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Oriola-KD Corporation's interim report for 1 January - 31 March 2009
29.4.2009
Oriola-KD Corporation Stock Exchange Release 29 April 2009 at 8.30
a.m.
This interim report presents the financial information of the
Oriola-KD Group (hereinafter Oriola-KD) for the period January-March
2009. As of 1 January 2009, the company has applied the revised IAS 1
standard and the IFRS 8 standard. This interim report was drawn up
in accordance with the IAS 34 standard and Oriola-KD' new
segmentation. The retail and wholesale businesses OOO Vitim & Co and
OOO Moron, acquired in Russia, have been consolidated into
Oriola-KD's accounts since 1 April 2008. The figures are unaudited.
Key figures 1 January - 31 March 2009
* Net sales increased 26.9 per cent to EUR 403.5 million (Q1/2008:
EUR 318.0 million).
* Operating profit increased 45.8 per cent to EUR 12.4 million
(Q1/2008: EUR 8.5 million).
* Net profit increased 28.5 per cent to EUR 8.9 million (Q1/2008:
EUR 6.9 million).
* Earnings per share were EUR 0.06 (Q1/2008: EUR 0.05).
* Return on capital employed was 15.9 per cent (Q1/2008: 17.0 per
cent)
President and CEO Eero Hautaniemi: "Oriola-KD's business developed
favourably in January-March 2009, with net sales increasing 27 per
cent and operating profit 46 per cent largely thanks to the positive
development of the Russian companies. In 2009, we will continue to
develop the business operations in Russia and prepare for the
possible liberalisation of the Swedish pharmacy market. Oriola-KD's
operating profit in 2009, without the costs of the Swedish strategic
program preparations, is expected to be higher than in 2008."
Financial performance
Oriola-KD's net sales in January-March 2009 were EUR 403.5 million
(EUR 318.0 million).
Operating profit for January-March 2009 came to EUR 12.4 million (EUR
8.5 million) and profit after financial items came to EUR 11.6
million (EUR 9.1 million).
During the review period, Oriola-KD continued to invest heavily in
strategic growth ventures, developing its business in Russia and
preparing for the business opportunities offered by the possible
liberalisation of the Swedish pharmacy market. The strategic program
concerning the liberalisation of the Swedish pharmacy market led to
costs of roughly EUR 2.3 million in the first quarter of 2009.
Oriola-KD's financing expenses in January-March 2009 were EUR 0.8
million. In the first quarter of 2008, the correspondig figure was a
financing income of EUR 0.6 million. The increase in financing
expenses was mainly due to the execution of the Russian acquisition
in April 2008.
Taxes in the review period amounted to EUR 2.7 million (EUR 2.1
million). The taxation corresponding to the result for the period
under review is entered under taxes.
Net profit in January-March 2009 was EUR 8.9 million (EUR 6.9
million).
Oriola-KD's earnings per share in the review period were EUR 0.06
(EUR 0.05). Return on capital employed was 15.9 per cent (17.0 per
cent) and return on equity 19.4 per cent (13.8 per cent).
Balance sheet, financing and cash flow
Oriola-KD's balance sheet total on 31 March 2009 stood at EUR 772.0
million (EUR 639.1 million). Cash assets at the end of March 2009
were EUR 28.9 million (EUR 98.5 million), and equity was EUR 182.3
million (EUR 199.8 million). Oriola-KD's equity ratio was 24.3 per
cent (32.3 per cent). The weakening of the Swedish currency (SEK) and
the Russian currency (RUB) decreased Oriola-KD's equity.
At the end of the review period, interest-bearing net debt amounted
to EUR 118.1 million (EUR -79.5 million) and the gearing ratio was
64.8 per cent (-39.8 per cent). Interest-bearing debt, which at the
end of March was EUR 147.0 million (EUR 19.1 million), comprised some
EUR 87 million from the commercial paper programme, some EUR 22
million from pharmacy advance payments in Finland and the debt of
approximately EUR 38 million from the anticipated final price of the
remaining 25 per cent holding in the Russian companies. Oriola-KD has
a EUR 100 million commercial paper programme. Oriola-KD's
approximately EUR 78 million credit facilities with banks stood
unused at the end of the review period.
Net cash flow from operating activities in January-March 2009 was EUR
-19.8 million (EUR -11.2 million), of which changes in working
capital accounted for EUR -28.7 million (EUR -20.4 million). Working
capital increased largely because of the growth of the Russian
companies and the seasonal increase in working capital in Finland.
Net cash flow from investments was EUR -24.9 million (EUR 0.4
million), including the additional sum of EUR 21.7 million paid for
the 75 per cent holding in the Russian companies. During the review
period, cash flow after investments was EUR -44.7 million (EUR -10.8
million).
Investments
Investments in January-March 2009 came to EUR 16.5 million (EUR 0.9
million), mostly associated with the increase of the anticipated
final price of the Russian companies, the acquisition of the minority
holding in Kronans Droghandel AB in Sweden and the operating
investments in maintenance and PPE.
