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Oriola-KD Corporation's Financial Statements Release 2015
5.2.2016
Oriola-KD Corporation Stock Exchange Release 5 February 2016 at 8.30 a.m.
Oriola-KD Corporation's Financial Statements Release 2015
Financial performance October-December 2015
* Invoicing, indicating volume, of the business increased by 5.3 (4.3) per
cent to EUR 858.0 (814.6) million
* Net sales increased by 0.8 (1.9) per cent to EUR 420.9 (417.7) million
* EBITDA excluding non-recurring items increased by 1.3 (19.3) per cent to EUR
21.0 (20.8) million
* EBITDA was EUR 23.0 (27.7) million
* Operating profit excluding non-recurring items was EUR 15.3 (15.1) million
* Operating profit was EUR 17.3 (22.1) million
* Net cash flow from operations was EUR 30.5 (8.4) million
* Profit for the period totalled EUR 12.4 (18.0) million and earnings per
share from continuing operations were EUR 0.07 (0.11)
Financial performance January-December 2015
* Invoicing, indicating volume, of the business increased by 6.6 (decreased
0.4) per cent to EUR 3,262.2 (3,060.1) million
* Net sales increased by 0.9 (decreased by 0.5) per cent to EUR 1,626.3
(1,612.3) million
* EBITDA excluding non-recurring items increased by 2.6 (45.3) per cent to EUR
83.4 (81.3) million
* EBITDA was EUR 85.1 (87.2) million
* Operating profit excluding non-recurring items was EUR 60.8 (59.1) million
* Operating profit was EUR 62.6 (65.0) million
* Net cash flow from operations was EUR 85.6 (-10.8) million
* Profit for the period totalled EUR 44.5 (46.5) million and earnings per
share from continuing operations were EUR 0.25 (0.28)
Key figures from
continuing operations 2015 2014 Change 2015 2014 Change
EUR million 10-12 10-12 % 1-12 1-12(1)) %
Invoicing 858.0 814.6 5.3 3,262.2 3,060.1 6.6
Net sales 420.9 417.7 0.8 1,626.3 1,612.3 0.9
EBITDA excluding non-
recurring items 21.0 20.8 1.3 83.4 81.3 2.6
EBITDA 23.0 27.7 -16.8 85.1 87.2 -2.4
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Operating profit
excluding non-recurring
items 15.3 15.1 1.0 60.8 59.1 3.0
Operating profit 17.3 22.1 -21.7 62.6 65.0 -3.7
Operating profit %
excluding non-recurring
items 3.6 3.6 3.7 3.7
Operating profit % 4.1 5.3 3.8 4.0
Profit for the period 12.4 18.0 -31.1 44.5 46.5 -4.2
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Earnings per share,
EUR( 2)) 0.07 0.11 -36.8 0.25 0.28 -9.5
Net cash flow from
operating activities 30.5 8.4 85.6 -10.8
Return on equity (ROE),
% 29.1 23.9
Gearing, % 3.4 91.8
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(1)) Equity-related key figures restated as a result of
correction of an error relating to previous financial periods.
The correction increased the amount of deferred tax liability
and decreased the amount of equity by EUR 2.1 million.
(2)) Calculated based on the rights issue -adjusted weighted average number of
shares, comparative figures adjusted accordingly.
Outlook for 2016
Oriola-KD estimates its full-year net sales to remain at the 2015 level on
constant currency basis. Adjusted Operating profit is estimated to remain at
2015 level or to increase, on a constant currency basis. Full-year net sales in
2015 were EUR 1,626 million and Operating profit excluding non-recurring items
was EUR 60.8 million.
Adjusted Operating profit excludes 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, or other income or expenses arising from rare events.
President and CEO Eero Hautaniemi's comments regarding the financial statements
release:
Year 2015 was successful and we managed to grow the volumes especially in the
wholesale business despite of the slow growth in the market.
We were able to further increase the margin of OTC medicines and the sales and
margin of traded goods in the Swedish retail business. Operating profit in
euros remained at the level of previous year, due to above all price cuts in the
generics and unfavourable development of the Swedish Krona. The combined effect
resulted in a significant decline in parallel imports from the previous year.
The business volume in the Swedish wholesale increased significantly which also
resulted in an improved profitability compared to previous year. In Finland we
renewed important, multi-annual pharmaceutical company agreements and improved
our efficiency. As a result of a successful rights-issue and strong cash flow
our balance sheet strengthened significantly.
We renewed our strategy and operating model in the second half of the year 2015
and signed an agreement to acquire Svensk dos, a Swedish company specialising in
dose dispensing of pharmaceuticals.
Oriola-KD Corporation's interim report 1 January-31 December 2015
The commentary for this financial statements release comprises of the continuing
operations of the Company unless otherwise stated. The results for the Russian
businesses sold in December 2014 are presented as discontinued operations
separately from the results from continuing 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
Key Figures 1-12 1-12(1))
Goodwill, EUR million 256.5 250.9
Equity, EUR million (1)) 194.6 111.5
Interest-bearing debt, EUR million 128.6 193.9
Net interest-bearing debt, EUR
million 6.6 102.4
Total assets, EUR million 946.9 874.0
Equity ratio, % (1)) 21.1 13.1
Return on equity (ROE), % (1)) 29.1 23.9
Return on capital employed (ROCE), % 19.9 14.4
Gearing, % (1)) 3.4 91.8
Net debt / 12-month EBITDA from
continuing operations 0.1 1.2
Equity per share, EUR 1.07 0.69
Earnings per share, continuing
operations, EUR( 2)) 0.25 0.28
Earnings per share, incl.
discontinued operations, EUR( 2)) 0.25 -1.33
Average number of shares, 1000 pcs
(2) 3)) 177,502 160,741
Average number of personnel,
continuing operations 2,327 2,377
Number of personnel at the end of the
period, continuing operations 2,353 2,356
Gross investments, continuing
operations, EUR million 20.4 25.7
(1)) Equity-related key figures restated as a result of correction of an error
relating to previous financial periods. The correction increased the amount of
deferred tax liability and decreased the amount of equity by EUR 2.1 million.
(2)) Calculated based on the rights issue -adjusted weighted average number of
shares, comparative figures adjusted accordingly.
