Oriola-KD Corporation's interim report for 1 January - 30 September
2009
(Thomson Reuters ONE) - Oriola-KD Corporation Stock Exchange Release 29 October 2009 at 8.30a.m.This review presents the financial information for the Oriola-KDGroup (hereinafter Oriola-KD) for the period January-September 2009.As of 1 January 2009, the company has applied the revised IAS 1standard and the IFRS 8 standard. This interim report was drawn up inaccordance with the IAS 34 standard and Oriola-KD's new segmentation. The retail and wholesale businesses OOO Vitim & Co and OOO Moron,acquired in Russia, have been consolidated into Oriola-KD's accountssince 1 April 2008. The figures are unaudited.Key figures for 1 January - 30 September 2009 * Net sales increased 8 per cent to EUR 1226.6 million (Jan-Sep 2008: EUR 1131.7 million). * Operating profit increased 87 per cent to EUR 38.5 million (Jan-Sep 2008: EUR 20.6 million). * Net profit increased 90 per cent to EUR 28.7 million (Jan-Sep 2008: EUR 15.1 million). * Earnings per share were EUR 0.20 (Jan-Sep 2008: EUR 0.11). * Net cash flow from operations was EUR 6.4 million (Jan-Sep 2008: EUR -22.6 million) * Return on capital employed was 15.5 per cent (Jan-Sep 2008: 13.4 per cent) * Oriola-KD's net sales for 2009 is forecast to be higher than in 2008, while its operating profit is forecast to be substantially higher.Key figures for 1 July - 30 September 2009 * Net sales increased 3 per cent to EUR 410.8 million (Q3/2008: EUR 398.4 million). * Operating profit increased 60 per cent to EUR 12.6 million (Q3/2008: EUR 7.9 million). * Net profit increased 83 per cent to EUR 10.0 million (Q3/2008: EUR 5.4 million). * Earnings per share were EUR 0.07 (Q3/2008: EUR 0.04).President and CEO Eero Hautaniemi: "Oriola-KD's business developedpositively in January-September 2009. Net sales were up by 8 per centand operating profit increased by 87 per cent on the previous year.In the final quarter of 2009, we will focus especially on developingthe Russian business, launching pharmacy operations in Sweden andstreamlining the Group structure."Financial performanceOriola-KD's net sales in January-September 2009 was EUR 1226.6million (EUR 1131.7 million) and third quarter net sales were EUR410.8 million (EUR 398.4 million).Operating profit for January-September 2009 came to EUR 38.5 million(EUR 20.6 million) and profit after financial items came to EUR 36.7million (EUR 20.2 million). Third-quarter operating profit came toEUR 12.6 million (EUR 7.9 million) and profit after financial itemscame to EUR 12.6 million (EUR 7.3 million).Oriola-KD invested in developing its business in Russia, preparingfor the change in Sweden's pharmacy market and improving itsoperating efficiency. The costs incurred in the preparations made forthe change in the pharmacy market in Sweden came to EUR 8.0 millionin January-September, of which EUR 2.0 million was recorded in thethird quarter.Oriola-KD's financing expenses in January-September 2009 were EUR 1.8million. A financing expense of EUR 0.4 million was recorded for thecorresponding period in 2008. The increase was mainly due to theexecution of the Russian acquisition in April 2008.Taxes for January-September 2009 came to EUR 8.0 million (EUR 5.1million). Taxes corresponding to the result for the period areentered under this figure.Net profit in January-September 2009 was EUR 28.7 million (EUR 15.1million). Third-quarter net profit was EUR 10.0 million (EUR 5.4million).Oriola-KD's earnings per share in January-September 2009 were EUR0.20 (EUR 0.11), and EUR 0.07 (EUR 0.04) in the third quarter.Return on capital employed in January-September 2009 was 15.5 percent (13.4 per cent) and return on equity 18.9 per cent (10.0 percent).Balance sheet, financing and cash flowOriola-KD's balance sheet total on 30 September 2009 stood at EUR855.5 million (EUR 796.7 million). Cash assets at the end ofSeptember 2009 were at EUR 52.3 million (EUR 20.4 million), andequity was EUR 219.7 million (EUR 196.9 million). Oriola-KD's equityratio was 26.4 per cent (25.3 per cent). The weakening of the Swedishkrona (SEK) and the Russian ruble (RUB) decreased Oriola-KD's