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Oriola-KD Corporation's Interim Report for 1 January - 30 June 2015
17.7.2015
Oriola-KD Corporation Stock Exchange Release 17 July 2015 at 8.30 a.m.
Oriola-KD Corporation's Interim Report for 1 January - 30 June 2015
Financial performance April-June 2015
* Net sales increased by 2.9 per cent to EUR 417.1 (405.5) million
* EBITDA excluding non-recurring items increased by 4.4 per cent to EUR 20.6
(19.7) million
* EBITDA was EUR 20.8 (19.4) million
* Operating profit excluding non-recurring items was EUR 14.9 (14.2) million
* Operating profit was EUR 15.2 (13.8) million
* Net cash flow from operations was EUR 25.6 (17.1) million
* Profit for the period totalled EUR 10.9 (9.3) million and earnings per share
were EUR 0.06 (0.06)
Financial performance January-June 2015
* Net sales increased by 2.9 per cent to EUR 828.4 (804.8) million
* EBITDA excluding non-recurring items increased by 1.9 per cent to EUR 39.3
(38.6) million
* EBITDA was EUR 38.1 (37.6) million
* Operating profit excluding non-recurring items was EUR 28.1 (27.6) million
* Operating profit was EUR 26.9 (26.7) million
* Net cash flow from operations was EUR 38.9 (-8.7) million
* Profit for the period totalled EUR 18.3 (16.9) million and earnings per
share were EUR 0.11 (0.11)
Key figures 2015 2014 Change 2015 2014 Change 2014
EUR million 4-6 4-6 % 1-6 1-6 % 1-12
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Net sales 417.1 405.5 2.9 828.4 804.8 2.9 1,612.3
EBITDA excluding non-recurring
items 20.6 19.7 4.4 39.3 38.6 1.9 81.3
EBITDA 20.8 19.4 7.4 38.1 37.6 1.4 87.2
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Operating profit excluding non-
recurring items 14.9 14.2 5.5 28.1 27.6 1.6 59.1
Operating profit 15.2 13.8 9.6 26.9 26.7 0.8 65.0
Operating profit % excluding non-
recurring items 3.6 3.5 3.4 3.4 3.7
Operating profit % 3.6 3.4 3.2 3.3 4.0
Profit for the period 10.9 9.3 17.3 18.3 16.9 8.3 46.5
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Earnings per share, EUR 0.06 0.06 7.4 0.11 0.11 1.1 0.29
Net cash flow from operating
activities 25.6 17.1 38.9 -8.7 -10.8
Return on equity (ROE), % 28.0 -53.0 28.0 -53.0 23.7
Gearing, % 25.5 73.0 25.5 73.0 90.1
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Outlook for 2015
Oriola-KD estimates its full-year net sales to remain at the 2014 level.
Operating profit excluding non-recurring items is estimated to increase from the
2014 level. Full-year net sales for continuing operations were EUR 1,612.3
million and operating profit excluding non-recurring items was EUR 59.1 million.
President and CEO Eero Hautaniemi's comments regarding the interim report:
"The first half of the year net sales and operating profit excluding non-
recurring items of the Swedish businesses remained at the level of the
corresponding period, on a constant currency basis operating profit excluding
non-recurring items increased by EUR 1.1 million. Profitability of the Swedish
retail business was negatively affected by significant decrease of parallel
import from the corresponding period and price cuts set by TLV (Tandvårds- och
läkemedelsförmånsverket) in fourth quarter of 2014 and on June 1, 2015. Net
sales of the Swedish wholesale business was supported by the new agreements with
pharmaceutical companies signed in 2014. In accordance with our strategy we will
open an online pharmacy in Sweden during the second half of the year.
In Finnish wholesale business we renewed significant long term cooperation
agreements with Orion and Boehringer Ingelheim.
In the second quarter we made an agreement regarding the rearrangement of our
long-term revolving credit facility and term loan agreement."
Oriola-KD Corporation's interim report 1 January-30 June 2015
The commentary of this financial statements release focuses on the January-June
2015 result. A comparison in accordance with the International Financial
Reporting Standards (IFRS) has been carried out on the figures for the
corresponding period in 2014, unless otherwise stated. The figures in this
interim report are unaudited. The results related to the Russian businesses sold
in December 2014 are presented as discontinued operations separately from the
results from continuing operations in January - June 2015 and comparative
period 2014 results have been revised to correspond to continuing operations.
The consolidated statement of financial position for the comparative period
2014 includes the assets and liabilities of discontinued operations. The
consolidated statement of cash flows for the comparative period 2014 includes
net cash flow of discontinued operations. The figures in the tables have been
rounded independently.
2015 2014 2014
Key Figures (1)) 1-6 1-6 1-12
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Goodwill, EUR million 255.8 294.8 250.9
Equity, EUR million 164.6 227.4 113.6
Interest-bearing debt, EUR million 133.5 274.6 193.9
Net interest-bearing debt, EUR million 42.0 166.1 102.4
Total assets, EUR million 911.9 1,335.0 874.0
Equity ratio, % 18.6 17.6 13.3
Return on equity (ROE), % 28.0 -53.0 23.7
Return on capital employed (ROCE), % 18.5 -22.0 14.4
Gearing, % 25.5 73.0 90.1
Net debt / rolling 12-month EBITDA from continuing
operations 0.5 2.4 1.2
Equity per share, EUR 0.91 1.50 0.75
Earnings per share, continuing operations, EUR 0.11 0.11 0.29
Earnings per share, incl. Discontinued operations,
EUR 0.11 -0.53 -1.42
Average number of shares, 1000 pcs (2)) 169,984 151,137 151,130
Average number of personnel, continuing operations 2,299 2,386 2,377
Number of personnel at the end of the period,
continuing operations 2,312 2,401 2,356
Gross investments, continuing operations ,EUR
million 8.1 14.7 25.7
(1)) Comparative balance sheet items include discontinued operations unless
otherwise stated.
(2)) Treasury shares held by the company not included
Changes in the Group Structure in January-June 2015
There were no changes in the Group structure during the period.
A decision to complete the following subsidiary mergers has been made in order
to simplify Oriola-KD Group structure: SIA Rigas Elizabetes aptieka will merge
into SIA Panpharmacy, Aloiro AB will merge into Oriola Oy, Oriola-KD Holding
Sverige AB will merge into Oriola-KD Holding Oy after which Oriola-KD Holding Oy
will merge into Oriola-KD Oyj. The mergers are expected to be completed by
31.12.2015.
The Group's net sales and result for April-June 2015
Oriola-KD's second quarter net sales were EUR 417.1 (405.5) million. Operating
profit excluding non-recurring items was EUR 14.9 (14.2) million, operating
profit was EUR 15.2 (13.8) million.
Profit after financial items was EUR 13.6 (12.1) million and profit for the
period was EUR 10.9 (9.3) million. Oriola-KD's net financial expenses were EUR
1.5 (1.7) million. Earnings per share were EUR 0.06 (0.06).
