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Oriola-KD Corporation's Interim Report for 1 January - 30 September 2015
22.10.2015
Oriola-KD Corporation Stock Exchange Release 22 October 2015 at 8.30 a.m.
Oriola-KD Corporation's Interim Report for 1 January - 30 September 2015
Financial performance July-September 2015
* Invoicing, indicating volume, of the business increased by 5.4 (-1.2) per
cent to EUR 787.7 (747.2) million
* Net sales decreased by 3.3 per cent to EUR 377.1 (389.8) million
* EBITDA excluding non-recurring items increased by 5.0 per cent to EUR 23.1
(22.0) million
* EBITDA was EUR 24.0 (21.9) million
* Operating profit excluding non-recurring items was EUR 17.5 (16.3) million
* Operating profit was EUR 18.4 (16.3) million
* Net cash flow from operations was EUR 16.2 (-10.5) million
* Profit for the period totalled EUR 13.8 (11.6) million and earnings per
share were EUR 0.08 (0.07)
Financial performance January-September 2015
* Invoicing, indicating volume, of the business increased by 7.1 (-2.1) per
cent to EUR 2,404.2 (2,245.5) million
* Net sales increased by 0.9 per cent to EUR 1,205.5 (1,194.6) million
* EBITDA excluding non-recurring items increased by 3.0 per cent to EUR 62.4
(60.5) million
* EBITDA was EUR 62.1 (59.5) million
* Operating profit excluding non-recurring items was EUR 45.5 (44.0) million
* Operating profit was EUR 45.3 (42.9) million
* Net cash flow from operations was EUR 55.1 (-19.2) million
* Profit for the period totalled EUR 32.1 (28.5) million and earnings per
share were EUR 0.18 (0.17)
Key figures 2015 2014 Change 2015 2014 Change 2014
EUR million 7-9 7-9 % 1-9 1-9 % 1-12
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Net sales 377.1 389.8 -3.3 1,205.5 1,194.6 0.9 1,612.3
EBITDA excluding
non-recurring items 23.1 22.0 5.0 62.4 60.5 3.0 81.3
EBITDA 24.0 21.9 9.5 62.1 59.5 4.4 87.2
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Operating profit
excluding non-
recurring items 17.5 16.3 7.1 45.5 44.0 3.6 59.1
Operating profit 18.4 16.3 13.3 45.3 42.9 5.5 65.0
Operating profit %
excluding non-
recurring items 4.6 4.2 3.8 3.7 3.7
Operating profit % 4.9 4.2 3.8 3.6 4.0
Profit for the
period 13.8 11.6 19.5 32.1 28.5 12.8 46.5
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Earnings per share,
EUR( 1)) 0.08 0.07 11.4 0.18 0.17 1.7 0.28
Net cash flow from
operating
activities 16.2 -10.5 55.1 -19.2 -10.8
Return on equity
(ROE), % 30.7 -41.5 23.7
Gearing, % 16.4 86.9 90.1
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(1)) Calculated based on the rights issue -adjusted weighted average
number of shares, comparative figures adjusted accordingly.
Outlook for 2015
Oriola-KD estimates its full-year net sales to remain at the 2014 level.
Operating profit excluding non-recurring items is estimated to increase from the
2014 level. Full-year net sales for continuing operations were EUR 1,612.3
million and operating profit excluding non-recurring items was EUR 59.1 million.
President and CEO Eero Hautaniemi's comments regarding the interim report:
"Swedish businesses net sales increased and operating profit excluding non-
recurring items improved from corresponding period in January-September, on a
constant currency basis operating profit excluding non-recurring items increased
by approximately EUR 2.3 million.
Profitability of the Swedish retail business was supported by increased sales of
OTC and traded goods and cost control. Profitability was negatively affected by
significant decrease of parallel import from the corresponding period and price
cuts set by Swedish authorities in fourth quarter of 2014 and in second quarter
of 2015. Positive development of the Swedish wholesale business was supported by
the new agreements with pharmaceutical companies signed in 2014 and increased
efficiency. In accordance with our plan, we opened a web shop in Sweden in
September. The product assortment of the web shop represents the entire Kronans
Apotek pharmacy chain product assortment.
In the Finnish wholesale business we renewed significant long term cooperation
agreements with MSD and Orifarm in the third quarter. The result of the Finnish
wholesale improved due to increase volume and services sales to pharmaceutical
companies.
Oriola-KD's updated strategy, new operating model and long term financial
targets were published on 18 August 2015. The new operating model and
responsibilities will be effective as of 1 January 2016."
Oriola-KD Corporation's interim report 1 January-30 September 2015
The commentary of this financial statements release focuses on the January -
September 2015 result. A comparison in accordance with the International
Financial Reporting Standards (IFRS) has been carried out on the figures for the
corresponding period in 2014, unless otherwise stated. The figures in this
interim report are unaudited. The results related to the Russian businesses sold
in December 2014 are presented as discontinued operations separately from the
results from continuing operations in January - September 2015 and comparative
period 2014 results have been revised to correspond to continuing operations.
The consolidated statement of financial position for the comparative period
2014 includes the assets and liabilities of discontinued operations. The
consolidated statement of cash flows for the comparative period 2014 includes
net cash flow of discontinued operations. The figures in the tables have been
rounded independently.
2015 2014 2014
Key Figures (1)) 1-9 1-9 1-12
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Goodwill, EUR million 250.5 285.4 250.9
Equity, EUR million 175.5 211.3 113.6
Interest-bearing debt, EUR
million 128.3 252.6 193.9
Net interest-bearing debt, EUR
million 28.9 183.7 102.4
Total assets, EUR million 928.7 1,267.5 874.0
Equity ratio, % 19.6 17.2 13.3
Return on equity (ROE), % 30.7 -41.5 23.7
Return on capital employed
(ROCE), % 20.2 -14.7 14.4
Gearing, % 16.4 86.9 90.1
Net debt / rolling 12-month
EBITDA from continuing operations 0.3 2.4 1.2
Equity per share, EUR 0.97 1.40 0.75
Earnings per share, continuing
operations, EUR( 3)) 0.18 0.17 0.28
Earnings per share, incl.
Discontinued operations, EUR( 3)) 0.18 -0.51 -1.33
Average number of shares, 1000
pcs (2) 3)) 176,204 160,745 160,741
Average number of personnel,
continuing operations 2,320 2,390 2,377
Number of personnel at the end of
the period, continuing operations 2,346 2,333 2,356
Gross investments, continuing
operations ,EUR million 13.2 22.0 25.7
(1)) Comparative balance sheet items include discontinued operations unless
otherwise stated.
(2)) Treasury shares held by the company
not included
(3)) Calculated based on the rights issue -adjusted weighted average number of
shares, comparative figures adjusted accordingly.
Changes in the Group Structure in January-September 2015
There were no changes in the Group structure during the period.
A decision to complete the following subsidiary mergers has been made in order
to simplify Oriola-KD Group structure: SIA Rigas Elizabetes aptieka will merge
into SIA Panpharmacy, Aloiro AB will merge into Oriola Oy, Oriola-KD Holding
Sverige AB will merge into Oriola-KD Holding Oy after which Oriola-KD Holding Oy
will merge into Oriola-KD Oyj. The mergers are expected to be completed by
31.12.2015.
The Group's net sales and result for July-September 2015
Oriola-KD's third quarter net sales were EUR 377.1 (389.8) million. Operating
profit excluding non-recurring items was EUR 17.5 (16.3) million, operating
profit was EUR 18.4 (16.3) million.
Profit after financial items was EUR 17.1 (14.8) million and profit for the
period was EUR 13.8 (11.6) million. Oriola-KD's net financial expenses were EUR
1.3 (1.4) million. Earnings per share were EUR 0.08 (0.07).
