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Oriola-KD Corporation's Interim Report for 1 January - 31 March 2010
29.4.2010
Oriola-KD Corporation Stock Exchange Release 29 April 2010 at 8.30 a.m.
This review presents the financial information for the Oriola-KD Group
(hereinafter Oriola-KD) for January-March 2010. The interim report 1 January-31
March 2010 was drawn up in accordance with the IAS 34 standard and Oriola-KD's
2009 annual report. In addition, new IAS/IFRS standards have been adopted in
2010, the most important of which are IFRS 3 and IAS 27. The figures are
unaudited.
Key figures for 1 January - 31 March 2010
* Net sales increased 11 per cent to EUR 449.0 million (Q1/2009: EUR 403.5
million).
* Operating profit decreased 66 per cent to EUR 4.2 million (Q1/2009: EUR
12.4 million).
* Net profit decreased 67 per cent to EUR 2.9 million (Q1/2009: EUR 8.9
million).
* Earnings per share were EUR 0.02 (Q1/2009: EUR 0.06).
* Net cash flow was EUR 30.1 million (Q1/2009: EUR -19.8 million)
* Return on capital employed was 3.8 per cent (Q1/2009: 15.9 per cent)
* Oriola-KD's net sales for 2010 is forecasted to be higher than in 2009 and
operating profit is forecasted to be lower than in 2009.
President and CEO Eero Hautaniemi: "Oriola-KD's net sales increased 11 per cent
to EUR 449.0 million in January-March 2010. Operating profit decreased 66 per
cent to EUR 4.2 million as a result of the Corporation's Russian operations. The
Russian pharmaceutical market declined some 10 per cent in Russian rubles, which
together with the price control system has lead to very intense competition.
Despite the declining pharmaceutical market in Russia our net sales grew some 6
per cent in Russian rubles. Oriola-KD's other businesses developed as
anticipated. We will continue to expand the Russian wholesale business
regionally and the organic growth of the retail business in Moscow. We have
initiated measures to increase the efficiency in the Russian wholesale business
and as a result, personnel will be reduced by approximately 100 in the second
quarter of 2010. In the first quarter we carried out the strategically
significant acquisition of the pharmacy chain in Sweden and completed the
acquisition of the companies in Russia.
Financial performance
Oriola-KD's net sales in January-March 2010 came to EUR 449.0 million (EUR
403.5 million) and operating profit to EUR 4.2 million (EUR 12.4 million).
Profit after financial items came to EUR 3.4 million (EUR 11.6 million) and net
profit to EUR 2.9 million (EUR 8.9 million). Oriola-KD's earnings per share in
January-March 2010 were EUR 0.02 (EUR 0.06). Operating profit decreased as a
result of the decline in the Russian pharmaceutical market and the very intense
competition there.
Oriola-KD's financing expenses in January-March 2010 were EUR 0.9 million (EUR
0.8 million). Taxes in the review period amounted to EUR 0.4 million (EUR 2.7
million). Taxes corresponding to the result for the January-March 2010 period
are entered under this figure.
Return on capital employed was 3.8 per cent (15.9 per cent) and return on equity
4.5 per cent (19.4 per cent) in January-March 2010.
Balance sheet, financing and cash flow
Oriola-KD's balance sheet total on 31 March 2010 stood at EUR 1,106.8 million
(EUR 772.0 million). The figures from the Swedish retail business have been
consolidated with the Oriola-KD figures since 19 February 2010. Cash assets at
the end of March 2010 were EUR 56.5 million (EUR 28.9 million), and equity was
EUR 264.7 million (EUR 182.3 million). The equity ratio was 24.6 per cent (24.3
per cent).
Interest-bearing net debt at the end of March 2010 was EUR 157.8 million (EUR
118.1 million) and the gearing ratio was 59.6 per cent (64.8 per cent).
Interest-bearing net debt consist of long-term debt financing, use of the issued
commercial paper programme, advance payments from pharmacies and the estimated
discounted value of the minority share of the Swedish pharmacy company.
The terms of the financial covenants were met with a wide margin at the end of
March 2010. Oriola-KD's long-term revolving credit limit facilities of
approximately EUR 100.9 million and EUR 40.6 million in short-term credit
account facilities stood unused at the end of the review period. Oriola-KD had
drawn EUR 73.9 million from the EUR 150 commercial paper programme at the end of
March.
Net cash flow from operations in January-March 2010 was EUR 30.1 million (EUR
-19.8 million), of which changes in working capital accounted for EUR 31.6
million (EUR -28.7 million). In wholesale business in Sweden the sale of a sales
receivables programme (non-recourse) was continued in the first quarter.