The Group's net sales and result for January-June 2015
Oriola-KD's net sales increased by 2.9 per cent to EUR 828.4 (804.8) million and
operating profit excluding non-recurring items increased by 1.6 per cent to EUR
28.1 (27.6) million. Operating profit was EUR 26.9 (26.7) million. The
depreciation of the Swedish krona from the corresponding period negatively
affected the euro denominated operating profit by approximately EUR 0.9 million.
Profit after financial items was EUR 23.4 (22.0) million and profit for the
period was EUR 18.3 (16.9) million. Oriola-KD's net financial expenses were EUR
3.5 (4.6) million. Income taxes for January-June 2015 were 5.1 (5.1) which
corresponds to effective tax rate of 21.7 (23.3) per cent. Earnings per share
were EUR 0.11 (0.11).
Reportable segments
Oriola-KD's reportable segments are Pharmaceutical Trade Sweden and
Pharmaceutical Trade Finland and Baltics. Oriola-KD has formed its reportable
segments by combining its operating segments. The Pharmaceutical Trade Sweden
reporting segment comprises the Swedish pharmaceutical retail and Swedish
pharmaceutical wholesale operating segments. The Pharmaceutical Trade Finland
and Baltics reporting segment comprises the Finnish pharmaceutical wholesale
business, the Consumer Health and the Pharmaceutical Trade Baltics operating
segments.
In December 2014 Oriola-KD sold its Russian businesses and as a result
classifies the Pharmaceutical Trade Russia reportable segment as discontinued
operations.
Pharmaceutical Trade Sweden
Key Figures 2015 2014 Change 2015 2014 Change 2014
EUR million 4-6 4-6 % 1-6 1-6 % 1-12
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Net Sales 309.9 298.5 3.8 616.5 597.0 3.3 1,176.4
Retail business 190.3 188.7 0.9 376.7 375.3 0.4 744.2
Wholesale business 204.6 193.5 5.7 407.4 389.0 4.7 761.2
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Operating profit excluding non-
recurring items 11.5 11.3 1.3 21.5 21.3 0.9 44.0
Retail business 8.4 8.7 -3.5 16.0 16.1 -0.7 33.8
Wholesale business 3.1 2.7 15.5 5.6 5.5 2.6 10.4
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Operating profit 11.5 11.0 4.4 21.5 20.4 5.6 50.5
Retail business 8.4 8.4 0.4 16.0 15.1 5.5 32.8
Wholesale business 3.1 2.7 15.5 5.6 5.5 2.6 17.9
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Operating profit % excluding
non-recurring items 3.7 3.8 3.5 3.6 3.7
Retail business 4.4 4.6 4.2 4.3 4.5
Wholesale business 1.5 1.4 1.4 1.4 1.4
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Operating profit % 3.7 3.7 3.5 3.4 4.3
Retail business 4.4 4.4 4.2 4.0 4.4
Wholesale business 1.5 1.4 1.4 1.4 2.4
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Number of personnel at the end
of period 1,787 1,851 1,792
Retail business 1,515 1,566 1,524
Wholesale business 272 285 268
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April-June 2015
The second quarter net sales of Pharmaceutical Trade Sweden were EUR 309.9
(298.5) million. Operating profit excluding non-recurring items was EUR 11.5
(11.3) million and operating profit was EUR 11.5 (11.0) million. Retail business
net sales were EUR 190.3 (188.7) million. Operating profit excluding non-
recurring items for the retail business was EUR 8.4 (8.7) million and operating
profit was EUR 8.4 (8.4) million. The net sales of wholesale business totalled
EUR 204.6 (193.5) million. Operating profit for the wholesale business was EUR
3.1 (2.7) million. Invoicing for the wholesale business was EUR 424.2 (382.0)
million.
January-June 2015
The net sales of Pharmaceutical Trade Sweden in January - June 2015 increased by
3.3 per cent to EUR 616.5 (597.0) million, and on a constant currency basis, net
sales increased by 7.7 (8.4) per cent. Retail business net sales were EUR 376.7
(375.3) million, wholesale business net sales totalled EUR 407.4 (389.0)
million.
Invoicing, indicating volume, of the wholesale business increased by 10.9
(-2.8) per cent to EUR 835.8 (753.6) million. On a constant currency basis
invoicing increased by 15.7 (2.1) per cent.
The Swedish retail business' EBITDA excluding non-recurring items was EUR 24.1
(23.8) million and EBITDA was EUR 24.1 (22.8) million in January - June 2015.
The EBITDA percentage excluding non-recurring items and the management fee for
the retail business was 6.7 (6.5) per cent. The wholesale business' EBITDA was
EUR 6.4 (6.7) million.
Pharmaceutical Trade Sweden's operating profit excluding non-recurring items
increased by 0.9 per cent to EUR 21.5 (21.3) million and operating profit
increased by 5.6 per cent and was EUR 21.5 (20.4) million. On a constant
currency basis operating profit excluding non-recurring items increased by 5.3
(178.6) per cent. Operating profit excluding non-recurring items for the Swedish
retail business totalled EUR 16.0 (16.1) million and operating profit was EUR
16.0 (15.1) million. Operating profit for the Swedish wholesale business was EUR
5.6 (5.5) million.
On a constant currency basis net sales of the Swedish retail business increased
by 4.7 (37.2) per cent. Operating profit of the Swedish retail business was
negatively affected by significant decrease of parallel import from the
corresponding period and price cuts set by TLV (Tandvårds- och
läkemedelsförmånsverket) in fourth quarter of 2014 and on June 1, 2015.
Increased sales of the new expensive prescription medicine with low margins
negatively affected the relative profitability of the Swedish retail business
and decreased the relative share of OTC and traded goods from the net sales to
26 (27) per cent. At the end of June 2015, Oriola-KD had a total of 304 (302)
pharmacies in Sweden. In accordance with the plan, Oriola-KD will open an online
pharmacy in Sweden during the second half of the year. Oriola-KD's market share
of the pharmaceutical retail market in January-June 2015 was 18.5 (19.0) per
cent (source: Apoteksföreningen). Parallel imports' share of the Swedish
pharmaceutical market was approximately 11 (18) per cent in January-June
(source: IMS Health).
The Swedish wholesale business' net sales increase was supported by new
agreements with pharmaceutical companies signed in 2014 and by the increased
sales of expensive RX products. On a constant currency basis the net sales
increased by 9.2 (6.8) per cent. The second quarter profitability of the Swedish
wholesale business improved from the corresponding period. Oriola-KD estimates
that its share of the Swedish pharmaceutical wholesale market was approximately
39 (36) per cent in January-June 2015.
The pharmaceutical market in Sweden grew by 8.0 (1.6) per cent in Swedish krona
(source: IMS Health) and the retail market for OTC products and traded goods
grew by 7.5 (5.4) per cent in Swedish krona (source: Apoteksföreningen) in
January-June 2015. Based on Oriola-KD's estimate the number of pharmacies in
Sweden increased by four pharmacies in January-June 2015, at the end of June
there were 1,343 pharmacies in Sweden.