Personnel
On 31 March 2009, Oriola-KD had a payroll of 4,461 employees (1,288
), 14 per cent of whom worked in Finland (54 per cent), 9 per cent in
Sweden (29 per cent), 72 per cent in Russia (0 per cent) and 5 per
cent in the Baltic countries and Denmark combined (17 per cent).
Changes in the Group Management Team
Pursuant to the resolution of Oriola-KD Corporation's Board of
Directors on 11 February 2009, Oriola-KD Corporation's Group
Management Team will be composed of the following members as of 1
March 2009:
Eero Hautaniemi President and CEO
Anne Kariniemi Vice President, Logistics and
Sourcing
Cecilia Marlow Vice Director, Pharmaceutical
Trade, Sweden
Jukka Niemi Vice President, Pharmaceutical
Trade, Finland
Ilari Vaalavirta Vice President, Healthcare Trade
Kimmo Virtanen Executive Vice President & CFO
The purpose of the changes in the Group Management Team is to promote
the implementation of the Group's strategic programs and to enhance
control of the business units. The directors in charge of Russian and
Baltic operations report directly to Oriola-KD's President and CEO.
The Group also has an extended Group Management Team, composed of
the Group Management Team and the heads of the business areas and
Group functions.
Operating segments
On 1 January 2009, Oriola-KD introduced financial reporting that is
based on the new segment division. The interim report for 1
January-31 March 2009 was drawn up in accordance with the new
segmentation.
Oriola-KD's new business segments as of 1 January 2009 are
Pharmaceutical Trade Finland, Pharmaceutical Trade Sweden,
Pharmaceutical Trade Russia, Pharmaceutical Trade Baltics, Healthcare
Trade and Dental Trade. The new segment structure is in line with the
Group's new organisation structure and internal reporting.
The Group's geographical segments as of 1 January 2009 are Finland,
Sweden, Russia, the Baltic countries and other countries.
Pharmaceutical Trade Finland
Pharmaceutical Trade Finland's net sales in January-March 2009 were
EUR 126.6 million (EUR 127.6 million) and its operating profit was
EUR 3.9 million (EUR 3.9 million).
The pharmaceutical market in Finland declined by 1.2 per cent (grew
by 6.3 per cent) in January-March 2009. The introduction of the
reference price system in Finland at the beginning of April 2009 will
hamper the growth of net sales of the Pharmaceutical Trade Finland
business segment in 2009. Oriola-KD's market share in the Finnish
wholesale market was 46.8 percent (48.1 per cent) in January-March
2009 (source: IMS Health).
No significant changes took place in distribution agreements in
Finland during the review period.
Based on the situation at the end of the review period, Oriola-KD's
estimated share of the pharmaceutical wholesale market in Finland
will be approximately 47 per cent in 2009.
At the end of March 2009, 411 (462) people were employed by
Pharmaceutical Trade Finland.
Pharmaceutical Trade Sweden
Pharmaceutical Trade Sweden's net sales in January-March 2009 were
EUR 126.1 million (EUR 139.8 million) and its operating profit was
EUR -0.4 million (EUR 1.7 million). Net sales were reduced by a
decline in Oriola-KD's market share and the weakening of the Swedish
currency (SEK). Operating profit was reduced by EUR 2.3 million in
costs from the strategic program concerning the liberalisation of the
Swedish pharmacy market, of which EUR 0.3 million was recorded for
the Group. Excluding the costs from the strategic program,
Pharmaceutical Trade Sweden's operating profit was EUR 1.7 million
for the review period.
The pharmaceutical market grew by 1.8 per cent (5.5 per cent) in
Sweden in January-March 2009. Oriola-KD's market share in the Swedish
wholesale market was 41.5 per cent (43.3 per cent) in January-March
2009 (source: IMS Health).
The pharmaceutical manufacturers Schering-Plough and Organon
discontinued as pharmaceutical principals in Sweden during the period
under review.
Based on the situation at the end of the review period, Oriola-KD's
estimated share of the pharmaceutical wholesale market in Sweden will
be approximately 40 per cent in 2009.
The Swedish Government has proposed that the state's pharmacy
monopoly be dismantled in mid-2009. The Swedish Parliament is
expected to make a decision on the proposed liberalisation of the
pharmacy market on 29 April 2009. Oriola-KD has continued to make
preparations for this proposed liberalisation during 2009.
Oriola-KD Corporation increased its shareholding in the Swedish-based
Kronans Droghandel AB (KD) from 98.13 per cent to 100.00 per cent by
acquiring Organon AB's minority holding in KD on 6 March 2009. The
shares were paid in cash. The price was not made public.
Pharmaceutical Trade Sweden had 262 (247) employees at the end of
March 2009.