equityin comparison on the corresponding period in 2008.Interest-bearing net debt at the end of September 2009 was EUR 97.1million (EUR 39.0 million) and the gearing ratio was 44.2 per cent(19.8 per cent). Interest-bearing debt, which at the end of Septemberwas EUR 149.4 million (EUR 59.4 million), comprised some EUR 77million from the commercial paper programme, some EUR 22 million frompharmacy advance payments in Finland and the debt of approximatelyEUR 49 million from the anticipated final price for the remaining 25per cent holding in the Russian companies. Oriola-KD has a EUR 150million commercial paper programme. Oriola-KD's bank creditfacilities of approximately EUR 79 million stood unused at the end ofthe review period.Net cash flow from operations in January-September 2009 was EUR 6.4million (EUR -22.6 million), of which changes in working capitalaccounted for EUR -26.2 million (EUR -43.3 million). Working capitalincreased largely because of the growth of the Russian companies andthe seasonal increase in working capital in Finland associated withthe first quarter. Net cash flow from investments was EUR -29.6million (EUR -76.0 million), including the additional sum of EUR 21.7million paid for the 75 per cent holding in the Russian companies.During the January-September 2009 period, cash flow after investmentswas EUR -23.2 million (EUR -98.5 million). Cash flow from financingincludes a dividend of EUR 11.3 million paid in May and the directedissue of EUR 20.6 million carried out in June.InvestmentsInvestments in January-September 2009 came to EUR 31.5 million (EUR112.3 million), mostly associated with the increase of theanticipated final price of the Russian companies, the acquisition ofthe minority holding in Kronans Droghandel AB in Sweden and operatinginvestments in maintenance and PPE.StaffOn 30 September 2009, Oriola-KD had a payroll of 4254 (4696 )employees, 15 per cent (14 per cent) of whom worked in Finland, 9 percent (8 per cent) in Sweden, 71 per cent (73 per cent) in Russia and5 per cent (5 per cent) in the Baltic countries and Denmark combined.Operating segmentsIn accordance with its organisational structure and internalreporting, Oriola-KD's business segments are Pharmaceutical TradeFinland, Pharmaceutical Trade Sweden, Pharmaceutical Trade Russia,Pharmaceutical Trade Baltic Countries, Healthcare Trade and DentalTrade.Changes in Oriola Oy's corporate structureIn the third quarter, Oriola-KD started preparations for the partialdemerger of Oriola Oy's Nordic business operations. In the demerger,Pharmaceutical Trade will continue under Oriola Oy and the HealthcareTrade business will be transferred to a new company named Oriola-KDHealthcare Oy. The demerger will take place at the beginning of2010, following which Oriola-KD Corporation will have two fully ownedFinnish subsidiaries that are engaged in business: Oriola Oy andOriola-KD Healthcare Oy. The demerger will simplify the corporatestructure and increase the efficiency of managing businessoperations. It is a follow-on to the structural changes carried outearlier in Sweden. The change will have no impact on Oriola-KD'soperating segments.Pharmaceutical Trade FinlandPharmaceutical Trade Finland's net sales in January-September 2009were EUR 378.9 million (EUR 389.4 million) and its operating profitwas EUR 13.7 million (EUR 11.9 million). Third-quarter net sales cameto EUR 120.4 million (EUR 129.1 million) and operating profit to EUR4.9 million (EUR 4.8 million).The Finnish pharmaceutical market expanded by 0.0 per cent (6.7 percent) in January-September 2009. The introduction of the referenceprice system in Finland at the beginning of April 2009 is impedingthe growth of net sales of the Pharmaceutical Trade Finland businesssegment in 2009. Oriola-KD's market share in the Finnish wholesalemarket was 46.9 percent (47.8 per cent) in January-September 2009(source: IMS Health). No significant changes took place indistribution agreements in Finland during the review period.At the end of September 2009, 460 (433) people were employed byPharmaceutical Trade Finland.Pharmaceutical Trade SwedenPharmaceutical Trade Sweden's