2007-11-01 07:30:00 CET
2007-11-01 07:30:00 CET
REGULATED INFORMATION
Lännen Tehtaat - Quarterly report
INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2007
LÄNNEN TEHTAAT PLC STOCK EXCHANGE RELEASE NOVEMBER 1, 2007 AT 8.30 AM
INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2007
July-September
- Third quarter profit totalled EUR 3.1 million (Q3 2006: 3.5 million).
- Earnings per share came to EUR 0.49 (0.56).
- Net sales of continuing operations amounted to EUR 73.6 (51.9) million, or
42% more than in the comparison period.
- The continuing operations showed an operating profit of EUR 0.3 (1.0) million
(excluding non-recurring items); the impact of non-recurring items amounted to
EUR -0.2 (0.5) million.
January-September
- Profit for January-September totalled EUR 9.4 (5.8) million.
- Earnings per share came to EUR 1.51 (0.92).
- Net sales of continuing operations amounted to EUR 213.1 (172.6) million,
which was 23.5% more than in the comparison period.
- The operating profit of the continuing operations was EUR 0.2 (0.8) million
(without non-recurring items); the impact of non-recurring items was EUR -0.1
(0.1) million.
The figures in this interim report have not been audited.
CHANGES IN GROUP STRUCTURE AND CORPORATE TRANSACTIONS IN THE THIRD QUARTER
Maritim Food AS, the Norwegian subsidiary of Lännen Tehtaat plc, exercised a
call option concerning the shares of the fish processing company Sandanger AS in
August and acquired a 3.5 per cent share in the company, as laid down in the
option. As a result, Maritim Food now owns 51% of Sandanger AS. Sandanger AS was
made part of Maritim Food and the Lännen Tehtaat Group at the end of August.
KEY INDICATORS, EUR million
7-9/2007 7-9/2006 1-9/2007 1-9/2006
All operations total
Net sales 73.6 91.6 280.3 291.3
Operating profit 1.6 4.5 9.3 6.4
Profit before taxes 3.1 4.3 10.1 7.8
Profit for the period 3.1 3.5 9.4 5.8
Earnings per share, EUR 0.49 0.56 1.51 0.92
Continuing operations
Net sales 73.6 51.9 213.1 172.6
Operating profit without
non-recurring items 0.3 1.0 0.2 0.8
Operating profit 0.1 1.5 0.1 0.9
Profit before taxes 1.7 1.6 1.4 3.4
Profit for the period 1.6 1.6 1.5 2.6
Discontinued operations
Net sales 0.0 45.4 78.8 135.7
Operating profit 1.5 2.9 9.2 5.5
NET SALES AND PROFIT
July-September
In July-September, the operating profit of the Group totalled EUR 1.6 (4.5)
million. The profit before taxes was EUR 3.1 (4.3) million and the profit for
the period EUR 3.1 (3.5) million. Earnings per share amounted to EUR 0.49
(0.56).
In July-September, net sales of the continuing operations totalled EUR 73.6
(51.9) million, up 42% on the same quarter the previous year. The increase in
net sales was mainly attributable to Grain Trading and Fish Products Business.
Incorporation of Maritim Food into the Group boosted the net sales of the Fish
Products Business by EUR 7.1 million. At the same time, the net sales of Frozen
Foods Business and Vegetable Oil Business were slightly higher than in the
comparison period.
Third quarter operating profit for continuing operations, excluding
non-recurring items, was EUR 0.3 (1.0) million. The impact of non-recurring
items was EUR -0.2 (0.5) million. The operating profit in the Frozen Foods
Business and in Grain Trading and Other Operations was up on the figure for the
same quarter a year earlier, whereas the Fish Products Business and the
Vegetable Oil Business posted poorer results.
For the Group's continuing operations, profit before taxes in the period
July-September came to EUR 1.7 (1.6) million and profit for the period EUR 1.6
(1.6) million. Taxes corresponding to the profit amounted to EUR 0.0 (-0.1)
million. The profits include a share of EUR 1.6 (0.0) million of the associated
companies' profits.
January-September
In January-September, the operating profit of the Group totalled EUR 9.3 (6.4)
million. Profit before taxes was EUR 10.1 (7.8) million and the profit for the
period EUR 9.4 (5.8) million. The figure includes the sales profit of EUR 5.5
million accumulated from the sale of the majority holding in Suomen Rehu.
Earnings per share were EUR 1.51 (0.92).
January-September net sales for the Group's continuing operations amounted to
EUR 213.1 (172.6) million, up EUR 40.5 million or 23.5% on the same period a
year earlier. Maritim Food and Grain Trading accounted for EUR 16.4 million and
EUR 27.1 million of this total, respectively.
Operating profit for continuing operations, excluding non-recurring items, was
EUR 0.2 (0.8) million. The impact of non-recurring items was EUR -0.1 (0.1)
million. Frozen Foods, Grain Trading and Other Operations all posted improved
results on the same quarter a year earlier, whereas the opposite was true for
the Fish Products Business and the Vegetable Oil Business.