Pharmaceutical Trade Russia
Pharmaceutical Trade Russia's net sales in January-March 2009 were
EUR 107.2 million (pro forma EUR 96.0 million) and its operating
profit was EUR 7.6 million (pro forma EUR -0.8 million). The
expansion and improving efficiency of the business in Russia and
investments in the development of the business had a positive impact
on the first quarter operating profit. At the end of March,
competition became tighter in the Russian pharmaceutical market. The
retail and wholesale businesses OOO Vitim & Co and OOO Moron,
acquired in Russia, have been consolidated into Oriola-KD's accounts
since 1 April 2008.
In ruble (RUB) terms, the pharmaceutical market in Russia grew almost
30 per cent in January-March 2009. At the end of March, Oriola-KD had
156 pharmacies in and around Moscow (133 pharmacies).
Pharmaceutical Trade Russia had 3,239 (pro forma 3,696) employees at
the end of March 2009.
The business in Russia is typically seasonal in that performance in
the first and fourth quarters of the year is usually strong. The
fourth quarter has long been the strongest by a clear margin, while
the second and third quarters have been weaker than the other two.
Pharmaceutical Trade Baltic Countries
Pharmaceutical Trade Baltic Countries' net sales in January-March
2009 were EUR 8.6 million (EUR 10.0 million) and the operating profit
was EUR 0.1 million (EUR 0.3 million). The Baltic market was
challenging, which had a negative effect on net sales and operating
profit. Pharmaceutical Trade Baltic Countries had 152 (165) employees
at the end of March 2009.
Healthcare trade
Healthcare Trade net sales in January-March 2009 were EUR 35.0
million (EUR 40.6 million) and the operating profit was EUR 1.7
million (EUR 2.9 million). Two important suppliers discontinued with
Oriola-KD as a result of international distribution channelreorganisation in
2008, which weakened net sales and operating profit
for January-March 2009.
In Finland, ConvaTec's wound and stoma care business, including
associated personnel, was moved on 1 April 2009 from Oriola's
representation to Oy Unomedical Ab as a part of an international
distribution channel solution.
The Healthcare Trade business segment had a payroll of 396 (414)
employees on 31 March 2009.
Dental Trade
Oriola-KD Corporation and Lifco AB merged their Dental Trade
businesses in 2007. Oriola-KD holds a 30 per cent share of the Dental
Trade business, while Lifco has a 70 per cent holding.
The Dental Trade's operating profit in January-March 2009 was EUR 1.1
million (EUR 0.6 million), improving largely due to the development
of the business in Finland and Denmark.
Related parties
Related parties in the Oriola-KD Group are deemed to comprise parent
company Oriola-KD Corporation, the subsidiaries and associated
companies, the members of the Board and the President and CEO of
Oriola-KD Corporation, other members of the Group Management Team of
the Oriola-KD Group, the immediate family of the aforementioned
persons, the companies controlled by the aforementioned persons, and
the Oriola Pension Foundation. The Group has no significant business
transactions with related parties, except for pension expenses
arising from defined benefit plans with the Oriola Pension
Foundation. The notes to the financial statements of Oriola-KD
Corporation provide additional information on intra-Group liabilities
and sureties given on behalf of Group companies. The Oriola-KD
Corporation has given no significant sureties on behalf of Group
companies.
Oriola-KD Corporation shares
Trading volume of the Oriola-KD Corporation's class A and B shares in
January-March 2009:
Trading volume January-March 2009 January-March 2008
Class A Class B Class A Class B
Trading volume, million 1.2 14.1 1.1 9.4
Trading volume, EUR million 1.9 23.1 3.0 26.8
Highest, euros 1.90 1.90 2.96 3.00
Lowest, euros 1.29 1.30 2.50 2.60
Closing quotation, end of 1.72 1.70 2.92 2.98
period, euros
In the review period, the traded volume of Oriola-KD Corporation
shares, excluding treasury shares, corresponded to 10.8 per cent (7.4
per cent) of the total outstanding shares. The traded volume of class
A shares amounted to 2.5 per cent (2.2 per cent) of the average
outstanding stock, and that of class B shares, excluding treasury
shares, 15.2 per cent (10.4 per cent).
Oriola-KD Corporation's market capitalisation on 31 March 2009 was
EUR 242.2 million (EUR 418.4 million).
At the end of March 2009, the company had 141,907,828 shares
(141,907,828), of which 48,392,203 were class A shares (50,778,807)
and 93,515,625 were class B shares (91,129,021). Pursuant to article
3 of the Articles of Association, a shareholder can request that
class A shares be converted to class B shares. In January-March 2009,
a total of 300,000 (466,598) class A shares were converted into class
B shares.
On 19 March 2009, pursuant to the authorisation granted to it by the
Annual General Meeting of 13 March 2007, the Board of Directors
resolved that a directed bonus issue be made, in which a total of
150,480 class B shares held by the company were assigned to the
company's President and CEO and to certain other members of Oriola-KD
Corporation's Group Management Team and of its extended Group
Management Team, as part of the Group's share-based incentive scheme
for senior management. These shares represent approximately 0.11 per
cent of the total number of company shares and approximately 0.01 per
cent of the total number of votes.