(3)) Treasury shares held by the company not
included.
Changes in the Group Structure in January-December 2015
The following subsidiary mergers have been completed during the final quarter of
2015 in order to simplify Oriola-KD Group structure: SIA Rigas Elizabetes
aptieka merged into SIA Panpharmacy, Aloiro AB merged into Oriola Oy, Oriola-KD
Holding Sverige AB merged into Oriola-KD Holding Oy after which Oriola-KD
Holding Oy merged into Oriola-KD Oyj.
Oriola-KD agreed on 2 December 2015 to acquire the shares in Svensk dos AB.
Svensk dos is a Swedish pharmacy company specialised in dose dispensing of
pharmaceuticals. In 2014, the net sales of Svensk dos were approximately EUR 25
million and estimated market share was 13 per cent. Svensk dos has approximately
60 employees and is based in Uppsala.
The Group's net sales and result for October-December 2015
Oriola-KD's final quarter net sales were EUR 420.9 (417.7) million. Operating
profit excluding non-recurring items was EUR 15.3 (15.1) million, operating
profit was EUR 17.3 (22.1) million. In the final quarter of 2015 a non-recurring
income of EUR 2.3 million was recognised due to a revaluation of the contingent
consideration for Medstop acquisition. In the fourth quarter of 2014 the central
warehouse property in Mölnlycke, Sweden was sold and leased back, and a non-
recurring gain of EUR 7.5 million was recognised on the sale.
Profit after financial items was EUR 15.6 (20.3) million and profit for the
period was EUR 12.4 (18.0) million. Oriola-KD's net financial expenses were EUR
1.7 (1.8) million. Earnings per share were EUR 0.07 (0.11).
The Group's net sales and result for January-December 2015
Oriola-KD's net sales increased by 0.9 (decreased by 0.5) per cent to EUR
1,626.3 (1,612.3) million and operating profit excluding non-recurring items
increased by 3.0 (59.5) per cent to EUR 60.8 (59.1) million. Operating profit
was EUR 62.6 (65.0) million. Operating profit in 2015 increased due to a non-
recurring revaluation of the contingent consideration for Medstop acquisition of
EUR 3.4 million and in 2014 due to afore mentioned non-recurring gain of EUR
7.5 million.
The depreciation of the Swedish Krona from the corresponding period negatively
affected the euro denominated operating profit by approximately EUR 1.2 million.
Profit after financial items was EUR 56.1 (57.1) million and profit for the
period was EUR 44.5 (46.5) million. Oriola-KD's net financial expenses were EUR
6.5 (7.8) million. Income taxes were 11.5 (10.7) which corresponds to effective
tax rate of 20.6 (18.7) per cent. Earnings per share for the full year were EUR
0.25 (0.28).
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 took place on 31 December 2015.
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
EUR million 10-12 10-12 % 1-12 1-12 %
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Invoicing 543.1 516.0 5.2 2,098.5 1,955.1 7.3
Retail business 197.7 192.0 3.0 769.3 757.5 1.6
Wholesale business 430.9 405.0 6.4 1,661.2 1,526.6 8.8
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Net Sales 302.8 298.1 1.6 1,190.1 1,176.4 1.2
Retail business 193.0 187.9 2.7 752.8 744.2 1.2
Wholesale business 195.3 191.2 2.1 769.3 761.2 1.1
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Operating profit excluding non-
recurring items 11.6 10.2 13.1 46.4 44.0 5.6
Retail business 7.6 7.7 -2.1 33.9 33.8 0.3
Wholesale business 4.0 2.5 60.5 12.6 10.4 20.9
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Operating profit 11.6 17.7 -34.8 46.4 50.5 -8.0
Retail business 7.6 7.7 -2.2 33.9 32.8 3.4
Wholesale business 4.0 10.0 -60.1 12.6 17.9 -29.7
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Operating profit % excluding non-
recurring items 3.8 3.4 3.9 3.7
Retail business 3.9 4.1 4.5 4.5
Wholesale business 2.0 1.3 1.6 1.4
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Operating profit % 3.8 6.0 3.9 4.3
Retail business 3.9 4.1 4.5 4.4
Wholesale business 2.0 5.2 1.6 2.4
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Number of personnel at the end of
period 1,831 1,792
Retail business 1,555 1,524
Wholesale business 276 268
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October-December 2015
The final quarter net sales of Pharmaceutical Trade Sweden were EUR 302.8
(298.1) million. Operating profit excluding non-recurring items was EUR 11.6
(10.2) million and operating profit was EUR 11.6 (17.7) million. In the fourth
quarter of 2014 the central warehouse property in Mölnlycke, Sweden was sold and
leased back, and a non-recurring gain of EUR 7.5 million was recognised on the
sale.
Retail business net sales were EUR 193.0 (187.9) million. Operating profit
excluding non-recurring items for the retail business was EUR 7.6 (7.7) million
and operating profit was EUR 7.6 (7.7) million. The operating profit was
negatively affected by the opening of two new pharmacies and increased discounts
in traded goods campaigns. The net sales of the wholesale business totalled EUR
195.3 (191.2) million. Operating profit excluding non-recurring items for the
wholesale business was EUR 4.0 (2.5) million and operating profit was EUR 4.0
(10.0) million. Operating profit strengthened in the final quarter due to
increase in business volume.
January-December 2015
The pharmaceutical market in Sweden grew by 6.7 (4.2) per cent (source: IMS
Health) and the retail market for OTC products and traded goods grew by 7.1
(4.0) per cent (source: Apoteksföreningen) in 2015. Parallel imports' share of
the Swedish pharmaceutical market was 11 (17) per cent (source: IMS Health).
Invoicing, indicating the business volume of the Oriola-KD Pharmaceutical Trade
Sweden, grew from the previous year by 10.3 (4.5) per cent in Swedish Krona.
Retail volume grew by 4.4 (17.8) per cent and wholesale by 11.9 (6.4) per cent,
in Swedish Krona. Oriola-KD's market share of the pharmaceutical retail market
in 2015 was 19 (19) per cent (source: Apoteksföreningen) and the share of the
Swedish pharmaceutical wholesale market was approximately 39 (36) per cent
(Oriola-KD estimate). Number of pharmacies in Sweden increased by 29 pharmacies
in 2015 and at the end of December 2015 there were 1,358 pharmacies in Sweden.