Pharmaceutical Trade Finland and Baltics
Key Figures 2015 2014 Change 2015 2014 Change 2014
EUR million 4-6 4-6 % 1-6 1-6 % 1-12
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Net Sales 107.2 107.0 0.2 211.9 207.8 2.0 435.9
Pharmaceutical wholesale in
Finland 85.5 86.5 -1.2 166.3 165.8 0.3 348.7
Pharmaceutical wholesale in
Baltics 11.3 10.8 4.1 24.4 22.2 9.8 46.6
Consumer Health 10.6 9.8 8.8 21.5 20.0 7.7 40.9
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Operating profit excluding non-
recurring items 5.0 4.4 15.1 9.7 9.2 5.2 19.6
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Operating profit 5.1 4.4 16.8 8.8 9.2 -3.6 19.2
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Operating profit % excluding non- 4.7 4.1 4.6 4.4 4.5
recurring items
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Operating profit % 4.8 4.1 4.2 4.4 4.4
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Number of personnel at the end of
period 488 511 523
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April-June 2015
The second quarter net sales of Pharmaceutical Trade Finland and Baltics were
EUR 107.2 (107.0) million. Operating profit excluding non-recurring items was
EUR 5.0 (4.4) million and operating profit was EUR 5.1 (4.4) million. The net
sales of the wholesale business in Finland was EUR 85.5 (86.5) million and
invoicing totalled EUR 267.3 (252.3) million. Net sales of the wholesale
business in the Baltic countries were EUR 11.3 (10.8) million. Net sales of the
Consumer Health business were EUR 10.6 (9.8) million.
January-June 2015
The net sales of Pharmaceutical Trade Finland and Baltics increased by 2.0 per
cent to EUR 211.9 (207.8) million. Operating profit excluding non-recurring
items increased by 5.2 per cent to EUR 9.7 (9.2) million. Operating profit
decreased by 3.6 per cent to EUR 8.8 (9.2) million. Oriola-KD recognised EUR
0.8 (-) million non-recurring items during the first half related to co-
operative negotiations concerning Oriola-KD's personnel in Finland.
The net sales of the wholesale business in Finland was EUR 166.3 (165.8)
million. Net sales of the wholesale business in the Baltic countries were EUR
24.4 (22.2) million. Net sales of the Consumer Health business were EUR 21.5
(20.0) million.
Invoicing, indicating volume, of the Finnish wholesale business increased by
5.9 (-6.1) per cent to EUR 516.7 (488.1) million.
The EBITDA excluding non-recurring items of Pharmaceutical Trade Finland and
Baltics was EUR 11.8 (11.1) million and EBITDA was EUR 11.0 (11.1) million.
In Finnish wholesale business Oriola-KD renewed agreement significant
cooperation agreement with Orion. According to a new long-term cooperation
agreement, Oriola-KD continues to be responsible for Orion's pharmaceutical
warehousing and distribution and extensive selection of services in Finland. In
addition Oriola-KD renewed cooperation agreement with Boehringer Ingelhein in
Finland and agreed on pre-wholesale operations of Sandoz's products in the
Baltic countries. Increased pharmaceutical sales of the key customers of
Finnish wholesale business supported positive development of the invoicing.
Service sales to the pharmaceutical companies increased in Finnish wholesale
business. Increased sales of Oriolashop.fi supported the development of Consumer
Health business' net sales. As a result of tightened competitive environment,
profitability of Consumer Health business decreased from the corresponding
period due to increased discounts.
The Finnish pharmaceutical market grew by 2.1 (3.7) per cent in January - June
2015 (source: IMS Express). Oriola-KD's share of the Finnish pharmaceutical
wholesale market was 46.3 (45.2) per cent in January - June 2015 (source: ATY).
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.
Non-recurring items included in Operating Profit 2015 2014 2015 2014 2014
EUR million 4-6 4-6 1-6 1-6 1-12
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Pharmaceutical Trade Finland and Baltics
Restructuring costs 0.1 - -0.8 - -
Service award arrangement - - - - -0.5
Pharmaceutical Trade Sweden
Restructuring costs - -0.3 - -1.0 -1.0
Gain on sale of property - - - - 7.5
Group items
Restructuring costs 0.1 - -0.4 - -
Service award arrangement - - - - -0.1
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Total 0.2 -0.3 -1.2 -1.0 5.9
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Non-recurring items reported in Januray - June 2015 relate to restructuring
charges in Finnish pharmaceutical wholesale business, Consumer Health and Group
functions. Non-recurring items reported January-June 2014 relate to
restructuring charges in Pharmaceutical Trade Sweden.
Balance sheet, financing and cash flow
Oriola-KD's total assets at 30 June 2015 were EUR 911.9 (1,335.0) million. Cash
and cash equivalents totalled EUR 91.5 (108.5) million and equity was EUR 164.6
(227.4) million. The equity ratio was 18.6 (17.6) per cent and gearing was 25.5
(73.0) per cent. The comparative information includes discontinued operations.
Oriola-KD rearranged its long-term revolving credit facility and term loan
agreement on 11 June 2015. The approximately EUR 175 million agreement will
replace the existing financing agreement that was signed on 15 May 2013. The new
financing agreement consists of EUR 100 million revolving credit facility and
Swedish crown denominated approximately EUR 75 million amortized term loan
agreement. Revolving credit facility and term loan agreement will mature in May
2018.
During the first quarter of 2015 Oriola-KD completed a rights offering. From the
offering Oriola-KD raised gross proceeds of EUR 75.6 million and net proceeds of
EUR 73.7 million.
Oriola-KD redeemed its EUR 40 million hybrid bond issued on 20 February 2014 in
its entirety together with accrued interest. The bond was redeemed in accordance
with its terms and conditions on 20 April 2015 with 103 per cent of its nominal
value.
Oriola-KD's goodwill of EUR 255.8 (294.8) million has been allocated in
impairment testing to the cash-generating units consisting of the Group's
operating segments. In Oriola-KD goodwill is tested annually, in accordance with
the timetable of its strategy and planning process. At the end of June 2015, EUR
229.6 (230.6) million of the goodwill was allocated to the Swedish
pharmaceutical retail business, EUR 25.9 (26.0) million to the Swedish
pharmaceutical wholesale business and EUR 0.2 (-) million to the Pharmaceutical
Trade Baltics.
At the end of June 2015, interest-bearing debt was EUR 133.5 (274.6) million of
which syndicated bank loans totalled EUR 76.0 (167.1) million, commercial papers
EUR 10.4 (50.7) million, advance payments from pharmacies EUR 27.7 (39.0)
million, a contingent consideration related to Medstop-acquisition EUR 15.5
(14.6) million and finance lease liabilities EUR 3.9 (3.1) million. Long-term
interest bearing-liabilities were EUR 72.7 (172.9) million and short-term
interest-bearing liabilities were EUR 60.8 (101.7) million. Interest-bearing net
debt was EUR 42.0 (166.1) million. The non-recourse trade receivables sales
programmes were continued in the Pharmaceutical Trade Sweden in January-June
2015. At the end of June 2015, a total of EUR 113.6 (80.0) 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 June 2015.