Following the share issues, the company has 343,472 treasury shares,
all of which are class B shares. These account for 0.24 per cent of
the company's outstanding stock and 0.03 per cent of the votes in the
company.
Risks
The Board of Directors of Oriola-KD 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 the operations of the company and the achievement of goals
set for them. 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:
* changes in bargaining position vis-à-vis suppliers and customers
* Impact on business concepts from potential changes in the
structure of the Swedish market
* maintenance of cost-effectiveness and flexibility in costs
* provision of competitive products and services in expanding and
consolidating markets
* expansion-related risks in new markets and businesses
* commitment of key employees
The major financial risks for Oriola-KD involve currency exchange
rates, interest rates, liquidity and credit. The anticipated
USD-denominated purchase price of the remaining 25 per cent holding
in the Russian business acquisition has been hedged in accordance
with the Group's treasury policy.
Oriola-KD's exposure to risks relating to new markets and businesses
as well as financial risks has increased as a result of the company's
expansion into the Russian pharmaceutical retail and wholesale
market. Currency risks are the most significant of Oriola-KD's
financial risks in Russia, as any changes in the value of the Russian
ruble (RUB) will have an impact on Oriola-KD's financial performance
and equity. Oriola-KD has invested some EUR 90 million to acquire a
75 per cent holding in the Russian companies and anticipates a
roughly EUR 38 million final price for the remaining 25 per cent. In
addition, by the end of March it had provided the companies with
long-term financing amounting to approximately EUR 49 million. The
Russian companies have no loans external to the Group.
Goodwill and intangible rights are subject to annual impairment
testing, which may have a negative effect on Oriola-KD's financial
performance.
Near-term risks and uncertainty factors
Factors significantly affecting Oriola-KD's outlook in the short term
are the completion of the processes involved in the Russian
acquisition, the realisation of the growth potential of the Russian
businesses, general market trends in Russia and the uncertainty of
the financial market. The potential changes in the Swedish pharmacy
market are subject to a number of uncertainties that could have a
substantial effect on Oriola-KD's business.
Events after the period under review
New managing directors were appointed to Oriola-KD's Russian
pharmaceutical retail and wholesale companies in April 2009. Henrijs
Fogels (b. 1963) was appointed managing director of the
pharmaceutical retail company (OOO Vitim & Co), and Vladimir Kniazev
(b. 1965) was appointed managing director of the pharmaceutical
wholesale company (OOO Moron). As has been agreed, Igor and Oleg
Yankov will resign from their posts as managing directors of the
companies and continue as members of the boards of Vitim and Moron.
Decisions of the Annual General Meeting
The Annual General Meeting of Oriola-KD Corporation, held on 16 April
2009, confirmed the 2008 financial statements and discharged the
Board members and the President and CEO from liability for the
financial year ending 31 December 2008.
The Annual General Meeting resolved that the sum of EUR 0.08 per
share be paid as dividend on the basis of the balance sheet adopted
for the financial year ending 31 December 2008. The dividend will be
paid to those who, on the dividend distribution record date of 21
April 2009, are entered as shareholders of the company in the
company's shareholder register kept by Euroclear Finland Ltd
(formerly the Finnish Central Securities Depository Ltd). The
dividend payment date is 15 May 2009.
The Annual General Meeting confirmed that the Board would continue to
comprise seven members. Harry Brade, Pauli Kulvik, Outi Raitasuo,
Antti Remes, Olli Riikkala, Jaakko Uotila and Mika Vidgrén were
re-elected to the Board. Olli Riikkala continues as Chairman of the
Board. The Annual General Meeting confirmed that the Chairman of the
Board will receive EUR 44,000 in remuneration for his term of office,
the Vice Chairman EUR 27,500 and the other members of the Board EUR
22,000 each. The Board's remuneration will be paid in cash. The
Chairman of the Board would receive an attendance fee of EUR 800 for
each meeting, and the other Board members EUR 400 per meeting.
Meeting fees will also be paid in the same manner to members of
committees set up by the Board of Directors or the company. The
Chairman of the Board will also have a company-paid phone. Travel
expenses will be paid in accordance with the travel policy of the
company.
The Annual General Meeting re-elected PricewaterhouseCoopers Oy as
auditor for the company, with Heikki Lassila APA as principal
auditor. The auditor will be remunerated according to invoice.
The Annual General Meeting resolved that articles 3, 4, 7, 9, 10 and
12 of the Articles of Association be amended. The main content of the
amendments is as follows: The references to minimum and maximum
authorised share capital were removed from article 3; the definition
in article 4 concerning the book-entry system was simplified and the
references concerning the record date procedure were removed; an
amendment was made to the wording of article 7 on the right to sign
on behalf of the company, ensuring that it is consistent with the
terminology used in the Limited Liability Companies Act; the
references to deputy auditor were removed from article 9 (following
this amendment the company has just one auditor, which must be a firm
of authorised public accountants); the phrases in article 10
concerning the AGM were amended to ensure consistency with the
terminology used in the Limited Liability Companies Act and with the
newly amended article 9; the definition in article 12 concerning the
notice of the annual general meeting was amended such that the notice
must be given at least 21 days prior to the meeting.
