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Oriola-KD Corporation's Interim Report for 1 January - 30 June 2011
4.8.2011
Oriola-KD Corporation Stock Exchange Release 4 August 2011 at 8.30 a.m.
Oriola-KD Corporation's Interim Report for 1 January - 30 June 2011
This review presents financial information regarding the continuing operations
of the Oriola-KD Group (hereinafter Oriola-KD) for the period January - June
2011. The interim report for 1 January - 30 June 2011 has been prepared in
accordance with the calculation policies of the IAS 34 standard. Oriola-KD
adopted new IAS/IFRS standards in 2011: IAS 32 (amendment), IAS 24 (revised) and
IFRIC 14 (amendment). The figures are unaudited.
Key figures for 1 January - 30 June 2011
* Net sales increased by 18.0 per cent to EUR 1,065.6 million (1 - 6/2010: EUR
903.1 million)
* Operating loss was EUR 29.4 million (1 - 6/2010: operating profit EUR 8.3
million) including an impairment charge of EUR 33.4 million of the Stary
Lekar brand in Russia
* Operating profit excluding one-off items and impairment charges was EUR 4.0
million (1 - 6/2010: EUR 8.3 million)
* Net result was EUR -27.5 million (1 - 6/2010: EUR 4.3 million)
* Earnings per share were EUR -0.18 (1 - 6/2010: EUR 0.03)
* Net cash flow from operations was EUR -16.1 million (1 - 6/2010: EUR 54.1
million)
* Return on equity was -16.8 per cent (1 - 6/2010: 3.0 per cent)
* Oriola-KD's net sales are expected to increase over 10 per cent in 2011
compared to the previous year. Operating profit excluding one-off items and
impairment charges is expected to exceed EUR 20 million in 2011
Key figures for 1 April - 30 June 2011
* Net sales increased by 9.9 per cent to EUR 535.5 million (Q2/2010: EUR
487.3 million)
* Operating loss was EUR 34.4 million (Q2/2010: operating profit EUR 6.9
million) including an impairment charge of EUR 33.4 million of the Stary
Lekar brand in Russia
* Operating loss excluding one-off items and impairment charges was EUR 1.0
million (Q2/2010: operating profit EUR 6.9 million)
* Net result was EUR -29.7 million (Q2/2010: EUR 4.0 million)
* Earnings per share were EUR -0.20 (Q2/2010: EUR 0.03)
President and CEO Eero Hautaniemi: "Oriola-KD's net sales for the second quarter
increased 10 per cent to EUR 536 million, and the operating loss excluding one-
off items and impairment charges was EUR 1 million. The profitability decreased
due to depressed profitability in the retail operations: Low gross margin caused
by fierce competition in Russia, and lower sales compared to 2010 and higher
than expected fixed costs mainly related to IT system implementation in Sweden.
Furthermore, during the second quarter we recognised an impairment charge of EUR
33 million in the value of intangible assets related to the Stary Lekar brand in
Russia due to the essential decline in the pricing power of the brand.
In the second half we will focus on improving our efficiency and profitability.
We will take in use the new information system in the Swedish retail business
during the third quarter, which will decrease our fixed costs starting from the
fourth quarter. We will also accelerate efficiency program in all pharmacies. In
Russian pharmaceutical retail, we will complete the integration of the Stary
Lekar and 03 Apteka pharmacy chains, close unprofitable pharmacies and implement
pricing changes in the retail business. In Russian wholesale, we will implement
a logistics efficiency program, increase regional sales and cut unprofitable
operations."
Financial performance
Oriola-KD's net sales in January-June 2011 were EUR 1,065.6 million (EUR 903.1
million) and operating loss was EUR 29.4 million (operating profit EUR 8.3
million). The operating loss includes an impairment charge of EUR 33.4 million
related to the value of the intangible assets of the Stary Lekar brand in
Russia. Operating profit excluding one-off items and impairment charges was EUR
4.0 million (Q1-2/2010: EUR 8.3 million). Profit after financial items was EUR
-33.4 million (EUR 5.9 million) and net result EUR -27.5 million (EUR 4.3
million). Earnings per share were EUR -0.18 (EUR 0.03).
Second-quarter net sales came to EUR 535.5 million (EUR 487.3 million) and
operating loss to EUR 34.4 million (EUR 6.9 million). The operating loss
includes an impairment charge of EUR 33.4 million related to the value of the
intangible assets of the Stary Lekar brand in Russia. Operating loss excluding
one-off items and impairment charge was EUR 1.0 million (Q2/2010: operating
profit EUR 6.9 million). Profit after financial items was EUR -36.5 million (EUR
5.4 million) and net result EUR -29.7 million (EUR 4.0 million). Earnings per
share in the second quarter were EUR -0.20 (EUR 0.03).
Oriola-KD's financial expenses in January-June 2011 were EUR 4.1 million (EUR
2.3 million). Taxes were EUR 5.9 million positive (EUR -1.6 million), mostly
owing to the change in deferred tax related to the brand write-off. Taxes
corresponding to the result for the January-June 2011 period are entered under
this figure.
Return on equity was -16.8 per cent (3.0 per cent) in January-June 2011.
Balance sheet, financing and cash flow
Oriola-KD's balance sheet total on 30 June 2011 stood at EUR 1,142.2 million
(EUR 1,173.2 million). Cash assets were EUR 106.2 million (EUR 148.1 million),
equity was EUR 301.3 million (EUR 325.9 million) and the equity ratio was 27.0
per cent (28.5 per cent).