Net cash flow from investments was EUR -228.5 million (EUR -24.9 million). Net
cash flow from investments includes the corporate acquisition in Sweden, the
acquisition of the 25 per cent minority share in Russia and operative
investments. In the January-March 2010 period, cash flow after investments was
EUR -198.4 million (EUR -44.7 million).
On 24 February 2010, Oriola-KD acquired the remaining 25 per cent holding in
Foreti Oy, which owns the pharmaceutical retail company (OOO Vitim) and
pharmaceutical wholesale company (OOO Moron) operating in Russia. As a result of
the acquisition, Oriola-KD's Russian subsidiaries are now fully-owned. The price
of the 25 per cent holding was EUR 65.0 million. The total price of the
corporate acquisition in Russia was EUR 153.7 million, paid in cash.
Investments
Investments on January-March 2010 were EUR 170.0 million (EUR 16.5 million),
including the acquisition in Sweden and operative investment.
On 19 February 2010, Kronans Droghandel Retail AB acquired 100 per cent of the
stock of a pharmacy company with 170 pharmacies. Paid in cash, the price was EUR
161.5 million (SEK 1.59 billion). Oriola-KD has an 80 per cent holding in
Kronans Droghandel Retail AB while KF (Kooperativa Förbundet) has 20 per cent.
Oriola-KD has obligation and right to acquire Kooperativa Förbundet's minority
share following long-term cooperation. The obligation to acquire was entered
under long term interest bearing debt in the Oriola-KD balance sheet in
conjunction with the acquisition of the pharmacies.
Personnel
On 31 March 2010, Oriola-KD had a payroll of 5,205 (4,461) employees, 12 per
cent (14 per cent) of whom worked in Finland, 27 per cent (9 per cent) in
Sweden, 58 per cent (72 per cent) in Russia and 3 per cent (5 per cent) in the
Baltic countries and Denmark combined. The numbers increased because of the
acquisition of the Swedish pharmacy chain in February 2010, which added some
930 persons.
Business segments
In accordance with its organisational structure and internal reporting,
Oriola-KD's business segments are Pharmaceutical Trade Finland, Pharmaceutical
Trade Sweden, Pharmaceutical Trade Russia, Pharmaceutical Trade Baltic
Countries, Healthcare Trade and Dental Trade.
Pharmaceutical Trade Finland
Pharmaceutical Trade Finland's net sales in January-March 2010 were EUR 104.1
million (EUR 126.6 million) and its operating profit was EUR 4.5 million (EUR
3.9 million). During the review period, changes from the stock owned by
Oriola-KD to consignment stock, agreed with pharmaceutical companies reduced net
sales.
The pharmaceutical market grew 1.8 per cent (declined 1.2 per cent) in Finland
in January-March 2010. Oriola-KD's market share in the Finnish pharmaceutical
wholesale market was 46.5 per cent (46.8 per cent) in January-March 2010
(source: IMS Health). No major changes in principals that would have had a
bearing on market share took place in the review period.
Pharmaceutical Trade Finland had 416 (358) employees at the end of March 2010.
Pharmaceutical Trade Sweden
Pharmaceutical Trade Sweden's net sales in January-March 2010 were EUR 180.8
million (EUR 126.1 million), of which retail accounted for EUR 50.8 million as
of 19 February 2010 (EUR 0.0 million) and wholesale EUR 130.0 million (EUR
126.1 million). The retail business acquired has been consolidated with the
Oriola-KD figures as of 19 February 2010. The takeover of the pharmacy chain has
proceeded well and the first new pharmacy was opened at a Coop hypermarket at
the end of March in Stockholm.
Pharmaceutical Trade Sweden made an operating profit of EUR -1.4 million (EUR
-0.4 million) The costs associated with the preparations made for pharmacy
business in Sweden in 1 January 2010- 19 February 2010 were EUR 2.2 million (EUR
2.3 million in January-March 2009). In addition, EUR 0.4 million has been
entered as depreciation on the fair value allocation of the acquisition.
On 19 February 2010, Kronans Droghandel Retail AB acquired 100 per cent of the
stock of a pharmacy company with 170 pharmacies nation-wide. Paid in cash, the
final price was EUR 161.5 million (SEK 1.59 billion). In 2009, the pro forma net
sales of the acquired pharmacy cluster was SEK 4.6 billion (SEK 4.4 billion in
2008) and pro forma operating profit including average central overhead costs of
Apoteket AB was SEK 205 million (SEK 183 million in 2008).
The Swedish pharmaceutical market grew 1.4 per cent (1.8 per cent) in Sweden in
January-March 2010. Oriola-KD's market share in the Swedish wholesale market was
40.6 per cent (41.5 per cent) in January-March 2010 (source: IMS Health).