The Group's net sales and result for January-September 2015
Oriola-KD's net sales increased by 0.9 (-1.3) per cent to EUR 1,205.5 (1,194.6)
million and operating profit excluding non-recurring items increased by 3.6
(72.6) per cent to EUR 45.5 (44.0) million. Operating profit was EUR 45.3 (42.9)
million. The depreciation of the Swedish krona from the corresponding period
negatively affected the euro denominated operating profit by approximately EUR
2.3 million.
Profit after financial items was EUR 40.5 (36.9) million and profit for the
period was EUR 32.1 (28.5) million. Oriola-KD's net financial expenses were EUR
4.8 (6.0) million. Income taxes were 8.3 (8.4) which corresponds to effective
tax rate of 20.6 (22.8) per cent. Earnings per share were EUR 0.18 (0.17).
Reportable segments
Oriola-KD's reportable segments are Pharmaceutical Trade Sweden and
Pharmaceutical Trade Finland and Baltics. Oriola-KD has formed its reportable
segments by combining its operating segments. The Pharmaceutical Trade Sweden
reporting segment comprises the Swedish pharmaceutical retail and Swedish
pharmaceutical wholesale operating segments. The Pharmaceutical Trade Finland
and Baltics reporting segment comprises the Finnish pharmaceutical wholesale
business, the Consumer Health and the Pharmaceutical Trade Baltics operating
segments.
In December 2014 Oriola-KD sold its Russian businesses and as a result
classifies the Pharmaceutical Trade Russia reportable segment as discontinued
operations.
Pharmaceutical Trade Sweden
Key Figures 2015 2014 Change 2015 2014 Change 2014
EUR million 7-9 7-9 % 1-9 1-9 % 1-12
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Net Sales 270.8 281.3 -3.7 887.3 878.3 1.0 1,176.4
Retail business 183.1 181.1 1.1 559.8 556.3 0.6 744.2
Wholesale business 166.6 181.0 -7.9 574.0 570.0 0.7 761.2
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Operating profit excluding non-
recurring items 13.4 12.4 7.5 34.9 33.7 3.3 44.0
Retail business 10.3 9.9 3.7 26.3 26.0 1.0 33.8
Wholesale business 3.0 2.5 21.6 8.6 7.9 8.6 10.4
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Operating profit 13.4 12.3 8.1 34.9 32.7 6.6 50.5
Retail business 10.3 9.9 4.5 26.3 25.0 5.1 32.8
Wholesale business 3.0 2.5 21.6 8.6 7.9 8.6 17.9
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Operating profit % excluding
non-recurring items 4.9 4.4 3.9 3.8 3.7
Retail business 5.6 5.5 4.7 4.7 4.5
Wholesale business 1.8 1.4 1.5 1.4 1.4
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Operating profit % 4.9 4.4 3.9 3.7 4.3
Retail business 5.6 5.4 4.7 4.5 4.4
Wholesale business 1.8 1.4 1.5 1.4 2.4
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Number of personnel at the end
of period 1,824 1,790 1,792
Retail business 1,558 1,512 1,524
Wholesale business 266 278 268
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July-September 2015
The third quarter net sales of Pharmaceutical Trade Sweden were EUR 270.8
(281.3) million. Operating profit excluding non-recurring items was EUR 13.4
(12.4) million and operating profit was EUR 13.4 (12.3) million. Retail business
net sales were EUR 183.1 (181.1) million. Operating profit excluding non-
recurring items for the retail business was EUR 10.3 (9.9) million and operating
profit was EUR 10.3 (9.9) million. The net sales of the wholesale business
totalled EUR 166.6 (181.0) million and operating profit was EUR 3.0 (2.5)
million. Invoicing for the wholesale business was EUR 394.5 (368.0) million.
Invoicing of the wholesale business was supported by volume growth of
consignment stock sales. Oriola-KD opened web shop in Sweden in the third
quarter. The product assortment of the web shop represents Kronans Apotek's
product assortment.
January-September 2015
The pharmaceutical market in Sweden grew by 8.2 (2.8) per cent (source: IMS
Health) and the retail market for OTC products and traded goods grew by 6.7
(5.9) per cent (source: Apoteksföreningen) in Swedish krona in January-September
2015. Parallel imports' share of the Swedish pharmaceutical market was 10.6
(17.4) per cent (source: IMS Health). Oriola-KD's market share of the
pharmaceutical retail market in January-September 2015 was 18.6 (19.0) per cent
(source: Apoteksföreningen), Oriola-KD estimates that its share of the Swedish
pharmaceutical wholesale market was approximately 39 (38) per cent. Number of
pharmacies in Sweden increased by eight pharmacies in January-September 2015, at
the end of September 2015 there were 1,345 pharmacies in Sweden. At the end of
the reporting period Oriola-KD had a total of 307 (303) pharmacies in Sweden.
The net sales of Pharmaceutical Trade Sweden in January - September 2015
increased by 1.0 (-1.7) per cent to EUR 887.3 (878.3) million, and on a constant
currency basis, net sales increased by 4.7 (3.5) per cent. Retail business net
sales were EUR 559.8 (556.3) million and wholesale business net sales totalled
EUR 574.0 (570.0) million. On a constant currency basis wholesale business net
sales increased by 4.3 (22.9) per cent and retail business net sales increased
by 4.4 (5.4) per cent.
Invoicing, indicating volume, of the wholesale business increased by 9.7 (-1.3)
per cent to EUR 1,230.3 (1,121.6) million. On a constant currency basis
invoicing increased by 13.7 (4.0) per cent.
The Swedish retail business' EBITDA excluding non-recurring items was EUR 38.4
(37.7) million and EBITDA was EUR 38.4 (36.6) million in January - September
2015. The EBITDA percentage excluding non-recurring items and the management fee
for the retail business was 7.1 (6.9) per cent. The wholesale business' EBITDA
was EUR 9.9 (9.8) million.
Pharmaceutical Trade Sweden's operating profit excluding non-recurring items
increased by 3.3 (108.2) per cent to EUR 34.9 (33.7) million. Operating profit
was EUR 34.9 (32.7) million. On a constant currency basis operating profit
excluding non-recurring items increased by 7.1 (119.3) per cent. Operating
profit excluding non-recurring items for the Swedish retail business totalled
EUR 26.3 (26.0) million and operating profit was EUR 26.3 (25.0) million.
Operating profit for the Swedish wholesale business was EUR 8.6 (7.9) million.
Profitability of the Swedish retail business was supported by increased sales of
OTC and traded goods and cost control. Operating profit was negatively affected
by significant decrease of parallel import from the corresponding period and
price cuts set by Swedish authorities in fourth quarter of 2014 and in second
quarter of 2015. Increased sales of the new expensive prescription medicine with
low margins negatively affected the relative profitability of the Swedish retail
business. The relative share of OTC and traded goods from the net sales was
26.2 (26.9) per cent.
Positive development of the Swedish wholesale business was supported by the new
agreements with pharmaceutical companies signed in 2014 and increased
efficiency.