net sales in January-September 2009were EUR 388.1 million (EUR 410.0 million) and its operating profitwas EUR -2.8 million (EUR 4.7 million). Third-quarter net sales cameto EUR 131.8 million (EUR 129.2 million) and operating profit to EUR-0.4 million (EUR 1.4 million).Net sales were reduced by a decline in Oriola-KD's market share andthe weakening of the Swedish krona (SEK). The costs incurred in thepreparations made for the change of the pharmacy market in Swedencame to EUR 8.0 million in January-September, of which EUR 2.0million was recorded in the third quarter. Of the total projectcosts, EUR 0.6 million has been recorded for the Group. Excludingthese project costs, Pharmaceutical Trade Sweden's operating profitin January-September 2009 was EUR 4.6 million.The pharmaceutical market grew 2.6 per cent (4.9 per cent) in Swedenin January-September 2009. Oriola-KD's market share in the Swedishwholesale market was 41.4 per cent (44.0 per cent) inJanuary-September 2009 (source: IMS Health). The pharmaceuticalmanufacturers Schering-Plough and Organon discontinued aspharmaceutical principals for Oriola-KD in Sweden during the periodunder review.On 29 April 2009, the Swedish Parliament decided that the country'spharmacy monopoly would be dismantled as of 1 July 2009. Thederegulation of the pharmacy market makes it possible for otheroperators than Apoteket AB to engage in the pharmacy business inSweden. With the deregulation, 466 pharmacies will be sold to largeand medium-sized companies, while 150 pharmacies remaining in stateownership will be later sold to small entrepreneurs. Apoteket AB willretain ownership of 330 pharmacies.On 15 June 2009, Oriola-KD and the Swedish KF (Kooperativa Förbundet)announced that they will be joining forces on the deregulatedpharmacy market. This will include preparation for the sales processof the pharmacy clusters owned by Apoteket AB and the founding of newpharmacies mostly in connection with the Coop hypermarkets andsupermarkets owned by KF. The purpose is to set up a joint venturein which Oriola-KD would hold a simple majority and be responsiblefor the development and management of the pharmacy chain. The jointventure would engage in the pharmacy business under the KronansDroghandel brand.Pharmaceutical Trade Sweden had 277 (241) employees at the end ofSeptember 2009.Pharmaceutical Trade RussiaPharmaceutical Trade Russia's net sales in January-September 2009were EUR 332.5 million (pro forma EUR 287.6 million) and itsoperating profit was EUR 22.8 million (pro forma EUR -1.6 million).Third-quarter net sales came to EUR 118.6 million (EUR 97.9 million)and operating profit to EUR 6.6 million (EUR 0.3 million). The retailand wholesale businesses OOO Vitim & Co and OOO Moron, acquired inRussia, have been consolidated into Oriola-KD's accounts since 1April 2008. The investments in expansion, efficiency improvements anddevelopment of the business in Russia had a positive impact on theJanuary-September 2009 operating profit.The Russian pharmaceutical market expanded by some 20 per cent andOriola-KD's net sales by more than 40 per cent in Russian rubles(RUB) in January-September 2009 compared with the correspondingperiod in 2008. Oriola-KD maintained 170 (140) pharmacies in theMoscow region at the end of September 2009. Pharmaceutical wholesaleoperations were launched in the third quarter in Rostov-on-Don insouthern Russia.In April 2009, Henry Fogels was appointed managing director of thepharmaceutical retail company (OOO Vitim & Co), and Vladimir Kniazevwas appointed managing director of the pharmaceutical wholesalecompany (OOO Moron). Igor and Oleg Yankov, the founders and currentminority shareholders of the two companies, will continue as membersof the Boards of Vitim and Moron.Pharmaceutical Trade Russia had 3011 (3459) employees at the end ofSeptember 2009.Pharmaceutical Trade Baltic CountriesPharmaceutical Trade Baltic Countries' net sales in January-September2009 were EUR 25.4 million (EUR 28.1 million) and the operatingprofit was EUR 0.6 million (EUR 0.8 million). Third-quarter net salescame to EUR 8.0 million (EUR 8.4 million) and operating profit