Pharmaceutical Trade Sweden had 1,263 (271) employees at the end of March 2010,
of whom 986 (0) were employed in retail and 277 (271) in wholesale.
Pharmaceutical Trade Russia
Pharmaceutical Trade Russia's net sales for January-March 2010 came to EUR
122.1 million (EUR 107.2 million), of which wholesale accounted for EUR 98.5
million (EUR 81.5 million) and retail EUR 23.6 million (EUR 25.7 million).
The January-March 2010 operating profit was EUR -0.4 million (EUR 7.6 million),
which includes discounts from pharmaceutical companies associated with
purchases. The Russian pharmaceutical market declined some 10 per cent in
Russian rubles (grew some 30 per cent in January-March 2009), which together
with the price control system has lead to very intense competition. Oriola-KD's
net sales grew some 6 per cent in Russian rubles in January-March 2010.
The regional expansion of the Russian wholesale business and the organic growth
of the retail business in Moscow will continue in 2010. In addition Oriola-KD
has started measures to improve the efficiency of operations, which will reduce
wholesale personnel by roughly 100 during the second quarter.
At the end of March 2010, Oriola-KD had 180 (156) pharmacies in the Moscow
region. Also, Oriola-KD started pharmaceutical wholesale in Yekaterinburg and
Novosibirsk.
Pharmaceutical Trade Russia had 3,011 (3,239) employees at the end of March
2010, of whom 1,419 (1,698) were employed in retail and 1,592 (1,541) in
wholesale.
Pharmaceutical Trade Baltic Countries
Pharmaceutical Trade Baltic Countries' net sales in January-March 2010 were EUR
8.3 million (EUR 8.6 million) and operating profit was EUR 0.3 million (EUR 0.1
million).
Oriola-KD discontinued pharmaceutical wholesale in Estonia in the first quarter.
The discontinuation of business operations did not have any material cost
effect.
Pharmaceutical Trade Baltic Countries had 113 (132) employees at the end of
March 2010.
Healthcare Trade
In the beginning of 2010, a partial demerger of Oriola Oy was carried out where
the Healthcare Trade business was transferred to the newly established company
Oriola-KD Healthcare Oy.
Healthcare Trade net sales in January-March 2010 were EUR 33.8 million (EUR
35.0 million) and operating profit was EUR 1.3 million (EUR 1.7 million).
In December 2009, Oriola-KD signed a five-year agreement on healthcare
warehousing and materials management services with the Swedish provinces of
Skåne and Halland and it will take effect in May 2010. The annual net sales of
the agreement are roughly EUR 35 million. The agreement will involve the
transfer of about 50 persons to Oriola-KD.
The Healthcare Trade business segment had 401 (460) employees on 31 March 2010.
Dental Trade
In January-March 2010, the operating profit of Dental Trade was EUR 1.6 million
(EUR 1.1 million).
The dental trade businesses of Oriola-KD Corporation and Lifco AB were combined
in 2007. Oriola-KD's holding in the Dental Trade business is 30 per cent and
Lifco's is 70 per cent.
Related parties
Related parties in the Oriola-KD Group are deemed to comprise the parent company
Oriola-KD Corporation, the subsidiaries and associated companies, the members of
the Board and the President and CEO of Oriola-KD Corporation, other members of
the Group Management Team of the Oriola-KD Group, the immediate family of the
aforementioned persons, the companies controlled by the aforementioned persons,
and the Oriola Pension Foundation. The Group has no significant business
transactions with related parties, except for pension expenses arising from
defined benefit plans with the Oriola Pension Foundation. 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.
Oriola-KD Corporation has given no significant sureties on behalf of Group
companies, with the exception of a mother company guarantee for a loan given to
Kronans Droghandel Retail AB.
Oriola-KD Corporation shares
Trading volume of the Oriola-KD Corporation's Class A and B shares in
January-March 2010:
Trading volume January-March 2010 January-March 2009
Class A Class B Class A Class B
Trading volume, million 2.5 19.3 1.2 14.1
Trading volume, EUR million 12.5 95.7 1.9 23.1
Highest, EUR 5.47 5.49 1.90 1.90
Lowest, EUR 4.21 4.16 1.29 1.30
Closing quotation, end of period, EUR 4.88 4.87 1.72 1.70
In the review period, the traded volume of Oriola-KD Corporation shares,
excluding treasury shares, corresponded to 14.4 per cent (10.8 per cent) of the
total number of shares. The traded volume of class A shares amounted to 5.2 per
cent (2.5 per cent) of the average stock, and that of class B shares, excluding
treasury shares, 18.7 per cent (15.2 per cent).