The Annual General Meeting authorised the Board to decide on the
purchase of Oriola-KD Corporation class B shares. Pursuant to the
authorisation, the Board is authorised to decide on the purchase of
no more than 14,000,000 of the company's own class B shares,
corresponding to approximately 9.9 per cent of the total number of
company shares. The authorisation can only be used in such a way that
the company and its subsidiaries together would hold no more than one
tenth (1/10) of the total number of company shares at any one time.
In accordance with the Board's decision, the company's shares can be
purchased in a manner other than in proportion to the existing
holdings of shareholders using assets belonging to the company's
non-restricted equity at the class B share's market price in public
trading arranged by the NASDAQ OMX Helsinki Ltd exchange at the time
of purchase. The shares will be paid for in accordance with the rules
and regulations of NASDAQ OMX Helsinki Ltd and Euroclear Finland Ltd.
The Board will decide how the shares are purchased. Derivatives may
also be used in the purchase. The purchase of the shares will reduce
the company's distributable non-restricted equity. The shares can be
purchased for the purpose of developing the company's capital
structure, implementing any corporate transactions or other business
arrangements, financing investments, inclusion in the company's
incentive schemes or to be otherwise assigned, held by the company or
annulled. The Board will decide on all other matters related to the
purchase of class B shares. The purchase authorisation remains in
force no longer than eighteen (18) months following the decision of
the Annual General Meeting. The authorisation repeals the Annual
General Meeting's decision of 17 March 2008 authorising the Board to
decide on the purchase of Oriola-KD Corporation class B shares.
The Annual General Meeting authorised the Board to decide on a share
issue of the company's class B shares against payment in one or more
batches. The authorisation would include the right to issue new class
B shares or to assign class B shares held by the company. The
authorisation covers no more than 28,000,000 of the company's class B
shares in total, which corresponds to approximately 19.8 per cent of
the total number of company shares. The authorisation granted to the
Board includes the right to deviate, by means of a directed issue,
from the pre-emptive subscription right of shareholders, provided
that there are financial grounds considered important from the
company's perspective for such a deviation. Subject to the
restrictions presented above, the authorisation could be used for
purposes such as payment of consideration in corporate transactions
or other business arrangements and financing and carrying out
investments, expansion of the company's ownership base, development
of the capital structure, or as part of incentive and commitment
programmes for personnel. On the basis of the authorisation, class B
shares held by the company could also be sold in public trading
arranged by the NASDAQ OMX Helsinki Ltd exchange. The authorisation
includes the right of the Board to determine the terms of the share
issue as specified in the Limited Liability Companies Act, including
the right to decide whether the subscription price will be partially
or fully entered in the invested non-restricted equity fund or in the
share capital. The authorisation will remain in force for eighteen
(18) months following the decision of the Annual General Meeting. The
authorisation cancels the share issue authorisations previously
received by the Board, with the exception of the authorisation
granted to the Board by the Annual General Meeting of 13 March 2007,
under which the Board may decide on arranging a directed bonus issue
concerning no more than 650,000 class B shares for the purpose of
implementing the share-based incentive scheme for management.
Decisions of the Board's organisational meeting
At the organisational meeting held immediately after the AGM, the
Board resolved to elect Antti Remes to continue serving as Vice
Chairman of the Board. The composition of the Audit and Compensation
Committees was confirmed as follows.
Audit Committee:
Antti Remes, Chairman
Harry Brade
Outi Raitasuo
Mika Vidgrén
Compensation Committee:
Olli Riikkala, Chairman
Pauli Kulvik
Jaakko Uotila
All members of the Board are independent of the company and its major
shareholders.
Outlook
Oriola-KD's outlook for 2009 is based on external market forecasts,
agreements with principals, the order intake and management
assessments. Long-term fundamentals and growth prospects are deemed
to remain favourable in the healthcare market.
Oriola-KD expects that the pharmaceutical market in Finland and
Sweden will grow by about 3-5 per cent annually over the next few
years, which is in line with the longer-term average growth rate of
these markets. The Russian pharmaceutical market is expected to see
annual growth of approximately 15-20 per cent in Russian rubles (RUB)
in the next few years. Growth in the market for healthcare equipment
and supplies in Finland and Sweden is expected to outpace that of the
pharmaceutical market.
The introduction of the reference price system in Finland at the
beginning of April 2009 will hamper the growth of net sales of the
Pharmaceutical Trade Finland business segment in 2009. It is too
early to foresee the development of net sales in Pharmaceutical Trade
Sweden because of the effects of the possible liberalisation of
Sweden's pharmacy market. The Pharmaceutical Trade Russia business
segment is expected to continue growing. Oriola-KD's net sales for
2009 are forecast to be higher than the net sales for 2008.
