2012-08-10 07:00:04 CEST
2012-08-10 07:00:16 CEST
REGULATED INFORMATION
HKScan Oyj - Interim report (Q1 and Q3)
HKScan Group’s interim report 1 January – 30 June 2012: Challenging first half of the year – slight recovery during the second quarter
HKScan Corporation INTERIM REPORT
10 August 2012 at 8:00 AM
HKSCAN GROUP'S INTERIM REPORT 1 JANUARY - 30 JUNE 2012:
Challenging first half of the year - slight recovery during the second quarter
- Group net sales in January-June 2012 totalled EUR 1 250.4 million (EUR 1
223.3 m for the corresponding period in 2011), growing by 2 per cent. After
eliminating changes in currency rates, growth stood at 3 per cent.
- Group EBIT came to EUR 4.9 million (EUR 8.0 m).
- EBIT decreased compared to the corresponding period in 2011 due to the
negative EBIT of the business in Sweden. The focus for the development
programme is to improve profitability in the market area of Sweden.
- Business in the market areas of Finland, the Baltics and Poland performed as
planned and their EBIT improved.
- The production break caused by the fire in early June at the Vinderup plant
in Denmark interrupted positive business operations in April-May by disturbing
and delaying the manufacturing of fresh products being developed according to
company strategy.
- Net financial expenses stood at EUR -16.0 million (EUR -12.9 m). Higher loan
margins were the main reason for the increase.
- According to its strategy, defined in the summer, the Group will particularly
concentrate on delivering profitable performance.
- HKScan keeps unchanged the 2012 outlook given in the January-March interim
report: due to the weak development of business in Sweden, there is a risk that
the Group's EBIT for 2012 will come out below the level of 2011.
HKSCAN GROUP
----------------------------------
(EUR million) Q2/2012 Q2/2011 Q1-Q2/2012 Q1-Q2/2011 2011
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Net sales 644.3 630.6 1 250.4 1 223.3 2 491.3
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EBIT 5.5 6.7 4.9 8.0 39.6
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- EBIT margin, % 0.9 1.1 0.4 0.7 1.6
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Profit/loss before taxes -1.6 -0.1 -9.4 -3.5 11.3
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Earnings per share, EUR 0.00 0.01 -0.09 -0.05 0.18
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GROUP OVERVIEW: APRIL-JUNE 2012
The HKScan Group's business in the second quarter of 2012 developed mostly as
planned despite the rainy beginning of the summer. Finland, the Baltics and
Poland all improved their EBIT levels. Business in Sweden continued to be
extremely challenging in the second quarter and the EBIT remained still clearly
in the red.
A fire on 6 June caused a production break, interrupting poultry slaughtering,
as well as production, packing and delivery operations at the Vinderup plant in
Denmark. Some lines of the production plant could be restarted to a certain
degree soon after the fire by temporarily reorganising the operations and by
increasing the slaughtering and production volumes at the Skovsgaard plant
within its capacity. According to plans, full production will be restarted,
phase by phase, in December at the latest. The insurance policies are estimated
to cover both the material damage and that caused by the interruption of the
business.
The scarcity of meat raw materials was troubling in all the Group's market
areas during April-June. There is a lack of Swedish meat raw material in
particular. Production volumes have continued to fall, procurement prices have
increased and Group slaughtering volumes have remained low. The further
strengthened Swedish krona has increased meat imports and made it difficult to
increase the price of products based on Swedish meat raw materials.
At the beginning of April, the Group reported that it will launch an extensive
development programme which will be implemented until the end of 2013. The aim
is to achieve annual performance improvements exceeding EUR 20 million and a
considerable reduction in invested capital. During the second quarter, a
management model and an organisation have been created for the development
programme, and its progress is being closely monitored. The programme covers
the Group's operations in Finland, the Baltics, Sweden and Denmark.
HKScan has redefined its strategy. According to the new strategy, the Group
will concentrate in particular on improving profitability by building up brand
value and demand, by improving operational efficiency, by actively managing the
dynamics of future business and by developing its capital structure and Group
reporting.
As part of the strategy, HKScan will reform the Group's management and
operating model in order to harmonise, simplify and enhance internal processes
and cultures. The businesses involved in the new operating model are
responsible for sales and marketing, product development, in addition to the
order-supply chain and production. They are: 1. Consumer (Finland, the Baltics,
Sweden and Denmark), 2. Away from Home (AFH) Business, and 3. Sokolów and other
joint ventures. The other Group functions supporting the businesses are
Technology and Operations Development, HR, Legal & Administration, Finance,
Treasury, Communications as well as Strategy and Strategic Projects.
In addition, the company will also reform the Group reporting to better support
the businesses, the new operating model, the organisation and Group management.
HKScan will introduce the operating model gradually by the end of 2013. The
work for building up Group functions has already begun. The reform will not
affect the Group's external reporting. The reform of the operating model and
organisation has been described further in a stock exchange release published
on 10 August 2012.
A plan concerning restructuring of the business in Sweden was published on 10
August 2012. The plan aims to achieve an annual performance improvement of
approximately EUR 10 million. The changes are planned to be implemented by the
middle of 2013. The plan is discussed in more detail under “Market area Sweden”
later in this report.
MARKET AREA: FINLAND
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(EUR million) Q2/2012 Q2/2011 Q1-Q2/2012 Q1-Q2/2011 2011
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Net sales 212.8 207.9 410.4 395.9 812.4
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EBIT 2.7 0.7 5.4 0.1 12.1
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- EBIT margin, % 1.3 0.3 1.3 0.0 1.5
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In Finland, the level of profitability for the business is still weak, but the
development of the business is on the right track. Net sales in the second
quarter totalled EUR 212.8 million (EUR 207.9 m). EBIT improved to EUR 2.7
million (EUR 0.7 m) and was 1.3 per cent (0.3%) of net sales.
Concerning pork and beef, scarcity of the meat raw material challenged the
company's ability to deliver. The scarcity of Finnish meat raw material results
from growing demand and simultaneously from decreasing meat production in
Finland.
In order to better manage and steer the fluctuations in supply and demand on
the one hand, and chain management on the other, in times of scarcity and
overproduction, the Group initiated a contract reform concerning pork
procurement in Finland in the fall of 2011. The reform is progressing as
planned.
The midsummer season sales, important for the Group, were a success as
expected. New products, such as HK Rapeseed Pork and Kariniemen Chicken
barbeque products were well received on the market.