Oriola-KD Corporation's market capitalisation on 31 March 2009 was EUR 737.1
million (EUR 242.2 million).
On 8 March 2010, pursuant to the authorisation granted to it by the Annual
General Meeting of 13 March 2007, the Board of Directors of Oriola-KD
Corporation resolved that a directed bonus issue be made, in which a total of
209,300 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 0.14 per cent of the total number of company shares and
approximately 0.02 per cent of the total number of votes.
The company has 134,172 treasury shares, all of which are class B shares. These
account for 0.09 per cent of the company's shares and 0.01 per cent of the
votes.
At the end of March 2010, the company had 151,257,828 shares (141,907,828), of
which 47,667,359 were class A shares (48,392,203) and 103,590,469 were class B
shares (93,515,625). 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 2010, no class A shares were converted into class B shares
(300,000).
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;
* impacts of the changes in the Swedish pharmacy and wholesale market on
business;
* impacts of the changes in the Russian pharmacy and wholesale market on
business;
* maintenance of cost-effectiveness and flexibility in costs;
* provision of competitive products and services in expanding and
consolidating markets; and
* commitment of key employees.
The major financial risks for Oriola-KD involve currency exchange rates,
interest rates, liquidity and credit.
Oriola-KD's exposure to risks relating to businesses and financial risks has
increased with the expansion into the Russian pharmaceutical retail and
wholesale market and the Swedish pharmaceutical retail market. Currency risks
are the most significant of Oriola-KD's financial risks in Russia and Sweden, as
any changes in the value of the Russian ruble or the Swedish krona will have an
impact on Oriola-KD's financial performance and equity.
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
The difficult state of the Russian economy, intense competition and the price
control system have a material impact on Oriola-KD near-term outlook in the
country. The development of the Swedish pharmacy market is subject to
uncertainties that may have a substantial effect on Oriola-KD's Swedish
business.
Events after the review period
Decisions of the Annual General Meeting
The Annual General Meeting of Oriola-KD Corporation, held on 7 April 2010,
confirmed the 2009 financial statements and discharged the Board members and the
President and CEO from liability for the financial year ending 31 December
2009. The Annual General Meeting resolved that the sum of EUR 0.12 per share be
paid as dividend on the basis of the balance sheet adopted for the financial
year ending 31 December 2009. The dividend will be paid to those who, on the
dividend distribution record date of 12 April 2010, are entered as shareholders
of the company in the company's shareholder register kept by Euroclear Finland
Ltd. The dividend payment date is 21 April 2010.
The Board was authorised to decide on the payment of an additional dividend from
undistributed profits in accordance with Chapter 13, section 6, sub-section 2,
of the Limited Liability Companies Act and/or distribution of funds from the
company's invested non-restricted equity fund or both under the terms below.
Under the authorisation, the Board may decide on the payment of additional
dividend from undistributed profits or distribution of funds from the invested
non-restricted equity fund or both so that the amount of the additional dividend
and/or return of capital paid under the authorisation would not exceed EUR 0.05
per share. The additional dividend and/or capital returned may be distributed in
one or several payments. The authorisation includes the Board's right to decide
on all other terms of the additional dividend and/or return of capital. The
authorisation will be in force until the next annual general meeting.
The Annual General Meeting confirmed that the Board comprises eight members.
Harry Brade, Pauli Kulvik, Outi Raitasuo, Antti Remes, Olli Riikkala, Jaakko
Uotila and Mika Vidgrén were re-elected to the Board, and Board of Directors Per
Båtelson was elected as a new member. Olli Riikkala continued as Chairman of the
Board. The Annual General Meeting confirmed that the Chairman of the Board will
receive EUR 48,400 in remuneration for his term of office, the Vice Chairman EUR
30,250 and the other members of the Board EUR 24,200 each. Of the annual fees,
60 per cent will be paid in cash and 40 per cent in company shares so that after
the release of the company's interim report for the first quarter of 2010,
Oriola-KD Corporation Class B shares would be acquired on the market for Board
members, and the cash portion of the annual fee will also be paid. The Chairman
of the Board will 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 any 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, for the 2010
financial year. The auditor will be remunerated according to invoice.
The Annual General Meeting resolved that article 12 of the Articles of
Association on time of the notice of general meeting be amended as follows:
"Section 12 The Notice of General Meeting must be published in one daily
newspaper in the capital city no earlier than two months and no later than
twenty-one days prior to the meeting. However, the notice must be published no
later than nine days prior to the record date of the general 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 15,000,000 of the
company's own class B shares, corresponding to approximately 9.92 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 would remain in force no longer than eighteen
(18) months following the decision of the General Meeting. The authorisation
repeals the Annual General Meeting's decision of 16 April 2009 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 shares against payment in one or more batches. The authorisation
includes the right to issue new class B shares or to assign class B shares held
by the company. The authorisation covers no more than thirty million
(30,000,000) of the company's class B shares in total, which corresponds to
approximately 19.83 per cent of the total number of company shares. The
authorisation granted to the Board includes the right to deviate 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 can 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, treasury shares held by the company can 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 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 of no
more than 650,000 class B shares for the purpose of implementing the 2007-2009
share-based incentive scheme for management.