Profit before taxes for the Group's continuing operations came to EUR 1.4 (3.4)
million in January-September, while the profit for the period was EUR 1.5 (2.6)
million. In January-September, taxes corresponding to the profit amounted to EUR
0.1 (-0.8) million. The profits include a share of EUR 1.3 (-0.3) million of the
associated companies' profits.
DISCONTINUED OPERATIONS
The Suomen Rehu Group has been included in discontinued operations. To allow
comparison with the same period a year earlier, the latter has been divided into
continuing and discontinued operations as if Suomen Rehu had been discontinued
from the start of 2006.
The profit of the discontinued operations includes that of the Suomen Rehu Group
from the beginning of January to the beginning of June 2007 and the sales profit
for the sale of majority holding in Suomen Rehu less the expenses incurred in
the transaction. The tax-free sales profit of EUR 4.1 million for the
transaction based on fixed sales price was entered in the second quarter. The
final sales price was determined on the basis of the balance sheet value at the
time of the transaction of the majority shareholding. The EUR 1.5 million
adjustment for the transaction of the majority of shareholding was reported in
the third quarter.
For the discontinued operations, a profit of EUR 1.5 (1.9) million was recorded
in July-September and EUR 7.9 (3.2) million in January-September.
The 49% share of the associated company Suomen Rehu's profits retained after the
sale of the majority holding in early June is included in the profit for
continuing operations.
FINANCING
The Group's financial position and liquidity continued to be good throughout the
period.
For January-September, cash flow from operations after interest and taxes
totalled EUR 0.0 (11.2) million. Effect of the change in the net working capital
is EUR -4.7 (0.2) million. Cash flow from investments was EUR 23.2 (-5.1)
million. Cash flow from loans was EUR -21.8 (-8.4) million.
A total of EUR 5.3 (4.6) million was paid in dividends.
At the end of the review period, the Group's interest-bearing liabilities came
to a total of EUR 36.8 (37.6) million and liquid assets to EUR 18.7 (4.3)
million. Net interest-bearing liabilities amounted to EUR 18.1 (33.2) million.
The consolidated balance sheet total stood at EUR 204.6 (207.7) million. The
equity ratio was 60.9 (54.2)%. Commercial papers issued for the Group's
short-term financing stood at EUR 27.0 (17.0) million at the end of the period
under review. Liquidity is secured with committed credit facilities. At the end
of the period under review there were no credit facilities in use.
The net financial income of the Group's continuing operations came to EUR 0.0
(0.1) million in July-September. Net financial income for January-September
stood at EUR -0.1 (2.8) million. The financial income for the comparison period
included sales profits of approximately EUR 2.6 million on the sale of shares
not comprising part of the Group's business operations.
SHARE OF ASSOCIATED COMPANIES' PROFITS
The profit recorded for the Group's continuing operations in July-September
includes a proportion of the profits of associated companies, amounting to EUR
1.6 (0.0) million. A transitional aid to full-time refiners amounting to EUR 0.7
million received on the basis of the 2006 sugar reform is included in the share
of profits for the associated company Sucros.
The share of the associated companies' profits in the period January-September
amounted to EUR 1.3 (-0.3) million. The figure includes the 49% share of profits
of the Suomen Rehu Group for June-September (EUR 0.5 million).
INVESTMENT
Gross investment in non-current assets in January-September, excluding corporate
acquisitions, amounted to EUR 4.1 (5.4) million. Investment by the Frozen Foods
Business totalled EUR 1.6 (0.7) million, by the Fish Products Business EUR 1.5
(0.3) million, by the Vegetable Oil Business EUR 0.3 (0.4) million and by Other
Operations EUR 0.1 (0.1) million. The investment by the Feeds segment totalled
EUR 0.6 (4.0) million at the time of the sale of the majority holding.
Investment in shares in January-September totalled EUR 11.3 (3.0) million. This
entire sum was for the purchase of shares in the Norwegian fish processing
company Maritim Food AS and Sandanger AS. More details about this are given in
the notes to the interim report.
PERSONNEL
The average number of personnel in the Group's continuing operations in
January-September was 696 (663). The average number of people working in the
Frozen Foods Business was 259 (272), in the Fish Products Business it was 361
(307), including the impact of the staff (71) at Maritim Food Group, as of March
1, 2007, in the Vegetable Oil Business it was 36 (35), in Grain Trading 29 (29)
and in Other Operations 11 (19). The figure for personnel at Apetit Suomi Oy has
been divided up between the Frozen Foods Business and Fish Products Business in
relation to the services charged. The figure given for personnel in Other
Operations in the same period in 2006 includes the personnel at Harviala Oy up
to February 28.
SEASONAL NATURE OF OPERATIONS
The transition to IFRS reporting has had a noticeable impact on the accrual of
Lännen Tehtaat's profits over the financial year. With production linked to the
harvesting season and with inventories being valued in accordance with IAS 2,
most of the Group's annual profit accrues during the final quarter of the year.
The focus on the harvesting season means that the seasonality of operations is
most marked in the Frozen Foods Business and in the operations of the associated
company Sucros.
The sales of the Fish Products Business depend to a great extent on seasonal
holidays. A major proportion of the entire year's profit depends on the success
of Christmas sales.
The net sales of Grain Trading vary both annually and quarterly, depending on
supply and demand and on prices in Finland and on other markets.