Pharmaceutical Trade Finland and Baltics
Key Figures 2015 2014 Change 2015 2014 Change 2014
EUR million 7-9 7-9 % 1-9 1-9 % 1-12
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Net Sales 106.3 108.5 -2.0 318.2 316.3 0.6 435.9
Pharmaceutical wholesale in
Finland 84.5 87.0 -2.9 250.7 252.9 -0.8 348.7
Pharmaceutical wholesale in
Baltics 11.5 11.5 0.3 35.9 33.7 6.6 46.6
Consumer Health 10.5 10.1 3.9 32.0 30.1 6.5 40.9
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Operating profit excluding non-
recurring items 5.8 5.5 3.8 15.4 14.7 4.6 19.6
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Operating profit 5.6 5.5 0.7 14.4 14.7 -2.0 19.2
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Operating profit % excluding non- 5.4 5.1 4.8 4.7 4.5
recurring items
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Operating profit % 5.3 5.1 4.5 4.7 4.4
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Number of personnel at the end of
period 486 504 523
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July-September 2015
The third quarter net sales of Pharmaceutical Trade Finland and Baltics were EUR
106.3 (108.5) million. Operating profit excluding non-recurring items was EUR
5.8 (5.5) million and operating profit was EUR 5.6 (5.5) million. The net sales
of the wholesale business in Finland was EUR 84.5 (87.0) million and invoicing
totalled EUR 262.8 (253.5) million. Net sales of the wholesale business in the
Baltic countries were EUR 11.5 (11.5) million. Net sales of the Consumer Health
business were EUR 10.5 (10.1) million.
On 25 September 2015 Oriola-KD decided to transfer the management of its Finnish
companies' statutory occupational pensions and associated pension portfolio from
Oriola Pension Fund to Ilmarinen Mutual Pension Insurance Company and
supplementary pension benefits and the associated pension portfolio to OP Life
Assurance Company Ltd. The transfer will take place according to the plan on 31
December 2015. The transfer is subject to the approval of the Finnish Financial
Supervisory Authority.
January-September 2015
The Finnish pharmaceutical market grew by 2.5 (4.0) per cent in January -
September 2015 (source: IMS Express). Oriola-KD's share of the Finnish
pharmaceutical wholesale market was 46.2 (45.6) per cent in January - September
2015 (source: ATY).
The net sales of Pharmaceutical Trade Finland and Baltics increased by 0.6 (0.1)
per cent to EUR 318.2 (316.3) million. Operating profit excluding non-recurring
items increased by 4.6 (0.7) per cent to EUR 15.4 (14.7) million. Operating
profit decreased by 2.0 per cent to EUR 14.4 (14.7) million. Oriola-KD
recognised EUR 0.9 (-) million non-recurring items during January-September
related to co-operative negotiations concerning Oriola-KD's personnel in
Finland.
The net sales of the wholesale business in Finland was EUR 250.7 (252.9)
million. Net sales of the wholesale business in the Baltic countries were EUR
35.9 (33.7) million. Net sales of the Consumer Health business were EUR 32.0
(30.1) million.
Invoicing, indicating volume, of the Finnish wholesale business increased by
5.1 (-3.0) per cent to EUR 779.6 (741.6) million.
The EBITDA excluding non-recurring items of Pharmaceutical Trade Finland and
Baltics was EUR 18.6 (17.7) million and EBITDA was EUR 17.7 (17.7) million.
In Finnish wholesale business Oriola-KD renewed long term cooperation agreements
with MSD and Orifarm in the third quarter of 2015. Positive development of
invoicing was supported by an increase in sales of the key pharmaceutical
companies in the Finnish wholesale business. Service sales to the pharmaceutical
companies strengthened in Finnish wholesale business. Increased sales of
Oriolashop.fi supported the positive development of Consumer Health business'
net sales. Orion's traded goods products moved over to Oriolashop.fi as of 1
September 2014. However, as a result of continued tight competitive environment,
profitability of Consumer Health business decreased from the corresponding
period due to increased discounts.
Non-recurring items
A non-recurring item is an income or expense arising from non-recurring or rare
events. Gains or losses from the sale or discontinuation of business operations
or assets, gains or losses from restructuring business operations, and
impairment losses of goodwill and other non-current assets are recognised by
Oriola-KD as non-recurring items. In addition, changes in estimates regarding
the realisation of contingent consideration arising from business acquisitions
are presented within non-recurring items.
Non-recurring items included in Operating Profit 2015 2014 2015 2014 2014
EUR million 7-9 7-9 1-9 1-9 1-12
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Pharmaceutical Trade Sweden
Restructuring costs - -0.1 - -1.0 -1.0
Gain on sale of property - - - - 7.5
Pharmaceutical Trade Finland and Baltics
Restructuring costs -0.1 - -0.9 - -
Service award arrangement - - - - -0.5
Group items
Restructuring costs -0.1 - -0.5 - -
Revaluation of contingent consideration 1.1 - 1.1 - -
Service award arrangement - - - - -0.1
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Total 0.9 -0.1 -0.2 -1.0 5.9
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Non-recurring items reported in January - September 2015 relate to restructuring
charges in Finnish pharmaceutical wholesale business, Consumer Health and Group
functions as well as the revaluation of a contingent consideration related to
the Medstop acquisition. Non-recurring items reported January-September 2014
relate to restructuring charges in Pharmaceutical Trade Sweden.
Balance sheet, financing and cash flow
Oriola-KD's total assets at 30 September 2015 were EUR 928.7 (1,267.5) million.
Cash and cash equivalents totalled EUR 99.5 (68.9) million and equity was EUR
175.5 (211.3) million. The equity ratio was 19.6 (17.2) per cent and gearing was
16.4 (86.9) per cent. The comparative information includes discontinued
operations.
Oriola-KD rearranged its long-term revolving credit facility and term loan
agreement on 11 June 2015. The approximately EUR 175 million agreement will
replace the existing financing agreement that was signed on 15 May 2013. The new
financing agreement consists of EUR 100 million revolving credit facility and
Swedish crown denominated approximately EUR 75 million amortized term loan
agreement. Revolving credit facility and term loan agreement will mature in May
2018.
During the first quarter of 2015 Oriola-KD completed a rights offering. From the
offering Oriola-KD raised gross proceeds of EUR 75.6 million and net proceeds of
EUR 73.7 million.
Oriola-KD redeemed its EUR 40 million hybrid bond issued on 20 February 2014 in
its entirety together with accrued interest. The bond was redeemed in accordance
with its terms and conditions on 20 April 2015 with 103 per cent of its nominal
value.
Oriola-KD's goodwill of EUR 250.5 (285.4) million has been allocated in
impairment testing to the cash-generating units consisting of the Group's
operating segments. In Oriola-KD goodwill is tested annually, in accordance with
the timetable of its strategy and planning process. At the end of September
2015, EUR 224.9 (231.3) million of the goodwill was allocated to the Swedish
pharmaceutical retail business, EUR 25.4 (26.1) million to the Swedish
pharmaceutical wholesale business and EUR 0.2 (-) million to the Pharmaceutical
Trade Baltics.
At the end of September 2015, interest-bearing debt was EUR 128.3 (252.6)
million of which syndicated bank loans totalled EUR 74.4 (167.6) million,
commercial papers EUR 3.0 (29.9) million, advance payments from pharmacies EUR
33.2 (35.2) million, a contingent consideration related to Medstop-acquisition
EUR 14.3 (14.9) million and finance lease liabilities EUR 3.4 (5.0) million.
Long-term interest bearing-liabilities were EUR 70.9 (163.9) million and short-
term interest-bearing liabilities were EUR 57.4 (88.7) million. Interest-bearing
net debt was EUR 28.9 (183.7) million. The non-recourse trade receivables sales
programmes were continued in the Pharmaceutical Trade Sweden in January-
September 2015. At the end of September 2015, a total of EUR 111.2 (80.7)
million in trade receivables had been sold. Oriola-KD's long term revolving
credit facility and term loan agreement includes financial covenants that are
based on Net Debt to EBITDA -ratio and on Gearing.
Oriola-KD's committed long-term credit facility of EUR 100.0 million and EUR
35.3 million of short-term credit account limits with banks were unused at the
end of September 2015.
Net cash flow from operations including discontinued operations in January-
September 2015 was EUR 55.1 (-19.2) million, of which changes in working capital
accounted for EUR 4.5 (-38.0) million. Net cash flow from investing activities
was EUR 13.1 (-24.7) million.