In addition to the authorisations referred to above, the Annual General Meeting
authorised the Board to decide on a bonus issue of the company's shares in one
or more batches. The maximum amount of the company's new B class shares issued
under this authorisation is 1,200,000, which is 0.79 per cent of the company's
total shares and 0.11 per cent of total votes. The Board will decide on all
other matters related to the issue of class B shares. The purpose of the
authorisation is to allow treasury shares to be used as laid out below in the
new share-based incentive scheme or Oriola-KD key persons. The Board was also
authorised to issue class B shares, waiving the pre-emptive subscription rights
of the shareholders. The class B shares issued may either be new or treasury
shares. The total share amount of the authorisation is 1,200,000 class B shares.
The share issue may be a bonus issue. These shares represent approximately 0.79
per cent of the total number of company shares and approximately 0.11 per cent
of the total number of votes. The Board may use this authorisation in the new
2010-2012 share-based incentive scheme or Oriola-KD key persons. The Board will
decide on all other matters related to share issues and key persons' incentive
schemes. A directed bonus issue requires that from the company's perspective and
taking into account the interest of all shareholders, there exist especially
significant financial grounds for such a deviation. The authorisations referred
to under this item remain in force for no more than four (4) years following the
decision of the General Meeting.
Decisions of the organisational meeting of the Board
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
The company also has a Nomination Committee, the members of which will be
elected later.
The Board of Directors has evaluated the independence of its members and found
that all the members are independent of both the company and its major
shareholders.
Outlook
Oriola-KD's outlook for 2010 is based on external market forecasts, agreements
with principals, 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 in the local currencies,
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 per cent in Russian rubles in the next few years. The growth of the Russian
pharmaceutical market in 2010 is expected to be slower than in the long term,
mainly because of the difficult state of the Russian economy, intense
competition and the price control system.
Growth in the market for healthcare equipment and supplies in Finland and Sweden
is expected to outpace that of the pharmaceutical market.
Competition in the Swedish pharmacy market is expected to be stiff in 2010 as a
result of the deregulation.
Outlook issued on 11 February 2010 concerning net sales and operating profit
Oriola-KD's net sales and operating profit for 2010 are forecast to be higher
than in 2009.
The outlook concerning net sales and operating profit is equal to the outlook
issued on 21 April 2010
Oriola-KD's net sales for 2010 is forecasted to be higher than in 2009 and
operating profit is forecasted to be lower than in 2009. Pharmaceutical Trade
Russia's operating profit is forecasted to be clearly lower than in 2009.
Tables
Consolidated Statement of 1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan - 31 Dec
Comprehensive Income (IFRS),
EUR million 2010 2009 2009
--------------------------------------------------------------------------------
Net sales 449.0 403.5 1713.1
Cost of goods sold -386.3 -342.5 -1462.9
--------------------------------------------------------------------------------
Gross profit 62.7 61.0 250.2
Other operating income 1.3 0.5 4.4
Selling and
distribution expenses -54.1 -40.0 -164.6
Administrative expenses -7.3 -10.1 -28.6
Profit from
associated company 1.7 1.1 3.9
--------------------------------------------------------------------------------
Operating profit 4.2 12.4 65.4
Financial income 1.1 2.0 7.8
Financial expenses -1.9 -2.8 -11.1
--------------------------------------------------------------------------------
Profit before taxes 3.4 11.6 62.1
Income taxes*) -0.4 -2.7 -13.4
--------------------------------------------------------------------------------
Profit for the period 2.9 8.9 48.6
Other comprehensive income:
Foreign exchange rate
differences of net investments 5.8 -3.8 -2.0
Tax effect of foreign exchange rate
differences of net investments -1.2 0.8 0.4
Translation differences 13.7 -8.0 1.3
--------------------------------------------------------------------------------
Total comprehensive
income for the period 21.2 -2.2 48.4
Attribution of profit:
--------------------------------------------------------------------------------
To parent company shareholders 2.9 8.9 49.5
--------------------------------------------------------------------------------
To minority interest 0.0 0.0 -0.9
--------------------------------------------------------------------------------
Attribution of total
comprehensive income:
--------------------------------------------------------------------------------
To parent company shareholders 21.2 -2.2 49.3
--------------------------------------------------------------------------------
To minority interest 0.0 0.0 -0.9
--------------------------------------------------------------------------------
Earnings
per share:
Basic earnings per share, EUR 0.02 0.06 0.34
Diluted earnings per share, EUR 0.02 0.06 0.34
*) The tax expense for the period
has been
calculated as the proportional
share of
the total estimated taxes for the financial year.