Net cash flow from operations including discontinued operations in January-June
2015 was EUR 38.9 (-8.7) million, of which changes in working capital accounted
for EUR 10.0 (-24.0) million. Net cash flow from investing activities was EUR
-8.0 (-17.9) million.
Investments
Gross investments in January-June 2015 totalled EUR 8.1 (14.7) million and
consisted of investments related to the opening of new pharmacies, information
systems and improvements in logistics efficiency.
Personnel
At the end of June 2015, Oriola-KD had a payroll of 2,312 (2,401) employees, 23
(23) per cent of whom worked in Finland and the Baltics and 77 (77) per cent in
Sweden. 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, Interim CFO
* Lars Birkeland, Vice President, Pharmaceutical Retail, Sweden
* Thomas Gawell, Vice President, Pharmaceutical Wholesale, Sweden
* Jukka Mäkelä, Vice President, Development
* Teija Silver, Vice President, HR
* Kimmo Virtanen, Executive Vice President, Pharmaceutical Wholesale, Finland,
Sweden and the Baltics
Oriola-KD applies the Finnish Corporate Governance Code which was issued by the
Securities Market Association on 15 June 2010 and which entered into force on 1
October 2010, with the exception that the company's Nomination Committee may
also have members who are not members of the company's Board of Directors. The
purpose of this deviation from Recommendation 22 of the Corporate Governance
Code (Appointment of members to the committees) is to allow the election of
major shareholders in the company to the Nomination Committee and thus to ensure
that their opinions are heard well before the Annual General Meeting. The
Nomination Committee is a body established by the Board for the purpose of
preparing and presenting to the Board a recommendation for the proposal to be
put to the Annual General Meeting concerning the composition and remuneration of
the Board. The Corporate Governance Statement and the Remuneration Statement
for 2014 can be viewed on the company's website at: http://www.oriola-
kd.com/en/Corporate-Governance/.
The auditor of Oriola-KD Corporation as elected by the Annual General Meeting,
PricewaterhouseCoopers Oy, will designate Ylva Eriksson APA as the principal
auditor as of July 16, 2015.
Board authorisations
The Annual General Meeting (AGM), held on 30 March 2015, authorised the Board of
Directors to decide on a share issue against payment in one or more issues. The
authorisation comprises the right to issue new shares or assign treasury shares
held by the company. The authorisation covers a maximum of 5,650,000 Class A
shares and 12,500,000 Class B shares and includes the right to derogate from the
shareholders' pre-emptive subscription right. Pursuant to the authorisation,
shares held by the company as treasury shares may also be sold through trading
on a regulated market organised by NASDAQ OMX Helsinki Ltd. The authorisation
is in effect for a period of eighteen months from the decision of the Annual
General Meeting.
The AGM authorised the Board of Directors to decide on a share issue against
payment in one or more issues. The authorisation comprises the right to issue
new class B shares or assign class B treasury shares held by the company. The
authorisation covers a combined maximum of 18,000,000 class B shares of the
company and includes the right to derogate from the shareholders' pre-emptive
subscription right. Pursuant to the authorisation, class B shares held by the
Company as treasury shares may also be sold on regulated market organised by
NASDAQ OMX Helsinki Ltd. The authorisation is in effect for a period of eighteen
months from the decision of the Annual General Meeting.
The authorisation revokes all previous share issue authorisations given to the
Board of Directors apart from the authorisation given to the Board of Directors
by the Annual General Meeting held on 20 March 2013, pursuant to which the Board
of Directors may decide upon directed share issues against or without a payment
concerning no more than 1,715,000 class B shares in order to execute the share-
based incentive plan for the Oriola-KD Group's executives and the share savings
plan for the Oriola-KD Group's key personnel.
The AGM also authorised the Board of Directors to decide on repurchasing of the
company's own class B shares. The authorisation entitles the Board of Directors
to decide on the repurchase of no more than 18,000,000 of the company's own
class B shares in a proportion other than in which shares are owned by the
shareholders. The authorisation to repurchase own shares is in force for a
period of not more than eighteen months from the decision of the Annual General
Meeting. Shares may be repurchased to develop the company's capital structure,
to execute corporate transactions or other business arrangements, to finance
investments, to be used as a part of the company's incentive schemes or to be
otherwise relinquished, held by the company or cancelled.
Oriola-KD Corporation shares
Oriola-KD completed a rights offering in the first quarter of 2015. The
subscription period of the offering ended on 3 March 2015. In the offering
9,429,742 new A Shares and 20,798,643 new B Shared were subscribed. As a result,
the total number of shares of Oriola-KD increased to 181,486,213 shares. The
subscription price was EUR 2.50 per offered share. Oriola-KD raised gross
proceeds of EUR 75.6 million through the offering. Oriola-KD recognised gross
proceeds and the transaction costs less taxes, in total of EUR 73.7 million, in
the invested unrestricted equity fund.
Trading volume of the Oriola-KD Corporation's class A and B shares in January-
June 2015:
January-June 2015 January-June 2014
Trading volume class A class B class A class B
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Trading volume, million 2.0 23.7 4.3 17.5
Trading volume, EUR million 7.8 90.3 10.3 41.9
Highest price, EUR 4.41 4.57 2.85 2.78
Lowest price, EUR 3.11 3.05 2.25 2.13
Closing quotation, end of period, EUR 4.10 4.14 2.43 2.37
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Oriola-KD Corporation's market capitalisation on 30 June 2015 was EUR 749.1
(361.3) million.
In the review period, the traded volume of Oriola-KD Corporation shares,
excluding treasury shares, corresponded to 15.5 (14.5) per cent of the total
number of shares. The traded volume of class A shares amounted to 3.9 (9.1) per
cent of the average stock, and that of class B shares, excluding treasury
shares, to 20.3 (16.9) per cent of the average stock.
At the end of June 2015, the company had a total of 181,486,213 (151,257,828)
shares, of which 56,578,452 (47,148,710) were class A shares and 124,907,761
(104,109,118) were class B shares. The company has 148,338 (127,827) treasury
shares (including treasury shares held by third-party service provider), all of
which are class B shares. They account for 0.08 (0.08) per cent of the company's
shares and 0.012 (0.012) per cent of the votes.
Under Article 3 of the Articles of Association, a shareholder may demand
conversion of class A shares into class B shares. During the period 1 January -
30 June 2015, no class A shares were converted into class B shares (0 shares).
On 19 December 2012, Oriola-KD Corporation's Board of Directors decided on a
share incentive scheme for the Group's senior management for the years
2013-2015. The scheme covers six persons. The company's Board of Directors will
determine the earnings criteria for the earning period and the targets to be set
for these at the start of each earning period. The bonus for the 2015 earning
period is based on the Oriola-KD Group's earnings per share (EPS) calculated
from the earnings excluding non-recurring items and taxes. The rewards to be
paid on the basis of the performance period 2015 will correspond to the value of
a maximum total of 1,010,000 Oriola-KD Corporation class B shares (also
including the proportion to be paid in cash), of which 625,483 Oriola-KD
Corporation class B shares (also including the proportion to be paid in cash)
have been allocated to the current participants.