At the end of the reporting period Oriola-KD had a total of 309 (304) pharmacies
in Sweden.
The net sales of Pharmaceutical Trade Sweden in 2015 increased by 1.2 (decreased
by 1.5) per cent to EUR 1,190.1 (1,176.4) million, and on a constant currency
basis, net sales increased by 4.0 (3.6) per cent. Retail business net sales were
EUR 752.8 (744.2) million and wholesale business net sales totalled EUR 769.3
(761.2) million. On a constant currency basis retail business net sales
increased by 4.0 (16.9) per cent and wholesale business net sales increased by
3.9 (7.7) per cent.
The Swedish retail business' EBITDA excluding non-recurring items in 2015 was
EUR 50.2 (49.4) million and EBITDA was EUR 50.2 (48.4) million in 2015. The
EBITDA percentage excluding non-recurring items and the group management fee for
the retail business was 6.9 (6.9) per cent. The wholesale business' EBITDA
excluding non-recurring items was EUR 14.3 (12.8) million and EBITDA was EUR
14.3 (20.3) million.
Pharmaceutical Trade Sweden's operating profit excluding non-recurring items
increased by 5.6 (82.6) per cent to EUR 46.4 (44.0) million. On a constant
currency basis operating profit excluding non-recurring items increased by 8.6
(92.1) per cent. Operating profit was EUR 46.4 (50.5) million. Operating profit
excluding non-recurring items for the Swedish retail business totalled EUR 33.9
(33.8) million and operating profit was EUR 33.9 (32.8) million. Operating
profit excluding non-recurring items for the Swedish wholesale business was EUR
12.6 (10.4) million and operating profit was EUR 12.6 (17.9) million.
Profitability of the Swedish retail business was supported by increased sales of
traded goods and good 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. Weak seasonal sales in the summer led into increased competition and
campaign discounts in retail trade. 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 (27) per cent. Oriola-KD opened web shop
in Sweden in the third quarter. The product assortment of the web shop
represents the entire Kronans Apotek's product assortment. In 2015 five new
pharmacies were opened of which two were new care & beauty concept stores.
Positive development of the Swedish wholesale business was supported by the new
agreements with pharmaceutical companies signed in 2014, increased efficiency
and improved profitability in logistic services for retail.
Pharmaceutical Trade Finland and Baltics
Key Figures 2015 2014 Change 2015 2014 Change
EUR million 10-12 10-12 % 1-12 1-12 %
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Invoicing 314.9 298.6 5.5 1,163.7 1,105.0 5.3
Pharmaceutical wholesale in
Finland 290.2 274.1 5.9 1,069.8 1,015.7 5.3
Pharmaceutical wholesale in
Baltics 13.8 13.6 1.5 51.4 48.6 5.6
Consumer Health 11.0 10.9 1.3 43.2 41.1 5.1
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Net Sales 118.1 119.6 -1.2 436.4 435.9 0.1
Pharmaceutical wholesale in
Finland 94.1 95.9 -1.9 344.8 348.7 -1.1
Pharmaceutical wholesale in
Baltics 13.2 12.9 2.0 49.1 46.6 5.3
Consumer Health 11.0 10.9 1.3 43.0 40.9 5.1
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Operating profit % excluding non-
recurring items 5.1 4.9 3.6 20.5 19.6 4.4
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Operating profit 5.1 4.4 14.2 19.5 19.2 1.8
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Operating profit % excluding non- 4.3 4.1 4.7 4.5
recurring items
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Operating profit % 4.3 3.7 4.5 4.4
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Number of personnel at the end of
period 488 523
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October-December 2015
The fourth quarter net sales of Pharmaceutical Trade Finland and Baltics were
EUR 118.1 (119.6) million. Operating profit excluding non-recurring items was
EUR 5.1 (4.9) million and operating profit was EUR 5.1 (4.4) million.
January-December 2015
The Finnish pharmaceutical market grew by 3.3 (4.7) per cent in 2015 (source:
IMS Express). Oriola-KD's share of the Finnish pharmaceutical wholesale market
was 46 (46) per cent (source: ATY).
Invoicing, indicating the business volume, of the Finnish wholesale business
increased from previous year by 5.3 (decreased 0.7) per cent to EUR 1,069.8
(1,015.7) million. The net sales of Pharmaceutical Trade Finland and Baltics
increased by 0.1 (2.5) per cent to EUR 436.4 (435.9) million. Operating profit
excluding non-recurring items increased by 4.4 (4.3) per cent to EUR 20.5 (19.6)
million. Operating profit increased by 1.8 (1.9) per cent to EUR 19.5 (19.2)
million. In 2015 Oriola-KD recognised EUR 0.9 (-) million non-recurring items
related to co-operative negotiations concerning Oriola-KD's personnel in
Finland. Non-recurring items recognised in in 2014 totalled EUR 0.5 million.
The EBITDA excluding non-recurring items of Pharmaceutical Trade Finland and
Baltics was EUR 24.8 (23.7) million and EBITDA was EUR 23.8 (23.2) million.
In Finnish wholesale business Oriola-KD renewed long term cooperation agreements
among others with Orion, MSD and Orifarm in 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 continued to grow in Finnish wholesale business. The sales of
Oriolashop.fi increased but profitability of Consumer Health business decreased
from the corresponding period due to increased discounts given as a result of
continued tight competitive environment.
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
EUR million 10-12 10-12 1-12 1-12
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Pharmaceutical Trade Sweden
Restructuring costs - - - -1.0
Gain on sale of property - 7.5 - 7.5
Pharmaceutical Trade Finland and Baltics
Restructuring costs - - -0.9 -
Service award arrangement - -0.5 - -0.5
Group items
Restructuring costs - - -0.5 -
Revaluation of contingent consideration 2.3 - 3.4 -
Service award arrangement - -0.1 - -0.1
Pensions -0.3 - -0.3 -
Other -0.1 - -0.1 -
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Total 2.0 6.9 1.8 5.9
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Non-recurring items reported in 2015 relate to restructuring charges in Finnish
pharmaceutical wholesale business, Consumer Health and Group functions. In
addition, non-recurring items within Group items include the revaluation of a
contingent consideration related to the Medstop acquisition and an expense of
EUR 0.4 (-) million related to the forthcoming pension reform in Finland and a
settlement gain of EUR 0.2 (-) million from the transfer of the management of
Finnish companies' statutory occupational pensions and associated pension
portfolio. Non-recurring items reported in 2014 relate to restructuring charges
in Pharmaceutical Trade Sweden and a gain on sale from a sale-and-leaseback
transaction of the Mölnlycke warehouse property.