BUSINESS SEGMENTS
Frozen Foods Business
Net sales of the Frozen Foods Business in July-September totalled EUR 11.0
(10.5) million, which was about 5% more than a year before. Net sales increased
in all sales channels.
Sales of frozen retail products, jams and marmalades increased by more than 6%
on the comparison period. Growth was strongest in the frozen pizza product
group. Active campaigning in August boosted the overall market for pizzas and
the market share of Apetit by well over ten per cent. There was also strong
growth in the sales of frozen potato products. The increase was a result of
strong sales of the new ‘Kermaperunat' (cream potatoes) product both in summer
and in autumn and the active campaigning for Apetit mashed potatoes on
television and in shops at the start of the school year. Sales of frozen foods
and vegetables remained at the level of the comparison period. Tikka Masala
Shrimps and Green Curry Chicken, two new products in the Apetit Quick&Tasty
range, were launched at the start of September. The new items were put on sale
in a number of major Finnish grocery chains and, with the help of advertising
and active input by the retail sector, helped to bring about a slight increase
in the market share of frozen foods.
According to a survey conducted in August on brand awareness, Apetit is
Finland's best known frozen food brand. Overall spontaneous awareness of the
brand was 52%.
Net sales of the Horeca sector grew by more than 10%. The growth was due to the
fact that domestic vegetables have become more competitive vis-a-vis imported
produce. In relative terms, the growth was strongest in exports. As a result of
a good harvest, peas were also exported to Central Europe where the harvest was
unusually poor due to bad weather.
The autumn harvest is still being processed. In addition to peas, the spinach
harvest was also good, both in terms of quantity and quality. The harvest of
root vegetables also seems to be good, in both quantity and quality, except for
the potato, which has been affected by the wet autumn weather.
The Frozen Foods Business posted an operating profit of EUR 1.0 (0.8) million
for the period July-September. The figure does not include non-recurring items.
A non-recurring write-off of EUR 0.2 million on disused non-current assets
affected the profit for the period.
Net sales for the period January-September amounted to EUR 36.1 (37.7) million.
The figure for the comparison period includes EUR 2.7 million in sales of
supplies for sugar beet contract farming and associated operations. These
operations became the responsibility of the associated company Sucros as of
January 1, 2007. Food sales grew by over 3% on the comparison period.
The Frozen Foods Business posted an operating profit of EUR 1.8 (0.4) million
for the period January-September (excluding non-recurring items). Non-recurring
items had an impact of EUR -0.2 (-0.1) million. Results were improved by higher
product sales and changes in the product mix. Systematic improvements in
productivity and higher cost efficiency have also contributed to the improved
profits of Apetit Pakaste. In order to further improve productivity and cost
efficiency, Apetit Pakaste has decided to move the production of its Turku plant
to Säkylä. The plans have been finished and the necessary earth-moving work in
Säkylä has started. The intention is to move the production of the Turku plant
to Säkylä by the end of 2008.
Investments in the Frozen Foods Business in the period January-September
amounted to EUR 1.6 (0.7) million. The most important investments concerned the
upgrading of the freezing technology, which will help to make energy use more
efficient, improve production logistics and boost product quality. Increased
automation also made packaging more efficient.
Fish Products Business
Net sales of the Fish Products Business for the period July-September totalled
EUR 19.8 (14.0) million, a growth of more than 40%. Maritim Food contributed
about EUR 7 million to this increase.
In May, Apetit Kala launched two new sliced hot-smoked fish products. Newspaper
advertising during the summer months, together with active campaigning by the
retail sector helped to boost the hot-smoked fish market, compared with summer
2006. The launching of the new products also helped Apetit to increase its
market share in hot-smoked products. Sales of shellfish products made by the
Maritim Food Group started in Finland in early September under the Apetit
Maritim brand.
According to a survey conducted in August on brand awareness, Apetit is
Finland's best known fresh-fish brand. Overall spontaneous awareness of the
brand is 24%.
The Fish Products Business made a loss of EUR 0.8 million (+0.1) in the third
quarter. The performance of Maritim Food Group was, as expected, slightly
positive. Machinery breakdowns and disruptions during the second quarter still
had a negative impact on Apetit Kala's sales and profits during the third
quarter. As expected, the transfer of production from Kerava to Kuopio in
August-September resulted in overlapping costs. The movement of production and
packaging from Kerava to Kuopio proceeded as planned. The targeted cost savings
are estimated to become reality from the beginning of 2008.
The domestic Fish Products Business has been able to substantially improve its
operations in the late summer and autumn. The focus has been on improvements in
delivery reliability and work and raw-material productivity. Improvements have
been achieved in all focus areas. Deliveries have become more reliable and, as a
result of more efficient production control, productivity has improved.
At the start of August, Ari Laarne became managing director of the company,
while Heljä Mantere was appointed as production director. The managing director
concentrates in particular on the development of the company's core processes
and operational control, while the production director is responsible for
production, productivity improvements, and quality.
Net sales of the Fish Products Business for the period January-September
amounted to EUR 56.7 (43.0) million, up 32%. Maritim Food contributed about EUR
16 million to this increase. Net sales of Maritim Food and Sandanger AS, which
was made part of the Group at the end of August, have been as expected.