On 28 May 2013 the Board of Directors of Oriola-KD Corporation decided to launch
a key personnel share savings plan. A total of about 38 key employees
participate in the plan during a savings period 1 October 2013 - 30 September
2014. A total of about 44 key employees participate in the plan during a savings
period 1 October 2014 - 30 September 2015.
For both savings plans the maximum and minimum monthly savings amount to 10 and
2 per cent, respectively, of each participant's fixed gross monthly salary. The
accumulated savings will be used for purchasing Oriola-KD's class B shares for
the participants at market prices. In return, each participant will receive two
free class B matching shares for every three acquired savings shares. Matching
shares will be delivered to a participant if the participant holds the acquired
shares from the savings period until the end of the designated holding period.
Matching shares will be paid partly in Oriola-KD's class B shares and partly in
cash. The cash proportion is intended for covering taxes and tax-related
payments arising from the reward to a key person.
On 18 June 2015 the Board of Directors of Oriola-KD Corporation decided to
launch a new savings period 2015-2016 that will be offered to approximately 95
Group key employees. This savings period will begin on 1 October 2015 and end on
31 December 2016. The maximum monthly saving is 8.3 percent and the minimum is
2 percent of each participant's fixed monthly gross salary.
Oriola-KD Corporation has an agreement with a third-party service provider
concerning administration of the share-based incentive program. At the end of
the reporting period, the amount of treasury shares held by the third-party
service provider was 51,516 (31,005).
Liquidity guarantee
There is no liquidity guarantee in effect for the shares of Oriola-KD
Corporation.
Flagging announcements
Oriola-KD has received notification according to which Mariatorp Oy on April
30, 2015 has signed a demerger plan. Following the completion of the demerger
the Oriola-KD shares owned by Mariatorp Oy, a company controlled by Niklas
Herlin, will transfer to a newly established company Mariatorp Oy. The
registration of the execution of the demerger is planned to take place on August
31, 2015. After the execution of the demerger, the ownership of the new
Mariatorp Oy of Oriola-KD Corporation's share capital is 7.43 per cent and total
number of voting rights is 7.43 per cent comprising a total of 13,521,147 shares
of which 4,200,000 A shares and 9,321,147 B shares.
Risks
Oriola-KD's Board of Directors has approved the company's risk management policy
in which the risk management operating model, principles, responsibilities and
reporting are specified. The Group's risk management seeks to identify, measure
and manage risks that may threaten Oriola-KD's operations and the achievement of
goals set. The roles and responsibilities relating to risk management have been
determined in the Group.
Oriola-KD's risks are classified as strategic, operational and financial. Risk
management is a key element of the strategic process, operational planning and
daily decision-making at Oriola-KD.
Oriola-KD has identified the following principal strategic and operational risks
in its business:
* Amendments to pharmaceutical market regulations, pricing of pharmaceuticals
and reimbursements may weaken Oriola-KD's net sales and profitability.
* In the Swedish retail business, the free establishment of pharmacies has led
to an increase in the number of pharmacies. The number of pharmacies may
continue to grow, which could further increase the fierce competition.
* Extra capacity ensuing from a change in the Swedish wholesale market will
intensify competition, which may weaken the profitability of operations. The
share of single channel distribution in the pharmaceutical wholesale market
may decline rapidly, which may weaken the profitability of operations and
lead to the restructuring of wholesale operations.
* Changes in share of parallel imports in Swedish pharmaceutical market may
affect profitability of the Swedish wholesale and retail businesses.
* Strategic development projects involve operational risks.
The main financial risks for Oriola-KD involve currency rate, liquidity,
interest rate and credit risks. Currency risk is the most significant financial
risks in Sweden, as any changes in the value of the Swedish krona will have an
impact on Oriola-KD's net sales, earnings and consolidated statement of
financial position.
Oriola-KD prepares goodwill impairment testing annually, in accordance with the
timetable of its strategy and planning process. Changes in cash flow forecasts
based on strategic plans, or in the discount rate or perpetuity growth rate, can
cause a goodwill write-off, which would weaken Oriola-KD's result.
Near-term risks and uncertainty factors
Oriola-KD's strategic development projects involve operational risks which may
have an effect on Oriola-KD's profitability.
Outlook
Oriola-KD's outlook for 2015 is based on external market forecasts, agreements
with pharmaceutical companies and pharmacies, and management assessments. During
the five-year period from 2013-2018, the Finnish pharmaceutical market is
expected to grow at an annual rate of 2.6 per cent and Swedish pharmaceutical
market is expected to change an average of 0 per cent per year in the local
currencies (source: IMS Health Prognosis 2014-2018, September 2014).
Outlook for 2015
Oriola-KD estimates its full-year net sales to remain at the 2014 level.
Operating profit excluding non-recurring items is estimated to increase from the
2014 level. Full-year net sales for continuing operations were EUR 1,612.3
million and operating profit excluding non-recurring items was EUR 59.1 million.
Events after the review period
There were no material events after the review period.