As a part of the on-going group-wide development programme, the Group announced
at the end of June that it will clarify and simplify the corporate structure in
Finland in order to harmonize the Group's operational policies and to
streamline its internal administration. HKScan Finland Oy and its wholly owned
subsidiaries − Järvi-Suomen Portti Oy and Helanderin Teurastamo Oy, which has
discontinued its business operations − will be merged into HK Ruokatalo Oy.
This matter is dealt with further in the “Changes in the corporate structure”
section in the present report.
MARKET AREA: BALTICS
--------------------------
(EUR million) Q2/2012 Q2/2011 Q1-Q2/2012 Q1-Q2/2011 2011
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 46.8 44.1 87.3 83.5 173.3
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EBIT 3.1 2.7 3.8 3.6 9.8
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- EBIT margin, % 6.7 6.1 4.4 4.3 5.6
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In the Baltics, net sales in the second quarter stood at EUR 46.8 million (EUR
44.1 m), achieving growth by 6 per cent. EBIT for the quarter was EUR 3.1
million (EUR 2.7 m), growing to a good level of 6.7 per cent (6.1%) of net
sales.
The local brands of HKScan succeeded well in the Baltics. Tallegg's broiler
grill product portfolio was well received in Estonia, as was the case with
Rakvere's new product series “Lihakas”. Jelgava, in turn, increased its sales
of smoked and cold smoked products in Latvia.
Rakvere's products were awarded in the annual competition arranged by the
Estonian Food Producers' Association. Rakvere received, among other things, the
highest prize of the contest, “Best Estonian food product 2012” for its pork
roast in bread coating.
The current price levels for feed raw materials and energy is high, which
increases meat product prices. Feed price is expected to rise further in late
2012.
Competitiveness in the Baltics has been strengthened by investing in energy
saving projects in pig primary production and by developing processes in
Rakvere Lihakombinaat and Tallegg among other things. Synergies between the
companies operating in the Baltics have been achieved by merging the operations
of Tallegg and Rakvere, e.g. in logistics and administration.
The ban on live animal imports set by Russia has increased the export of
carcass from the Baltics. Exports of more valuable meat parts to other European
countries, on the other hand, has suffered from lower demand.
MARKET AREA: SWEDEN
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(EUR million) Q2/2012 Q2/2011 Q1-Q2/2012 Q1-Q2/2011 2011
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Net sales 267.0 263.0 513.9 515.4 1 045.7
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EBIT -4.2 4.0 -9.7 4.3 17.2
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- EBIT margin, % -1.6 1.5 -1.9 0.8 1.6
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In Sweden, net sales in the second quarter amounted to EUR 267.0 million (EUR
263.0 m). Net sales calculated in krona were on the same level compared with
the previous year too. As far as the business result is concerned, it was at
the lowest at the beginning of the second quarter, which means that the result
for the reporting period continued to be weak: EUR -4.2 million (EUR 4.0 m) and
was -1.6 per cent of net sales (1.5%).
The difficulties reported in the first quarter continued further at the
beginning of the second quarter in Sweden. As far as primary production is
concerned, pork and beef production has declined further, causing high
procurement prices for Swedish meat, and there is also a shortage of meat raw
material. Slaughtering volumes have decreased. Additionally, the further
strengthened Swedish krona has made meat imports easier and tightened
competition. Increases in sales prices have been implemented to all customer
groups, but during the reporting period, they have not yet been adequate with
regard to the higher raw material costs. The share of private labels in retail
has grown further.
Rainy weather conditions in the early summer have affected the demand for
barbeque products. The launch of Swedish rapeseed pork (Svensk Rapsgris) for
the HoReCa customers succeeded well. Svensk Rapsgris will be introduced to
retail customers in August. Slaughtering and cutting of Rapsgris pigs is
concentrated at the Skara plant in Sweden.
The Chosen By Farmers concept, launched at the end of 2011, was well received
by consumers and trade during the Easter and barbeque seasons.
A plan concerning restructuring of the business in Sweden was published on 10
August 2012. The plan aims to achieve an annual performance improvement of
approximately EUR 10 million. The changes are planned to be implemented by the
middle of 2013.
The aim is to clarify and streamline the structure of the business in Sweden in
line with the Group's new operating model. The wholly-owned subsidiaries
belonging to the subgroup in Sweden will be merged into a single business
entity to be known as HKScan Sweden. Scan and Pärsons, which have previously
operated as business units, will continue as brands in HKScan's business in
Sweden. The aim is to continue to further develop the brands, the product
offering, as well as raising the added-value of the products.
In addition, HKScan will streamline the structure of production and revamp the
organisation. When the plan is implemented HKScan's commercial, production and
logistics organisations and other operations supporting the business in Sweden
will be merged. Regarding the actions previously announced, the aim is to
employ the plan in order to transfer the production of semi-finished products
from Strövelstorp to the production facilities located in Halmstad and
Kristianstad, Sweden. The plan, when implemented, will mean the discontinuation
of production operations at the Strövelstorp plant. Negotiations concerning the
plan with the employee representatives have been started in Sweden by
initiating employer-employee negotiations. The implementation of the plan will
mean a workforce reduction of approximately 100 white-collar employees and 50
blue-collar employees.
MARKET AREA: DENMARK
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(EUR million) Q2/2012 Q2/2011 Q1-Q2/2012 Q1-Q2/2011 2011
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Net sales 51.4 55.9 109.1 113.5 228.1
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EBIT 1.5 -0.5 1.7 -1.0 -3.7
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- EBIT margin, % 2.8 -1.0 1.6 -0.9 -1.6
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In Denmark, net sales in the second quarter were EUR 51.4 million (EUR 55.9 m).
EBIT for the period came in at EUR 1.5 million (EUR -0.5 m) and was 2.8 per
cent (-1.0%) of net sales. It is estimated that because of the fire, the net
sales for June were 20 per cent lower than planned. The EBIT includes
non-recurring items amounting to EUR 3.4 million (net) due to the fire.
Sales and the launch of fresh poultry products onto the Swedish market
progressed as planned during April-May. Sales development, as well as the
investment programme which was almost at its final phase, were partly
interrupted after the fire at the Vinderup plant in early June.
Lines in the production plant could be restarted to a certain degree quite soon
after the fire. The reparations have proceeded as planned. Additionally at the
moment, part of poultry slaughtering has been returned to temporary production
lines at Vinderup. According to plans, full production will be restarted in
December at the latest. The insurances are estimated to cover both the material
damages and those caused by the business interruption. The amount of the damage
in euros will be specified further during the rest of the year. At the moment
it is estimated that the total amount of damages will amount to more than EUR
50 million.
At this stage write-downs of EUR 6.3 million in total have been implemented for
the property, plant and equipment as well as inventories destroyed in the fire.