Operating profit of the Fish Products Business in January-September (excluding
non-recurring items) was EUR -2.1 (0.6) million. Non-recurring items had an
impact of EUR 0.0 (0.4) million. The costs arising from the movement of
production in Kustavi and Kerava have not been categorized as non-recurring
items. Performance in the early months of the year were affected by lower sales
margins, a result of high raw material prices.
Investments in the Fish Products Business were EUR 1.5 (0.3) million during the
period January-September. The most important investments were connected with the
expansion of the Kuopio plant, which is in accordance with the concentration of
Apetit Kala's production, upgrading of the smoking furnaces and improvement of
filleting procedures.
Vegetable Oil Business
Net sales of the Vegetable Oil Business for the period July-September amounted
to EUR 10.6 (10.1) million. This was 5% more than in the comparison period.
Operating profit was EUR -0.2 (0.5) million. The fall is the result of a drop in
the processing margin, which was expected. Sales prices for vegetable oils and
protein feeds have risen more slowly than the prices of raw materials, which has
weakened processing margins, particularly during the third quarter.
Net sales for the period January-September amounted to EUR 31.3 (30.7) million,
and the comparable operating profit was EUR 0.7 (2.1) million.
Investments in the Vegetable Oil Business totalled EUR 0.3 (0.4) million. The
most important investment was the introduction of the ERP enterprise research
planning.
Grain Trading
The favourable development in the Grain Trading Business continued strongly in
the third quarter. Net sales were EUR 32.1 (17.5) million, showing growth of
almost 85%. The growth was a result of exceptionally high grain prices and
higher volumes.
The third quarter was unusually brisk on the grain market.
Domestic sales were slightly below those of the comparison period, while exports
and sales between third countries increased substantially.
Avena Nordic Grain opened an office in Salo in September so that it can increase
domestic grain purchases.
Operating profit for July-September more than doubled on the comparison period,
and totalled EUR 0.9 (0.4) million.
Net sales for the period January-September grew 44%, to EUR 89.3 (62.2) million.
Operating profit was EUR 2.6 (1.2) million.
Other Operations
The Other Operations segment is made up of the service company Apetit Suomi,
group administration, and various items that do not come under any particular
segment. The cost effect of the services produced by Apetit Suomi is an
encumbrance on the operating result in proportion to the use of services.
Net sales for the segment for the period July-September totalled EUR 1.0 (0.0)
million and the operating loss was EUR 0.6 (0.9) million.
Net sales for the period January-September totalled EUR 2.9 (0.0) million, and
the operating loss without non-recurring items EUR 2.9 (-3.4) million.
Non-recurring items for the period totalled EUR 0.1 (-0.6) million.
Lännen Tehtaat has decided to introduce an ERP system covering the Frozen Foods
Business, the Fish Products Business and the group administration. The project
was launched in September and the new system will be introduced in stages during
2008.
AUTHORIZATIONS BY THE ANNUAL GENERAL MEETING
The Annual General Meeting authorized the Board to decide on a new share issue
and to sell the company's own shares held by the company either together or in
several lots in the form of a rights issue. The maximum number of new shares
that can be issued is 631,757, and the maximum number of shares held by the
company that can be sold is 65,000. The issue price of the new shares will be at
least the nominal share value, i.e. two (2) euros. The sales price of the
company's own shares will be at least the market price at the moment of sale,
defined on the basis of the trading price determined by public trading on the
Helsinki Stock Exchange. The authorization covers the right to depart from the
subscription priority of existing shareholders if there is a pressing financial
reason for so doing from the company's point of view; the right to offer shares
rather than money against apportionment as well, or on some other specific
condition or using right-of-setoff; and the right to decide the issue price of
the shares and any other conditions or matters associated with the share issue.
The authorization will be in force until the next Annual General Meeting. This
authorization supersedes the share issue authorization given on March 29, 2006
and the authorization to sell the company's own shares given on the same date.
The Board has not, as yet, exercised the share issue authorization granted by
the Annual General Meeting.
SHARES AND TRADING
At the end of the period under review, the total number of the company's shares
in circulation was 6,317,576, and the registered share capital was EUR
12,635,152. The company held 65,000 of its own shares, i.e. 1.0% of the entire
share stock. The nominal value of the company's own shares was EUR 130,000. No
changes in the share capital or in the number of the company's own shares held
by the company took place in the year under review or the previous year.
During the period under review, 739,417 (1,379,454) of the company's shares were
traded on the stock exchange, i.e. 11.7% (21.8%) of the entire share stock. The
highest share price was EUR 24.50 (24.19) and the lowest EUR 17.65 (15.26).
Share trading during the period totalled EUR 16.2 (27.6) million. At the end of
the period, the market value of the share stock was EUR 114.3 (132.2) million.
FLAGGING ANNOUNCEMENTS
No flagging announcements were made in the review period. After the end of the
review period, on October 19, 2007, Skagen Funds, administered by Skagen AS,
announced in accordance with chapter 2, section 9 of the Securities Markets Act,
that it had bought some shares of Lännen Tehtaat plc and that on October 18,
2007 it owned a total of 318,200 shares or 5.04% of all company shares and
voting rights.