to EUR0.2 million (EUR 0.2 million). The Baltic market was challenging,which had a negative effect on net sales and operating profit.Pharmaceutical Trade Baltic Countries had 140 (164) employees at theend of September 2009.Healthcare TradeHealthcare Trade net sales in January-September 2009 were EUR 101.7million (EUR 112.6 million) and operating profit was EUR 6.6 million(EUR 6.2 million). Third-quarter net sales came to EUR 31.9 million(EUR 33.8 million) and operating profit to EUR 1.9 million (EUR 1.8million). The sale of the Finnish ConvaTec wound and stoma carebusiness to the manufacturer of the products in the second quarterimproved the January-September operating profit. Healthcare Trade'sbusiness in Sweden has developed favourably in 2009.The Healthcare Trade business segment had a payroll of 367 (399)employees on 30 September 2009.Dental TradeDental Trade operating profit in January-September 2009 came to EUR2.6 million (EUR 1.3 million) and in the third quarter to EUR 0.8million (EUR 0.3 million). The operating profit improved mainly as aresult of the positive trend in the Finnish, Swedish and Danishbusinesses.The dental trade businesses of Oriola-KD Corporation and Lifco ABwere combined in 2007. Oriola-KD's holding in the Dental Tradebusiness is 30 per cent, while that of Lifco is 70 per cent.Related partiesRelated parties in the Oriola-KD Group are deemed to comprise theparent company Oriola-KD Corporation, the subsidiaries and associatedcompanies, the members of the Board and the President and CEO ofOriola-KD Corporation, other members of the Group Management Team ofthe Oriola-KD Group, the immediate family of the aforementionedpersons, the companies controlled by the aforementioned persons, andthe Oriola Pension Foundation. The Group has no significant businesstransactions with related parties, except for pension expensesarising from defined benefit plans with the Oriola PensionFoundation. The notes to the financial statements of Oriola-KDCorporation provide additional information on intra-Group liabilitiesand sureties given on behalf of Group companies. Oriola-KDCorporation has given no significant sureties on behalf of Groupcompanies.Oriola-KD Corporation sharesTrading volume of the Oriola-KD Corporation's Class A and B shares inJanuary-September 2009:Trading volume Jan-Sep 2009 Jan-Sep 2008 Class A Class B Class A Class BTrading volume, million 6.1 83.6 3.2 28.7Trading volume, EUR million 15.0 214.4 8.5 79.1Highest, EUR 4.15 4.20 3.03 3.10Lowest, EUR 1.29 1.30 2.00 1.94Closing quotation, end of period, EUR 4.10 4.13 2.00 2.00In the review period, the traded volume of Oriola-KD Corporationshares, excluding treasury shares, corresponded to 61.7 per cent(22.5 per cent) of the total number of shares. The traded volume ofclass A shares amounted to 12.6 per cent (6.3 per cent) of theaverage stock, and that of class B shares, excluding treasury shares,86.1 per cent (31.4 per cent).Oriola-KD Corporation's market capitalisation on 30 September 2009was EUR 623.3 million (EUR 283.8 million).On 19 March 2009, pursuant to the authorisation granted to it by theAnnual General Meeting of 13 March 2007, the Board of Directors ofOriola-KD Corporation resolved that a directed bonus issue be made,in which a total of 150,480 class B shares held by the company wereassigned to the company's President and CEO and to certain othermembers of Oriola-KD Corporation's Group Management Team and of itsextended Group Management Team, as part of the Group's share-basedincentive scheme for senior management. These shares representapproximately 0.11 per cent of the total number of company shares andapproximately 0.01 per cent of the total number of votes.Following the share issues, the company has 343,472 treasury shares,all of which are class B shares. These account for 0.23 per cent ofthe company's shares and 0.03 per cent of the votes.On 3 June 2009, Oriola-KD Corporation's Board of Directors decided ona directed issue of shares under an authorisation granted by theAnnual General Meeting of 16 April 2009, issuing 9,350,000 new classB shares to institutional investors. The new class B shares in