Balance sheet, financing and cash flow
Oriola-KD's total assets at 31 December 2015 were EUR 946.9 (874.0) million.
Cash and cash equivalents totalled EUR 121.9 (91.5) million and equity was EUR
194.6 (111.5) million. The equity ratio was 21.1 (13.1) per cent and gearing was
3.4 (91.8) per cent.
Oriola-KD rearranged its long-term revolving credit facility and term loan
agreement on 11 June 2015. The approximately EUR 175 million agreement replaced
the previous 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 256.5 (250.9) million has been allocated in
impairment testing to the cash-generating units consisting of the Group's
operating segments. Goodwill is tested annually, in accordance with the
timetable of its strategy and planning process. At the end of December 2015, EUR
230.3 (225.3) million of the goodwill was allocated to the Swedish
pharmaceutical retail business, EUR 26.0 (25.4) million to the Swedish
pharmaceutical wholesale business and EUR 0.2 (0.2) million to the
Pharmaceutical Trade Baltics.
At the end of December 2015, interest-bearing debt was EUR 128.6 (193.9) million
of which syndicated bank loans totalled EUR 76.2 (102.2) million, commercial
papers EUR 13.0 (51.8) million, advance payments from pharmacies EUR 23.9 (20.6)
million, a contingent consideration related to Medstop-acquisition EUR 12.4
(14.7) million and finance lease liabilities EUR 3.2 (4.5) million. Long-term
interest bearing-liabilities were EUR 66.9 (98.5) million and short-term
interest-bearing liabilities were EUR 61.7 (95.4) million. Interest-bearing net
debt was EUR 6.6 (102.4) million. The non-recourse trade receivables sales
programmes were continued in the Pharmaceutical Trade Sweden in 2015. At the end
of December 2015, a total of EUR 114.6 (100.1) 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
35.4 million of short-term credit account limits with banks were unused at the
end of December 2015.
Net cash flow from operations in 2015 including discontinued operations was EUR
85.6 (-10.8) million, of which changes in working capital accounted for EUR
11.2 (-42.5) million. Net cash flow from investing activities was EUR -19.9
(40.3) million.
Investments
Gross investments in January-December 2015 totalled EUR 20.4 (25.7) million and
consisted of investments related to the opening of new pharmacies, information
systems and improvements in logistics efficiency.
Personnel
At the end of 2015, Oriola-KD had 2,353 (2,356) employees, 77.8 (76.1) per cent
of whom worked in Sweden and 22.2 (23.9) 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 (as of 9 April , 2015)
* Lars Birkeland, Vice President, Pharmaceutical Retail, Sweden
* Thomas Gawell, Vice President, Pharmaceutical Wholesale, Sweden (as of 6
February, 2015)
* Jukka Mäkelä, Vice President, Development
* Teija Silver, Vice President, HR
* Kimmo Virtanen, Executive Vice President, Pharmaceutical Wholesale, Finland,
Sweden and the Baltics
Tuomas Itkonen, former CFO and member of the Group Management Team, left the
company on 1 April, 2015.
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 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
2015 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 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 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 on 30 March 2015 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 2015:
2015 2014
Trading volume (1)) class A class B class A class B
------------------------------------------------------------------------------
Trading volume, million 3.0 35.8 7.9 41.2
Trading volume, EUR million 11.9 140.1 18.6 101.5
Highest price, EUR 4.52 4.60 3.31 3.30
Lowest price, EUR 2.93 2.84 1.89 1.98
Closing quotation, end of
period, EUR 4.24 4.32 3.26 3.27
------------------------------------------------------------------------------
(1)) Adjusted by the impact of rights issue, comparative
figures adjusted accordingly.
Oriola-KD Corporation's market capitalisation on 31 December 2015 was EUR 779.6
(524.4) million.
In the review period, the traded volume of Oriola-KD Corporation shares,
excluding treasury shares, corresponded to 21.9 (30.5) per cent of the total
number of shares. The traded volume of class A shares amounted to 5.5 (15.7) per
cent of the average stock, and that of class B shares, excluding treasury
shares, to 29.3 (37.2) per cent of the average stock.
At the end of September 2015, the company had a total of 181,486,213
(160,876,788) shares, of which 55,484,648 (50,147,044) were class A shares and
126,001,565 (110,729,744) were class B shares. The company has 124,024 (139,752)
treasury shares (including treasury shares held by third-party service
provider), all of which are class B shares. They account for 0.07 (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 -
31 December 2015, 1,093,804 (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 approximately 625,500
Oriola-KD Corporation class B shares (also including the proportion to be paid
in cash) have been allocated to the current participants.
On 4 December 2015 the Board of Directors of Oriola-KD Corporation resolved to
establish a new share-based incentive plan directed to the Group key personnel
(the Plan). Approximately 20 key persons, including the members of the Group
Management Team, participate in the Plan. The Plan includes three performance
periods, calendar years 2016, 2017 and 2018, and three vesting periods, calendar
years 2017, 2018 and 2019, respectively. The Board of Directors of the Company
will resolve on the Plan's performance criteria and on the required performance
level for each criterion at the beginning of a performance period.
The prerequisite for participation in the Plan and for receipt of reward on the
basis of the Plan is that a key person has enrolled in the OKShares and makes
the monthly saving from his or her fixed gross monthly salary, in accordance
with the Rules of the OKShares in force. The aim is also to harmonize the
Company's incentive plans into a One-Platform Plan where the Company's Key
Personnel Share Savings Plan (the OKShares) and Long-Term Incentive Plan are
combined.