Consolidated Balance Sheet (IFRS),
EUR million
ASSETS 31 Mar 2010 31 Mar 2009 31 Dec 2009
------------------------------------------------------------------------
Non-current assets
Tangible assets 63.8 53.4 53.3
Goodwill 252.2 110.1 141.7
Other intangible assets 69.6 38.1 39.5
Investments in
associated companies 32.8 29.5 30.7
Other non-current assets 7.3 9.9 7.5
Deferred tax assets 4.2 1.2 2.5
------------------------------------------------------------------------
Non-current assets total 429.9 242.2 275.2
Current assets
Inventories 325.7 242.8 287.1
Trade and other receivables 294.7 258.1 227.1
Cash and cash equivalents 56.5 28.9 133.7
------------------------------------------------------------------------
Current assets total 676.9 529.8 647.8
ASSETS TOTAL 1106.8 772.0 923.1
------------------------------------------------------------------------
EQUITY AND LIABILITIES 31 Mar 2010 31 Mar 2009 31 Dec 2009
------------------------------------------------------------------------
Equity
Share capital 36.2 36.2 36.2
Other funds 50.9 30.1 50.9
Retained earnings 177.7 116.0 156.4
Equity of the parent
company shareholders 264.7 182.3 243.4
Minority interest 0.0 0.0 10.8
------------------------------------------------------------------------
Equity total 264.7 182.3 254.2
Non-current liabilities
Deferred tax liabilities 22.8 14.4 13.6
Pension liabilities 5.3 4.2 4.9
Provisions 0.0 0.0 0.0
Interest-bearing
non-current liabilities 114.1 0.1 0.2
------------------------------------------------------------------------
Non-current liabilities total 142.1 18.7 18.8
Current liabilities
Trade payables
and other current liabilities 599.8 424.1 500.5
Interest-bearing current liabilities 100.2 146.9 149.5
------------------------------------------------------------------------
Current liabilities total 700.0 571.0 650.1
EQUITY AND LIABILITIES TOTAL 1106.8 772.0 923.1
------------------------------------------------------------------------
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 interests Total
--------------------------------------------------------------------------------
Equity
1 Jan 2009 36.2 30.1 -30.1 148.2 184.4 1.0 185.5
--------------------------------------------------------------------------------
Dividends paid - - - - 0.0 - 0.0
Share issue - - - - 0.0 - 0.0
Change in
minority
interests - - - - 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 -0.1 182.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity
1 Jan 2010 36.2 50.9 -30.4 186.8 243.4 10.8 254.2
--------------------------------------------------------------------------------
Dividends - - - - 0.0 - 0.0
Share issue - - - - 0.0 - 0.0
Change in
minority
interests - - - - 0.0 -10.8 -10.8
Share-based
payments - - - 0.1 0.1 - 0.1
Total
comprehensive
income
for the period - - 18.3 2.9 21.2 0.0 21.2
--------------------------------------------------------------------------------
Equity
31 Mar 2010 36.2 50.9 -12.1 189.8 264.7 0.0 264.7
--------------------------------------------------------------------------------
Consolidated Cash Flow Statement
(IFRS), 1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan - 31 Dec
EUR million 2010 2009 2009
--------------------------------------------------------------------------------
Operating profit 4.2 12.4 65.4
Depreciation 2.5 2.4 9.4
Change in
working capital 31.6 -28.7 37.9
Cash flow
from financial
items and taxes -9.9 -2.1 -13.3
Other adjustments 1.6 -3.9 1.5
Net cash from
operating activities 30.1 -19.8 100.9
Net cash flow from
investing activities -228.5 -24.9 -28.0
Net cash flow from
financing activities 117.2 27.9 14.5
Net change in cash
and cash equivalents -81.2 -16.8 87.4
Cash and cash equivalents
at the beginning of the period 133.7 46.5 46.5
Foreign exchange
rate difference 4.0 -0.8 -0.2
Net change in cash
and cash equivalents -81.2 -16.8 87.4
Cash and cash equivalents
at the end of the period 56.5 28.9 133.7
--------------------------------------------------------------------------------
Change in Tangible Assets 1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan - 31 Dec
EUR million 2010 2009 2009
-------------------------------------------------------------------------
Carrying amount at the