Correspondingly, a total of EUR 9.8 million in insurance compensation has been
allocated on the basis of the property and interruption insurance policy
towards other business income. Insurance claims booked in the reporting period
are based on occurred costs, write-downs and estimated loss of margin.
MARKET AREA: POLAND
--------------------------
(EUR million) Q2/2012 Q2/2011 Q1-Q2/2012 Q1-Q2/2011 2011
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*)
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Net sales 86.9 77.0 167.3 147.5 298.9
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EBIT 4.5 2.8 7.9 5.8 12.7
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- EBIT margin, % 5.1 3.6 4.7 3.9 4.2
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*) The figures refer to HKScan's share (50 %) of the Sokolów Group's figures.
In Poland, net sales in the second quarter totalled EUR 86.9 million (EUR 77.0
m), i.e. a growth of up to 13 per cent. When calculated in zloty the growth was
even bigger, 21 per cent. EBIT for the period rose to EUR 4.5 million (EUR 2.8
m) and complied with the Group's EBIT target, i.e. 5.1 per cent (3.6%) of net
sales.
The second quarter of the year was good in Poland despite the tough market
situation and the fierce price competition in retail. Sales of processed
products increased and the Sokolów brand strengthened.
At the beginning of the second quarter Sokolów received a license for its
exports to China. Full SAP system was implemented in the company's own
distribution network in June.
The new slaughtering line at Tarnów and the cold cuts plant at Sokołów Podlaski
were introduced mostly during the first half of 2012.
CHANGES IN ORGANISATION
In conjunction with the strategy update and changes of operating model
following appointments have been made in HKScan's Management Team and
management as announced in a stock release on 10 August 2012: M.Sc.(Tech.) Aki
Laiho (39) has been appointed Chief Operating Officer (COO) responsible for the
development of HKScan's technology and production, deputy to the CEO and member
of the management team; M.Sc.(Econ.) Tuomo Valkonen (45) has been appointed
Chief Financial Officer (CFO) of HKScan and member of the management team. The
current CFO Irma Kiilunen will continue as Group Treasurer of HKScan.
M.Sc.(Econ.) Jukka Nikkinen (49) has been appointed Executive Vice President of
the Away from Home (AFH) Business and member of the management team.
M.Sc.(Econ.) Samuli Eskola (38) has been appointed Senior Vice President
responsible for HKScan's strategy and strategic projects. The above mentioned
persons report to CEO Hannu Kottonen.
M.Sc.(Econ.) Pekka Kuokka (55) has been appointed Senior Vice President
responsible for ICT at HKScan's Technology & Operations Development. Pekka
Kuokka will also act as the Group's Purchasing Director (in addition to his
main position) responsible for purchasing categories other than primary
production and meat raw materials. Pekka Kuokka reports to Aki Laiho.
HKSCAN'S MANAGEMENT TEAM
From 1 September 2012, the Management Team of HKScan will be comprised as
follows: Hannu Kottonen, CEO; Aki Laiho, COO, Chief Operating Officer; Tuomo
Valkonen, CFO; Anne Mere (EVP), Executive vice president of Finland and the
Baltics; Denis Mattsson, (EVP), Executive vice president of Sweden and Denmark;
Jukka Nikkinen, EVP, Away from Home Business; Sirpa Laakso, EVP, HR, and Markku
Suvanto, EVP, Legal & Administration, who also acts as the Secretary of the
Management Team.
CHANGES TO THE CORPORTE STRUCTURE
HKScan announced on 29 June 2012 that it will clarify and simplify its
corporate structure in Finland in order to harmonize the Group's operational
policies and to streamline its internal administration.
HKScan Finland Oy and its wholly owned subsidiaries − Järvi-Suomen Portti Oy
and Helanderin Teurastamo Oy, which has already earlier discontinued its
business operations − will be merged into HK Ruokatalo Oy.
The company has submitted the merger plan concerning the restructuring
programme (described above) to the Trade Register on 29 June 2012. It is
planned that the mergers will be completed by 31 December 2012.
Concerning the restructuring of the business in Sweden, a stock exchange
release was announced on 10 August 2012. See further chapters “Market area
Sweden” and “Events after the reporting period”.
INVESTMENTS
The Group's production-related gross investments in the second quarter totalled
EUR 13.8 million (EUR 17.3 m) and in January-June EUR 33.6 million (EUR 32.4
m). They were divided by market area as follows:
(EUR million) Q2/2012 Q2/2011 Q1-Q2/2012 Q1-Q2/2011 2011
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Finland 3.2 5.6 6.5 10.3 17.3
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Baltics 2.3 3.4 4.7 6.3 12.4
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Sweden 2.1 3.2 5.0 5.7 8.9
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Denmark 2.3 1.7 7.8 2.8 7.8
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Poland 1) 4.0 3.3 9.7 7.2 14.5
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Total 13.8 17.3 33.6 32.4 61.0
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1) HKScan's share (50%) of Sokolów investments.
In Finland, the investments concerned the repair and maintenance of the
production lines. In Sweden, the investments were made in process development
in Linköping and the Svensk Rapsgris concept in Skara. In Denmark, the
investments involved the improvement of Rose Poultry's production processes.
The fire in early June interrupted the investment programme in Vinderup. In
the market area of the Baltics, the investments involved energy savings and
primary production as well the programme for restructuring production at
Tallegg. In Poland, the investments included the beef slaughtering line at the
Tarnów plant and development of the Sokolów Podlaski production facility.
FINANCING
The Group's interest-bearing debt at the end of June stood at EUR 522.4 million
(EUR 508.7 m). Gross interest-bearing debt at the turn of the year was EUR
504.2 million. The growth in debt compared with the situation at the turn of
the year is attributable to currency changes, paid dividend and tying up of
working capital. Compared with the corresponding period in 2011, the debt
increased due to currency changes and especially the tying up of working
capital.
Group net financial expenses in January-June totalled EUR -16.0 million (EUR
-12.9 m). Net financial expenses increased compared with the previous year due
to higher debt, higher margins on loans and non-recurring expenses for
financing arrangements. Because of interest rate hedging, decreased general
interest levels have not significantly lowered the financial expenses.
Untapped credit facilities on 30 June 2012 stood at EUR 176.8 million (EUR
171.9 m). In addition, the Group had other untapped overdraft and other
facilities of EUR 28.1 million (EUR 39.9 m). The EUR 200 million commercial
paper programme had been drawn to the amount of EUR 142.5 million (EUR 60.0 m).
The equity ratio at the end of June was 32.7 per cent (33.7%). The equity ratio
at the turn of the year was 33.6 per cent.