During the second quarter of 2011, Oriola-KD recognised an impairment charge of
EUR 33.4 million in the value of intangible assets related to the Stary Lekar
brand in Russia. In the changed competitive environment the pricing power of
Stary Lekar brand has essentially declined.
Of Oriola-KD's group goodwill of EUR 267.5 million, EUR 131.8 million has been
allocated in impairment testing to the cash-generating unit of the Russian
retail and wholesale companies, EUR 109.2 million to the cash-generating unit of
the Swedish pharmaceutical retail business and EUR 26.5 million to the cash-
generating unit of the Swedish pharmaceutical wholesale business. Regardless of
a decline in long-term expectations Oriola-KD does not have a need for goodwill
write-offs based on the impairment tests conducted in July 2011.
Interest-bearing debt at the end of June 2011 was EUR 147.9 million (EUR 223.2
million), interest-bearing net debt was EUR 41.8 million (EUR 75.1 million) and
the gearing ratio was 13.9 per cent (23.0 per cent). Interest-bearing debt
consists of long-term debt financing, advance payments from pharmacies in
Finland and the estimated discounted value of the minority share of the Swedish
pharmacy company that Oriola-KD is obliged to acquire. Oriola-KD has hedged the
interest rate risk of long-term debt financing.
Oriola-KD's committed long-term credit facilities of EUR 102.7 million and EUR
41.8 million in short-term credit account facilities with banks stood unused at
the end of the review period. Oriola-KD's EUR 150 million commercial paper
programme was not in use at the end of the review period. The terms of the
financial covenants were met with a wide margin at the end of June 2011.
Cash flow from operations in January-June 2011 was EUR -16.1 million (EUR 54.1
million), of which changes in working capital accounted for EUR -17.9 million
(EUR 33.6 million). In the Swedish pharmaceutical wholesale business the trade
receivables sales programme was continued during 2011.
Net cash flow from investments was EUR -10.2 million (EUR -153.3 million).
During the January-June 2011 period, cash flow after investments was EUR -26.3
million (EUR -99.2 million).
Investments
Gross investments for January-June 2011 came to EUR 13.6 million (EUR 185.7
million). They include operational investments mostly in establishing new
pharmacies, improving the efficiency of wholesale operations and information
systems.
Personnel
On 30 June 2011, Oriola-KD had a payroll of 5,017 (4,333) employees, 11 per cent
(13 per cent) of whom worked in Finland and the Baltic countries, 26 per cent
(30 per cent) in Sweden, and 63 per cent (57 per cent) in Russia. Personnel
numbers include the members of staff in active employment.
Anne Kariniemi, Vice President, Logistics and Sourcing, and member of the Group
Management Team, resigned on 23 June 2011. Her duties were reorganised within
the present organisation.
Business segments
In accordance with its organisational structure and internal reporting, Oriola-
KD's business segments are, as of 1 January 2011, Pharmaceutical Trade Finland
and Baltics, Pharmaceutical Trade Sweden and Pharmaceutical Trade Russia.
Pharmaceutical Trade Finland and Baltics
Pharmaceutical Trade Finland's net sales in January-June 2011 were EUR 207.3
million (EUR 225.7 million) and its operating profit was EUR 10.3 million (EUR
9.9 million). The invoicing of pharmaceutical wholesale Finland in January-June
was EUR 485.5 was million (EUR 473.8 million) and net sales were EUR 167.0
million (EUR 188.8 million). Net sales of pharmaceutical wholesale Baltics were
EUR 17.2 million (EUR 15.6 million) and net sales of the Consumer Health
business, i.e. consumer health products sold under Oriola-KD's own or exclusive
sales rights, was EUR 23.3 million (EUR 21.5 million).
The net sales of Pharmaceutical Trade Finland and Baltics in the second quarter
of 2011 were EUR 104.8 million (EUR 113.1 million) and its operating profit was
EUR 4.7 million (EUR 5.2 million). Invoicing of pharmaceutical wholesale Finland
in the second quarter came to EUR 245.1 million (EUR 237.1 million) and net
sales to EUR 85.2 million (EUR 95.1 million). Net sales of pharmaceutical
wholesale Baltics were EUR 7.9 million (EUR 7.3 million), while net sales of the
Consumer Health business was EUR 11.8 million (EUR 10.8 million).
The Finnish pharmaceutical market grew by 0.8 per cent (-1.4 per cent) in
January-June 2011. Oriola-KD's market share in the Finnish pharmaceutical
wholesale market was 45.8 per cent (46.2 per cent) in January-June 2011 (source:
IMS Health).
Pharmaceutical Trade Finland and Baltics had 509 (565) employees at the end of
June 2011.
Pharmaceutical Trade Sweden
Pharmaceutical Trade Sweden's net sales in January-June 2011 were EUR 533.9
million (EUR 422.4 million) and its operating profit was EUR 4.2 million (EUR
4.2 million). The operating profit in 2010 included EUR 2.2 million in
preparation costs associated with the launch of pharmacy operations. Competition
in the pharmaceutical retail business in Sweden was stiff and the profitability
of business operations did not reach a satisfactory level. Invoicing of the
pharmaceutical wholesale business in Sweden was EUR 745.8 million (EUR 600.4
million) and net sales were EUR 317.5 million (EUR 276.5 million). Net sales of
the pharmaceutical retail business in Sweden were EUR 246.3 million (EUR 166.3
million). The pharmaceutical retail business has been consolidated with the
Oriola-KD figures as of 19 February 2010.