beginning of the period 53.3 54.5 54.5
Increase through acquisition
of subsidiary share 8.8 - -
Additions 2.3 1.5 6.0
Disposals -0.4 -0.3 -1.8
Depreciation -1.8 -1.6 -6.5
Translation differences 1.5 -0.6 1.1
-------------------------------------------------------------------------
Carrying amount at the end
of the period 63.8 53.4 53.3
-------------------------------------------------------------------------
1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan - 31 Dec
Key Figures 2010 2009 2009
-------------------------------------------------------------------------
Equity ratio, % 24.6% 24.3% 29.2%
Equity per share, EUR 1.75 1.28 1.61
Return on capital employed
(ROCE), % 3.8% 15.9% 18.7%
Return on equity, % 4.5% 19.4% 22.1%
Net interest-bearing debt,
EUR million 157.8 Me 118.1 Me 16.0 Me
Gearing, % 59.6% 64.8% 6.3%
Earnings per share, EUR 0.02 0.06 0.34
Average number of share,
1,000 pcs 151 167 141 928 147 034
Derivatives, Commitments
and Contingent Liabilities
31 Mar 2010
Positive fair Negative fair Nominal values of
EUR million value value contracts
Derivatives recognised
as cash flow hedges:
Foreign currency forward
and swap contracts - - -
Derivatives measured
at fair value through profit
or loss:
Foreign currency forward
and swap contracts 0.1 - 17.2
31 Mar 2009
Positive fair Negative fair Nominal values of
EUR million value value contracts
Derivatives recognised
as cash flow hedges:
Foreign currency forward
and swap contracts 4.9 - 26.7
Derivatives measured
at fair value through profit
or loss:
Foreign currency forward
and swap contracts - -0.1 18.9
Contingencies for Own
Liabilities
EUR million 31 Mar 2010 31 Mar 2009 31 Dec 2009
--------------------------------------------------------------------------------
Guarantees given 119.5 36.0 36.8
Mortgages on land
and buildings 2.0 2.0 2.0
Mortgages on
company assets 2.2 1.9 2.0
Other guarantees
and liabilities 0.1 1.2 1.9
--------------------------------------------------------------------------------
Total 123.8 41.1 42.7
--------------------------------------------------------------------------------
Leasing-liabilities (operating
liabilities) 0.4 0.4 0.3
Rent contingent 56.0 37.6 33.8
1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan - 31 Mar
Net Sales by Operating Segments,
EUR million 2010 2009 2010
--------------------------------------------------------------------------------
Pharmaceutical Trade Finland 104.1 126.6 504.5
Pharmaceutical Trade Sweden 180.8 126.1 547.0
Pharmaceutical Trade Russia 122.1 107.2 480.7
Pharmaceutical Trade Baltics 8.3 8.6 35.7
Healthcare Trade 33.8 35.0 145.1
--------------------------------------------------------------------------------
Group Total 449.0 403.5 1713.1
Operating Profit by
Operating Segments, 1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan - 31 Mar
EUR million 2010 2009 2010
--------------------------------------------------------------------------------
Pharmaceutical Trade Finland 4.5 3.9 18.1
Pharmaceutical Trade Sweden -1.4 -0.4 -5.0
Pharmaceutical Trade Russia -0.4 7.6 44.5
Pharmaceutical Trade Baltics 0.3 0.1 0.9
Healthcare Trade 1.3 1.7 8.9
Dental Trade 1.6 1.1 3.9
Group Administration and Others -1.6 -1.6 -5.9
--------------------------------------------------------------------------------
Group total 4.2 12.4 65.4
Average number of personnel 4 891 4 514 4 373
Number of personnel
at the end of the period 5 205 4 461 4 299
Net Sales by Operating Segments,
Q1/ Q4/ Q3/ Q2/ Q1/
EUR million 2010 2009 2009 2009 2009
--------------------------------------------------------------
Pharmaceutical Trade Finland 104.1 125.6 120.4 131.9 126.6
Pharmaceutical Trade Sweden 180.8 159.0 131.8 130.2 126.1
Pharmaceutical Trade Russia 122.1 148.2 118.6 106.6 107.2
Pharmaceutical Trade Baltics 8.3 10.3 8.0 8.8 8.6
Healthcare Trade 33.8 43.4 31.9 34.9 35.0
--------------------------------------------------------------
Group Total 449.0 486.5 410.8 412.3 403.5
Operating Profit by
Operating Segments,
Q1/ Q4/ Q3/ Q2/ Q1/
EUR million 2010 2009 2009 2009 2009
--------------------------------------------------------------
Pharmaceutical Trade Finland 4.5 4.4 4.9 4.9 3.9
Pharmaceutical Trade Sweden -1.4 -2.2 -0.4 -2.0 -0.4
Pharmaceutical Trade Russia -0.4 21.6 6.6 8.6 7.6