thedirected issue have been entered in the Trade Register and they werelisted for public trading on NASDAQ OMX Helsinki Ltd on 8 June 2009with the old class B shares. Following the share issue the companyhad a total of 151,257,828 shares, of which class A shares accountfor 48,392,203 and class B shares for 102,865,625.On 26 June 2009, Varma Mutual Pension Insurance Company executedshare transactions as a result of which the votes conferred by itsOriola-KD Corporation shares exceeded one twentieth (1/20) of thetotal votes as referred to in Chapter 2, section 9, of the SecuritiesMarkets Act. The direct share holding of Varma Mutual PensionInsurance Company by share class on 26 June 2009 was 3.56 per cent ofOriola-KD Corporation shares and 5.21 per cent of the votes conferredby the shares.At the end of September 2009, the company had a total of 151,257,828(141,907,828) shares, of which 47,967,359 (48,692,203) were class Ashares and 103,290,469 were class B shares (93,215,625). Pursuant toarticle 3 of the Articles of Association, a shareholder can requestthat class A shares be converted to class B shares. DuringJanuary-September 2009, a total of 724,844 (2,553,202) Class A shareshave been converted into Class B sharesDecisions of the Annual General MeetingThe Annual General Meeting of Oriola-KD Corporation, held on 16 April2009, confirmed the 2008 financial statements and discharged theBoard members and the President and CEO from liability for thefinancial year ending 31 December 2008.The Annual General Meeting resolved that the sum of EUR 0.08 pershare be paid as dividend on the basis of the balance sheet adoptedfor the financial year ending 31 December 2008. The dividend was paidto those who, on the dividend distribution record date of 21 April2009, were entered as shareholders of the company in the company'sshareholder register kept by Euroclear Finland Ltd. The dividendpayment date was 15 May 2009.The Annual General Meeting confirmed that the Board would continue tocomprise seven members. Harry Brade, Pauli Kulvik, Outi Raitasuo,Antti Remes, Olli Riikkala, Jaakko Uotila and Mika Vidgrén werere-elected to the Board. Olli Riikkala continued as Chairman of theBoard. The Annual General Meeting confirmed that the Chairman of theBoard will receive EUR 44,000 in remuneration for his term of office,the Vice Chairman EUR 27,500 and the other members of the Board EUR22,000 each. The Board's remuneration will be paid in cash. TheChairman of the Board will receive an attendance fee of EUR 800 foreach meeting, and the other Board members EUR 400 per meeting.Meeting fees will also be paid in the same manner to members of anycommittees set up by the Board of Directors or the company. TheChairman of the Board will also have a company-paid phone. Travelexpenses will be paid in accordance with the travel policy of thecompany.The Annual General Meeting re-elected PricewaterhouseCoopers Oy asauditor for the company, with Heikki Lassila APA as principalauditor. The auditor will be remunerated according to invoice.The Annual General Meeting resolved that articles 3, 4, 7, 9, 10 and12 of the Articles of Association be amended. The main content of theamendments is as follows: The references to minimum and maximumauthorised share capital were removed from article 3; the definitionin article 4 concerning the book-entry system was simplified and thereferences concerning the record date procedure were removed; anamendment was made to the wording of article 7 on the right to signon behalf of the company, ensuring that it is consistent with theterminology used in the Limited Liability Companies Act; thereferences to deputy auditor were removed from article 9. Followingthis amendment the company has just one auditor, which must be a firmof authorised public accountants; the phrases in article 10concerning the AGM were amended to ensure consistency with theterminology used in the Limited Liability Companies Act and with thenewly amended article 9; the definition in article 12 concerning thenotice of the annual general meeting was amended such that the noticemust be given at least 21 days prior to the meeting.The