The potential reward of from the performance period 2016 will be based on the
Group's Earnings per Share (EPS). The rewards to be paid on the basis of the
performance period 2016 correspond to the value of an approximate maximum total
of 800,000 Oriola-KD Corporation Class B shares (including also the proportion
to be paid in cash). The potential reward will be paid partly in Oriola-KD
Corporation Class B shares and partly in cash in 2018. The cash proportion is
intended to cover taxes and tax-related costs arising from the reward to a key
person.
The member of the Group Management Team must hold 50 per cent of the net shares
given on the basis of the entire Plan, until his or her shareholding in the
Company in total equals the value of his or her gross annual salary. Such number
of shares must be held as long as the key person holds a position as a Group
Management Team member.
On 28 May 2013 the Board of Directors of Oriola-KD Corporation decided to launch
a key personnel share savings plan. A total of 34 key employees participated in
the plan during a savings period 1 October 2013 - 30 September 2014. A total of
39 key employees participated in the plan during a savings period 1 October
2014 - 30 September 2015. For both savings plans the maximum and minimum
monthly savings amounted 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 begun on 1 October
2015 and will 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.
During the final quarter in 2015, 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 and the employment has not terminated by the last day of the 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.
During 2015, in total 24,314 company's class B shares were granted under the
savings period 2013 - 2014. The savings of plan 2014-2015 correspond to
approximately 48,600 savings shares and 32,400 matching shares estimated at the
share price level of the year end.
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 27,202 (42,930).
Liquidity guarantee
There is no liquidity guarantee in effect for the shares of Oriola-KD
Corporation.
Flagging announcements
Oriola-KD Corporation received from Mariatorp Oy (business ID 1948056-9) on 30
April 2015 a disclosure, according to which Mariatorp Oy on 30 April 2015 had
signed a demerger plan. Following the completion of the demerger the Oriola-KD
shares owned by Mariatorp Oy, a company controlled by Niklas Herlin, would be
transfer to a newly established company Mariatorp Oy.
Oriola-KD has on 31 August2015 received from Mariatorp Oy (business ID
1948056-9) ("Demerged Company") a disclosure according to which Mariatorp Oy on
31 August2015 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 2016 is based on external market forecasts, agreements
with pharmaceutical companies and pharmacies, and management assessments. The
Finnish pharmaceutical market is expected to grow during 2015-2019, 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 2016
Oriola-KD estimates its full-year net sales to remain at the 2015 level on
constant currency basis. Adjusted Operating profit is estimated to remain at
2015 level or to increase, on a constant currency basis. Full-year net sales in
2015 were EUR 1,626 million and Operating profit excluding non-recurring items
was EUR 60.8 million.
Adjusted Operating profit excludes 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, or other income or expenses arising from rare events.
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. Comparable financial information 2015 in the new structure will be
published on 5 February 2016.
New long-term financial targets published in connection with the updated
strategy include:
* Business growth at the rate of the market
* Annual EPS growth over 5 per cent without non-recurring items
* Return on capital employed of over 20 per cent
* Adjusted gearing ratio of 30-60 per cent
Non-recourse trade receivables are added to the net debt.
To support its strategy Oriola-KD will invest in improving its operational
efficiency and strengthening company's market position. To support this Oriola-
KD's Board of Directors has decided on additional investments, of about EUR 20
million, into Group's IT systems and the logistics centre in Finland. These
investments will be realised during 2016 - 2018.
Events after the review period
On 1 February 2016 the Nomination Committee of Oriola-KD presented to the Board
of Directors its recommendation on the proposal to the 2016 Annual General
Meeting concerning the composition of the Board of Directors as follows:
* The number of members of the Board of Directors would be eight
* The present members of the Board of Directors Anja Korhonen, Kuisma Niemelä,
Eva Nilsson Bågenholm, Staffan Simberg, Matti Rihko and Anssi Vanjoki would
be re-elected
* Mariette Kristenson and Lena Ridström would be elected new members of the
Board of Directors
* Anssi Vanjoki would be re-elected as Chairman of the Board of Directors
Members of the Board of Directors Per Båtelson and Jukka Alho will leave the
office of Board of Directors after the 2016 Annual General Meeting.
Profit distribution proposal
Oriola-KD's parent company is Oriola-KD Corporation, whose distributable assets
based on the balance sheet on 31 December 2015 were EUR 368.8 (253.2) million.
Oriola-KD Corporation's profit for the financial year 2015 was EUR 40.2 (26.6)
million.
The Board proposes to the Annual General Meeting that a dividend of EUR 0.13 (-)
per share is paid for 2015.
Annual General Meeting
Oriola-KD Corporation's Annual General Meeting will be held on 14 March 2016 at
2 p.m. at the Helsinki Fair Centre. The matters specified in article 10 of the
Articles of Association and other proposals of the Board of Directors, if any,
will be dealt with at the meeting. The Board of Directors will decide on the
notice of the Annual General Meeting and the proposals contained in it at a
later date. The notice of the Annual General Meeting will be published in
Helsingin Sanomat newspaper on 19 February 2016.
Publication of the financial statements
Oriola-KD Corporation will publish its 2015 financial statements by 22 February
2016.