Second quarter net sales of Pharmaceutical Trade Sweden came to EUR 268.6
million (EUR 241.4 million), of which retail accounted for EUR 122.7 million
(EUR 115.5 million). Wholesale invoicing was EUR 374.3 million (EUR 310.4
million) and net sales EUR 161.1 million (EUR 140.3 million). Pharmaceutical
Trade Sweden's operating profit was EUR 1.9 million (EUR 5.6 million). In the
pharmaceutical retail business, the operating profit was weakened by a decrease
in comparable sales in Swedish Crowns from the previous year as a result of
stiff competition, as well as by fixed costs that were higher than expected and
mainly due to the implementation of an information system.
The aim is to bring the new information system into use during the third
quarter, which will decrease fixed costs in the retail business starting from
the last quarter. Moreover, after the implementation of the information system,
the efficiency program in all pharmacies will be accelerated.
The Swedish pharmaceutical market grew by 4.1 per cent (0.4 per cent) in
January-June 2011. Oriola-KD's market share in the Swedish pharmaceutical
wholesale market was 39.5 per cent (40.4 per cent) and in the retail market
about 13.1 per cent (13.7 per cent) in January-June 2011 (source: IMS Health).
Oriola-KD had a total of 199 (173) pharmacies in Sweden at the end of June
2011.
Pharmaceutical Trade Sweden had 1,305 (1,299) employees at the end of June
2011, of whom 1,064 (997) were employed in retail and 241 (302) in wholesale.
Pharmaceutical Trade Russia
Pharmaceutical Trade Russia's net sales in January-June 2011 were EUR 324.6
million (EUR 255.0 million) and operating loss was EUR 40.7 million (EUR 2.5
million). Operating loss excluding one-off items and impairment charges was EUR
7.4 million (EUR 2.5 million). In Russia, fierce competition decreased the gross
margin in the retail business. In the changed competitive environment the
pricing power of the Stary Lekar brand has essentially declined. During the
second quarter of 2011, Oriola-KD recognised an impairment charge of EUR 33.4
million in the value of intangible assets related to the Stary Lekar brand in
Russia. The net sales of pharmaceutical wholesale in Russia were EUR 280.3
million (EUR 231.9 million) and of retail EUR 65.1 million (EUR 47.5 million).
The figures for the 03 Apteka pharmacy chain have been consolidated with Oriola-
KD's figures as of 31 August 2010.
In the Pharmaceutical Trade Russia, the second-quarter net sales came to EUR
162.2 million (EUR 132.8 million), of which retail accounted for EUR 31.8
million (EUR 23.9 million) and wholesale EUR 140.9 million (EUR 121.3 million).
Operating loss excluding one-off items and impairment charges was EUR 5.7
million (EUR 2.0 million).
The Russian rouble-denominated growth in the commercial pharmaceutical market in
Russia was 6.8 per cent (10.0 per cent) in January-June 2011 (source:
Pharmexpert). Oriola-KD's net sales increased by 28 per cent (8 per cent) in
Russian Roubles in January-June 2011.
At the end of June 2011, Oriola-KD had 262 (181) pharmacies in the Moscow area,
of which 189 (181) operated under the Stary Lekar brand and 73 under the 03
Apteka name. In addition to the main logistics centre in Moscow, there are
twelve regional logistics centres.
Pharmaceutical Trade Russia had 3,202 (2,469) employees at the end of June
2011, of whom 1,613 (1,124) were employed in retail and 1,589 (1,345) in
wholesale.
In the second half of 2011, the operational focus will be on strengthening the
wholesale organisation and improving retail and wholesale efficiency. In the
pharmaceutical retail, the integration of Stary Lekar and 03 Apteka pharmacy
chains will be completed, unprofitable pharmacies will be closed and pricing
changes will be implemented in the retail business. In the wholesale, a
logistics efficiency program will be carried out, regional sales will be
increased and unprofitable operations will be cut.
Related parties
Related parties in the Oriola-KD Group are deemed to comprise the parent company
Oriola-KD Corporation, the subsidiaries and associated companies, the members of
the Board and the President and CEO of Oriola-KD Corporation, other members of
the Group Management Team of the Oriola-KD Group, the immediate family of the
aforementioned persons, the companies controlled by the aforementioned persons,
and the Oriola Pension Foundation. The Group has no significant business
transactions with related parties, except for pension expenses arising from
defined benefit plans with the Oriola Pension Foundation. Oriola-KD Corporation
has given internal loans mainly to the holding companies of the Swedish and
Russian businesses. Oriola-KD Corporation has given no significant sureties on
behalf of Group companies, with the exception of a parent company guarantee for
a loan given to Kronans Droghandel Apotek AB.
Oriola-KD Corporation shares
Trading volume of Oriola-KD Corporation's class A and B shares in January-June
2011:
Trading volume Jan-Jun 2011 Jan-Jun 2010
class A class B class A class B
Trading volume, million 1.5 41.7 3.6 53.8
Trading volume, EUR million 5.1 131.3 16.9 228.4
Highest price, EUR 3.83 3.74 5.47 5.49
Lowest price, EUR 2.50 2.28 3.30 3.30
Closing quotation, end of period, EUR 3.13 2.66 3.95 3.83
In the review period, the traded volume of Oriola-KD Corporation shares,
excluding treasury shares, corresponded to 28.6 per cent (38.0 per cent) of the
total number of shares. The traded volume of class A shares amounted to 3,2 per
cent (7,5 per cent) of the average stock, and that of class B shares, excluding
treasury shares, 40,1 per cent (52,1 per cent) of the average stock.