GOVERNANCE
After the auditor appointed as the accontable auditor of Lännen Tehtaat plc
resigned from PricewaterhouseCoopers Oy, authorized public accountants,
PricewaterhouseCoopers appointed Tomi Moisio, authorized public accountant, as
the new accountable auditor of Lännen Tehtaat plc.
IMPORTANT OCCURRENCES AFTER THE END OF THE REVIEW PERIOD
There were no important occurrences after the end of the period under review.
SHORT-TERM RISKS AND UNCERTAINTIES
The major risks for the Lännen Tehtaat Group are connected with the control of
fluctuations in raw material prices, volume and quality of harvests, and supply
of raw materials.
In the Fish Products Business and the Vegetable Oil Business, and in Grain
Trading, the most important raw material prices are determined on the world
market. These raw materials include salmon, rainbow trout, shellfish, rapeseed,
soya beans and grain. World grain prices, for exemple, are now exceptionally
high because of brisk demand.
Because of the tight competition on the market, it may not be possible to pass
on all rises in raw material prices to sales prices, as this would have a
negative impact on Group profits.
Sugar
On September 26, 2007, the agricultural ministers of the European Union approved
the proposals put forward by the European Commission to cut down sugar
production. According to the decisions, further cuts in production should be
achieved through voluntary abandonment of production by growers and the
industry.
Lännen Tehtaat owns 20% of Sucros Oy, which produces sugar in Finland. After the
dividend of EUR 5.3 million paid by Sucros in September and the entry of the
results for the third quarter, the value of Sucros-ownership in the balance
sheet of the Lännen Tehtaat Group is about EUR 18 million. If Sucros were to
give up its complete production quota and the Säkylä sugar factory were to
close, the closure compensation Sucros would be entitled to because of the sales
of its sugar quota and the present value of Sucros' expected cash flow would at
least equal the balance sheet value of the Sucros ownership.
PROSPECTS FOR THE ENTIRE YEAR
Net sales of continuing operations for the year as whole are expected to rise
above the 2006 level because of the strong growth in the Fish Products Business
and Grain Trading. Operating profit of the continuing operations (excluding
non-recurring items) is expected to be at the same level as in the comparison
year.
Growth in the Frozen Foods Business and Grain Trading will boost the operating
profit of continuing operations. Profits will be affected by production
interruptions in the domestic Fish Products Business, costs arising from
production restructuring and lower processing margins in the Vegetable Oil
Business.
Lännen Tehtaat's vision is to be one of the leading Finnish food companies. In
order to realize the vision, Lännen Tehtaat continues to evaluate potential
structural arrangements and acquisition targets within the food industry.
CONSOLIDATED INCOME STATEMENT
EUR million
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2007 2006 2007 2006 2006
3 mths 3 mths 9 mths 9 mths 12 mths
Continuing operations
Net sales 73.6 51.9 213.1 172.6 244.5
Other operating income 0.3 1.0 0.9 2.0 2.0
Operating expenses -72.3 -49.9 -210.1 -169.7 -236.3
Depreciation -1.3 -1.3 -3.6 -3.8 -4.7
Impairments -0.2 -0.2 -0.2 -0.2 -0.2
Operating profit/loss 0.1 1.5 0.1 0.9 5.3
Financial income and expenses 0.0 0.1 -0.1 2.8 3.2
Share of profit of associated
companies 1.6 0.0 1.3 -0.3 1.6
Profit/loss before taxes 1.7 1.6 1.4 3.4 10.2
Income taxes 0.0 -0.1 0.1 -0.8 -2.7
Profit/loss for the period,
continuing operations 1.6 1.6 1.5 2.6 7.5
Discontinued operations
Profit/loss for the period,
discontinued operations 1.5 1.9 7.9 3.2 5.6
Profit/loss for the period 3.1 3.5 9.4 5.8 13.1
Attributable to:
Equity holders of the parent 3.1 3.5 9.4 5.8 13.1
Minority interests 0.0 0.0 0.0 0.0 -
Earnings per share, calculated of
the profit/loss attributable to the
shareholders of the parent company
Basic and diluted earnings per
share, EUR, continuing operations 0.26 0.26 0.25 0.42 1.20
Basic and diluted earnings per
share, EUR, discontinued operations 0.23 0.30 1.26 0.50 0.90
CONSOLIDATED BALANCE SHEET
EUR million
Sept 30,2007 Sept 30,2006 Dec 31, 2006
ASSETS
Non-current assets
Tangible assets 42.5 71.6 67.4
Goodwill 7.5 17.4 17.4
Other intangible assets 3.6 1.5 1.5
Investment in associated
companies 37.0 21.3 23.1
Available-for-sale investments 0.1 0.2 0.1