Investments
Gross investments in January-September 2015 totalled EUR 13.2 (22.0) million and
consisted of investments related to the opening of new pharmacies, information
systems and improvements in logistics efficiency.
Personnel
At the end of September 2015, Oriola-KD had a payroll of 2,346 (2,333)
employees, 78 (77) per cent of whom worked in Sweden and 22 (23) per cent in
Finland and the Baltics. Personnel numbers consist of members of staff in active
employment.
Administration
Oriola-KD Corporation's Board of Directors:
* Anssi Vanjoki, Chairman
* Jukka Alho, Vice Chairman
* Eva Nilsson Bågenholm
* Per Båtelson
* Anja Korhonen
* Kuisma Niemelä
* Matti Rihko
* Staffan Simberg
Oriola-KD Corporation's Board's Audit Committee members are: Anja Korhonen
(Chairman), Kuisma Niemelä and Staffan Simberg. Board's Remuneration Committee
members are: Jukka Alho (Chairman), Per Båtelson, Eva Nilsson Bågenholm and
Matti Rihko.
Oriola-KD's Group Management Team:
* Eero Hautaniemi, President and CEO
* Sari Aitokallio, CFO
* Lars Birkeland, Vice President, Pharmaceutical Retail, Sweden
* Thomas Gawell, Vice President, Pharmaceutical Wholesale, Sweden
* Jukka Mäkelä, Vice President, Development
* Teija Silver, Vice President, HR
* Kimmo Virtanen, Executive Vice President, Pharmaceutical Wholesale, Finland,
Sweden and the Baltics
Oriola-KD applies the Finnish Corporate Governance Code which was issued by the
Securities Market Association on 15 June 2010 and which entered into force on 1
October 2010, with the exception that the company's Nomination Committee may
also have members who are not members of the company's Board of Directors. The
purpose of this deviation from Recommendation 22 of the Corporate Governance
Code (Appointment of members to the committees) is to allow the election of
major shareholders in the company to the Nomination Committee and thus to ensure
that their opinions are heard well before the Annual General Meeting. The
Nomination Committee is a body established by the Board for the purpose of
preparing and presenting to the Board a recommendation for the proposal to be
put to the Annual General Meeting concerning the composition and remuneration of
the Board. The Corporate Governance Statement and the Remuneration Statement
for 2014 can be viewed on the company's website at: http://www.oriola-
kd.com/en/Corporate-Governance/.
Oriola-KD Corporations Board appointed on 25 September 2015 members of the
company's Nomination Committee: Pekka Pajamo (chairman), Peter Immonen, Timo
Leino, Mikko Mursula and Into Ylppö.
The auditor of Oriola-KD Corporation as elected by the Annual General Meeting,
PricewaterhouseCoopers Oy, will designate Ylva Eriksson APA as the principal
auditor as of July 16, 2015.
Board authorisations
The Annual General Meeting (AGM), held on 30 March 2015, authorised the Board of
Directors to decide on a share issue against payment in one or more issues. The
authorisation comprises the right to issue new shares or assign treasury shares
held by the company. The authorisation covers a maximum of 5,650,000 Class A
shares and 12,500,000 Class B shares and includes the right to derogate from the
shareholders' pre-emptive subscription right. Pursuant to the authorisation,
shares held by the company as treasury shares may also be sold through trading
on a regulated market organised by NASDAQ OMX Helsinki Ltd. The authorisation
is in effect for a period of eighteen months from the decision of the Annual
General Meeting.
The AGM authorised the Board of Directors to decide on a share issue against
payment in one or more issues. The authorisation comprises the right to issue
new class B shares or assign class B treasury shares held by the company. The
authorisation covers a combined maximum of 18,000,000 class B shares of the
company and includes the right to derogate from the shareholders' pre-emptive
subscription right. Pursuant to the authorisation, class B shares held by the
Company as treasury shares may also be sold on regulated market organised by
NASDAQ OMX Helsinki Ltd. The authorisation is in effect for a period of eighteen
months from the decision of the Annual General Meeting.
The authorisation revokes all previous share issue authorisations given to the
Board of Directors apart from the authorisation given to the Board of Directors
by the Annual General Meeting held on 20 March 2013, pursuant to which the Board
of Directors may decide upon directed share issues against or without a payment
concerning no more than 1,715,000 class B shares in order to execute the share-
based incentive plan for the Oriola-KD Group's executives and the share savings
plan for the Oriola-KD Group's key personnel.
The AGM also authorised the Board of Directors to decide on repurchasing of the
company's own class B shares. The authorisation entitles the Board of Directors
to decide on the repurchase of no more than 18,000,000 of the company's own
class B shares in a proportion other than in which shares are owned by the
shareholders. The authorisation to repurchase own shares is in force for a
period of not more than eighteen months from the decision of the Annual General
Meeting. Shares may be repurchased to develop the company's capital structure,
to execute corporate transactions or other business arrangements, to finance
investments, to be used as a part of the company's incentive schemes or to be
otherwise relinquished, held by the company or cancelled.
Oriola-KD Corporation shares
Oriola-KD completed a rights offering in the first quarter of 2015. The
subscription period of the offering ended on 3 March 2015. In the offering
9,429,742 new A Shares and 20,798,643 new B Shared were subscribed. As a result,
the total number of shares of Oriola-KD increased to 181,486,213 shares. The
subscription price was EUR 2.50 per offered share. Oriola-KD raised gross
proceeds of EUR 75.6 million through the offering. Oriola-KD recognised gross
proceeds and the transaction costs less taxes, in total of EUR 73.7 million, in
the invested unrestricted equity fund.
Trading volume of the Oriola-KD Corporation's class A and B shares in January-
September 2015:
January-September 2015 January-September 2014
Trading volume (1)) class A class B class A class B
-----------------------------------------------------------------------------
Trading volume, million 2.6 28.8 5.9 24.3
Trading volume, EUR
million 9.9 110.2 13.1 54.2
Highest price, EUR 4.52 4.60 2.69 2.62
Lowest price, EUR 3.10 3.01 1.89 1.98
Closing quotation, end
of period, EUR 4.19 4.30 2.27 2.23
-----------------------------------------------------------------------------
(1)) Adjusted by the impact of rights issue, comparative figures
adjusted accordingly.
Oriola-KD Corporation's market capitalisation on 30 September 2015 was EUR
774.2 (359.3) million.
In the review period, the traded volume of Oriola-KD Corporation shares,
excluding treasury shares, corresponded to 17.8 (18.8) per cent of the total
number of shares. The traded volume of class A shares amounted to 4.7 (11.7) per
cent of the average stock, and that of class B shares, excluding treasury
shares, to 23.7 (22.0) per cent of the average stock.
At the end of September 2015, the company had a total of 181,486,213
(151,257,828) shares, of which 56,458,452 (47,148,710) were class A shares and
125,027,761 (104,109,118) were class B shares. The company has 148,338 (134,982)
treasury shares (including treasury shares held by third-party service
provider), all of which are class B shares. They account for 0.08 (0.09) per
cent of the company's shares and 0.01 (0.01) per cent of the votes.
Under Article 3 of the Articles of Association, a shareholder may demand
conversion of class A shares into class B shares. During the period 1 January -
30 September 2015, 120,000 (0) class A shares were converted into class B
shares.
On 19 December 2012, Oriola-KD Corporation's Board of Directors decided on a
share incentive scheme for the Group's senior management for the years
2013-2015. The scheme covers six persons. The company's Board of Directors will
determine the earnings criteria for the earning period and the targets to be set
for these at the start of each earning period. The bonus for the 2015 earning
period is based on the Oriola-KD Group's earnings per share (EPS) calculated
from the earnings excluding non-recurring items and taxes. The rewards to be
paid on the basis of the performance period 2015 will correspond to the value of
a maximum total of 1,010,000 Oriola-KD Corporation class B shares (also
including the proportion to be paid in cash), of which 625,483 Oriola-KD
Corporation class B shares (also including the proportion to be paid in cash)
have been allocated to the current participants.