Future outlook for operating profit given on 12 February 2009
Due to the changes in the market environment it is too early to
estimate Oriola-KD's operating profit in 2009
New future outlook for operating profit
Oriola-KD's operating profit in 2009, without the costs of the
Swedish strategic program preparations, is expected to be higher than
in 2008.
Tabels
1 Jan - 31 1 Jan - 31
Consolidated Statement of Mar Mar 1 Jan -31 Dec
Comprehensive Income (IFRS), EUR
million 2009 2008 2008
Net sales 403.5 318.0 1580.8
Cost of goods sold -342.5 -282.0 -1370.0
Gross profit 61.0 35.9 210.8
Other operating income 0.5 1.2 3.4
Selling and
distribution expenses -40.0 -25.8 -146.7
Administrative expenses -10.1 -3.4 -33.3
Profit from
associated company 1.1 0.6 2.2
Operating profit 12.4 8.5 36.4
Financial income
and expenses -0.8 0.6 -1.8
Profit before taxes 11.6 9.1 34.6
Tax expense*) -2.7 -2.1 -7.2
Profit for the period 8.9 6.9 27.5
Other comprehensive income:
Translation differences -11.1 0.4 -27.6
Total comprehensive
income for the period -2.2 7.4 -0.1
Profit attributable to:
Parent company shareholders 8.9 6.8 27.4
Minority interest 0.0 0.2 0.1
Total comprehensive
income attributable to:
Parent company shareholders -2.2 7.1 -0.2
Minority interest 0.0 0.2 0.1
Earnings
per share:
Basic earnings per share (EUR) 0.06 0.05 0.19
Diluted earnings
per share (EUR) 0.06 0.05 0.19
*) The tax expense for the
period has been
calculated as the proportional
share of
the total estimated taxes for the financial year.
Consolidated Statement of
Financial Position (IFRS), EUR
million
ASSETS 31 Mar 2009 31 Mar 2008 31 Dec 2008
Non-current assets
Tangible assets 53.4 54.8 54.5
Goodwill 110.1 34.0 105.1
Other intangible assets 38.1 3.8 41.9
Investments in associates 29.5 27.8 28.5
Other non-current receivables 9.9 9.9 9.8
Deferred tax assets 1.2 0.1 0.8
Non-current assets total 242.2 130.4 240.5
Current assets
Inventories 242.8 179.6 250.7
Trade and other receivables 258.1 230.6 252.9
Cash and cash equivalents 28.9 98.5 46.5
Current assets total 529.8 508.7 550.1
ASSETS TOTAL 772.0 639.1 790.6
EQUITY AND LIABILITIES 31 Mar 2009 31 Mar 2008 31 Dec 2008
Equity
Share capital 36.2 36.2 36.2
Other funds 30.1 30.1 30.1
Retained earnings 116.0 125.1 118.1
Equity of the parent
company shareholders 182.3 191.5 184.4
Minority interest 0.0 8.3 1.0
Equity total 182.3 199.8 185.5
Non-current liabilities
Deferred tax liabilities 14.4 8.5 16.5
Pension liability 4.2 4.4 4.2
Provisions 0.0 0.0 0.0
Interest-bearing non-current
liabilities 0.1 0.3 27.9
Other non-current liabilities 0.0 0.2 0.0
Non-current liabilities total 18.7 13.4 48.5
Current liabilities
Trade payables and other current
liabilities 424.1 407.1 475.8
Provisions 0.0 0.0 0.0
Interest-bearing current
liabilities 146.9 18.8 80.8
Current liabilities total 571.0 425.9 556.6
EQUITY AND LIABILITIES TOTAL 772.0 639.1 790.6
Consolidated
Statement of
Changes in
Equity
(IFRS):
Equity
of the
parent
company
Translation Retained share- Minority
Share Other
EUR million capital funds differences earnings holders interest Total
Equity
1 Jan 2008 36.2 30.1 -2.5 131.7 195.5 8.1 203.6
Dividends -11.3 -11.3 -11.3
Change in
minority
interest 0.0 0.0
Share based
payments 0.1 0.1 0.1
Total
comprehensive
income
for the
period 0.4 6.8 7.1 0.2 7.4
Equity
31 Mar 2008 36.2 30.1 -2.2 127.3 191.5 8.3 199.8
Equity
1 Jan 2009 36.2 30.1 -30.1 148.2 184.4 1.1 185.5
Dividends 0.0 0.0
Change in
minority
interest 0.0 -1.1 -1.1
Share based
payments 0.1 0.1 0.1
Total
comprehensive
income
for the
period -11.1 8.9 -2.2 -2.2
Equity
31 Mar 2009 36.2 30.1 -41.2 157.2 182.3 0.0 182.3
Consolidated Statement of Cash Flows 1 Jan - 31 1 Jan - 31 1 Jan -31
(IFRS), Mar Mar Dec
EUR million 2009 2008 2008
Operating profit 12.4 8.5 36.4
Depreciation 2.4 2.3 9.8
Change in working capital -28.7 -20.4 -52.2