Next interim report
Oriola-KD Corporation will publish its result for the first quarter of 2016 on
22 April 2017 at about 8.30 am.
Oriola-KD's Financial Statements Release January - December 2015
Consolidated Statement of
Comprehensive Income (IFRS), 2015 2014 2015 2014
EUR million 10-12 10-12 1- 12 1- 12
-------------------------------------------------------------------------------
Continuing operations
Net sales 420.9 417.7 1,626.3 1,612.3
Other operating income 4.8 14.2 14.9 21.0
Cost of goods sold -335.8 -336.0 -1,298.4 -1,287.9
Employee benefit expenses -36.4 -36.2 -143.8 -143.8
Other operating expenses -30.4 -32.1 -113.9 -114.5
-------------------------------------------------------------------------------
Gross profit 23.0 27.7 85.1 87.2
Depreciation and impairment -5.8 -5.6 -22.6 -22.2
-------------------------------------------------------------------------------
Operating profit 17.3 22.1 62.6 65.0
Financial income and expenses -1.7 -1.8 -6.5 -7.8
-------------------------------------------------------------------------------
Profit before taxes 15.6 20.3 56.1 57.1
Income taxes -3.2 -2.2 -11.5 -10.7
-------------------------------------------------------------------------------
Profit for the period from continuing
operations 12.4 18.0 44.5 46.5
Profit for the period from discontinued
operations 0.3 -149.2 0.1 -258.8
-------------------------------------------------------------------------------
Profit for the period 12.7 -131.1 44.6 -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 3.9 -42.2 3.6 -52.1
Translation differences transferred to
Profit for the period from discontinued
operations - 74.3 - 74.3
Cash flow hedge 0.2 -0.4 0.1 -1.4
Income tax relating to
other comprehensive income -0.1 0.2 -0.0 0.3
-------------------------------------------------------------------------------
4.1 31.9 3.7 21.1
Items which will not be reclassified to
profit or loss:
Actuarial gains/losses on
defined benefit plan 5.6 -16.5 5.6 -16.5
Income tax relating to
other comprehensive income -1.1 3.3 -1.1 3.3
-------------------------------------------------------------------------------
4.4 -13.1 4.4 -13.1
Total comprehensive income for the
period 21.2 -112.4 52.8 -204.3
Profit attributable to
-------------------------------------------------------------------------------
Parent company shareholders 12.7 -131.1 44.6 -212.3
-------------------------------------------------------------------------------
Total comprehensive income attributable
to
-------------------------------------------------------------------------------
Parent company shareholders 21.2 -112.4 52.8 -204.3
-------------------------------------------------------------------------------
Earnings per share attributable to
parent company shareholders:
Basic earnings per share, EUR (2))
-------------------------------------------------------------------------------
Continued operations 0.07 0.11 0.25 0.28
Discontinued operations 0.00 -0.93 0.00 -1.61
From profit of the year 0.07 -0.82 0.25 -1.33
-------------------------------------------------------------------------------
Diluted earnings per share, EUR (2))
-------------------------------------------------------------------------------
Continued operations 0.07 0.11 0.25 0.28
Discontinued operations 0.00 -0.93 0.00 -1.61
From profit of the year 0.07 -0.82 0.25 -1.33
-------------------------------------------------------------------------------
(1)) 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 31 Dec 2015 31 Dec 2014(1))
Non-current assets
Property, plant and equipment 72.7 75.2
Goodwill 256.5 250.9
Other intangible assets 63.2 61.3
Other non-current assets 0.3 0.0
Deferred tax assets 3.7 3.3
-------------------------------------------------------------------------------
Non-current assets total 396.4 390.8
Current assets
Inventories 201.1 185.0
Trade receivables 194.0 178.4
Other receivables 33.4 28.4
Cash and cash equivalents 121.9 91.5
-------------------------------------------------------------------------------
Current assets total 550.5 483.2
ASSETS TOTAL 946.9 874.0
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
-------------------------------------------------------------------------------
Equity
Share capital 36.2 36.2
Hedging reserve -1.2 -1.3
Contingency fund 19.4 19.4
Invested unrestricted equity
reserve 74.8 1.1
Hybrid bond - 39.6
Other reserves 0.2 0.1
Translation differences 0.5 -3.1
Retained earnings( 1)) 64.7 19.5
-------------------------------------------------------------------------------
Equity attributable to the parent
company shareholders (1)) 194.6 111.5
Non-current liabilities
Deferred tax liabilities( 1)) 15.8 14.8
Pension obligations 10.0 14.9
Borrowings 66.9 98.5
Other non-current liabilities 2.1 2.2
-------------------------------------------------------------------------------
Non-current liabilities total (1)) 94.7 130.4
Current liabilities
Trade payables 547.7 494.3
Provisions - 0.6
Borrowings 61.7 95.4
Other current liabilities 48.1 41.8
-------------------------------------------------------------------------------
Current liabilities total 657.5 632.1
EQUITY AND LIABILITIES TOTAL 946.9 874.0
-------------------------------------------------------------------------------
(1) )A correction of an error relating to previous financial periods was made
in the financial statements. The correction increased the amount of deferred
tax liability and decreased the amount of equity by EUR 2.1 million.
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 36.2 20.4 -25.3 246.8 - 278.1
-------------------------------------------------------------------------------
Correction of error - - - -2.1 - -2.1
Restated equity
1 Jan 2014 36.2 20.4 -25.3 244.7 - 276.0
-------------------------------------------------------------------------------
Comprehensive income
for the period
Net profit for the
period - - - -212.3 - -212.3
Other
comprehensive
income:
Cash flow hedge - -1.4 - - - -1.4
Actuarial gains
and losses - - - -16.5 - -16.5
Income tax
relating to
other
comprehensive income - 0.3 - 3.3 - 3.6
Translation
difference - 0.0 22.2 - - 22.2
-------------------------------------------------------------------------------
Comprehensive income
for the period total - -1.1 22.2 -225.4 - -204.3
-------------------------------------------------------------------------------
Transactions with
owners
Hybrid bond - - - - 39.6 39.6
Share-based
payments - - - 0.2 - 0.2
Purchase of
treasury shares - - - -0.1 - -0.1
-------------------------------------------------------------------------------
Transactions with
owners total - - - 0.1 39.6 39.8
-------------------------------------------------------------------------------
Equity
31 Dec 2014 36.2 19.3 -3.1 19.5 39.6 111.5
-------------------------------------------------------------------------------
Comprehensive income
for the period
Net profit for the
period - - - 44.6 - 44.6
Other
comprehensive
income:
Cash flow hedge - 0.1 - - - 0.1
Actuarial gains and
losses - - - 5.6 - 5.6
Income tax relating
to
other comprehensive
income - -0.0 - -1.1 - -1.2
Translation
difference - - 3.6 - - 3.6
-------------------------------------------------------------------------------
Comprehensive income
for the period total - 0.1 3.6 49.0 - 52.8
-------------------------------------------------------------------------------
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
31 Dec 2015 36.2 93.1 0.5 64.7 - 194.6
-------------------------------------------------------------------------------
A correction of an error relating to previous financial periods was
made in the financial statements. The amount of deferred tax liability
relating to depreciation difference has been corrected in 2014 opening
equity in accordance with retrospective correction of errors pursuant
to IAS 8. The impact of the correction on opening equity was EUR -2.1
million. The error relates to Pharmaceutical Trade Sweden -segment.