On 28 May 2013 the Board of Directors of Oriola-KD Corporation decided to launch
a key personnel share savings plan. A total of about 37 key employees
participate in the plan during a savings period 1 October 2013 - 30 September
2014. A total of about 42 key employees participate in the plan during a savings
period 1 October 2014 - 30 September 2015. For both savings plans the maximum
and minimum monthly savings amount to 10 and 2 per cent, respectively, of each
participant's fixed gross monthly salary.
On 18 June 2015 the Board of Directors of Oriola-KD Corporation decided to
launch a new savings period 2015-2016. This savings period will begin on 1
October 2015 and end on 31 December 2016. The maximum monthly saving is 8.3
percent and the minimum is 2 percent of each participant's fixed monthly gross
salary. A total of about 50 key employees participate in the plan.
The accumulated savings will be used for purchasing Oriola-KD's class B shares
for the participants at market prices. In return, each participant will receive
two free class B matching shares for every three acquired savings shares.
Matching shares will be delivered to a participant if the participant holds the
acquired shares from the savings period until the end of the designated holding
period. Matching shares will be paid partly in Oriola-KD's class B shares and
partly in cash. The cash proportion is intended for covering taxes and tax-
related payments arising from the reward to a key person.
Oriola-KD Corporation has an agreement with a third-party service provider
concerning administration of the share-based incentive program. At the end of
the reporting period, the amount of treasury shares held by the third-party
service provider was 51,516 (38,160).
Liquidity guarantee
There is no liquidity guarantee in effect for the shares of Oriola-KD
Corporation.
Flagging announcements
Oriola-KD has on August 31, 2015 received from Mariatorp Oy (business ID
1948056-9) ("Demerged Company") a disclosure according to which Mariatorp Oy on
August 31, 2015 has registered execution of a demerger. All Oriola-KD shares
owned by the Demerged Company will transfer to a newly established company
Mariatorp Oy (business ID 2690035-7). After the execution of the demerger, the
ownership of the new Mariatorp Oy of Oriola-KD Corporation's share capital is
7.76 per cent and total number of voting rights is 7.92 per cent comprising a
total of 14,075,000 shares of which 4,500,000 A shares and 9,575,000 B shares.
Risks
Oriola-KD's Board of Directors has approved the company's risk management policy
in which the risk management operating model, principles, responsibilities and
reporting are specified. The Group's risk management seeks to identify, measure
and manage risks that may threaten Oriola-KD's operations and the achievement of
goals set. The roles and responsibilities relating to risk management have been
determined in the Group.
Oriola-KD's risks are classified as strategic, operational and financial. Risk
management is a key element of the strategic process, operational planning and
daily decision-making at Oriola-KD.
Oriola-KD has identified the following principal strategic and operational risks
in its business:
* Amendments to pharmaceutical market regulations, pricing of pharmaceuticals
and reimbursements may weaken Oriola-KD's net sales and profitability.
* In the Swedish retail business, the free establishment of pharmacies has led
to an increase in the number of pharmacies. The number of pharmacies may
continue to grow, which could further increase the fierce competition.
* Extra capacity ensuing from a change in the Swedish wholesale market will
intensify competition, which may weaken the profitability of operations. The
share of single channel distribution in the pharmaceutical wholesale market
may decline rapidly, which may weaken the profitability of operations and
lead to the restructuring of wholesale operations.
* Changes in share of parallel imports in Swedish pharmaceutical market may
affect profitability of the Swedish wholesale and retail businesses.
* Strategic development projects involve operational risks.
The main financial risks for Oriola-KD involve currency rate, liquidity,
interest rate and credit risks. Currency risk is the most significant financial
risks in Sweden, as any changes in the value of the Swedish krona will have an
impact on Oriola-KD's net sales, earnings and consolidated statement of
financial position.
Oriola-KD prepares goodwill impairment testing annually, in accordance with the
timetable of its strategy and planning process. Changes in cash flow forecasts
based on strategic plans, or in the discount rate or perpetuity growth rate, can
cause a goodwill write-off, which would weaken Oriola-KD's result.
Near-term risks and uncertainty factors
Oriola-KD's strategic development projects involve operational risks which may
have an effect on Oriola-KD's profitability.
Outlook
Oriola-KD's outlook for 2015 is based on external market forecasts, agreements
with pharmaceutical companies and pharmacies, and management assessments. During
the five-year period from 2015-2019, the Finnish pharmaceutical market is
expected to grow at an annual rate of 1-4 per cent and Swedish pharmaceutical
market is expected to grow an annual rate of 2-5 per cent per year in the local
currencies (source: IMS Health).
Outlook for 2015
Oriola-KD estimates its full-year net sales to remain at the 2014 level.
Operating profit excluding non-recurring items is estimated to increase from the
2014 level. Full-year net sales for continuing operations were EUR 1,612.3
million and operating profit excluding non-recurring items was EUR 59.1 million.
Strategy and Operational Model
On 17 August 2015, as part of the company's annual strategy work, Oriola-KD's
Board of Directors approved the company's updated strategy, new operating model
and new long-term financial targets. Oriola-KD's operations will be divided into
three business areas and operating segments: Consumer, Services and Healthcare.
The new operating model and responsibilities will be in force starting 1 January
2016.
Events after the review period
On 7 October 2015 the Disciplinary Committee of NASDAQ OMX Helsinki Ltd has
imposed a public warning and a fine of EUR 50,000 on Oriola-KD Corporation due
to breaches of the Rules of the Exchange. According the decision Oriola-KD
Corporation has breached the Rules regarding the obligation to maintain adequate
administrative procedures and to disclose corrected information in connection to
the sale of its Russian businesses without undue delay.
On 8 December 8 2014, the company disclosed a stock exchange release on the sale
of its Russian businesses, including an estimate of the recognized loss. In a
stock exchange release dated 2 February 2015, the amount of the loss was
revised. According to the opinion of Oriola-KD the correction release was
published as soon as the recognized loss was verified in connection with the
annual closing process.