Receivables 4.5 5.7 5.8
Deferred tax assets 1.4 2.4 0.3
96.4 120.0 115.6
Current assets
Inventories 58.4 46.8 65.3
Receivables 31.2 36.6 49.0
Financial assets at fair value
through profit and loss 15.0 - -
Cash and cash equivalents 3.7 4.3 7.5
108.2 87.8 121.9
Total assets 204.6 207.7 237.5
EQUITY AND LIABILITIES
Equity attributable to the
equity holders of the parent
company 123.9 112.4 119.2
Minority interest 0.8 - -
Total equity 124.6 112.4 119.2
Non-current liabilities
Long term financial liabilities 6.0 9.7 7.0
Deferred tax liabilities 4.5 7.0 7.0
Long-term provisions 0.1 0.9 -
Non-current liabilities total 10.6 17.6 14.0
Current liabilities
Trade payables and other
liabilities 38.5 48.9 55.2
Short-term financial liabilities 30.9 27.9 49.1
Short-term provisions - 0.9 -
Current liabilities total 69.4 77.7 104.3
Total liabilities 80.0 95.3 118.3
Total equity and liabilities 204.6 207.7 237.5
CONSOLIDATED CASH FLOW STATEMENT
EUR million
1-9/2007 1-9/2006 1-12/2006
9 mths 9 mths 12 mths
Net profit for the period 9.4 5.8 13.1
Adjusments, total -3.2 8.3 8.5
Change in working capital -4.7 0.2 -23.1
Interests paid from
operating activities -2.2 -1.4 -1.9
Interests received from
operating activities 0.9 0.2 0.3
Taxes paid -0.3 -1.8 -3.2
Net cash flow from operating
activities 0.0 11.2 -6.4
Investments in tangible and
intangible assets -4.1 -5.4 -7.7
Proceeds from sales of tangible
and intangible assets 0.1 0.0 4.6
Acquisition of subsidiaries
deducted by cash -9.9 -2.8 -2.8
Proceeds from sales of
subsidiaries 46.3 0.0 0.0
Acquisition of associated
companies 0.0 -0.2 -0.2
Proceeds from sales of
associated companies 0.6 0.0 0.0
Purchases of other investments -35.0 -0.1 -0.1
Proceeds from sales of
other investments 20.0 3.4 3.4
Dividends received from
investing activities 5.3 0.0 0.0
Net cash flow from investing
activities 23.2 -5.1 -2.7
Raising of long-term loans 0.0 0.0 1.9
Raising of short-term loans 0.0 0.0 19.1
Repayments of short-term loans -14.4 -2.1 0.0
Repayments of long-term loans -7.3 -6.2 -10.8
Payment of financial lease
liabilities -0.1 -0.1 -0.1
Dividends paid -5.3 -4.6 -4.6
Cash flows from financing
activities -27.0 -13.0 5.5
Net changes in cash and
cash equivalents -3.8 -6.9 -3.7
Cash and cash equivalents at the
beginning of the the period 7.5 11.2 11.2
Cash and cash equivalents at the
end of the period 3.7 4.3 7.5
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
EUR million
A = Share capital
B = Share premium account
C = Net unrealised gains
D = Other reserves
E = Own shares
F = Translation differences
G = Retained earnings
H = Attributable to equity holders of the parent company
I = Minority interest
J = Shareholders' equity total
A B C D E F G H I J
Shareholders'
equity at
Jan. 1, 2006 12.6 23.4 1.9 7.3 -0.8 -0.2 68.3 112.4 3.7 116.1
Available-for-sale
financial assets:
transferred to
income statement
on sale - - -2.1 - - - - -2.1 - -2.1
Cash flow hedges:
gains recorded
in equity - - 0.8 - - - - 0.8 - 0.8
Taxes related to
items entered into
equity and removed
from equity - - 0.3 - - - - 0.3 - 0.3
Other changes - - - - - - -0.2 -0.2 - -0.2
Business combination - - - - - - - - -3.7 -3.7
Dividend
distribution - - - - - - -4.6 -4.6 - -4.6
Profit for the period - - - - - - 5.8 5.8 - 5.8
Shareholders'
equity at
Sept 30,2006 12.6 23.4 0.9 7.3 -0.8 -0.2 69.3 112.4 - 112.4
Shareholders'
equity at
Jan. 1, 2007 12.6 23.4 0.4 7.3 -0.8 -0.2 76.5 119.2 - 119.2
Cash flow hedges:
gains recorded
in equity - - 0.0 - - - - 0.0 - 0.0
Taxes related to
items entered into
equity and removed
from equity - - - - - - - - - -
Increase/decrease
in subsidiary - - - - - 0.2 - 0.2 0.8 1.0
Translation
differences - - - 0.5 0.5 - 0.5
Other changes - - - -0.1 - - -0.1 -0.2 - -0.2
Dividend
distribution - - - - - -5.3 -5.3 - -5.3
Profit for the
period - - - - - 9.4 9.4 - 9.4
Shareholders'
equity at
Sept 30, 2007 12.6 23.4 0.4 7.2 -0.8 0.5 80.5 123.8 0.8 124.6
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The interim financial statements have been prepared in accordance with IAS 34,
Interim Financial Reporting, as adopted by the EU. The accounting policies
adopted are consistent with those of the Group's annual financial statements for
the year ended 31 December 2006.
Lännen Tehtaat has adopted the following new amendments and interpretations to
published standards as well as new standards from January 1, 2007:
- IFRS 7 Financial Instruments: Disclosures.
- IAS 1 (Amendment) Capital Disclosures.