SHARES
At the end of June 2012, the HKScan Group's share capital stood at EUR 66 820
528.10. The Group's total number of shares issued was 55 026 522, and 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 53 734 A Shares as treasury shares at the end of June.
HKScan's market capitalization at the end of June 2012 stood at EUR 208.6
million. It breaks down as follows: The Series A shares had a market value of
EUR 188.1 million and the unlisted Series K shares a calculated market value of
EUR 20.5 million.
In January-June 2012, a total of 5 702 100 of the company's shares with a total
value of EUR 28 032 244 were traded. The highest price quoted in the period
under review was EUR 6.40 and the lowest EUR 3.17. The median price was EUR
4.87. At the end of June, the closing price was EUR 3.79.
At the end of June 2012, foreign and nominee-registered shareholders held 14.9
per cent of the company's shares.
HKScan has a market making agreement with FIM Pankkiiriliike Oy which meets the
requirements of NASDAQ OMX's Liquidity Providing (LP) operation.
REPURCHASE OF OWN SHARES
On 4 June 2012, the former owners of the Danish company Rose Poultry A/S −
Vinderup Poultry A/S, Skovsgaard Fjerkræslagteri A/S and Hedegaard A/S −
invoked their put option under the terms of the share purchase agreement,
announced on 9 September 2010, concerning the shares in Rose Poultry A/S.
Consequently, HKScan repurchased 1 000 000 its own Series A shares for EUR 8
000 000 (á 8.00 euros/share). The payment was made on 6 August.
The share repurchase concerns the acquisition of Rose Poultry A/S concluded in
2010. More detailed information about the agreement was announced in HKScan's
stock exchange release on 9 September 2010.
The repurchased shares remain in the company. The total amount of own shares
will thus be a total of 1 053 734 series A shares.
ANNUAL GENERAL MEETING AND BOARD OF DIRECTORS' AUTHORIZATIONS
The Annual General Meeting of HKScan Corporation held on 25 April 2012 in
Helsinki adopted the parent company's and consolidated financial statements and
discharged the members of the Board of Directors and the CEO from liability for
the year 2011.
The AGM resolved that a dividend of EUR 0.17 per share be paid for 2011 in
accordance with the proposal made by the Board of Directors. In addition, the
AGM agreed on the annual remuneration and remuneration for meeting attendance
for Board members and the chairs of the committees.
Niels Borup, Tero Hemmilä Juha Kylämäki, and Henrik Treschow were re-elected to
the Board, and Gunilla Aschan and Teija Andersen were elected as new members.
At the organisation meeting held after the AGM, the Board re-elected Juha
Kylämäki as chairman and Niels Borup as deputy chairman.
Authorized Public Accountants PricewaterhouseCoopers Oy, with APA Johan
Kronberg as principal auditor, and APA Petri Palmroth were appointed as
auditors. The deputy auditors are APA Mika Kaarisalo and APA Jari Viljanen.
The AGM gave the following three authorizations to the Board:
(1) The Board of Directors was authorized to decide on share issue as well as
issue of option rights and other special rights entitling to shares. The shares
issued under the authorization are new Series A shares of the Company. Under
the authorization, a maximum of 2 500 000 Series A shares, which corresponds to
approximately 4.50 per cent of all of the shares in the Company and
approximately 5.00 per cent of all the Series A shares in the Company, can be
issued. The shares, option rights or other special rights entitling to shares
can be issued in one or more tranches.
(2) The Board of Directors was authorized to decide on the purchase of the
Company's own Series A shares and/or on the acceptance of the Company's own
Series A shares as a pledge as follows. The aggregate number of own Series A
shares to be acquired and/or accepted as a pledge shall not exceed 2 500 000
Series A shares in total, which corresponds to approximately 4.50 per cent of
all of the shares in the Company and approximately 5.00 per cent of all the
Series A shares in the Company. However, the Company together with its
subsidiaries cannot at any moment own and/or hold as a pledge more than 10 per
cent of all the shares in the Company.
The above authorizations revoke authorizations granted on 27 April 2011 by the
Annual General Meeting to the Board of Directors.
(3) The Board of Directors was authorized to decide on the transfer of the
Company's own shares. Under the authorization, a maximum of 2 500 000 Series A
Shares, which corresponds to approximately 4.50 per cent of all of the shares
in the Company and approximately 5.00 per cent of all the Series A shares in
the Company, can be transferred. The Company's own shares may be transferred in
one or several tranches. The Board of Directors decides on all the conditions
for the transfer of own shares. To avoid any doubt, this authorization does not
invalidate any other authorizations decided in the meeting.
All the authorizations given to the Board will be effective until 30 June 2013.
During January-June 2012, the Board did not exercise the authorizations
described above. Related to the share repurchase payment carried out on 6
August 2012, see “Share repurchase“ and “Events after the reporting period”.
EMPLOYEES
During the first half of 2012, HKScan, excluding Sokolów in Poland, had an
average workforce of 8 164 employees (8 594).
The number of employees in Finland has increased mainly due to the intake of
outsourced cutting operations. In Sweden, Denmark and the Baltics, the numbers
of employees have decreased as a consequence of efficiency programmes.
The average number of employees by market area was as follows:
Q1-Q2/2012 Q1-Q2/2011 2011
--------------------------------------
Finland 2 832 2 773 2 750
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Baltics 1 783 1 905 1 881
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Sweden 2 761 3 008 2 789
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Denmark 788 908 867
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Total 8 164 8 594 8 287
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In addition, the Sokolów Group employed an average of 6 166 (6 192) persons
during the period. In 2011, the average number of personnel was 6 191.
On 30 June the number of employees, excluding Sokolów in Poland, stood at 8 990
(9 309).
Division of employees by market area on 30 June is as follows:
30.6.2012 30.6.2011 31.12.2011
--------------------------------------------------------------
Finland 3 254 3 249 2 568
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Baltics 1 787 1 913 1 803
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Sweden 3 115 3 259 2 704
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Denmark 834*) 888 807
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Total 8 990 9 309 7 882
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Additionally, the Sokolów Group had 6 491 (6 363) employees at the end of the
period under review. At the end of 2011, the corresponding number was 6 175.
*) The figure includes approximately 200 persons laid off because of the fire.
RISKS AND UNCERTAINTY FACTORS IN THE NEAR FUTURE
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 the price
development and availability of local meat raw material as well as with the
adequacy of increases in the sales prices for the products in relation to cost
development. Market area-specific factors of uncertainty have to do with the
implementation of the business development programmes. The factors are also
related to recovery from the production break at the Vinderup plant in Denmark
on the market.