Condensed Consolidated Statement of Cash Flows
(IFRS),
2015 2014
EUR million (1)) 1- 12 1- 12
------------------------------------------------------------------------------
Operating profit 62.7 -42.4
Depreciation and amortisation 22.6 26.2
Impairment - 71.1
Change in working capital 11.2 -42.5
Cash flow from financial
items and taxes -16.9 -13.5
Other adjustments 6.2 -9.7
------------------------------------------------------------------------------
Net cash flow from operating
activities 85.6 -10.8
Net cash flow from investing
activities -19.9 40.3
Net cash flow from financing
activities -35.2 -80.3
Net change in cash and cash
equivalents 30.6 -50.8
Cash and cash equivalents
at the beginning of the period 91.5 137.3
Foreign exchange rate differences -0.1 5.0
Net change in cash and cash
equivalents 30.6 -50.8
------------------------------------------------------------------------------
Cash and cash equivalents
at the end of the period 121.9 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 financial statements release 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. The
consolidated statement of cash flows for comparative period 2014 includes net
cash flow of discontinued operations.
The calculation principles of key figures in this financial statements release
are the same as for the annual financial statements, expect for the calculation
of earnings per share (EPS) whereby the average number of shares includes the
impact of the 2015 rights issues and 2014 comparatives have been adjusted
accordingly.
The figures in the financial statement release 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 financial statements release are unaudited.
Earnings per share
2015 2014 2015 2014
EUR million 10-12 10-12 1- 12 1- 12
-------------------------------------------------------------------------------
Profit attributable to equity
owners of the parent from
continuing operations 12.4 18.0 44.5 46.5
Accumulated interest on hybrid
bond net of tax - -0.6 - -1.9
-------------------------------------------------------------------------------
Adjusted profit for the period
from continuing operations 12.4 17.5 44.5 44.6
2015 2014 2015 2014
EUR million 10-12 10-12 1- 12 1- 12
-------------------------------------------------------------------------------
Profit incl. discontinued
operations attributable to
equity owners of the parent 12.7 -131.1 44.6 -212.3
Accumulated interest on hybrid
bond net of tax - -0.6 - -1.9
-------------------------------------------------------------------------------
Adjusted profit for the period
including discontinued
operations 12.7 -131.7 44.6 -214.2
Average number of outstanding shares
(1000 shares) (1))
Basic 177,502 160,741 177,502 160,741
Diluted 177,502 160,741 177,502 160,741
Earnings per share (EUR) (1))
Basic
Continuing operations 0.07 0.11 0.25 0.28
Discontinuing operations 0.00 -0.93 0.00 -1.61
Total 0.07 -0.82 0.25 -1.33
Diluted
Continuing operations 0.07 0.11 0.25 0.28
Discontinuing operations 0.00 -0.93 0.00 -1.61
Total 0.07 -0.82 0.25 -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
EUR million 1- 12 1- 12
------------------------------------------------------------------
Carrying amount at the beginning of the period 75.2 93.2
Increases through acquisitions of subsidiary shares - 0.0
Increases 11.9 27.0
Decreases -0.6 -13.2
Divestment of business - -11.3
Reclassifications 0.0 0.2
Depreciation, Continuing operations -14.8 -15.0
Depreciation, Discontinued operations - -1.3
Foreign exchange rate differences 1.0 -4.4
------------------------------------------------------------------
Carrying amount at the end of the period 72.7 75.2
------------------------------------------------------------------
Changes in Intangible assets, 2015 2014
EUR million 1- 12 1- 12
------------------------------------------------------------------
Carrying amount at the beginning of the period 312.3 451.0
Increases through acquisitions of subsidiary shares - 0.2
Increases 8.5 6.8
Decreases - -0.0
Divestment of business - -24.5
Reclassifications 0.0 -0.2
Amortisation, Continuing operations -7.8 -7.2
Impairments and amortisation, Discontinued operations - -73.8
Foreign exchange rate differences 6.7 -39.8
------------------------------------------------------------------
Carrying amount at the end of the period 319.7 312.3
------------------------------------------------------------------
Derivatives
31 Dec 2015 Positive fair Negative fair Nominal values of
EUR million value value contracts
-------------------------------------------------------------------------------
Derivatives recognised
as cash flow hedges
Interest rate swaps - 1.6 56.6
Derivatives measured at
fair value through profit and
loss
Foreign currency forward and
swap contracts - 1.2 126.9
-------------------------------------------------------------------------------
31 Dec 2014 Positive fair Negative fair Nominal values of
EUR million value value Contracts
-------------------------------------------------------------------------------
Derivatives recognised
as cash flow hedges
Interest rate swaps - 1.7 55.4
Derivatives measured at
fair value through profit and
loss
Foreign currency forward and
swap contracts 1.0 - 154.7
-------------------------------------------------------------------------------
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
31 Dec 2015 Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Assets
Derivatives measured at fair value through
profit and loss - 0.1 - 0.1
Liabilities
Derivatives designated as hedges - 1.6 - 1.6
Derivatives measured at fair value through
profit and loss - 1.3 - 1.3
Contingent consideration - - 12.4 12.4
-------------------------------------------------------------------------------
EUR million
31 Dec 2014 Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Assets
Derivatives measured at fair value through
profit and loss - 1.4 - 1.4
Liabilities
Derivatives designated as hedges - 1.7 - 1.7
Derivatives measured at fair value through
profit and loss - 0.3 - 0.3
Contingent consideration - - 14.7 14.7
-------------------------------------------------------------------------------
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 0.9
Change in fair value recognised in other
operating income -3.4
Translation differences 0.2
-------------------------------------------------------------------------------
Book value 31 Dec 2015 12.4
-------------------------------------------------------------------------------
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 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 31 Dec 2015 31 Dec 2014
--------------------------------------------------------------------
Commitments for own liabilities
Guarantees on behalf of own companies 8.5 8.1
Guarantees on behalf of other companies 2.0 22.0
Mortgages on company assets 2.3 2.2
Other guarantees and liabilities 1.0 1.1
Accumulated interest on hybrid bond - 2.4
--------------------------------------------------------------------
Total 13.7 35.8
--------------------------------------------------------------------
Leasing liabilities (operating liabilities) 0.7 0.8
Rent liabilities 40.0 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 4.1 million counter guarantee
mainly subject to parent company guarantees of the commercial agreements. The
guarantees on behalf of other companies will expire in 2016.