Pharmaceutical Trade Baltics 0.3 0.3 0.2 0.2 0.1
Healthcare Trade 1.3 2.4 1.9 3.0 1.7
Dental Trade 1.6 1.2 0.8 0.7 1.1
Group Administration and Others -1.6 -0.8 -1.5 -2.0 -1.6
--------------------------------------------------------------
Group total 4.2 26.9 12.6 13.5 12.4
1 Jan - 31 Mar 1 Jan - 31 Mar 1 Jan - 31 Mar
Net Sales by Market,
EUR million 2010 2009 2010
-----------------------------------------------------------------
Finland 117.1 143.0 575.9
Sweden 197.7 141.5 605.4
Russia 122.2 107.2 480.7
Baltics countries 10.5 11.0 44.3
Other countries 1.6 0.8 6.8
-----------------------------------------------------------------
Total 449.0 403.5 1713.1
Net Sales by Market,
EUR million Q1/2010 Q4/2009 Q3/2009 Q2/2009 Q1/2009
------------------------------------------------------------
Finland 117.1 147.5 139.2 146.2 143.0
Sweden 197.7 176.4 140.0 147.5 141.5
Russia 122.2 148.2 118.6 106.6 107.2
Baltics countries 10.5 12.4 9.8 11.1 11.0
Other countries 1.6 1.9 3.2 1.0 0.8
------------------------------------------------------------
Total 449.0 486.5 410.8 412.3 403.5
CORPORATE ACQUISITIONS
Acquisition of national pharmacy chain in Sweden (Pharmacy Company Sweden 2 AB).
Oriola-KD announced in November 2009 that it would acquire 100 per cent of the
shares of Pharmacy Company Sweden 2 AB, a national pharmacy cluster with 170
pharmacies.
The transaction was executed in February 2010.
The acquisition cost is calculated on the basis of the company's provisional
balance sheet as per 28 February 2010 prepared in accordance with IFRS and the
Oriola-KD Group's accounting principles in respect of all material elements. The
provisional balance sheet and acquisition cost calculation are unaudited.
The acquisition is accounted for using provisional values as permitted under
IFRS 3R. Over the 12 months following the acquisition, Oriola-KD will make the
necessary adjustments to these provisional values. The initial purchase price
allocation calculation calculated in Swedish crowns has been translated into
euros by using the exchange rate of acquisition date.
The balance sheet of the acquired company has been consolidated into the
Oriola-KD Group as of 1 March 2010 and the financial result has been
consolidated from the acquisition date, i.e. 19 February 2010.
Provisional details on the net assets and
goodwill acquired are as follows:
Fair value
Carrying amount, allocations, Fair value,
EUR million EUR million EUR million
Tangible assets 8.7 0.0 8.7
Other intangible
assets 0.0 25.4 25.4
Inventories, advances
paid 22.1 0.2 22.3
Trade receivables 44.0 0.0 44.0
Other receivables 6.8 0.0 6.8
Cash and cash
equivalents 2.4 0.0 2.4
Deferred tax
liabilities 0.0 -6.7 -6.7
Trade payables and
other current
liabilities -39.7 0.0 -39.7
----------------------------------------------------------------------------
Net indentifiable
assets 44.4 19.0 63.3
Acquisition price
Purchase price -161.5
----------------------------------------------------------------------------
Goodwill 98.2
Purchase price
settled in cash -161.5
Cash and cash
equivalents acquired 2.4
----------------------------------------------------------------------------
Total cash outflow
on acquisition -159.1
The goodwill arising from the acquisition is primarily representing the strong
market position, growth expectations, opportunities after monopoly driven market
and experienced existing personnel as well as expected synergies with
Oriola-KD's sizeable wholesale operations in Sweden.
Espoo 28 April 2010
Oriola-KD Corporation's Board of Directors
Oriola-KD Corporation
Eero Hautaniemi
President and CEO
Kimmo Virtanen
Executive Vice President and CFO
Further information:
Eero Hautaniemi
President and CEO
tel. +358 (0)10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Kimmo Virtanen
Executive Vice President and CFO
tel. +358 (0)10 429 2069
e-mail: kimmo.virtanen@oriola-kd.com
Pellervo Hämäläinen
Vice President, Communications and Investor Relations
tel. +358 (0)10 429 2497
e-mail: pellervo.hamalainen@oriola-kd.com
Distribution
NASDAQ OMX Helsinki Ltd
Principal media
Published by:
Oriola-KD Corporation
Corporate Communications
Orionintie 5
FI-02200 Espoo, Finland
www.oriola-kd.com
[HUG#1409627]