Oriola-KD Corporation's market capitalisation on 30 June 2011 was EUR 424.5
million (EUR 585.0 million).
At the end of 2011, the company had a total of 151,257,828 shares (151,257,828),
of which 47,163,160 were class A shares (47,217,359) and 104,094,668 were class
B shares (104,040,469). Under Article 3 of the Articles of Association, a
shareholder may demand conversion of class A shares into class B shares. During
January-June 2011, no Class A shares were converted into Class B shares
(450,000).
The company holds 96,822 treasury shares, all of which are class B shares. These
account for 0.06 per cent of the company's shares and 0.009 per cent of the
votes.
The Board of Directors of Oriola-KD has specified the earnings criteria for the
share incentive scheme for the Group's key personnel for the years 2010-2012,
stating that any payment for the 2011 earnings period will be based on Oriola-
KD's earnings per share (EPS) and return on equity (ROE). No payment was made
for the 2010 earnings period in the share incentive scheme for 2010-2012.
Risks
Oriola-KD's Board of Directors has approved the company's risk management policy
in which the risk management operating model, principles, responsibilities and
reporting are specified. The Group's risk management seeks to identify, measure
and manage risks that may threaten Oriola-KD's operations and the achievement of
goals set. The roles and responsibilities relating to risk management have been
determined in the Group.
Oriola-KD's risks are classified as strategic, operational and financial. Risk
management is a key element of the strategic process, operational planning and
daily decision-making at Oriola-KD.
Oriola-KD has identified the following principal strategic and operational risks
in its business:
* growth in number of pharmacies outperforms growth in the market, leading to
intense competition
* competition for market share in pharmaceutical wholesale in a consolidating
market
* ensuring cost efficiency, flexibility and quality
* development of processes and infrastructure required by strategic expansion
* requirements and restrictions on pharmaceutical retail and wholesale imposed
by the authorities, especially price control
* commitment of key employees.
The major financial risks for Oriola-KD involve currency exchange rates,
liquidity, interest rates and credit. Expansion of operations into new business
areas and new markets has increased the financial risks. Currency risks are the
most significant financial risks in Russia and Sweden, as any changes in the
value of the Russian rouble or the Swedish krona will have an impact on Oriola-
KD's financial performance and equity.
Goodwill and intangible rights are subject to impairment testing made at least
once a year. Changes in cash flow forecasts based on strategic plans, or in the
discount rate or perpetuity growth rate, can cause a goodwill write-off, which
would weaken Oriola-KD's result. Especially the impairment test of the goodwill
of the Russian cash-generating unit is more sensitive than before to changes in
the discount rate or cash-flow forecasts.
Near-term risks and uncertainty factors
The tight competition has a material impact on Oriola-KD's retail and wholesale
near-term outlook in Russia. The number of new pharmacies to be established and
the implementation of the information system will have an effect on the
profitability of Oriola-KD's business in Sweden.
Decisions of the Annual General Meeting 2011
The Annual General Meeting held on 6 April 2011 adopted the financial statements
and discharged the members of the Board of Directors and the President and CEO
from liability for the financial year ending 31 December 2010.
The AGM resolved that based on the balance sheet adopted for the financial year
ending 31 December 2010, EUR 0.05 per share shall be paid as dividend and EUR
0.13 per share shall be distributed from the reserve of invested unrestricted
equity as repayment of equity. The payment date of the dividend and the return
of equity is 19 April 2011.
The AGM authorised the Board of Directors to decide on the distribution of
additional dividend from the retained earnings and/or distribution of assets
from the reserves of unrestricted equity or both up to EUR 0.10 per share in
total. The authorisation is in effect until the next annual general meeting.
The AGM confirmed that the Board of Directors consists of eight members. Mr.
Harry Brade, Mr. Per Båtelson, Mr. Pauli Kulvik, Ms. Outi Raitasuo, Mr. Olli
Riikkala and Mr. Mika Vidgrén were re-elected to the Board of Directors, and Mr.
Jukka Alho and Mr. Ilkka Salonen were elected as new members to the Board of
Directors. Mr. Olli Riikkala was re-elected Chairman of the Board of Directors.
The AGM confirmed that the fee for the term of office of the Chairman of the
Board of Directors is EUR 48,400, for the Vice Chairman of the Board EUR 30,250
and for the other members of the Board of Directors EUR 24,200 each. Of the
annual fee, 60 per cent shall be paid in cash and 40 per cent in the company's
class B shares.
PricewaterhouseCoopers Oy, who has put forward authorised public accountant Mr.
Heikki Lassila as principal auditor, was re-elected as the auditor of the
company for the financial year 2011. The auditor's fees shall be paid according
to invoice approved by the company.
The AGM authorised the Board of Directors to decide on repurchasing of up to
fifteen million (15,000,000) of the company's own class B shares, which
currently represents approximately 9.92 per cent of all shares in the company.
Shares may be repurchased also in a proportion other than in which shares are
owned by the shareholders, using funds belonging to the company's unrestricted
equity. The authorisation to repurchase own shares is in force for a period of
not more than eighteen (18) months from the decision of the AGM.
The AGM also authorised the Board of Directors to decide on a share issue
against payment in one or more issues, including the right to issue new class B
shares or assign class B treasury shares held by the company. The authorisation
covers a combined maximum of fifteen million (15,000,000) class B shares of the
company, representing currently approximately 9.92 per cent of all shares in the
company. The authorisation given to the Board of Directors includes the right to
derogate from the shareholders' pre-emptive subscription right. The
authorisation is in effect for a period of eighteen (18) months from the
decision of the AGM.