Financial statements release
Oriola-KD Corporation will publish its financial statements release for 2015 on
5 February 2016 at about 8.30 am.
Oriola-KD's Interim Report January - September 2015
Consolidated
Statement of
Comprehensive Income
(IFRS), 2015 2014 2015 2014 2014
EUR million 7-9 7-9 1-9 1-9 1- 12
Revised (1) ) Revised (1) )
-----------------------------------------------------------------------------
Continuing operations
Net sales 377.1 389.8 1,205.5 1,194.6 1,612.3
Other operating
income 3.7 1.9 10.1 6.8 21.0
Cost of goods sold -297.1 -311.5 -962.5 -951.9 -1,287.9
Employee benefit
expenses -32.4 -32.4 -107.4 -107.6 -143.8
Other operating
expenses -27.4 -26.0 -83.5 -82.4 -114.5
-----------------------------------------------------------------------------
Gross profit 24.0 21.9 62.1 59.5 87.2
Depreciation and
impairment -5.6 -5.6 -16.8 -16.6 -22.2
-----------------------------------------------------------------------------
Operating profit 18.4 16.3 45.3 42.9 65.0
Financial income and
expenses -1.3 -1.4 -4.8 -6.0 -7.8
-----------------------------------------------------------------------------
Profit before taxes 17.1 14.8 40.5 36.9 57.1
Income taxes -3.3 -3.3 -8.3 -8.4 -10.7
-----------------------------------------------------------------------------
Profit for the period
from continuing
operations 13.8 11.6 32.1 28.5 46.5
Profit for the period
from discontinued
operations -0.0 -13.2 -0.2 -109.6 -258.8
-----------------------------------------------------------------------------
Profit for the period 13.8 -1.6 31.9 -81.1 -212.3
Other comprehensive
income
Items which may be
reclassified
subsequently to
profit or loss:
Translation
differences
recognised in
comprehensive income
during the reporting
period -3.0 -15.1 -0.3 -25.0 -52.1
Translation
differences
transferred to Profit
for the period from
discontinued
operations - - - - 74.3
Cash flow hedge -0.0 -0.3 -0.1 -1.3 -1.4
Income tax relating
to
other comprehensive
income 0.0 0.9 0.0 1.0 0.3
-----------------------------------------------------------------------------
-3.0 -14.4 -0.4 -25.2 21.1
Items which will not
be reclassified to
profit or loss:
Actuarial
gains/losses on
defined benefit plan - - - - -16.5
Income tax relating
to
other comprehensive
income - - - - 3.3
-----------------------------------------------------------------------------
- - - - -13.1
Total comprehensive
income for the period 10.8 -16.0 31.6 -106.3 -204.3
Profit attributable
to
-----------------------------------------------------------------------------
Parent company
shareholders 13.8 -1.6 31.9 -81.1 -212.3
-----------------------------------------------------------------------------
Total comprehensive
income attributable
to
-----------------------------------------------------------------------------
Parent company
shareholders 10.8 -16.0 31.6 -106.3 -204.3
-----------------------------------------------------------------------------
Earnings per share
attributable to
parent company
shareholders:
Basic earnings per
share, EUR (2))
-----------------------------------------------------------------------------
Continued operations 0.08 0.07 0.18 0.17 0.28
Discontinued
operations -0.00 -0.08 -0.00 -0.68 -1.61
From profit of the
year 0.08 -0.01 0.18 -0.51 -1.33
-----------------------------------------------------------------------------
Diluted earnings per
share, EUR (2))
-----------------------------------------------------------------------------
Continued operations 0.08 0.07 0.18 0.17 0.28
Discontinued
operations -0.00 -0.08 -0.00 -0.68 -1.61
From profit of the
year 0.08 -0.01 0.18 -0.51 -1.33
-----------------------------------------------------------------------------
(1) )The January-September 2014 figures have been revised as a
result of the sale of the in December 2014 to reflect the
classification of the Russian business as a discontinued
operation.
(2)) Calculated based on the rights issue -adjusted weighted average number
of shares, comparative figures adjusted accordingly.
Consolidated Statement of
Financial Position (IFRS),
EUR million
ASSETS 30 Sep 2015 30 Sep 2014 (1)) 31 Dec 2014
------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 70.7 102.1 75.2
Goodwill 250.5 285.4 250.9
Other intangible assets 61.7 67.5 61.3
Pension assets - 9.1 -
Other non-current assets 0.2 0.0 0.0
Deferred tax assets 6.3 2.9 3.3
------------------------------------------------------------------------------
Non-current assets total 389.5 467.1 390.8
Current assets
Inventories 204.7 342.5 185.0
Trade receivables 187.4 318.6 178.4
Other receivables 47.6 70.5 28.4
Cash and cash equivalents 99.5 68.9 91.5
------------------------------------------------------------------------------
Current assets total 539.2 800.4 483.2
ASSETS TOTAL 928.7 1,267.5 874.0
------------------------------------------------------------------------------
EQUITY AND LIABILITIES
------------------------------------------------------------------------------
Equity
Share capital 36.2 36.2 36.2
Hedging reserve -1.4 -1.2 -1.3
Contingency fund 19.4 19.4 19.4
Invested unrestricted equity
reserve 74.8 1.1 1.1
Hybrid bond - 39.6 39.6
Other reserves 0.1 0.1 0.1
Translation differences -3.4 -49.5 -3.1
Retained earnings 49.7 165.6 21.6
------------------------------------------------------------------------------
Equity attributable to the parent
company shareholders 175.5 211.3 113.6
Non-current liabilities
Deferred tax liabilities 13.4 15.5 12.7
Pension obligations 15.6 7.4 14.9
Borrowings 70.9 163.9 98.5
Other non-current liabilities 2.3 - 2.2
------------------------------------------------------------------------------
Non-current liabilities total 102.3 186.8 128.3
Current liabilities
Trade payables 545.8 732.5 494.3
Provisions 0.3 0.4 0.6
Borrowings 57.4 88.7 95.4
Other current liabilities 47.4 47.8 41.8
------------------------------------------------------------------------------
Current liabilities total 650.9 869.4 632.1
EQUITY AND LIABILITIES TOTAL 928.7 1,267.5 874.0
------------------------------------------------------------------------------
(1)) Includes the assets and liabilities of the Russian businesses
sold in December 2014
Consolidated
Statement of Changes
in Equity (IFRS)
Equity attributable to the parent
company shareholders
Trans- Re-
lation tained
Share diffe- earn- Hybrid Equity
EUR million capital Funds rences ings bond total
-------------------------------------------------------------------------
Equity
1 Jan 2014 (1)) 36.2 20.4 -25.3 246.8 - 278.1
-------------------------------------------------------------------------
Comprehensive income
for the period
Net profit for the
period - - - -81.1 - -81.1
Other
comprehensive
income:
Cash flow hedge - -1.3 - - - -1.3
Income tax
relating to
other
comprehensive income - 0.3 0.7 - - 1.0
Translation
difference - 0.0 -25.0 - - -25.0
-------------------------------------------------------------------------
Comprehensive income
for the period total - -1.0 -24.2 -81.1 - -106.3
-------------------------------------------------------------------------
Transactions with
owners
Hybrid bond - - - - 39.6 39.6
Share-based
payments - - - -0.07 - 0.0
Purchase of
treasury shares - - - -0.1 - -0.1
-------------------------------------------------------------------------
Transactions with
owners total - - - -0.1 39.6 39.5
-------------------------------------------------------------------------
Equity
30.9.2014 (1)) 36.2 19.4 -49.5 165.6 39.6 211.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Equity
1 Jan 2015 36.2 19.3 -3.1 21.6 39.6 113.6
-------------------------------------------------------------------------
Comprehensive income
for the period
Net profit for the
period - - - 31.9 - 31.9
Other
comprehensive
income:
Cash flow hedge - -0.1 - - - -0.1
Income tax
relating to
other
comprehensive income - 0.0 - - - 0.0
Translation
difference - - -0.3 0.0 - -0.3
-------------------------------------------------------------------------
Comprehensive income
for the period total - -0.1 -0.3 31.9 - 31.6
-------------------------------------------------------------------------
Transactions with
owners
Share issue - 73.7 - - - 73.7
Hybrid bond paid
interest - - - -2.6 - -2.6
Hybrid bond
redemption - - - -1.3 -39.6 -41.0
Share-based
incentive - - - 0.3 - 0.3
Distributed
treasury shares - - - -0.1 - -0.1
Purchase of own
shares - - - -0.0 - -0.0
-------------------------------------------------------------------------
Transactions with
owners total - 73.7 - -3.8 -39.6 30.3
-------------------------------------------------------------------------
Equity
30 Sep 2015 36.2 92.9 -3.4 49.7 - 175.5
-------------------------------------------------------------------------
(1)) Includes the assets and liabilities of the Russian
businesses sold in December 2014
Condensed Consolidated Statement
of Cash Flows 2015 2014 2014
(IFRS), EUR million (1)) 1-9 1-9 1- 12
---------------------------------------------------------------------------
Operating profit 45.1 -59.5 -42.4
Depreciation and amortisation 16.8 19.9 26.2
Impairment - 71.1 71.1
Change in working capital 4.5 -38.0 -42.5
Cash flow from financial
items and taxes -9.5 -9.6 -13.5
Other adjustments -1.8 -3.1 -9.7
---------------------------------------------------------------------------
Net cash flow from operating
activities 55.1 -19.2 -10.8
Net cash flow from investing
activities -13.1 -24.7 40.3
Net cash flow from financing
activities -34.0 -26.3 -80.3
Net change in cash and cash
equivalents 8.0 -70.2 -50.8
Cash and cash equivalents
at the beginning of the period 91.5 137.3 137.3
Foreign exchange rate differences 0.0 1.8 5.0
Net change in cash and cash
equivalents 8.0 -70.2 -50.8
---------------------------------------------------------------------------
Cash and cash equivalents
at the end of the period 99.5 68.9 91.5
---------------------------------------------------------------------------
(1) )Includes the net cash flow from the disposed Russian businesses
until 30 November 2014.