Challenges in the global economic situation will continue. Major fluctuations
in the Group's central currencies and higher interest rates may affect the
Group's competitiveness, net sales, earnings and balance sheet. Changes in
demand attributable to the financial situation, such as growing unemployment,
may occur in the Group's market areas or its export markets. These may affect
the Group's net sales and earnings.
Rapid and unforeseeable procedures by the authorities may affect the company's
business in its export markets.
The possibility of animal diseases can never be fully excluded in the food
industry's raw meat supplies.
EVENTS AFTER THE REVIEW PERIOD
On 6 August, HKScan published a stock exchange release on having repurchased
own shares according to the announcement in June. The company acquired 1 000
000 HKScan series A shares for EUR 8 000 000 (á 8,00 euros/share) on 6 August
2012. The acquisition pertains to the share purchase agreement of the Danish
company Rose Poultry A/S, announced on 9 September 2010 and 4 June 2012. After
the acquisition HKScan has in total 1 053 734 Series A own shares.
HKScan's strategy reshape as well as the renewal of the Group's operating model
and organisation have been announced in a specific stock exchange release on 10
August 2012 and also described in “the Group overview” in this report.
On 10 August 2012, HKScan announced a plan on enhancing the Group's business in
Sweden. The plan aims to achieve an annual performance improvement of
approximately EUR 10 million. The changes are planned to be implemented by the
middle of 2013.
The aim is to clarify and streamline the structure of the business in Sweden in
line with the Group's new operating model. The plan is that the wholly-owned
subsidiaries belonging to the subgroup in Sweden will be merged into a single
business entity to be known as HKScan Sweden. Scan and Pärsons, which have
previously operated as business units, will continue as brands in HKScan's
business in Sweden. The aim is to continue to further develop the brands and
the product offering, as well as raising the added-value of the products.
In addition, HKScan will streamline the structure of production and revamp the
organisation. When the plan is implemented, HKScan's commercial, production and
logistics organisations and other operations supporting the business in Sweden
will be merged. Regarding the actions previously announced, the aim is to
employ the plan in order to transfer the production of semi-finished products
from Strövelstorp to the production facilities located in Halmstad and
Kristianstad, Sweden. The plan, when implemented, will mean the discontinuation
of production operations at the Strövelstorp plant. Negotiations concerning the
plan with the employee representatives have been started in Sweden by
initiating employer-employee negotiations. The implementation of the plan will
mean a workforce reduction of approximately 100 white-collar employees and 50
blue-collar employees.
FUTURE OUTLOOK
Consumer demand for meat is expected to remain steady in the Group's home
markets.
Control of the sector is highly challenging, because prices of meat raw
material are difficult to predict under cost pressure in primary production.
The Group will improve its profitability through its development programmes,
raising sales prices and through the controlled adjustment of procurement
volumes. Rectifying the performance level of the business in Sweden will have a
significant impact on the Group during the end of the year.
HKScan keeps unchanged the 2012 outlook given in the January-March interim
report: due to the weak development of business in Sweden, there is a risk
that the Group's EBIT for 2012 will come out below the level of 2011.
CONSOLIDATED INTERIM REPORT 1 JANUARY - 30 JUNE 2012
CONSOLIDATED INCOME STATEMENT
(EUR million) Note Q2/20 Q2/2011 Q1-Q2/2012 Q1-Q2/201 2011
12 1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NET SALES 644.3 630.6 1 250.4 1 223.3 2 491.3
--------------------------------------------------------------------------------
Operating income and 1. -615. -605.8 -1 203.5 -1 179.4 -2 380.5
expenses 1
--------------------------------------------------------------------------------
Share of associates' -0.2 0.2 -0.3 0.4 1.1
results
--------------------------------------------------------------------------------
Depreciation and 1. -23.5 -18.3 -41.7 -36.3 -72.3
impairment
--------------------------------------------------------------------------------
EBIT 5.5 6.7 4.9 8.0 39.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial income 1.5 1.9 3.4 3.5 7.4
--------------------------------------------------------------------------------
Financial expenses -9.5 -9.5 -19.3 -16.4 -38.3
--------------------------------------------------------------------------------
Share of associates' 0.9 0.8 1.7 1.4 2.5
results
--------------------------
PROFIT/LOSS BEFORE TAXES -1.6 -0.1 -9.4 -3.5 11.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income taxes 1.8 1.1 4.3 1.8 1.0
--------------------------------------------------------------------------------
PROFIT/LOSS FOR THE 0.1 1.0 -5.1 -1.7 12.2
PERIOD
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROFIT/LOSS FOR THE
PERIOD
ATTRIBUTABLE TO:
--------------------------------------------------------------------------------
Equity holders of the 0.0 0.6 -5.1 -2.5 10.1
parent
--------------------------------------------------------------------------------
Non-controlling interests 0.1 0.4 0.0 0.8 2.1
--------------------------------------------------------------------------------
Total 0.1 1.0 -5.1 -1.7 12.2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings per share calculated on profit attributable to equity holders
of the parent company:
-----------------------------------------------------------------------
EPS, undiluted, continuing 0.00 0.01 -0.09 -0.05 0.18
operations,
EUR/share
--------------------------------------------------------------------------------
EPS, diluted, continuing 0.00 0.01 -0.09 -0.05 0.18
operations, EUR/share
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1 JANUARY - 30 JUNE
(EUR million) Q2/201 Q2/201 Q1-Q2/2 Q1-Q2/2 31.12.2
2 1 012 011 011
--------------------------------------------------------------------------------
Profit/loss for the period 0.1 1.0 -5.1 -1.7 12.2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME (after
taxes):
--------------------------------------------------------------------------------
Exchange differences on translating -0.2 -2.8 4.1 -1.7 -2.5
foreign operations
--------------------------------------------------------------------------------
Cash flow hedging -0.9 -1.7 -0.4 1.0 -7.4
--------------------------------------------------------------------------------
Revaluation 0.0 0.0 0.2 0.0 0.0
--------------------------------------------------------------------------------
TOTAL OTHER COMPREHENSIVE INCOME -1.1 -4.5 3.9 -0.8 -9.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE -0.9 -3.5 -1.2 -2.5 2.4
PERIOD
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD ATTRIBUTABLE TO:
--------------------------------------------------------------------------------
Equity holders of the parent -1.1 -4.0 -1.2 -3.2 0.3
company
--------------------------------------------------------------------------------
Non-controlling interests 0.1 0.5 0.1 0.8 2.1
--------------------------------------------------------------------------------
Total -0.9 -3.5 -1.2 -2.5 2.4
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(EUR million) Note 30.6.201 30.6.201 31.12.20
2 1 11
--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-CURRENT ASSETS
--------------------------------------------------------------------------------
Intangible assets 2. 77.0 75.0 76.6
--------------------------------------------------------------------------------