Decisions of the constitutive meeting of the Board of Directors
In its constitutive meeting after the AGM, the Board of Directors of Oriola-KD
Corporation elected Ms. Outi Raitasuo as Vice Chairman of the Board of
Directors. The Board of Directors appointed from among its members the following
members to the Board's Audit Committee and Remuneration Committee:
Audit Committee:
Chairman Ms. Outi Raitasuo, Mr. Harry Brade, Mr. Ilkka Salonen, Mr. Mika Vidgrén
Remuneration Committee:
Chairman Mr. Olli Riikkala, Mr. Per Båtelson, Mr. Pauli Kulvik
The members to the company's Nomination Committee are elected later in
accordance with the charter of the Nomination Committee.
The Board of Directors has assessed the independence of its members, and
determined that all members of the Board of Directors are independent of the
company and its significant shareholders.
Events after the review period
Oriola-KD revised its outlook for the future on 19 July 2011.
Outlook
Oriola-KD's outlook for 2011 is based on external market forecasts, supplier and
customer agreements and management assessments. In the period 2011-2014, the
pharmaceutical market is expected to grow by some 3 per cent in Finland, 2-3 per
cent in Sweden, and 11-13 per cent in Russia, measured in local currencies
(source: IMS Health). Growth in the Russian pharmaceutical market in 2011 is
expected to be lower than the longer term trend and the tough competition is
expected to continue. The visibility in Russian pharmaceutical market
development continues to be poor. Competition in the Swedish retail market is
expected to continue to be stiff as a result of the deregulation.
Outlook issued on 28 April 2011 concerning net sales and operating profit
Oriola-KD's net sales is expected to be higher and operating profit from
continuing operations excluding one-off items clearly better than in 2010.
Outlook issued on 19 July 2011 concerning net sales and operating profit
Oriola-KD's net sales are expected to increase over 10 per cent in 2011 compared
to the previous year. Operating profit excluding one-off items and impairment
charges is expected to exceed EUR 20 million in 2011.
Tables
Consolidated
Statement of
Comprehensive 1 Jan - 30 1 Jan - 30 1 April - 1 April - 1 Jan - 31
Income (IFRS), June June 30 June 30 June Dec
EUR million 2011 2010 2011 2010 2010
--------------------------------------------------------------------------------
Continuing
operations
Net sales 1,065.6 903.1 535.5 487.3 1,929.4
Cost of goods sold -907.0 -779.9 -457.4 -416.7 -1,668.2
--------------------------------------------------------------------------------
Gross profit 158.6 123.2 78.1 70.6 261.2
Other operating
income 1.4 1.9 0.6 0.8 4.8
Selling and
distribution
expenses -126.3 -98.2 -61.8 -52.5 -214.7
Administrative
expenses -29.6 -18.7 -18.0 -12.0 -41.5
--------------------------------------------------------------------------------
Operating
Profit/Loss before
Impairment * 4.0 8.3 -1.0 6.9 9.8
Impairment ** -33.4 - -33.4 - -
--------------------------------------------------------------------------------
Operating
Profit/Loss -29.4 8.3 -34.4 6.9 9.8
Financial income 5.5 3.4 3.2 2.3 13.0
Financial expenses -9.6 -5.7 -5.2 -3.8 -18.3
--------------------------------------------------------------------------------
Profit/Loss before
taxes -33.4 5.9 -36.5 5.4 4.5
Income taxes *** 5.9 -1.6 6.8 -1.5 -0.9
--------------------------------------------------------------------------------
Profit/Loss for the
period
from continuing
operations -27.5 4.3 -29.7 4.0 3.5
Discontinued
operations
Profit for the
period
from discontinued
operations - 59.3 - 56.8 98.6
--------------------------------------------------------------------------------
Profit/Loss for the
period
including
discontinued
operations -27.5 63.6 -29.7 60.7 102.1
Other comprehensive
income
Net investment in
a foreign operation -0.1 8.2 -0.5 2.5 5.1
Cash flow hedge 0.4 -0.4 -0.4 -0.4 1.2
Income tax relating
to
other comprehensive
income 0.0 -1.6 0.1 -0.5 -1.0
Translation
difference 3.0 30.8 -2.9 17.1 20.0
--------------------------------------------------------------------------------
Total comprehensive
income
for the period
including
discontinued
operations -24.2 100.6 -33.5 79.4 127.4
Attribution of
Profit/Loss for
the period
from continuing
operations
--------------------------------------------------------------------------------
To parent company
shareholders -27.5 4.3 -29.7 4.0 3.5
--------------------------------------------------------------------------------
To non-controlling
interest - - - - -
--------------------------------------------------------------------------------
Attribution of
Profit/Loss for the
period
including
discontinued
operations
--------------------------------------------------------------------------------
To parent company
shareholders -27.5 63.6 -29.7 60.7 102.1
--------------------------------------------------------------------------------
To non-controlling
interest - - - - -
--------------------------------------------------------------------------------
Attribution of
total comprehensive
income for the
period
(including
discontinued
operations)
--------------------------------------------------------------------------------
To parent company
shareholders -24.2 100.6 -33.5 79.4 127.4
--------------------------------------------------------------------------------
To non-controlling
interest - - - - -
--------------------------------------------------------------------------------
Earnings per share
for the period