Next interim report
Oriola-KD Corporation will publish its results for the third quarter of 2015 on
22 October 2015 at about 8.30 am.
Oriola-KD's Interim Report January - June 2015
Consolidated Statement
of
Comprehensive Income
(IFRS), 2015 2014 2015 2014 2014
EUR million 4-6 4-6 1-6 1-6 1- 12
Revised (1) ) Revised (1) )
-----------------------------------------------------------------------------
Continuing operations
Net sales 417.1 405.5 828.4 804.8 1,612.3
Other operating income 3.2 2.4 6.4 4.9 21.0
Cost of goods sold -333.6 -322.4 -665.5 -640.3 -1,287.9
Employee benefit
expenses -37.2 -37.7 -75.0 -75.2 -143.8
Other operating
expenses -28.7 -28.4 -56.1 -56.5 -114.5
-----------------------------------------------------------------------------
Gross profit 20.8 19.4 38.1 37.6 87.2
Depreciation and
impairment -5.6 -5.6 -11.2 -10.9 -22.2
-----------------------------------------------------------------------------
Operating profit 15.2 13.8 26.9 26.7 65.0
Financial income and
expenses -1.5 -1.7 -3.5 -4.6 -7.8
-----------------------------------------------------------------------------
Profit before taxes 13.6 12.1 23.4 22.0 57.1
Income taxes -2.8 -2.9 -5.1 -5.1 -10.7
-----------------------------------------------------------------------------
Profit for the period
from continuing
operations 10.9 9.3 18.3 16.9 46.5
Profit for the period
from discontinued
operations -0.0 -91.4 -0.2 -96.4 -258.8
-----------------------------------------------------------------------------
Profit for the period 10.8 -82.1 18.1 -79.5 -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 1.2 7.6 2.7 -9.9 -52.1
Translation
differences
transferred to profit
for the period from
discontinued
operations - - - - 74.3
Cash flow hedge 0.3 -0.5 -0.1 -1.0 -1.4
Income tax relating to
other comprehensive
income -0.1 -0.5 0.0 0.1 0.3
-----------------------------------------------------------------------------
1.5 6.6 2.7 -10.8 21.1
Items which will not
be reclassified to
profit or loss:
Actuarial gains/losses
on
defined benefit plan - - - - -16.5
Income tax relating to
other comprehensive
income - - - - 3.3
-----------------------------------------------------------------------------
- - - - -13.1
Total comprehensive
income for the period 12.3 -75.6 20.8 -90.3 -204.3
Profit attributable to
-----------------------------------------------------------------------------
Parent company
shareholders 10.8 -82.1 18.1 -79.5 -212.3
-----------------------------------------------------------------------------
Total comprehensive
income attributable to
-----------------------------------------------------------------------------
Parent company
shareholders 12.3 -75.6 20.8 -90.3 -204.3
-----------------------------------------------------------------------------
Earnings per share
attributable to parent
company shareholders:
Basic earnings per
share, EUR
-----------------------------------------------------------------------------
Continued operations 0.06 0.06 0.11 0.11 0.29
Discontinued
operations -0.00 -0.60 -0.00 -0.64 -1.71
From profit of the
year 0.06 -0.55 0.11 -0.53 -1.42
-----------------------------------------------------------------------------
Diluted earnings per
share, EUR
-----------------------------------------------------------------------------
Continued operations 0.06 0.06 0.11 0.11 0.29
Discontinued
operations -0.00 -0.60 -0.00 -0.64 -1.71
From profit of the
year 0.06 -0.55 0.11 -0.53 -1.42
-----------------------------------------------------------------------------
(1) )The first half 2014 figures have been revised as a
result of the sale of the Russian business in December
2014 to reflect the classification of the Russian business
as a discontinued operation.
Consolidated Statement of
Financial Position (IFRS),
EUR million
ASSETS 30 Jun 2015 30 Jun 2014 (1)) 31 Dec 2014
-------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 73.2 96.1 75.2
Goodwill 255.8 294.8 250.9
Other intangible assets 62.0 68.7 61.3
Pension assets - 9.2 -
Other non-current assets 0.0 0.0 0.0
Deferred tax assets 6.2 3.5 3.3
-------------------------------------------------------------------------------
Non-current assets total 397.1 472.3 390.8
Current assets
Inventories 198.3 365.2 185.0
Trade receivables 190.9 318.1 178.4
Other receivables 34.0 70.9 28.4
Cash and cash equivalents 91.5 108.5 91.5
-------------------------------------------------------------------------------
Current assets total 514.7 862.7 483.2
ASSETS TOTAL 911.9 1,335.0 874.0
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
-------------------------------------------------------------------------------
Equity
Share capital 36.2 36.2 36.2
Hedging reserve -1.4 -1.0 -1.3
Contingency fund 19.4 19.4 19.4
Invested unrestricted equity
reserve 74.8 1.1 1.1
Hybrid bond - 39.6 39.6
Other reserves 0.1 0.1 0.1
Translation differences -0.4 -35.3 -3.1
Retained earnings 35.8 167.2 21.6
-------------------------------------------------------------------------------
Equity attributable to the
parent company shareholders 164.6 227.4 113.6
Non-current liabilities
Deferred tax liabilities 13.8 15.9 12.7
Pension obligations 15.5 7.4 14.9
Borrowings 72.7 172.9 98.5
Other non-current liabilities 2.3 - 2.2
-------------------------------------------------------------------------------
Non-current liabilities total 104.3 196.2 128.3
Current liabilities
Trade payables 528.7 757.2 494.3
Provisions 0.3 0.7 0.6
Borrowings 60.8 101.7 95.4
Other current liabilities 53.1 51.8 41.8
-------------------------------------------------------------------------------
Current liabilities total 642.9 911.4 632.1
EQUITY AND LIABILITIES TOTAL 911.9 1,335.0 874.0
-------------------------------------------------------------------------------
(1)) Includes the assets and liabilities of the Russian businesses
sold in December 2014
Consolidated Statement
of Changes in Equity
(IFRS)
Equity attributable to the parent
company shareholders
Trans- Re-
lation tained
Share diffe- earn- Hybrid Equity
EUR million capital Funds rences ings bond total
-------------------------------------------------------------------------------
Equity
1 Jan 2014 36.2 20.4 -25.3 246.8 - 278.1
-------------------------------------------------------------------------------
Comprehensive income for
the period
Net profit for the
period - - - -79.5 - -79.5
Other comprehensive
income:
Cash flow hedge - -1.0 - - - -1.0
Income tax relating to
other comprehensive
income - 0.2 -0.1 - - 0.1
Translation difference - -0.0 -9.9 - - -9.9
-------------------------------------------------------------------------------
Comprehensive income for
the period total - -0.8 -10.0 -79.5 - -90.3
-------------------------------------------------------------------------------
Transactions with owners
Hybrid bond - - - - 39.6 39.6
Share-based payments - - - 0.0 - 0.0
Increase in treasury
shares - - - -0.1 - -0.1
-------------------------------------------------------------------------------
Transactions with owners
total - - - -0.1 39.6 39.6
-------------------------------------------------------------------------------
Equity
30 Jun 2014 36.2 19.6 -35.3 167.2 39.6 227.4
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity
1 Jan 2015 36.2 19.3 -3.1 21.6 39.6 113.6
-------------------------------------------------------------------------------
Comprehensive income for
the period
Net profit for the
period - - - 18.1 - 18.1
Other comprehensive
income:
Cash flow hedge - -0.1 - - - -0.1
Income tax relating to
other comprehensive
income - 0.0 - - - 0.0
Translation difference - - 2.7 - - 2.7
-------------------------------------------------------------------------------
Comprehensive income for
the period total - -0.1 2.7 18.1 - 20.8
-------------------------------------------------------------------------------
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 payments - - - 0.1 - 0.1
Distributed treasury
shares - - - -0.1 - -0.1
Increase in treasury
shares - - - -0.0 - -0.0
-------------------------------------------------------------------------------
Transactions with owners
total - 73.7 - -3.9 -39.6 30.2
-------------------------------------------------------------------------------
Equity
30 Jun 2015 36.2 93.0 -0.4 35.8 - 164.6
-------------------------------------------------------------------------------
Condensed Consolidated Statement of Cash
Flows (IFRS),
2015 2014 2014
EUR million (1)) 1-6 1-6 1- 12
---------------------------------------------------------------------------
Operating profit 26.7 -64.1 -42.4
Depreciation and amortisation 11.2 13.2 26.2
Impairment - 71.1 71.1
Change in working capital 10.0 -24.0 -42.5
Cash flow from financial
items and taxes -5.8 -6.4 -13.5
Other adjustments -3.3 1.4 -9.7
---------------------------------------------------------------------------
Net cash flow from operating
activities 38.9 -8.7 -10.8
Net cash flow from investing
activities -8.0 -17.9 40.3
Net cash flow from financing
activities -31.0 -1.7 -80.3
Net change in cash and cash
equivalents -0.1 -28.3 -50.8
Cash and cash equivalents
at the beginning of the
period 91.5 137.3 137.3
Foreign exchange rate
differences 0.1 -0.5 5.0
Net change in cash and cash
equivalents -0.1 -28.3 -50.8
---------------------------------------------------------------------------
Cash and cash equivalents
at the end of the period 91.5 108.5 91.5
---------------------------------------------------------------------------
(1) )Includes the net cash flow from the disposed Russian businesses
until 30 November 2014.