Goodwill 3. 101.6 99.4 101.0
--------------------------------------------------------------------------------
Tangible assets 4. 513.0 530.2 516.5
--------------------------------------------------------------------------------
Shares in associates 30.2 27.9 29.9
--------------------------------------------------------------------------------
Trade and other receivables 35.2 29.0 31.1
--------------------------------------------------------------------------------
Available-for-sale investments 13.4 12.1 13.0
--------------------------------------------------------------------------------
Deferred tax asset 28.1 14.8 21.1
--------------------------------------------------------------------------------
NON-CURRENT ASSETS 798.5 788.4 789.2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CURRENT ASSETS
--------------------------------------------------------------------------------
Inventories 5. 183.8 174.3 190.2
--------------------------------------------------------------------------------
Trade and other receivables 234.0 227.9 223.8
--------------------------------------------------------------------------------
Income tax receivable 2.3 4.4 1.5
--------------------------------------------------------------------------------
Other financial assets 0.4 0.4 0.4
--------------------------------------------------------------------------------
Cash and bank 38.7 43.6 48.0
--------------------------------------------------------------------------------
CURRENT ASSETS 459.2 450.5 463.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ASSETS 1 257.7 1 238.8 1 253.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 154.6 162.3 153.2
--------------------------------------------------------------------------------
Translation differences 2.1 -2.0 -1.9
--------------------------------------------------------------------------------
Retained earnings 102.1 105.3 117.9
--------------------------------------------------------------------------------
Equity attributable to equity holders of the 398.9 405.8 409.3
parent company
--------------------------------------------------------------------------------
Non-controlling interests 11.4 10.9 12.2
--------------------------------------------------------------------------------
EQUITY 410.3 416.7 421.5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
--------------------------------------------------------------------------------
Deferred tax liability 37.9 37.3 36.9
--------------------------------------------------------------------------------
Non-current interest-bearing liabilities 334.6 407.6 333.5
--------------------------------------------------------------------------------
Non-current non-interest bearing liabilities 2.3 12.6 3.0
--------------------------------------------------------------------------------
Non-current provisions 0.6 1.4 0.6
--------------------------------------------------------------------------------
Pension obligations 3.0 3.0 3.1
--------------------------------------------------------------------------------
NON-CURRENT LIABILITIES 378.5 461.9 377.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CURRENT LIABILITIES
--------------------------------------------------------------------------------
Current interest-bearing liabilities 187.9 101.1 170.6
--------------------------------------------------------------------------------
Trade and other payables 280.0 255.1 282.9
--------------------------------------------------------------------------------
Income tax liability 0.4 3.2 0.1
--------------------------------------------------------------------------------
Current provisions 0.7 0.8 0.7
--------------------------------------------------------------------------------
CURRENT LIABILITIES 468.9 360.2 454.4
--------------------------------------------------------------------------------
------------------------------------------------------------- ---------
EQUITY AND LIABILITIES 1 257.7 1 238.8 1 253.0
--------------------------------------------------------------------------------
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 -13.9 143.5 23.5 -1.9 0.0 117.9 409.3 12.2 421.5
1.1.2012
--------------------------------------------------------------------------------
Result 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -5.1 -5.1 0.0 -5.1
for the
financial
period
--------------------------------------------------------------------------------
Transl. 0.0 0,0 0,0 0.0 0.0 4.0 0.0 0.0 4.0 0.1 4.1
diff.
--------------------------------------------------------------------------------
Cash flow 0.0 0.0 -0.4 0.0 0.0 0.0 0.0 0.0 -0.4 0.0 -0.4
hedging
--------------------------------------------------------------------------------
Revaluat. 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.2 0.0 0.2
--------------------------------------------------------------------------------
Total 0.0 0.0 -0.4 0.0 0.2 4.0 0.0 -5.1 -1.2 0.1 -1.2
compreh.
income
for
the
period
--------------------------------------------------------------------------------
Shared-ba 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
sed
compens.
expense
--------------------------------------------------------------------------------
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
change
--------------------------------------------------------------------------------
Direct 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.2 0.0 0.2
recognit
.
in
retained
earnings
--------------------------------------------------------------------------------
Transfers 0.0 0.0 0.0 0.0 1.6 0.0 0.0 -1.6 0.0 0.0 0.0
between
items
--------------------------------------------------------------------------------
Share 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
issue
--------------------------------------------------------------------------------
Purchase 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
of
treasury
shares
--------------------------------------------------------------------------------
Increase 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
in
holdings
in
subsidiar
ies
--------------------------------------------------------------------------------
Dividend 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -9.3 -9.3 -0.9 -10.2
distribut
ion
--------------------------------------------------------------------------------
EQUITY AT 66.8 73.4 -14.2 143.5 25.3 2.1 0.0 102.1 398.9 11.4 410.3
30.6.2012
--------------------------------------------------------------------------------
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
--------------------------------------------------------------------------------
EQUITY AT 66.8 73.4 -6.5 143.5 17.4 0.6 0.0 124.4 419.6 11.1 430.6
1.1.2011
--------------------------------------------------------------------------------
Result 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -2.5 -2.5 0.8 -1.7
for the
financial
period
--------------------------------------------------------------------------------
Transl. 0.0 0.0 0.0 0.0 0.2 -2.6 0.0 0.8 -1.6 -0.1 -1.7
diff.
--------------------------------------------------------------------------------
Cash flow 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 1.0
hedging
--------------------------------------------------------------------------------
Total 0.0 0.0 1.0 0.0 0.2 -2.6 0.0 -1.7 -3.2 0.8 -2.5
compreh.
income
for
the
period
--------------------------------------------------------------------------------
Shared-ba 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
sed
compens.
expense
--------------------------------------------------------------------------------
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
change
--------------------------------------------------------------------------------
Direct 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 1.5 0.0 1.5
recognit
.