from continuing
operations
Basic earnings per
share, EUR -0.18 0.03 -0.20 0.03 0.02
Diluted earnings
per share, EUR -0.18 0.03 -0.20 0.03 0.02
Earnings per share
for the period
(including
discontinued
operations)
Basic earnings per
share, EUR -0.18 0.42 -0.20 0.40 0.68
Diluted earnings
per share, EUR -0.18 0.42 -0.20 0.40 0.68
*) Including
depreciation, EUR
million -7.3 -5.1 -3.7 -2.8 -11.1
**) Stary Lekar
-brand impairment,
EUR million -33.4 - -33.4 - -
***) The tax
expense for the
period
corresponds to the
taxes calculated
from the
profit/loss for the
financial year and
a change in
deferred tax caused
by impairment of
Stary Lekar -brand
Consolidated Balance Sheet (IFRS),
EUR million
ASSETS 30 June 2011 30 June 2010 31 Dec 2010
--------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 69.0 61.0 68.0
Goodwill 267.5 258.4 266.1
Other intangible assets 49.9 72.6 79.3
Investments in associated companies 0.0 30.4 0.0
Other non-current assets 10.9 8.3 10.6
Deferred tax assets 4.9 5.7 3.3
--------------------------------------------------------------------------------
Non-current assets total 402.2 436.5 427.2
Current assets
Inventories 315.4 311.8 287.5
Trade and other receivables 318.5 276.8 290.1
Cash and cash equivalents 106.2 148.1 187.8
--------------------------------------------------------------------------------
Current assets total 740.0 736.7 765.4
ASSETS TOTAL 1,142.2 1,173.2 1,192.6
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES 30 June 2011 30 June 2010 31 Dec 2010
--------------------------------------------------------------------------------
Equity
Share capital 36.2 36.2 36.2
Other funds 32.8 50.4 52.1
Retained earnings 232.3 239.3 264.5
Equity of the parent
company shareholders 301.3 325.9 352.7
Non-controlling interests - - -
--------------------------------------------------------------------------------
Equity total 301.3 325.9 352.7
Non-current liabilities
Deferred tax liabilities 15.6 23.1 22.2
Pension obligations 5.7 5.0 5.7
Provisions - - -
Interest-bearing non-current liabilities 122.3 116.6 124.5
--------------------------------------------------------------------------------
Non-current liabilities total 143.6 144.8 152.5
Current liabilities
Trade payables and other current
liabilities 671.6 596.0 633.6
Interest-bearing current liabilities 25.6 106.6 53.7
--------------------------------------------------------------------------------
Current liabilities total 697.3 702.5 687.4
EQUITY AND LIABILITIES TOTAL 1,142.2 1,173.2 1,192.6
--------------------------------------------------------------------------------
Consolidated
Statement
of Changes in
Equity (IFRS)
Equity
of the Non-
Trans- parent cont-
lation Re- company rolling
Share Hedge Other diffe- tained share- inte-
EUR million capital fund funds rences earnings holders rest Total
--------------------------------------------------------------------------------
Equity
1 Jan 2010 36.2 - 50.9 -30.4 186.8 243.4 10.8 254.2
--------------------------------------------------------------------------------
Dividends paid - - - - -18.1 -18.1 - -18.1
Change in non-
controlling interest - - - - - - -10.8 -10.8
Share-based payments - - - - 0.1 0.1 - 0.1
Net profit/loss for
the period - - - - 63.6 63.6 - 63.6
Other comprehensive
income:
Net investment in
a foreign operation - - - 8.2 - 8.2 - 8.2
Cash flow hedge - -0.4 - - - -0.4 - -0.4
Income tax relating
to
other comprehensive
income - - - -1.6 - -1.6 - -1.6
Translation
difference - - -0.1 30.8 - 30.7 - 30.7
--------------------------------------------------------------------------------
Equity
30 June 2010 36.2 -0.4 50.8 7.0 232.4 325.9 - 325.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity
1 Jan 2011 36.2 1.2 50.9 -6.3 270.8 352.7 - 352.7
--------------------------------------------------------------------------------
Dividends paid and
return of equity - - -19.7 - -7.6 -27.2 - -27.2
Net profit/loss for
the period - - - - -27.5 -27.5 - -27.5
Other comprehensive
income:
Net investment in
a foreign operation - - - -0.1 - -0.1 - -0.1
Cash flow hedge - 0.4 - - - 0.4 - 0.4
Income tax relating
to
other comprehensive
income - - - 0.0 - 0.0 - 0.0
Translation
difference - - - 3.0 - 3.0 - 3.0
--------------------------------------------------------------------------------
Equity
30 June 2011 36.2 1.6 31.2 -3.4 235.7 301.3 - 301.3
--------------------------------------------------------------------------------
Consolidated Cash Flow
Statement * 1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
(IFRS), EUR million 2011 2010 2010
--------------------------------------------------------------------------------
Operating profit /loss -29.4 14.2 17.1
Depreciation 7.3 5.5 11.5
Impairment 33.4 - -
Change in working capital -17.9 33.6 73.4
Cash flow from financial
items and taxes -10.8 -7.5 -18.1
Other adjustments 1.3 8.4 4.8
Net cash flow from operating
activities -16.1 54.1 88.7
Net cash flow from investing
activities -10.2 -153.3 -104.7
Net cash flow from financing
activities -55.3 108.0 61.2
Net change in cash and cash
equivalents -81.6 8.9 45.2
Cash and cash equivalents
at the beginning of the period 187.8 133.7 133.7
Foreign exchange rate
differences -0,0 5.5 8.9
Net change in cash and cash
equivalents -81.6 8.9 45.2
Cash and cash equivalents
at the end of the period 106.2 148.1 187.8
--------------------------------------------------------------------------------
*) Includes net cash flow of
Healthcare
Trade until 31 May 2010 and
net cash
flow of Dental Trade until 28
October 2010.