Notes to financial statements
Principal accounting policies as of 1 January 2015 (IFRS)
These financial statements release has been prepared in accordance with IFRS
standards (IAS 34). The accounting policies and calculation methods applied in
the interim report are the same as those in the 31 December 2014 annual
financial statements, excluding the standards and interpretations applied as of
1 January 2015 as presented below. However, the interim report does not include
all of the information and notes presented in the annual financial statements.
Consequently, the interim report should be read together with the company's
financial statements for 2014.
Results of the Russian businesses, sold in December 2014, are reported as
discontinued operations separately from results from continuing operations in
January - June 2015. The comparative financial information for 2014 has been
revised to reflect the results for continuing operations. The consolidated
statement of financial position for comparative period 2014 includes the assets
and liabilities of discontinued operations. The consolidated statement of cash
flows for comparative period 2014 includes net cash flow of discontinued
operations.
The figures in the interim report have been rounded independently.
New standards or amendments to the existing ones that have been applied as of 1
January 2015:
* Amendment to IAS 19 Defined benefit plans
* Annual improvements in IFRS standards 2010-2012 and 2011-2013
The new standards have not had a material impact on the Group's financial
position.
The figures in this interim review are unaudited.
Earnings per share
2015 2014 2015 2014 2014
EUR million 4-6 4-6 1-6 1-6 1- 12
-------------------------------------------------------------------------------
Profit attributable to equity owners
of the parent from continuing
operations 10.9 9.3 18.3 16.9 46.5
Accumulated interest on hybrid bond
net of tax 0.2 -0.5 - -0.8 -1.9
-------------------------------------------------------------------------------
Adjusted profit for the period from
continuing operations 11.1 8.8 18.3 16.1 44.6
2015 2014 2015 2014 2014
EUR million 4-6 4-6 1-6 1-6 1- 12
-------------------------------------------------------------------------------
Profit incl. discontinued operations
attributable to equity owners of the
parent 10.8 -82.1 18.1 -79.5 -212.3
Accumulated interest on hybrid bond
net of tax 0.2 -0.5 - -0.8 -1.9
-------------------------------------------------------------------------------
Adjusted profit for the period
including discontinued operations 11.1 -82.6 18.1 -80.3 -214.2
Average number of outstanding shares
(1000 shares)
Basic 169,984 151,137 169,984 151,137 151,130
Diluted 169,984 151,137 169,984 151,137 151,130
Earnings per share (EUR)
Basic
Continuing operations 0.06 0.06 0.11 0.11 0.29
Discontinuing operations -0.00 -0.60 -0.00 -0.64 -1.71
Total 0.06 -0.55 0.11 -0.53 -1.42
Diluted
Continuing operations 0.06 0.06 0.11 0.11 0.29
Discontinuing operations -0.00 -0.60 -0.00 -0.64 -1.71
Total 0.06 -0.55 0.11 -0.53 -1.42
Tangible and intangible assets
Changes in Property, Plant and Equipment, 2015 2014 2014
EUR million 1-6 1-6 1- 12
------------------------------------------------------------------------
Carrying amount at the beginning of the period 75.2 93.2 93.2
Increases through acquisitions of subsidiary shares - - 0.0
Increases 4.6 12.8 27.0
Decreases -0.2 -0.3 -13.2
Divestment of business - - -11.3
Reclassifications - 0.8 0.2
Depreciation, Continuing operations -7.4 -7.4 -15.0
Depreciation, Discontinued operations - -0.8 -1.3
Foreign exchange rate differences 1.0 -2.3 -4.4
------------------------------------------------------------------------
Carrying amount at the end of the period 73.2 96.1 75.2
------------------------------------------------------------------------
Changes in Intangible assets, 2015 2014 2014
EUR million 4-6 4-6 1- 12
------------------------------------------------------------------------
Carrying amount at the beginning of the period 312.3 451.0 451.0
Increases through acquisitions of subsidiary shares - - 0.2
Increases 3.5 5.1 6.8
Decreases - -0.2 -0.2
Divestment of business - - -24.5
Reclassifications - -0.8 -0.2
Amortisation, Continuing operations -3.8 -3.6 -7.2
Impairments and amortisation, Discontinued operations - -72.6 -73.8
Foreign exchange rate differences 5.9 -15.5 -39.8
------------------------------------------------------------------------
Carrying amount at the end of the period 317.8 363.5 312.3
------------------------------------------------------------------------
Derivatives
30 Jun 2015 Positive fair Negative fair Nominal values of
EUR million value value contracts
-------------------------------------------------------------------------------
Derivatives recognised
as cash flow hedges
Interest rate swaps - 1.8 56.4
Derivatives measured at
fair value through profit and
loss
Foreign currency forward and
swap contracts - 1.4 133.3
-------------------------------------------------------------------------------
30 Jun 2014 Positive fair Negative fair Nominal values of
EUR million value value contracts
-------------------------------------------------------------------------------
Derivatives recognised
as cash flow hedges
Interest rate swaps - 1.3 43.6
Derivatives measured at
fair value through profit and
loss
Foreign currency forward and
swap contracts 1.2 - 99.1
-------------------------------------------------------------------------------
Derivatives measured at fair value through profit and loss are mainly related to
hedging of group's internal transactions. Fair values of the derivatives have
been booked to balance sheet in gross amount as the derivatives contracts are
related to credit events and cannot be netted in financial statements. The group
has not given nor received collateral to/from derivatives counterparties.
Fair value hierarchy
EUR million
30 Jun 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 - 1.8 - 1.8
Derivatives measured at fair value through
profit and loss - 1.5 - 1.5
Contingent consideration - - 15.5 15.5
-------------------------------------------------------------------------------
EUR million
30 Jun 2014 Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------
Assets
Derivatives measured at fair value through
profit and loss - 1.3 - 1.3
Liabilities
Derivatives designated as hedges - 1.3 - 1.3
Derivatives measured at fair value through
profit and loss - 0.1 - 0.1
Contingent consideration - - 14.6 14.6
-------------------------------------------------------------------------------
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 0.5
Translation differences 0.3
---------------------------------------
Book value 30 Jun 2015 15.5
---------------------------------------
Financial liabilities recognised at fair value through profit and loss (level
3) include estimated discounted fair value of a contingent consideration related
to the Medstop acquisition. Payment of the contingent consideration will be
based on management estimate of 2015 EBITDA of Oriola-KD's combined Swedish
retail businesses and will be paid in first quarter of 2016. The fair value of
the contingent consideration has been calculated using discounted cash flow
method. The discount rate used in the valuation is determined using the weighted
average cost of capital of the Group.