Notes to financial statements
Principal accounting policies as of 1 January 2015 (IFRS)
These financial statements release has been prepared in accordance with IFRS
standards (IAS 34). The accounting policies and calculation methods applied in
the interim report are the same as those in the 31 December 2014 annual
financial statements, excluding the standards and interpretations applied as of
1 January 2015 as presented below. However, the interim report does not include
all of the information and notes presented in the annual financial statements.
Consequently, the interim report should be read together with the company's
financial statements for 2014.
Results of the Russian businesses, sold in December 2014, are reported as
discontinued operations separately from results from continuing operations in
January - September 2015. The comparative financial information for 2014 has
been revised to reflect the results for continuing operations. The consolidated
statement of financial position for comparative period 2014 includes the assets
and liabilities of discontinued operations. The consolidated statement of cash
flows for comparative period 2014 includes net cash flow of discontinued
operations.
The figures in the interim report have been rounded independently.
New standards or amendments to the existing ones that have been applied as of 1
January 2015:
* Amendment to IAS 19 Defined benefit plans
* Annual improvements in IFRS standards 2010-2012 and 2011-2013
The new standards have not had a material impact on the Group's financial
position.
The figures in this interim review are unaudited.
Earnings per share
2015 2014 2015 2014 2014
EUR million 7-9 7-9 1-9 1-9 1- 12
-------------------------------------------------------------------------------
Profit attributable to equity
owners of the parent from
continuing operations 13.8 11.6 32.1 28.5 46.5
Accumulated interest on hybrid
bond net of tax - -0.6 - -1.4 -1.9
-------------------------------------------------------------------------------
Adjusted profit for the period
from continuing operations 13.8 11.0 32.1 27.1 44.6
2015 2014 2015 2014 2014
EUR million 7-9 7-9 1-9 1-9 1- 12
-------------------------------------------------------------------------------
Profit incl. discontinued
operations attributable to
equity owners of the parent 13.8 -1.6 31.9 -81.1 -212.3
Accumulated interest on hybrid
bond net of tax - -0.6 - -1.4 -1.9
-------------------------------------------------------------------------------
Adjusted profit for the period
including discontinued
operations 13.8 -2.2 31.9 -82.5 -214.2
Average number of outstanding
shares (1000 shares) (1))
Basic 181,338 160,745 176,204 160,745 160,741
Diluted 181,338 160,745 176,204 160,745 160,741
Earnings per share (EUR) (1))
Basic
Continuing operations 0.08 0.07 0.18 0.17 0.28
Discontinuing operations -0.00 -0.08 -0.00 -0.68 -1.61
Total 0.08 -0.01 0.18 -0.51 -1.33
Diluted
Continuing operations 0.08 0.07 0.18 0.17 0.28
Discontinuing operations -0.00 -0.08 -0.00 -0.68 -1.61
Total 0.08 -0.01 0.18 -0.51 -1.33
(1)) Calculated based on the rights issue -adjusted weighted average number of
shares, comparative figures adjusted accordingly.
Tangible and intangible assets
Changes in Property, Plant and Equipment, 2015 2014 2014
EUR million 1-9 1-9 1- 12
------------------------------------------------------------------------
Carrying amount at the beginning of the period 75.2 93.2 93.2
Increases through acquisitions of subsidiary shares - - 0.0
Increases 6.4 23.1 27.0
Decreases -0.4 -0.3 -13.2
Divestment of business - - -11.3
Reclassifications 0.6 0.8 0.2
Depreciation, Continuing operations -11.1 -11.2 -15.0
Depreciation, Discontinued operations - -1.1 -1.3
Foreign exchange rate differences -0.1 -2.4 -4.4
------------------------------------------------------------------------
Carrying amount at the end of the period 70.7 102.1 75.2
------------------------------------------------------------------------
Changes in Intangible assets, 2015 2014 2014
EUR million 1-9 1-9 1- 12
------------------------------------------------------------------------
Carrying amount at the beginning of the period 312.3 451.0 451.0
Increases through acquisitions of subsidiary shares - - 0.2
Increases 6.8 6.5 6.8
Decreases - -0.2 -0.2
Divestment of business - - -24.5
Reclassifications -0.6 -0.8 -0.2
Amortisation, Continuing operations -5.7 -5.4 -7.2
Impairments and amortisation, Discontinued operations - -73.4 -73.8
Foreign exchange rate differences -0.5 -24.9 -39.8
------------------------------------------------------------------------
Carrying amount at the end of the period 312.2 352.9 312.3
------------------------------------------------------------------------
Derivatives
30 Sep 2015 Positive fair Negative fair Nominal values of
EUR million value value contracts
-------------------------------------------------------------------------------
Derivatives recognised
as cash flow hedges
Interest rate swaps - 1.8 55.3
Derivatives measured at
fair value through profit and
loss
Foreign currency forward and
swap contracts 0.3 - 119.9
-------------------------------------------------------------------------------
30 Sep 2014 Positive fair Negative fair Nominal values of
EUR million value value contracts
-------------------------------------------------------------------------------
Derivatives recognised
as cash flow hedges
Interest rate swaps - 1.5 43.7
Derivatives measured at
fair value through profit and
loss
Foreign currency forward and
swap contracts - 0.1 131.3
-------------------------------------------------------------------------------
Derivatives measured at fair value through profit and loss are mainly related to
hedging of group's internal transactions. Fair values of the derivatives have
been booked to balance sheet in gross amount as the derivatives contracts are
related to credit events and cannot be netted in financial statements. The group
has not given nor received collateral to/from derivatives counterparties.
Fair value hierarchy
EUR million
30 Sep 2015 Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Assets
Derivatives measured at fair value through
profit and loss - 0.8 - 0.8
Liabilities
Derivatives designated as hedges - 1.8 - 1.8
Derivatives measured at fair value through
profit and loss - 0.5 - 0.5
Contingent consideration - - 14.3 14.3
-------------------------------------------------------------------------------
EUR million
30 Sep 2014 Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Assets
Derivatives measured at fair value through
profit and loss - 0.2 - 0.2
Liabilities
Derivatives designated as hedges - 1.5 - 1.5
Derivatives measured at fair value through
profit and loss - 0.3 - 0.3
Contingent consideration - - 14.9 14.9
-------------------------------------------------------------------------------
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable
market data (i.e. unobservable inputs).
Reconciliation of financial liabilities recognised at fair value through
profit and loss according to the level 3
EUR million
-------------------------------------------------------------------------------
Book value 31 Dec 2014 14.7
-------------------------------------------------------------------------------
Recognised in financial expenses 0.7
Change in fair value recognised in other
operating income -1.1
Translation differences 0.0
-------------------------------------------------------------------------------
Book value 30 Sep 2015 14.3
-------------------------------------------------------------------------------
Financial liabilities recognised at fair value through profit and loss (level
3) include estimated discounted fair value of a contingent consideration related
to the Medstop acquisition. Payment of the contingent consideration will be
based on management estimate of 2015 EBITDA of Oriola-KD's combined Swedish
retail businesses and will be paid in first quarter of 2016. The fair value of
the contingent consideration has been calculated using discounted cash flow
method. The discount rate used in the valuation is determined using the weighted
average cost of capital of the Group.