Change in Property, Plant and
Equipment, 1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
EUR million 2011 2010 2010
--------------------------------------------------------------------------------
Carrying amount at the
beginning of the period 68.0 53.3 53.3
Increases through acquisitions
of subsidiary shares - 8.9 9.7
Increases 6.8 4.5 14.3
Decreases -0.4 -4.0 -5.2
Depreciation -4.5 -3.7 -7.6
Foreign exchange rate
differences -0.8 2.1 3.4
--------------------------------------------------------------------------------
Carrying amount at the end of
the period 69.0 61.0 68.0
--------------------------------------------------------------------------------
1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
Key Figures 2011 2010 2010
--------------------------------------------------------------------------------
Equity ratio, % 27.0 28.5 30.8
Equity per share, EUR 1.99 2.16 2.33
Return on capital employed
(ROCE)
from continuing operations, % -12.0 3.5 2.1
Return on capital employed
(ROCE)
incl. discontinued operations,
% -12.0 28.6 23.3
Return on equity from
continuing operations, % -16.8 3.0 1.2
Return on equity incl.
discontinued operations, % -16.8 43.9 33.7
Net interest-bearing debt, EUR
million 41.8 75.1 -9.5
Gearing, % 13.9 23.0 -2.7
Earnings per share from
continuing operations, EUR -0.18 0.03 0.02
Earnings per share incl.
discontinued operations, EUR -0.18 0.42 0.68
Average number of shares,
1000 pcs 151,161 151,167 151,164
Derivatives, Commitments
and Contingent Liabilities
30 June 2011
Positive fair Negative fair Nominal values of
EUR million value value contracts
Derivatives recognised as
cash flow hedges
Interest rate swaps 1.6 - 109.0
Derivatives measured at
fair value through profit or
loss
Foreign currency forward and
swap contracts 0.1 - 11.6
30 June 2010
Positive fair Negative fair Nominal values of
EUR million value value contracts
Derivatives recognised
as cash flow hedges
Interest rate swaps - -0.4 105.0
Derivatives measured at
fair value through profit or
loss
Foreign currency forward and
swap contracts 0.6 - 59.3
Contingencies for Own
Liabilities,
EUR million 30 June 2011 30 June 2010 31 Dec 2010
--------------------------------------------------------------------------------
Guarantees given 121.6 119.4 125.4
Mortgages on land and
buildings 2.0 2.0 2.0
Mortgages on company assets 2.3 2.2 2.3
Other guarantees and
liabilities 0.5 0.1 0.5
--------------------------------------------------------------------------------
Total 126.4 123.7 130.3
--------------------------------------------------------------------------------
Leasing-liabilities (operating
liabilities) 0.8 1.2 0.9
Rent contingencies 62.8 59.6 66.5
1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
Net Sales by Operating
Segments, EUR million 2011 2010 2010
--------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 207.3 225.7 448.3
Pharmaceutical Trade Sweden 533.9 422.4 908.7
Pharmaceutical Trade Russia 324.6 255.0 572.4
Net sales to other segments -0.2 -0,0 -0,0
--------------------------------------------------------------------------------
Continuing operations total 1,065.6 903.1 1,929.4
Operating Profit/Loss by
Operating Segments, 1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
EUR million 2011 2010 2010
--------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 10.3 9.9 21.4
Pharmaceutical Trade Sweden 4.2 4.2 12.5
Pharmaceutical Trade Russia -40.7 -2.5 -18.1
Group Administration and
Others -3.1 -3.5 -6.0
--------------------------------------------------------------------------------
Continuing operations total -29.4 8.3 9.8
1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
One-off costs and Impairment,
EUR million 2011 2010 2010
--------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics - - -
Pharmaceutical Trade Sweden * - - -2.8
Pharmaceutical Trade Russia ** -33.4 - -10.0
Group Administration and
Others - - -
--------------------------------------------------------------------------------
One-off costs and Impairment
total -33.4 - -12.7
*) Write-off of a receivable
relating to the bankruptcy of
a pharmaceutical company EUR
-1.7 million and a provision
related to restructuring of
the pharmaceutical wholesale
operations EUR -1.1 million
**) Stary Lekar -brand
impairment EUR -33.4 million
and a write-off of a trade
receivable relating to the
bankruptcy of a pharmaceutical
chain EUR -2.1 million
and purchase-related discounts
booked in stock value EUR -7.9
million
Operating Profit/Loss by
Operating Segments
excl. One-off costs and
Impairment 1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
EUR million 2011 2010 2010
--------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 10.3 9.9 21.4
Pharmaceutical Trade Sweden 4.2 4.2 15.3
Pharmaceutical Trade Russia -7.4 -2.5 -8.2
Group Administration and
Others -3.1 -3.5 -6.0
--------------------------------------------------------------------------------