Commitments and Contingent Liabilities
EUR million 30 Jun 2015 30 Jun 2014 31 Dec 2015
-------------------------------------------------------------------------------
Commitments for own liabilities
Guarantees on behalf of own companies 8.3 17.2 8.1
Guarantees on behalf of other companies 14.7 - 22.0
Mortgages on company assets 2.3 2.3 2.2
Other guarantees and liabilities 1.0 0.9 1.1
Accumulated interest on hybrid bond - 1.0 2.4
-------------------------------------------------------------------------------
Total 26.2 21.4 35.8
-------------------------------------------------------------------------------
Leasing liabilities (operating
liabilities) 0.8 1.0 0.8
Rent liabilities 40.5 70.4 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 17.6 million counter-
guarantee. Majority of the guarantees on behalf of other companies will expire
in 2015.
The most significant guarantees are bank guarantees against trade payables in
wholesale company in Sweden. In addition, Oriola-KD Corporation has granted
parent company guarantees of EUR 2.8 (25.2) million against subsidiaries' trade
payables and EUR 76.2 (147.9) million against Oriola-KD Holding Sverige AB's
external loan.
Provisions
On 30 June 2015 Oriola-KD had provisions totalling EUR 0.3 (0.7) million. Group
items include a provision of EUR 0.3 (-) million related to the sale of Russian
businesses included within profit for the period from discontinued operations.
The restructuring provision for the comparative period related to the
integration of the Medstop acquisition within Pharmaceutical Trade Sweden.
Related parties
Related parties in the Oriola-KD Group are deemed to comprise the members of the
Board of Directors and the President and CEO of Oriola-KD Corporation, the other
members of the Group Management Team of the Oriola-KD Group, the immediate
family of the aforementioned persons, the companies controlled by the
aforementioned persons, and the Oriola Pension Fund. The Group has no
significant business transactions with related parties, except for pension
expenses arising from defined benefit plans with the Oriola Pension Fund.
Segment information( 1)
2015 2014 2014
Net Sales, EUR million 1-6 1-6 1- 12
------------------------------------------------
Pharmaceutical Trade
Sweden 616.5 597.0 1,176.4
Pharmaceutical Trade
Finland and Baltics 211.9 207.8 435.9
Net sales to other
segments -0.0 -0.0 -0.0
------------------------------------------------
Total 828.4 804.8 1,612.3
2015 2014 2014
Operating Profit, EUR
million 1-6 1-6 1- 12
------------------------------------------------
Pharmaceutical Trade
Sweden 21.5 20.4 50.5
Pharmaceutical Trade
Finland and Baltics 8.8 9.2 19.2
Group Administration and
Others -3.5 -2.9 -4.6
------------------------------------------------
Total 26.9 26.7 65.0
Operating Profit excl.
Non-recurring items, 2015 2014 2014
EUR million 1-6 1-6 1- 12
------------------------------------------------
Pharmaceutical Trade
Sweden 21.5 21.3 44.0
Pharmaceutical Trade
Finland and Baltics 9.7 9.2 19.6
Group Administration and
Others -3.1 -2.9 -4.5
------------------------------------------------
Operating Profit excl.
non-recurring items 28.1 27.6 59.1
------------------------------------------------
Non-recurring items -1.2 -1.0 5.9
------------------------------------------------
Total 26.9 26.7 65.0
2015 2015 2014 2014 2014 2014
Quarterly Net Sales, EUR
million 4-6 1-3 10-12 7-9 4-6 1-3
-----------------------------------------------------------------------------
Pharmaceutical Trade
Sweden 309.9 306.6 298.1 281.3 298.5 298.5
Pharmaceutical Trade
Finland and Baltics 107.2 104.7 119.6 108.5 107.0 100.8
Net sales to other
segments -0.0 -0.0 0.0 -0.0 -0.0 -0.0
-----------------------------------------------------------------------------
Total 417.1 411.3 417.7 389.8 405.5 399.3
2015 2015 2014 2014 2014 2014
Quarterly Operating
Profit, EUR million 4-6 1-3 10-12 7-9 4-6 1-3
-----------------------------------------------------------------------------
Pharmaceutical Trade
Sweden 11.5 10.0 17.7 12.3 11.0 9.4
Pharmaceutical Trade
Finland and Baltics 5.1 3.7 4.4 5.5 4.4 4.8
Group Administration and
Others -1.4 -2.0 -0.1 -1.6 -1.5 -1.3
-----------------------------------------------------------------------------
Total 15.2 11.7 22.1 16.3 13.8 12.8
Quarterly Operating
Profit, 2015 2015 2014 2014 2014 2014
excl. non-recurring items,
EUR million 4-6 1-3 10-12 7-9 4-6 1-3
-----------------------------------------------------------------------------
Pharmaceutical Trade
Sweden 11.5 10.0 10.2 12.4 11.3 10.0
Pharmaceutical Trade
Finland and Baltics 5.0 4.6 4.9 5.5 4.4 4.8
Group Administration and
Others -1.6 -1.5 -0.0 -1.6 -1.5 -1.3
-----------------------------------------------------------------------------
Operating Profit excl.
non-recurring items 14.9 13.1 15.1 16.3 14.2 13.5
-----------------------------------------------------------------------------
Non-recurring items 0.2 -1.4 6.9 -0.1 -0.3 -0.6
-----------------------------------------------------------------------------
Total 15.2 11.7 22.1 16.3 13.8 12.8
2015 2014 2014
Net Sales by Market, EUR
million 1-6 1-6 1-12
------------------------------------------------
Sweden 585.4 568.1 1,114.8
Finland 186.6 185.1 388.3
Baltic countries 22.4 20.7 43.5
Other countries 33.9 30.9 65.7
------------------------------------------------
Total 828.4 804.8 1,612.3
2015 2015 2014 2014 2014 2014
Quarterly Net Sales by
Market, EUR million 4-6 1-3 10-12 7-9 4-6 1-3
-----------------------------------------------------------------------------
Sweden 294.4 291.0 280.9 265.8 283.7 284.4
Finland 95.5 91.1 106.1 97.1 95.9 89.2
Baltic countries 10.7 11.7 11.8 11.1 9.8 10.9
Other countries 16.4 17.5 19.0 15.9 16.1 14.8
-----------------------------------------------------------------------------
Total 417.1 411.3 417.7 389.8 405.5 399.3
(1)) The first half 2014 figures have been revised as a result of the
sale of the Russian business in December 2014 to reflect the
classification of the Russian business as a discontinued operation.
Espoo, 17 July 2015
Board of Directors of Oriola-KD Corporation
Further information:
Eero Hautaniemi
President and CEO
tel. +358 (0)10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Distribution:
NASDAQ OMX Helsinki Ltd
Key media
Released by:
Oriola-KD Corporation
Corporate Communications
Orionintie 5
02200 Espoo
www.oriola-kd.com
[HUG#1939302]