in
retained
earnings
--------------------------------------------------------------------------------
Transfers 0.0 0.0 0.0 0.0 6.8 0.0 0.0 -6.8 0.0 0.0 0.0
between
items
--------------------------------------------------------------------------------
Share 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
issue
--------------------------------------------------------------------------------
Purchase 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
of
treasury
shares
--------------------------------------------------------------------------------
Increase 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
in
holdings
in
subsidiar
ies
--------------------------------------------------------------------------------
Dividend 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -12.1 -12.1 -0.9 -13.0
distribut
ion
--------------------------------------------------------------------------------
EQUITY AT 66.8 73.4 -5.5 143.5 24.4 -2.0 0.0 105.3 405.8 10.9 416.7
30.6.2011
--------------------------------------------------------------------------------
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-Q2/2012 Q1-Q2/2011 2011
--------------------------------------------------------------------------------
Operating activities
--------------------------------------------------------------------------------
Cash flow from operating activities 36.4 30.9 79.9
--------------------------------------------------------------------------------
Financial items and taxes -22.2 -13.6 -26.1
--------------------------------------------------------------------------------
Net cash flow from operating 14.2 17.3 53.9
activities
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Investments
-----------------------------------------
Gross investments in property, plant -32.7 -31.7 -60.4
and equipment
--------------------------------------------------------------------------------
Disposals of property, plant and 0.8 1.0 1.9
equipment
--------------------------------------------------------------------------------
Investments in subsidiary - - -
--------------------------------------------------------------------------------
Shares in associates purchased -0.1 -0.2 -1.0
--------------------------------------------------------------------------------
Shares in associates sold 0.6 0.0 0.0
--------------------------------------------------------------------------------
Loans granted -0.4 -2.1 -1.8
--------------------------------------------------------------------------------
Repayments of loans receivable 0.3 1.1 2.1
--------------------------------------------------------------------------------
Net cash flow from investing -31.5 -31.9 -59.2
activities
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flow before financing activities -17.3 -14.6 -5.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financing activities
--------------------------------------------------------------------------------
Current borrowings raised 43.8 28.0 76.8
--------------------------------------------------------------------------------
Current borrowings repaid -26.8 -81.8 -98.3
--------------------------------------------------------------------------------
Non-current borrowings raised 103.6 109.7 159.4
--------------------------------------------------------------------------------
Non-current borrowings repaid -102.5 -57.7 -142.4
--------------------------------------------------------------------------------
Dividends paid -9.9 -12.1 -12.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net cash flow from financing 8.1 -13.9 -17.1
activities
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in cash and cash equivalents -9.1 -28.5 -22.5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash and cash equivalents at 1.1. 48.4 73.4 73.4
--------------------------------------------------------------------------------
Effect of changes in exchange rates on -0.2 -1.0 -2.5
cash and cash equivalents
--------------------------------------------------------------------------------
Cash and cash equivalents at 30.6. 39.0 43.9 48.4
--------------------------------------------------------------------------------
FINANCIAL INDICATORS
30.6.2012 30.6.2011 31.12.2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share (EPS), undiluted, EUR -0.09 -0.05 0.18
----------------------------------------------------------------------------
Earnings per share (EPS), diluted, EUR -0.09 -0.05 0.18
----------------------------------------------------------------------------
Equity per share at 31 March, EUR 7.46 7.38 7.67
----------------------------------------------------------------------------
Equity ratio, % 32.7 33.7 33.6
----------------------------------------------------------------------------
Adjusted average number of shares, mil. 55.0 55.0 55.0
----------------------------------------------------------------------------
Gross capital expenditure on PPE, EUR mil. 33.6 32.4 61.0
----------------------------------------------------------------------------
Employees, end of month average 8 164 8 594 8 287
----------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED INTERIM REPORT
ACCOUNTING POLICIES
HKScan Corporation's interim report for 1 January - 30 June 2012 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 2011. There are no IFRS standards or IFRIC
interpretations that have become effective in the period under review that
would have a material impact on the Group. 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 2011.
ANALYSIS BY SEGMENT
Net sales and EBIT by market area
------------------------------------
(EUR million) Q2/2012 Q2/2011 Q1-Q2/2012 Q1-Q2/2011 2011
-----------------------------------------------------------------------------
NET SALES
-----------------------------------------------------------------------------
- Finland 212.8 207.9 410.4 395.9 812.4
-----------------------------------------------------------------------------
- Baltics 46.8 44.1 87.3 83.5 173.3
-----------------------------------------------------------------------------
- Sweden 267.0 263.0 513.9 515.4 1 045.7
-----------------------------------------------------------------------------
- Denmark 51.4 55.9 109.1 113.5 228.1
-----------------------------------------------------------------------------
- Poland 86.9 77.0 167.3 147.5 298.9
-----------------------------------------------------------------------------
- Between segments -20.5 -17.4 -37.6 -32.4 -67.1
-----------------------------------------------------------------------------
Group total 644.3 630.6 1 250.4 1 223.3 2 491.3
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
EBIT
-----------------------------------------------------------------------------
- Finland 2.7 0.7 5.4 0.1 12.1
-----------------------------------------------------------------------------
- Baltics 3.1 2.7 3.8 3.6 9.8
-----------------------------------------------------------------------------
- Sweden -4.2 4.0 -9.7 4.3 17.2
-----------------------------------------------------------------------------
- Denmark 1.5 -0.5 1.7 -1.0 -3.7
-----------------------------------------------------------------------------
- Poland 4.5 2.8 7.9 5.8 12.7
-----------------------------------------------------------------------------
- Between segments - - - - -
-----------------------------------------------------------------------------
Segments total 7.6 9.6 9.2 12.7 48.0
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Group administration costs -2.1 -2.9 -4.3 -4.7 -8.4
-----------------------------------------------------------------------------
Group total 5.5 6.7 4.9 8.0 39.6
-----------------------------------------------------------------------------
NOTES TO THE INCOME STATEMENT
1. NON-RECURRING ITEMS
(EUR million) Q2/2012 Q2/2011 Q1-Q2/2012 Q1-Q2/2011 2011
--------------------------------------------------------------------------------
Insurance claim 1) 9.8 - 9.8 - -
--------------------------------------------------------------------------------
Impairment of stock 1) -0.9 - -0.9 - -
--------------------------------------------------------------------------------
Impairment of fixed assets 2) -5.4 - -5.4 - -
--------------------------------------------------------------------------------
Non-recurring items total 3.5 - 3.5 - -
--------------------------------------------------------------------------------
1) Included in the Income Statement in the item ”Operating income and
expenses”
2) Included in the Income Statement in the item ”Depreciation and
impairment”
NOTES TO THE STATEMENT OF FINANCIAL POSITION
2. CHANGES IN INTANGIBLE ASSETS
(EUR million) Q1-Q2/2012 Q1-Q2/2011 2011
---------------------------------------------------------------------