- IFRIC 9 Reassessment of Embedded derivatives
- IFRIC 10 Interim Financial Reporting and Impairment.
The adopted standards and interpretations have not had any significant effects
on this interim report.
SEGMENT INFORMATION
A Frozen Foods
B Fish
C Grain trading
D Vegetable Oil
E Other Operations
F Continuing operations total
G Discontinued operations
H Total
Business segments 1-9/2007
EUR million A B C D E F G H
Total external sales 36.1 56.7 89.3 31.3 2.9 216.3 78.8 295.1
Intra-group sales -0.1 -0.1 -0.7 0.0 -2.4 -3.2 -11.6 -14.8
Net sales 36.0 56.6 88.6 31.3 0.5 213.1 67.2 280.3
Operating profit/loss 1.6 -2.1 2.6 0.7 -2.8 0.1 9.2 9.3
Share of profit/losses
of associated companies 0.0 0.1 - - 1.2 1.3 0.1 1.4
Gross investments in
non-current assets 1.6 1.5 - 0.3 0.1 3.5 0.6 4.1
Corporate acquisitions
and other share
purchases - 11.3 - - - 11.3 - 11.3
Depreciations 1.3 0.9 0.1 0.5 0.7 3.6 0.2 3.8
Impairments 0.2 - - - - 0.2 - 0.2
Personnel 259 361 29 36 11 696 167 863
Business segments 1-9/2006
EUR million A B C D E F G H
Total external sales 37.7 43.0 62.2 30.7 0.0 173.6 135.7 309.3
Intra-group sales -0.2 0.0 -0.8 0.0 0.0 -1.0 -17.0 -18.0
Net sales 37.5 43.0 61.4 30.7 0.0 172.6 118.7 291.3
Operating profit/loss 0.3 1.0 1.2 2.4 -4.0 0.9 5.5 6.4
Share of profit/
losses of associated
companies 0.0 - - - -0.3 -0.3 0.1 -0.2
Gross investments in
non-current assets 0.7 0.3 0.0 0.4 0.1 1.5 3.9 5.4
Corporate acquisitions
and other share
purchases - 1.7 - 1.3 0.1 3.0 - 3.0
Depreciations 2.1 0.6 0.1 0.4 0.4 3.8 2.4 6.2
Impairments - 0.2 - - - 0.2 - 0.2
Personnel 272 307 29 35 19 663 323 986
Business segments 1-12/2006
EUR million A B C D E F G H
Total external sales 50.2 58.9 96.3 40.6 0.0 246.0 173.5 419.5
Intra-group sales -0.1 0.0 -1.4 0.0 0.0 -1.5 -9.3 -10.8
Net sales 50.1 58.9 94.9 40.6 0.0 244.5 164.2 408.7
Operating profit/
loss 1.7 1.6 2.0 3.0 -3.0 5.3 9.2 14.5
Share of profit/
losses of associated
companies 0.0 0.0 - - 1.6 1.6 0.1 1.7
Gross investments in
non-current assets 0.8 0.6 0.0 0.4 0.1 1.9 5.7 7.6
Corporate acquisitions
and other share
purchases - 1.7 - 1.3 0.1 3.0 - 3.0
Depreciations 2.7 0.8 0.1 0.6 0.5 4.7 3.5 8.2
Impairments - 0.2 - - - 0.2 - 0.2
Personnel 275 303 29 36 19 662 319 981
GEOGRAPHICAL SEGMENTS
Net sales
EUR million
1-9/2007 1-9/2006 1-2/2006
9 mths 9 mths 12 mths
Finland 134.6 140.4 188.6
Scandinavia 29.4 7.5 22.4
Baltic states and Russia 7.3 1.7 2.3
Other countries 41.8 23.0 31.2
Continuing operations total 213.1 172.6 244.5
Discontinued operations 67.2 118.7 164.2
Total 280.3 291.3 408.7
DISCONTINUED OPERATIONS
The sale of the majority holding in Suomen Rehu Ltd was completed at the start
of June, when Suomen Rehu and its subsidiaries were transferred to
Hankkija-Maatalous Oy. Suomen Rehu Ltd is presented as discontinued operations
apart from continuing operations of Lännen Tehtaat till the point of sale. From
the beginning of June Lännen Tehtaat's 49% ownership in Suomen Rehu Ltd is
presented as an associated company.
Based on the change in Suomen Rehu Ltd's assets and liabilities share price
adjustment was determined during the third interim period and EUR +1.5 million
was recognised in the bookkeeping related to the sold 51% shareholding.
In connection with the sale of the majority shareholding an option scheme has
also been agreed under which Lännen Tehtaat will, if it wishes, have the right
to sell the remaining 49% of the shares in Suomen Rehu Ltd to
Hankkija-Maatalous. The latter, for its part, has a purchasing option for the
remaining shares, which it will be able to put into effect at the earliest 15
months after the purchase of the majority holding.
In the case of option exercise, Lännen Tehtaat receives the same price per share
for the remaining 49% ownership as for the sold majority shareholding in Suomen
Rehu Ltd, including the share price adjustment. In addition, the sale price is
affected by the financial result of Suomen Rehu Ltd from the beginning of June
2007.
