINGENT LIABILITIES
--------------------------------------------------------------------------
(EUR million)
--------------------------------------------------------------------------
30.9.2013 30.9.2012 31.12.2012
--------------------------------------------------------------------------
Debts secured by pledges or mortgages
--------------------------------------------------------------------------
- loans from financial institutions 328.1 372.7 370.3
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Given as security
--------------------------------------------------------------------------
- real estate mortgages 70.0 74.2 74.6
--------------------------------------------------------------------------
- pledges 4.9 5.1 5.2
--------------------------------------------------------------------------
- floating charges 16.1 19.3 16.7
--------------------------------------------------------------------------
--------------------------------------------------------------------------
For associates
--------------------------------------------------------------------------
- guarantees 7.5 5.2 7.5
--------------------------------------------------------------------------
--------------------------------------------------------------------------
For others
--------------------------------------------------------------------------
- guarantees and pledges 11.8 13.4 12.9
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Other contingencies
--------------------------------------------------------------------------
Leasing commitments 19.6 23.5 21.8
--------------------------------------------------------------------------
Rent liabilities 50.7 56.0 58.0
--------------------------------------------------------------------------
Other commitments 7.2 8.0 7.8
--------------------------------------------------------------------------
The parent company has pledged the shares of its subsidiaries, HK Ruokatalo Oy
and Scan AB, as security for its loans.
THE FAIR VALUE DETERMINATION PRINCIPLES APPLIED BY THE GROUP ON FINANCIAL
INSTRUMENTS MEASURED AT FAIR VALUE
Derivatives
The fair values of currency derivatives are determined by using the market
prices for contracts of equal duration at the reporting date. The fair values
of interest rate swaps are determined using the net present value method
supported by the market interest rates at the reporting date. The fair value of
commodity derivatives are determined by using publicly quoted market prices.
FAIR VALUE HIERARCHY FOR FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
30.9.2013 Level 1 Level 2 Level 3
--------------------------------------------------------------------------------
Assets measured at fair value
--------------------------------------------------------------------------------
Financial assets recognised at fair value
through profit or loss
--------------------------------------------------------------------------------
- Trading securities - - - -
--------------------------------------------------------------------------------
- Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
- Foreign exchange derivatives 0.1 0.0 0.1 0.0
--------------------------------------------------------------------------------
- Commodity derivatives 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
Available-for-sale financial assets
--------------------------------------------------------------------------------
- Investments in shares 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
Total 0.1 0.0 0.1 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liabilities measured at fair value
--------------------------------------------------------------------------------
Financial liabilities recognised at fair
value
through profit or loss
--------------------------------------------------------------------------------
-Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps -17.5 0.0 -17.5 0.0
--------------------------------------------------------------------------------
of which subject to cash flow hedging -13.1 0.0 -13.1 0.0
--------------------------------------------------------------------------------
- Foreign exchange derivatives -0.2 0.0 -0.2 0.0
--------------------------------------------------------------------------------
of which subject to net investment - - - -
hedging
--------------------------------------------------------------------------------
- Commodity derivatives -1.2 0.0 -1.2 0.0
--------------------------------------------------------------------------------
of which subject to cash flow hedging -1.2 0.0 -1.2 0.0
--------------------------------------------------------------------------------
Total -18.9 0.0 -18.9 0.0
--------------------------------------------------------------------------------
BUSINESS TRANSACTIONS WITH RELATED PARTIES
-------------------------------------------
(EUR million) Q1-Q3/2013 Q1-Q3/2012 2012
------------------------------------------------------------
Sales to associates 82.5 75.4 99.9
------------------------------------------------------------
Purchases from associates 35.2 36.9 54.9
------------------------------------------------------------
Trade and other receivables 3.2 3.2 3.2
------------------------------------------------------------
Trade and other payables 2.6 9.4 3.5
------------------------------------------------------------
NEXT FINANCIAL REPORT
HKScan Group's financial statements bulletin 2013 will be published on 12
February 2014.
Vantaa, 6 November 2013
HKScan Corporation
Board of Directors
Further information is available from HKScan Corporation's CEO, Hannu Kottonen
and CFO, Tuomo Valkonen. Please leave any messages for them to call with
Communications Manager Elina Hollo, tel. +358 40 570 4030 or +358 10 570 2133.
HKScan is one of the leading food companies in northern Europe, with home
markets in Finland, Sweden, Denmark, the Baltic countries and Poland. HKScan
manufactures, sells and markets pork and beef, poultry products, processed
meats and convenience foods under strong brand names. Its customers are the
retail, food service, industrial and export sectors. In 2012, it had net sales
of EUR 2.5 billion and some 11 000 employees.
DISTRIBUTION:
NASDAQ OMX Helsinki,
Main media,
www.hkscan.com
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