Cash flow from financial
items and taxes -2.1 -1.3 -6.8
Other adjustments -3.9 -0.3 -5.2
Net cash from operating activities -19.8 -11.2 -18.1
Net cash used in investing activities -24.9 0.4 -75.3
Net cash used in financing activities 27.9 -22.0 10.5
Net change in cash and cash
equivalents -16.8 -32.7 -82.9
Cash and cash equivalents
at beginning of period 46.5 131.0 131.0
Foreign exchange difference -0.8 0.3 -1.6
Net change in cash and cash
equivalents -16.8 -32.7 -82.9
Cash and cash equivalents at end of
period 28.9 98.5 46.5
1 Jan - 31 1 Jan - 31 1 Jan -31
Change in Tangible Assets Mar Mar Dec
EUR million 2009 2008 2008
Carrying amount at the beginning of
the period 54.5 56.3 56.3
Increase through acquisition of
subsidiary share 6.9
Additions 1.5 0.9 4.0
Disposals -0.3 -0.8 -2.2
Depreciation -1.6 -1.6 -6.7
Translation differencies -0.6 0.1 -3.7
Carrying amount at the end of the
period 53.4 54.8 54.5
1 Jan - 31 1 Jan - 31 1 Jan -31
Mar Mar Dec
Key Figures 2009 2008 2008
Equity ratio, % 24.3% 32.3% 25.1%
Equity per share, EUR 1.28 1.35 1.30
Return on capital employed (ROCE), % 15.9% 17.0% 13.5%
Return on equity, % 19.4% 13.8% 14.1%
Net interest bearing debt, Me 118.1 Me -79.5 Me 62.2 Me
Gearing, % 64.8% -39.8% 33.5%
Earnings per share, EUR 0.06 0.05 0.19
Average number of share, tpcs 141 928 141 326 141 393
Forward Contracts and
Contingent Liabilities
31 Mar 2009
Nominal values
Positive fair Negative fair of
EUR million value value contracts
Currency forward and swap
contracts
under hedge accounting 4.9 26.7
Other forward and
currency swap contracts -0.1 18.9
31 Mar 2008
Positive fair Negative fair Nominal values
of
EUR million value value contracts
Currency forward and swap
contracts
under hedge accounting
Other forward and
currency swap contracts -0.0 30.6
FX options purchased 65.1
Contingent for Own
Liabilities
EUR million 31 Mar 2009 31 Mar 2008 31 Dec 2008
Guarantees given 36.0 2.8 37.8
Real-estate mortgages
given 2.0 2.0 2.0
Mortgages on company
assets 1.9 22.0 2.2
Other guarantees and
liabilities 1.2 1.2 1.2
Total 41.1 28.0 43.2
Guarantees given on behalf of
external parties 0.0 0.0 0.0
Leasing-liabilities (operating
liabilities) 0.4 0.5 0.4
Rent contingent 37.6 4.7 33.3
1 Jan - 31 1 Jan - 31 1 Jan -31
Mar Mar Dec
Net Sales by Operating Segments, EUR
million 2009 2008 2008
Pharmaceutical Trade Finland 126.6 127.6 533.4
Pharmaceutical Trade Sweden 126.1 139.8 535.9
Pharmaceutical Trade Russia 107.2 0.0 318.9
Pharmaceutical Trade Baltics 8.6 10.0 37.4
Healthcare Trade 35.0 40.6 155.2
Dental Trade 0.0 0.0 0.0
Group Total 403.5 318.0 1580.8
Operating Profit by Operating 1 Jan - 31 1 Jan - 31 1 Jan -31
Segments, Mar Mar Dec
EUR million 2009 2008 2008
Pharmaceutical Trade Finland 3.9 3.9 16.6
Pharmaceutical Trade Sweden -0.4 1.7 6.0
Pharmaceutical Trade Russia 7.6 0.0 8.2
Pharmaceutical Trade Baltics 0.1 0.3 1.1
Healthcare Trade 1.7 2.9 7.9
Dental Trade 1.1 0.6 2.1
Group Administration and Others -1.6 -0.8 -5.6
Group total 12.4 8.5 36.4
Average number of personnel 4 514 1 288 3 807
Number of personnel at the end of the
period 4 461 1 288 4 709
Net Sales by Operating
Segments,
EUR million Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
Pharmaceutical Trade Finland 126.6 144.0 129.1 132.7 127.6
Pharmaceutical Trade Sweden 126.1 125.9 129.2 141.0 139.8
Pharmaceutical Trade Russia 107.2 127.3 97.9 93.8 0.0
Pharmaceutical Trade Baltics 8.6 9.2 8.4 9.8 10.0
Healthcare Trade 35.0 42.7 33.8 38.1 40.6
Dental Trade 0.0 0.0 0.0 0.0 0.0
Group Total 403.5 449.1 398.4 415.4 318.0
Operating Profit by Operating
Segments,
EUR million Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
Pharmaceutical Trade Finland 3.9 4.7 4.8 3.2 3.9
Pharmaceutical Trade Sweden -0.4 1.3 1.4 1.6 1.7
Pharmaceutical Trade Russia 7.6 8.9 0.3 -1.0 0.0