EUR million 1-5/2007 1-9/2006 1-12/2006
5 mths 9 mths 12 mths
Profits 85.2 119.8 176.7
Costs -76.5 -115.5 -169.1
Profit before taxes 8.7 4.3 7.6
Income taxes -0.8 -1.2 -2.0
Profit for the period 7.9 3.2 5.6
Profits 1-5/2007 include revenue from the sale of Suomen Rehu Ltd shares
totalling EUR 5.8 million.
EUR million 1-5/2007 1-9/2006 1-12/2006
5 mths 9 mths 12 mths
Cash flows from operating activities 7.6 2.0 5.4
Cash flows from investing activities -0.6 -5.3 1.4
Cash flows from financing activities -6.9 3.7 -10.5
Total financing activities 0.1 0.4 -3.7
The change in the net working capital has a significant effect on the operating
cash flows.
ACQUISITIONS
Maritim Food AS, a Norwegian subsidiary of Lännen Tehtaat plc, decided to
exercise an option to purchase shares in the fish-processing company Sandanger
AS. Maritim Food AS purchased 3.5% of Sandanger AS's shares in accordance with
the option agreement. The transaction made Maritim Food the majority shareholder
in Sandanger AS, with its holding rising to 51%. Sandanger AS was incorporated
into the Lännen Tehtaat Group on August 31, 2007.
The purchase price for the 51 % ownership was EUR 1.1 million and resulted to
goodwill of EUR 0.5 million. The acquisition has been recognised on a
preliminary basis in the manner permitted by IFRS 3. Determination of the fair
value of the company's assets and liabilities was still incomplete at the time
the interim report was published.
KEY INDICATORS
Sept 30,2007 Sept 30,2006 Dec 31, 2006
Shareholders' equity per
share, EUR 19.81 17.98 19.06
Equity ratio, % 60.9% 54.2% 50.3%
Gearing, % 14.3% 29.6% 40.7%
Gross investments in non-
current assets, EUR million 4.1 5.4 7.6
Corporate acquisitions and other
share purchases, EUR million 11.3 3.0 3.0
Average number of personnel 863 986 981
Average number of shares, 1 000 6 253 6 253 6 253
The key figures in this interim financial report are calculated with same
accounting principles than presented in year 2006 annual financial statements.
CONTINGENT LIABILITIES
EUR million
Sept 30,2007 Sept 30,2006 Dec 31, 2006
Mortgages given for debts:
Real estate mortgages 33.4 40.7 37.5
Corporate mortgages 31.4 51.4 51.4
Shares pledged 9.4 3.6 3.6
Other securities given for own
commitments:
Non-cancellable other leases,
minimum lease payments:
Real estate leases 5.6 2.8 2.8
Other leases 0.8 1.1 1.1
Contingent liabilities for own
commitments:
Repurchasing commitments 0.0 0.0 0.0
Estimated additional share
purchase price, Maritim 0-1.3 - -
Contingent liabilities on behalf
of the associated companies:
Guarantees 4.9 0.0 -
SUOMEN REHU - OPTION SCHEME
The calculatory unrecognised value for the result based component included in
the option scheme as of September 30, 2007 is approximately EUR 0.2 million.
DERIVATIVE INSTRUMENTS
Outstanding nominal values of
derivative instruments
Forward currency contracts 4.4 7.5 4.5
Commodity derivative instruments 6.4 6.4 4.6
Interest rate swaps 25.0 25.0 25.0
INVESTMENT COMMITMENTS
Lännen Tehtaat has investment commitments in fish and frozen foods segments a
total of EUR 2.3 million as of September 30, 2007.
TANGIBLE ASSETS
EUR million
1-9/2007 1-9/2006 1-12/2006
9 mths 9 mths 12 mths
Book value at the beginning
of the period 67.4 72.2 72.2
Acquisitions 3.7 5.4 7.3
Acquisitions of operations 7.5 - -
Disposals 0.0 -0.2 -4.2
Disposals of operations -32.6 -0.4 -0.4
Depreciations and impairments -3.6 -5.7 -7.7
Other changes 0.1 0.2 0.2
Book value at the end of the period 42.5 71.6 67.4
TRANSACTIONS WITH ASSOCIATED COMPANIES AND JOINT VENTURES
EUR million
1-9/2007 1-9/2006 1-12/2006
9 mths 9 mths 12 mths
Sales to associated companies 9.6 0.4 1.1
Sales to joint ventures 6.2 5.8 7.7
Purchase from associated companies 17.7 14.4 19.3
Purchase from joint ventures 0.1 0.0 0.3
Long-term receivebles from
associated companies 3.9 5.0 5.2
Trade receivables and other
receivables from associated companies 2.8 2.2 5.0
Trade receivables and other
receivables from joint ventures 1.1 0.5 0.6
Trade payables and other liabilities
to associated companies 0.6 1.5 3.7
The sale of goods and services to the associated companies and joint ventures
are based on valid price catalogues of the Group.
LÄNNEN TEHTAAT PLC
Board of Directors
More details: Matti Karppinen, CEO, tel. +358 10 402 4001
Distribution:
Helsinki Stock Exchange
Main media
www.lannen.fi
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