Commitments and Contingent Liabilities
EUR million 30 Sep 2015 30 Sep 2014 31 Dec 2014
-------------------------------------------------------------------------------
Commitments for own liabilities
Guarantees on behalf of own companies 8.1 16.9 8.1
Guarantees on behalf of other companies 3.2 - 22.0
Mortgages on company assets 2.2 2.3 2.2
Other guarantees and liabilities 1.0 1.1 1.1
Accumulated interest on hybrid bond - 1.7 2.4
-------------------------------------------------------------------------------
Total 14.5 21.9 35.8
-------------------------------------------------------------------------------
Leasing liabilities (operating
liabilities) 0.7 0.9 0.8
Rent liabilities 35.5 87.2 44.3
Guarantees on behalf of other companies include parent company guarantees given
to third parties on behalf of sold Russian entities commercial agreements and
rent contracts. In accordance of framework agreement the buyer undertakes to
compensate Oriola-KD for any claim against the guarantees. In addition the
buyer's bank has given Oriola-KD in aggregate EUR 6.5 million counter guarantee
mainly subject to parent company guarantees of the commercial agreements.
Majority of the guarantees on behalf of other companies will expire in 2015.
The most significant guarantees are bank guarantees against trade payables in
wholesale company in Sweden. In addition, Oriola-KD Corporation has granted
parent company guarantees of EUR 2.8 (23.8) million against subsidiaries' trade
payables and EUR 74.6 (148.3) million against external loan to Oriola-KD Holding
Sverige AB.
Provisions
On 30 September 2015 Oriola-KD had provisions totalling EUR 0.3 (0.4) million.
Group items include a provision of EUR 0.3 (-) million related to the sale of
Russian businesses included within profit for the period from discontinued
operations. The restructuring provision for the comparative period related to
the integration of the Medstop acquisition within Pharmaceutical Trade Sweden.
Related parties
Related parties in the Oriola-KD Group are deemed to comprise the members of the
Board of Directors and the President and CEO of Oriola-KD Corporation, the other
members of the Group Management Team of the Oriola-KD Group, the immediate
family of the aforementioned persons, the companies controlled by the
aforementioned persons, and the Oriola Pension Fund. The Group has no
significant business transactions with related parties, except for pension
expenses arising from defined benefit plans with the Oriola Pension Fund.
Segment information( 1)
2015 2014 2014
Net Sales, EUR million 1-9 1-9 1- 12
--------------------------------------------------------------------
Pharmaceutical Trade Sweden 887.3 878.3 1,176.4
Pharmaceutical Trade
Finland and Baltics 318.2 316.3 435.9
Net sales to other segments -0.1 -0.0 -0.0
--------------------------------------------------------------------
Total 1,205.5 1,194.6 1,612.3
2015 2014 2014
Operating Profit, EUR million 1-9 1-9 1- 12
--------------------------------------------------------------------
Pharmaceutical Trade Sweden 34.9 32.7 50.5
Pharmaceutical Trade
Finland and Baltics 14.4 14.7 19.2
Group Administration and Others -4.0 -4.5 -4.6
--------------------------------------------------------------------
Total 45.3 42.9 65.0
Operating Profit excl. Non-recurring items, 2015 2014 2014
EUR million 1-9 1-9 1- 12
--------------------------------------------------------------------
Pharmaceutical Trade Sweden 34.9 33.7 44.0
Pharmaceutical Trade
Finland and Baltics 15.4 14.7 19.6
Group Administration and Others -4.7 -4.5 -4.5
--------------------------------------------------------------------
Operating Profit excl. non-recurring items 45.5 44.0 59.1
--------------------------------------------------------------------
Non-recurring items -0.2 -1.0 5.9
--------------------------------------------------------------------
Total 45.3 42.9 65.0
2015 2015 2015 2014 2014 2014 2014
Quarterly Net Sales,
EUR million 7-9 4-6 1-3 10-12 7-9 4-6 1-3
---------------------------------------------------------------------------
Pharmaceutical Trade
Sweden 270.8 309.9 306.6 298.1 281.3 298.5 298.5
Pharmaceutical Trade
Finland and Baltics 106.3 107.2 104.7 119.6 108.5 107.0 100.8
Net sales to other
segments -0.0 -0.0 -0.0 0.0 -0.0 -0.0 -0.0
---------------------------------------------------------------------------
Total 377.1 417.1 411.3 417.7 389.8 405.5 399.3
2015 2015 2015 2014 2014 2014 2014
Quarterly Operating
Profit, EUR million 7-9 4-6 1-3 10-12 7-9 4-6 1-3
---------------------------------------------------------------------------
Pharmaceutical Trade
Sweden 13.4 11.5 10.0 17.7 12.3 11.0 9.4
Pharmaceutical Trade
Finland and Baltics 5.6 5.1 3.7 4.4 5.5 4.4 4.8
Group Administration
and Others -0.5 -1.4 -2.0 -0.1 -1.6 -1.5 -1.3
---------------------------------------------------------------------------
Total 18.4 15.2 11.7 22.1 16.3 13.8 12.8
Quarterly Operating
Profit, 2015 2015 2015 2014 2014 2014 2014
excl. non-recurring
items, EUR million 7-9 4-6 1-3 10-12 7-9 4-6 1-3
---------------------------------------------------------------------------
Pharmaceutical Trade
Sweden 13.4 11.5 10.0 10.2 12.4 11.3 10.0
Pharmaceutical Trade
Finland and Baltics 5.8 5.0 4.6 4.9 5.5 4.4 4.8
Group Administration
and Others -1.6 -1.6 -1.5 -0.0 -1.6 -1.5 -1.3
---------------------------------------------------------------------------
Operating Profit
excl. non-recurring
items 17.5 14.9 13.1 15.1 16.3 14.2 13.5
---------------------------------------------------------------------------
Non-recurring items 0.9 0.2 -1.4 6.9 -0.1 -0.3 -0.6
---------------------------------------------------------------------------
Total 18.4 15.2 11.7 22.1 16.3 13.8 12.8
2015 2014 2014
Net Sales by Market,
EUR million 1-9 1-9 1- 12
----------------------------------------------
Sweden 839.8 833.9 1,114.8
Finland 281.1 282.2 388.3
Baltic countries 33.4 31.7 43.5
Other countries 51.2 46.8 65.7
----------------------------------------------
Total 1,205.5 1,194.6 1,612.3
2015 2015 2015 2014 2014 2014 2014
Quarterly Net Sales
by Market, EUR
million 7-9 4-6 1-3 10-12 7-9 4-6 1-3
---------------------------------------------------------------------------
Sweden 254.4 294.4 291.0 280.9 265.8 283.7 284.4
Finland 94.4 95.5 91.1 106.1 97.1 95.9 89.2
Baltic countries 11.0 10.7 11.7 11.8 11.1 9.8 10.9
Other countries 17.3 16.4 17.5 19.0 15.9 16.1 14.8
---------------------------------------------------------------------------
Total 377.1 417.1 411.3 417.7 389.8 405.5 399.3
(1) )The January-September 2014 figures have been revised as a
result of the sale of the Russian business in December 2014 to
reflect the classification of the Russian business as a discontinued
operation.
Espoo, 22 October 2015
Board of Directors of Oriola-KD Corporation
Further information:
Eero Hautaniemi
President and CEO
tel. +358 (0)10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Distribution:
NASDAQ OMX Helsinki Ltd
Key media
Released by:
Oriola-KD Corporation
Corporate Communications
Orionintie 5
02200 Espoo
www.oriola-kd.com
[HUG#1960396]