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 (4.7) million against subsidiaries' trade
payables.
Provisions
On 31 December 2015 Oriola-KD had provisions totalling EUR - (0.2) million.
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 until 31 December 2015 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
Reportable
segments
1-12/2015
Pharmaceutical
Pharmaceutical Trade
Trade Finland and
EUR million Sweden Baltics Group items Total
----------------------------------------------------------------------
External
Invoicing 2,098.4 1,163.7 - 3,262.2
Internal
Invoicing 0.1 0.0 -0.1 -
----------------------------------------------------------------------
Invoicing 2,098.5 1,163.7 -0.1 3,262.2
External Net
Sales 1,190.0 436.3 - 1,626.3
Internal Net
Sales 0.1 0.0 -0.1 -
----------------------------------------------------------------------
Net Sales 1,190.1 436.4 -0.1 1,626.3
Operating profit 46.4 19.5 -3.4 62.6
Operating Profit
excl. non-
recurring items 46.4 20.5 -6.1 60.8
Assets 650.3 163.8 132.7 946.9
Liabilities 408.8 211.8 131.6 752.3
Investments 13.6 3.9 2.9 20.4
Depreciation 18.0 4.3 0.2 22.6
Average number
of personnel 1,800 489 38 2,327
1-12/2014( 1))
Pharmaceutical
Pharmaceutical Trade
Trade Finland and
EUR million Sweden Baltics Group items Total
----------------------------------------------------------------------
External
Invoicing 1,955.1 1,105.0 - 3,060.1
Internal
Invoicing 0.0 0.0 -0.1 -
----------------------------------------------------------------------
Invoicing 1,955.1 1,105.0 -0.1 3,060.1
External Net
Sales 1,176.5 435.8 - 1,612.3
Internal Net
Sales -0.0 0.0 0.0 -
----------------------------------------------------------------------
Net Sales 1,176.4 435.9 0.0 1,612.3
Operating profit 50.5 19.2 -4.6 65.0
Operating Profit
excl. non-
recurring items 44.0 19.6 -4.5 59.1
Assets 624.3 150.5 99.3 874.0
Liabilities 368.6 195.9 198.0 762.5
Investments 21.0 4.2 0.6 25.7
Depreciation 18.0 4.0 0.2 22.2
Average number
of personnel 1,826 511 40 2,377
(1) )The impact of the correction of an error on the Pharmaceutical trade
Sweden -segment liabilities was EUR 2.1 million.
10-12/2015
Pharmaceutical
Pharmaceutical Trade
Trade Finland and
EUR million Sweden Baltics Group items Total
----------------------------------------------------------------------
External
Invoicing 543.1 314.9 - 858.0
Internal
Invoicing 0.0 0.0 -0.0 -
----------------------------------------------------------------------
Invoicing 543.1 314.9 -0.0 858.0
External Net
Sales 302.8 118.1 - 420.9
Internal Net
Sales 0.0 0.0 -0.0 -
----------------------------------------------------------------------
Net Sales 302.8 118.1 -0.0 420.9
Operating profit 11.6 5.1 0.6 17.3
Operating Profit
excl. non-
recurring items 11.6 5.1 -1.4 15.3
Assets 650.3 163.8 132.7 946.9
Liabilities 408.8 211.8 131.6 752.3
Investments 4.7 1.2 1.2 7.2
Depreciation 4.6 1.1 0.1 5.8
10-12/2014(1)) Pharmaceutical
Pharmaceutical Trade
Trade Finland and
EUR million Sweden Baltics Group items Total
----------------------------------------------------------------------
External
Invoicing 516.0 298.6 - 814.6
Internal
Invoicing 0.1 0.0 -0.1 -
----------------------------------------------------------------------
Invoicing 516.1 298.6 -0.1 814.6
External Net
Sales 298.1 119.6 - 417.7
Internal Net
Sales 0.0 0.0 -0.0 -
----------------------------------------------------------------------
Net Sales 298.1 119.6 -0.0 417.7
Operating profit 17.7 4.4 -0.1 22.1
Operating Profit
excl. non-
recurring items 10.2 4.9 -0.0 15.1
Assets 624.3 150.5 99.3 874.0
Liabilities 368.6 195.9 198.0 762.5
Investments 2.7 1.0 0.0 3.7
Depreciation 4.5 1.1 0.1 5.6
(1) )The impact of the correction of an error on the Pharmaceutical trade
Sweden -segment liabilities was EUR 2.1 million.
Geographical
information
1-12/2015
Baltic Other
EUR million Sweden Finland countries countries Total
-------------------------------------------------------------------------------
Net Sales 1,124.4 385.7 45.7 70.6 1,626.3
Assets 656.9 271.4 18.6 - 946.9
Investments 13.6 6.4 0.4 - 20.4
1-12/2014
Baltic Other
EUR million Sweden Finland countries countries Total
-------------------------------------------------------------------------------
Net Sales 1,114.8 388.3 43.5 65.7 1,612.3
Assets 631.1 225.8 17.1 - 874.0
Investments 21.0 4.2 0.5 0.0 25.7
10-12/2015
Baltic Other
EUR million Sweden Finland countries countries Total
-------------------------------------------------------------------------------
Net Sales 284.6 104.6 12.3 19.4 420.9
Assets 656.9 271.4 18.6 - 946.9
Investments 4.7 2.4 0.1 - 7.2
10-12/2014
Baltic Other
EUR million Sweden Finland countries countries Total
-------------------------------------------------------------------------------
Net Sales 280.9 106.1 11.8 19.0 417.7
Assets 631.1 225.8 17.1 - 874.0
Investments 2.7 0.7 0.3 - 3.7
Espoo, 5 February 2016
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
Sari Aitokallio
CFO
tel. +358 (0)10 429 2112
e-mail: sari.aitokallio@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#1983796]