Carrying amount at beginning of period 76.6 77.1 77.1
---------------------------------------------------------------------
Translation differences 1.0 -1.5 0.3
---------------------------------------------------------------------
Increase 0.6 0.7 2.3
---------------------------------------------------------------------
Increase (acquisitions) - - -
---------------------------------------------------------------------
Decrease 0.0 -0.1 -0.3
---------------------------------------------------------------------
Depreciation and impairment -2.1 -1.9 -4.0
---------------------------------------------------------------------
Transfer to other balance sheet item 0.9 0.7 1.1
---------------------------------------------------------------------
Carrying amount at end of period 77.0 75.0 76.6
---------------------------------------------------------------------
3. CHANGES IN GOODWILL
(EUR million) Q1-Q2/2012 Q1-Q2/2011 2011
---------------------------------------------------------------------
Carrying amount at beginning of period 101.0 100.4 100.4
---------------------------------------------------------------------
Translation differences 0.6 -1.4 0.2
---------------------------------------------------------------------
Increase - 0.4 0.4
---------------------------------------------------------------------
Increase (acquisitions) - 0.0 0.0
---------------------------------------------------------------------
Decrease - - -
---------------------------------------------------------------------
Depreciation and impairment - - -
---------------------------------------------------------------------
Transfer to other balance sheet item - - -
---------------------------------------------------------------------
Carrying amount at end of period 101.6 99.4 101.0
---------------------------------------------------------------------
4. CHANGES IN PROPERTY, PLANT AND EQUIPMENT
---------------------------------------------------
(EUR million) Q1-Q2/2012 Q1-Q2/2011 2011
---------------------------------------------------------------------
Carrying amount at beginning of period 516.5 537.8 537.8
---------------------------------------------------------------------
Translation differences 6.3 -1.8 -7.9
---------------------------------------------------------------------
Increase 31.7 30.3 56.2
---------------------------------------------------------------------
Increase (acquisitions) -0.1 0.7 1.3
---------------------------------------------------------------------
Decrease -0.5 -0.9 -1.2
---------------------------------------------------------------------
Depreciation and impairment -40.0 -34.4 -67.7
---------------------------------------------------------------------
Transfer to other balance sheet item -0.9 -1.5 -1.8
---------------------------------------------------------------------
Carrying amount at end of period 513.0 530.2 516.5
---------------------------------------------------------------------
5. INVENTORIES
(EUR million) Q1-Q2/2012 Q1-Q2/2011 2011
---------------------------------------------------------------------
Materials and supplies 81.7 86.3 88.7
---------------------------------------------------------------------
Unfinished products 11.9 11.2 9.1
---------------------------------------------------------------------
Finished products 70.7 58.3 72.1
---------------------------------------------------------------------
Goods 0.0 0.0 0.0
---------------------------------------------------------------------
Other inventories 7.9 8.1 7.7
---------------------------------------------------------------------
Prepayments for inventories 3.2 2.2 4.5
---------------------------------------------------------------------
Live animals. IFRS 41 8.4 8.2 7.9
---------------------------------------------------------------------
Total inventories 183.8 174.3 190.2
---------------------------------------------------------------------
6. NOTES TO EQUITY
Share Number of Share Share Reserve for Treasury Total
capita outstanding capital premium invested
and share shares reserve unrestricte
premium d
reserve equity
--------------------------------------------------------------------------------
1.1.2012 54 972 788 66.8 72.9 143.5 0.0 283.2
--------------------------------------------------------------------------------
30.6.2012 54 972 788 66.8 72.9 143.5 0.0 283.2
--------------------------------------------------------------------------------
DERIVATIVE INSTRUMENT
LIABILITIES
(EUR million) 30.6.2012 30.6.2011 31.12.2011
---------------------------------------------------------------------------
Nominal values of derivative
instruments
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Foreign exchange derivatives 95.5 77.1 63.2
---------------------------------------------------------------------------
Interest rate derivatives 285.2 276.5 283.8
---------------------------------------------------------------------------
Electricity derivatives 11.0 10.4 11.1
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Fair values of derivative
instruments
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Foreign exchange derivatives -1.3 0.4 -0.5
---------------------------------------------------------------------------
Interest rate derivatives -23.2 -12.2 -23.0
---------------------------------------------------------------------------
Electricity derivatives -1.4 0.5 -1.1
---------------------------------------------------------------------------
OTHER CONSOLIDATED CONTINGENT LIABILITIES
(EUR million) 30.6.2012 30.6.2011 31.12.2011
---------------------------------------------------------------------------
Debts secured by
---------------------------------------------------------------------------
pledges or mortgages
---------------------------------------------------------------------------
- loans from financial 367.9 39.6 34.1
institutions
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Given as security
---------------------------------------------------------------------------
- real estate mortgages 76.0 63.4 63.0
---------------------------------------------------------------------------
- pledges 5.1 6.3 5.1
---------------------------------------------------------------------------
- floating charges 23.5 44.6 22.8
---------------------------------------------------------------------------
---------------------------------------------------------------------------
For associates
---------------------------------------------------------------------------
- guarantees 5.1 5.3 5.2
---------------------------------------------------------------------------
---------------------------------------------------------------------------
For others
---------------------------------------------------------------------------
- guarantees and pledges 13.4 14.0 14.0
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Other contingencies
---------------------------------------------------------------------------
Leasing commitments 23.9 25.8 26.2
---------------------------------------------------------------------------
Rent liabilities 57.9 43.4 61.0
---------------------------------------------------------------------------
Other commitments 7.8 20.3 7.8
---------------------------------------------------------------------------
The parent company has pledged the shares of its subsidiaries, HKScan
Finland Oy and
Scan Ab, as security for its loans.
BUSINESS TRANSACTIONS WITH RELATED PARTIES
-------------------------------------------
(EUR million) Q1-Q2/2012 Q1-Q2/2011 2011
------------------------------------------------------------
Sales to associates 43.7 29.5 73.0
------------------------------------------------------------
Purchases from associates 19.7 24.8 47.3
------------------------------------------------------------
Trade and other receivables 3.7 1.7 2.8
------------------------------------------------------------
Trade and other payables 9.3 8.7 9.1
------------------------------------------------------------
NEXT FINANCIAL REPORT
The HKScan Group's interim report for January-September 2012 will be published
on Tuesday 6 November, 2012.
Vantaa, 10 August 2012
HKScan Corporation
Board of Directors
Further information is available from HKScan Corporation's CEO, Hannu Kottonen.
Please leave any messages for him with HKScan's communications manager Marja
Siltala, firstname.surname@hkscan.com, tel. +358 10 570 2290 or with executive
assistant Marjukka Hujanen, tel. +358 10 570 6218.
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 retail,
the Food Service, industry and export sectors. It had net sales of EUR 2.5
billion in 2011 and some 11 400 employees.
DISTRIBUTION: NASDAQ OMX Helsinki, Main media, www.hkscan.com
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