Continuing operations total
excl. One-off costs and
Impairment 4.0 8.3 22.5
One-off costs and impairment -33.4 - -12.7
--------------------------------------------------------------------------------
Continuing operations total -29.4 8.3 9.8
Continuing operations
Average number of personnel 4,959 4,244 4,512
Number of personnel at the end
of the period 5,017 4,333 4,954
Group total
Average number of personnel 4,959 4,571 4,675
Number of personnel at the end
of the period 5,017 4,333 4,954
Net Sales by Operating Segments,
EUR million Q2/2011 Q1/2011 Q4/2010 Q3/2010 Q2/2010 Q1/2010
--------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 104.8 102.5 111.5 111.1 113.1 112.6
Pharmaceutical Trade Sweden 268.6 265.3 246.8 239.5 241.4 181.0
Pharmaceutical Trade Russia 162.2 162.4 169.6 147.8 132.8 122.1
Net sales to other segments -0.1 -0.1 -0.0 -0.0 -0.0 -0.0
--------------------------------------------------------------------------------
Continuing operations total 535.5 530.1 527.8 498.5 487.3 415.7
Operating Profit/Loss by
Operating Segments,
EUR million Q2/2011 Q1/2011 Q4/2010 Q3/2010 Q2/2010 Q1/2010
--------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 4.7 5.6 5.3 6.2 5.2 4.8
Pharmaceutical Trade Sweden 1.9 2.3 3.3 4.9 5.6 -1.4
Pharmaceutical Trade Russia -39.1 -1.6 0.1 -15.7 -2.0 -0.4
Group Administration and Others -1.9 -1.2 -1.4 -1.2 -1.9 -1.6
--------------------------------------------------------------------------------
Continuing operations total -34.4 5.0 7.3 -5.8 6.9 1.3
One-off costs and Impairment,
EUR million Q2/2011 Q1/2011 Q4/2010 Q3/2010 Q2/2010 Q1/2010
--------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics - - - - - -
Pharmaceutical Trade Sweden * - - -1.1 -1.7 - -
Pharmaceutical Trade Russia ** -33.4 - - -10.0 - -
Group Administration and Others - - - - - -
--------------------------------------------------------------------------------
One-off costs and Impairment
total -33.4 - -1.1 -11.7 - -
*) Write-off of a receivable
relating to the bankruptcy of a
pharmaceutical company EUR -1.7
million (Q3/2010) and a
provision related to
restructuring of the
pharmaceutical wholesale
operations EUR -1.1 million
(Q4/2010)
**) Stary Lekar -brand
impairment EUR -33.4 million
(Q2/2011) and a write-off of a
trade receivable relating to the
bankruptcy of a pharmaceutical
chain EUR -2.1 million (Q3/2010)
and purchase-related discounts
booked in stock value EUR -7.9
million (Q3/2010)
Operating Profit/Loss by
Operating Segments,
excl. One-off costs and
Impairment
EUR million Q2/2011 Q1/2011 Q4/2010 Q3/2010 Q2/2010 Q1/2010
--------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 4.7 5.6 5.3 6.2 5.2 4.8
Pharmaceutical Trade Sweden 1.9 2.3 4.5 6.6 5.6 -1.4
Pharmaceutical Trade Russia -5.7 -1.6 0.1 -5.7 -2.0 -0.4
Group Administration and Others -1.9 -1.2 -1.4 -1.2 -1.9 -1.6
--------------------------------------------------------------------------------
Continuing operations total
excl.
One-off costs and Impairment -1.0 5.0 8.4 5.9 6.9 1.3
One-off costs and impairment -33.4 - -1.1 -11.7 - -
--------------------------------------------------------------------------------
Continuing operations total -34.4 5.0 7.3 -5.8 6.9 1.3
1 Jan - 30 June 1 Jan - 30 June 1 Jan - 31 Dec
Net Sales by Market, EUR million 2011 2010 2010
-------------------------------------------------------------------------------
Finland 189.6 211.5 417.6
Sweden 520.5 409.4 882.6
Russia 324.6 255.0 572.4
Baltic countries 16.4 15.6 30.5
Other countries 14.4 11.6 26.4
-------------------------------------------------------------------------------
Continuing operations total 1,065.6 903.1 1,929.4
Net Sales by Market, EUR million Q2/2011 Q1/2011 Q4/2010 Q3/2010 Q2/2010 Q1/2010
--------------------------------------------------------------------------------
Finland 96.5 93.1 103.5 102.6 106.5 105.0
Sweden 262.1 258.4 239.6 233.5 235.3 174.2
Russia 162.2 162.4 169.6 147.8 132.8 122.1
Baltic countries 7.7 8.7 7.8 7.0 7.3 8.3
Other countries 6.9 7.5 7.4 7.4 5.4 6.2
--------------------------------------------------------------------------------
Continuing operations total 535.5 530.1 527.8 498.5 487.3 415.7
Espoo, 3 August 2011
Oriola-KD Corporation's Board of Directors
Oriola-KD Corporation
Eero Hautaniemi
President and CEO
Kimmo Virtanen
Executive Vice President and CFO
Further information:
Eero Hautaniemi
President and CEO
tel. +358 (0)10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Kimmo Virtanen
Executive Vice President and CFO
tel. +358 (0)10 429 2069
e-mail: kimmo.virtanen@oriola-kd.com
Pellervo Hämäläinen
Vice President, Communications and IR
tel. +358 (0)10 429 2497
e-mail: pellervo.hamalainen@oriola-kd.com
Distribution
NASDAQ OMX Helsinki Ltd
Principal media
Published by:
Oriola-KD Corporation
Corporate Communications
Orionintie 5
FI-02200 Espoo, Finland
www.oriola-kd.com
[HUG#1536013]