Pharmaceutical Trade Baltics 0.1 0.3 0.2 0.3 0.3
Healthcare Trade 1.7 1.7 1.8 1.5 2.9
Dental Trade 1.1 0.8 0.3 0.4 0.6
Group Administration and
Others -1.6 -1.9 -1.0 -1.8 -0.8
Group total 12.4 15.8 7.9 4.2 8.5
1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan -31 Dec
Net Sales by Market, EUR
million 2009 2008 2008
Finland 143.0 148.7 618.2
Sweden 141.5 155.7 568.9
Russia 107.2 0.0 319.0
Baltics countries 11.0 12.7 48.2
Other countries 0.8 0.8 26.5
Total 403.5 318.0 1580.8
Net Sales by Market, EUR
million Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
Finland 143.0 174.5 144.6 150.5 148.7
Sweden 141.5 111.1 144.4 157.8 155.7
Russia 107.2 127.3 97.9 93.8 0.0
Baltics countries 11.0 12.1 10.9 12.5 12.7
Other countries 0.8 24.1 0.8 0.8 0.8
Total 403.5 449.1 398.4 415.4 318.0
Consolidated Proforma net sales for the he
retail and wholesale businesses
acquired in Russia was 96 EUR million
and consolidated Proforma
EBIT -0.8 EUR million for the
period January to March 2008.
Corporate acquisitions
Acquisition of Vitim & Co and Moron Ltd
Oriola-KD announced in March 2008 that it would acquire 75 percent of
a Moscow-based pharmacy company (Vitim & Co) and of a pharmaceutical
wholesaler (Moron Ltd.)
The transaction was executed in April 2008. In addition, Oriola-KD
has agreed to buy out the remaining 25-percent holding in 2010 for a
consideration based on the companies' performance in 2009. The
purchase of the remaining 25-percent holding is recognized as a
liability, the maginitude of which is based on the best estimate of
management.
The acquisition cost is calculated on the basis of the companies'
balance sheets as per 31 March 2008 prepared in accordance with IFRS
and the Oriola-KD Group's accounting principles.
The balance sheets of the acquired companies have been consolidated
into the Oriola-KD Group as of 1 April 2008 and the calculation below
includes the acquisition of both companies.
Details on the net assets and
goodwill acquires are as follows:
Carrying Fair value Fair value
amount allocations EUR
EUR million EUR million million
Tangible assets 5.0 1.8 6.9
Other intangible
assets 5.4 41.5 46.9
Deferred tax assets 0.7 0.0 0.7
Inventories, advances
paid 69.2 0.0 69.2
Trade receivables 39.6 0.0 39.6
Other receivables 5.0 0.0 5.0
Cash and cash
equivalents 3.0 0.0 3.0
Deferred tax
liabilities 0.0 -10.4 -10.4
Interest-bearing
non-current
liabilities -8.8 0.0 -8.8
Trade payables and
other current
liabilities -108.5 0.0 -108.5
Interest-bearing
current liabilities -8.9 0.0 -8.9
Net indentifiable
assets 1.7 32.9 34.7
Acquisition price
Purchase price -64.0
Additional purchase
price
and purchase of the
remaining 25% -61.4
Costs related to
acquisition -4.4
Goodwill 95,2
Purchase price settled
in cash -64.0
Paid additional
purchase price -21.7
Costs related to
acquisition -4.4
Cash and cash
equivalents acquired 3.0
Cash outflow on acquisition
as per 31 March 2009 -87.1
Estimated purchase
price payable -37.8
Total cash outflow
on acquisition -125.0
The remaining goodwill arising from the acquisition,
is based on synergy benefits and widened
new market area possibilities and benefits.
Espoo 28 April 2009
Oriola-KD Corporation's Board of Directors
Oriola-KD Corporation
Eero Hautaniemi
President and CFO
Kimmo Virtanen
Executive Vice President and CFO
Further information:
Eero Hautaniemi
President and CEO
tel. +358 (0)10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Kimmo Virtanen
Executive Vice President and CFO
Tel. +358 (0)10 429 2069
e-mail: kimmo.virtanen@oriola-kd.com
Pellervo Hämäläinen
Vice President, Communications and Investor Relations
+358 (0)10 429 2497
e-mail: pellervo.hamalainen@oriola-kd.com
Distribution
NASDAQ OMX Helsinki Ltd
Principal media
Published by:
Oriola-KD Corporation
Corporate Communications
Orionintie 5
FI-02200 Espoo, Finland
www.oriola-kd.com