Annual General Meeting authorised the Board to decide on thepurchase of Oriola-KD Corporation class B shares. Pursuant to theauthorisation, the Board is authorised to decide on the purchase ofno more than 14,000,000 of the company's own class B shares,corresponding to approximately 9.9 per cent of the total number ofcompany shares. The authorisation can only be used in such a way thatthe company and its subsidiaries together would hold no more than onetenth (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 bepurchased in a manner other than in proportion to the existingholdings of shareholders using assets belonging to the company'snon-restricted equity at the class B share's market price in publictrading arranged by the NASDAQ OMX Helsinki Ltd exchange at the timeof purchase. The shares will be paid for in accordance with the rulesand regulations of NASDAQ OMX Helsinki Ltd and Euroclear Finland Ltd.The Board will decide how the shares are purchased. Derivatives mayalso be used in the purchase. The purchase of the shares will reducethe company's distributable non-restricted equity. The shares can bepurchased for the purpose of developing the company's capitalstructure, implementing any corporate transactions or other businessarrangements, financing investments, inclusion in the company'sincentive schemes or to be otherwise assigned, held by the company orannulled. The Board will decide on all other matters related to thepurchase of class B shares. The purchase authorisation remains inforce no longer than eighteen (18) months following the decision ofthe General Meeting. The authorisation repeals the Annual GeneralMeeting's decision of 17 March 2008 authorising the Board to decideon the purchase of Oriola-KD Corporation class B shares.The Annual General Meeting authorised the Board to decide on a shareissue of the company's class B shares against payment in one or morebatches. The authorisation includes the right to issue new class Bshares or to assign class B shares held by the company. Theauthorisation covers no more than 28,000,000 of the company's class Bshares in total, which corresponds to approximately 19.8 per cent ofthe total number of company shares. The authorisation granted to theBoard includes the right to deviate, by means of a directed issue,from the pre-emptive subscription right of shareholders, providedthat there are financial grounds considered important from thecompany's perspective for such a deviation. Subject to therestrictions presented above, the authorisation can be used forpurposes such as payment of consideration in corporate transactionsor other business arrangements and financing and carrying outinvestments, expansion of the company's ownership base, developmentof the capital structure, or as part of incentive and commitmentprogrammes for personnel. On the basis of the authorisation, class Bshares held by the company can also be sold in public tradingarranged by the NASDAQ OMX Helsinki Ltd exchange. The authorisationincludes the right of the Board to determine the terms of the shareissue as specified in the Limited Liability Companies Act, includingthe right to decide whether the subscription price will be partiallyor fully entered in the invested non-restricted equity fund or in theshare capital. The authorisation will remain in force for eighteen(18) months following the decision of the General Meeting. Theauthorisation cancels the share issue authorisations previouslyreceived by the Board, with the exception of the authorisationgranted to the Board by the Annual General Meeting of 13 March 2007,under which the Board may decide on arranging a directed bonus issueof no more than 650,000 class B shares for the purpose ofimplementing the share-based incentive scheme for management.Decisions of the Board's organisational meetingAt the organisational meeting held immediately after the AGM, theBoard resolved to elect Antti Remes to continue serving as ViceChairman of the Board. The composition of the Audit and CompensationCommittees was confirmed as follows.Audit Committee:Antti Remes, ChairmanHarry BradeOuti RaitasuoMika VidgrénCompensation Committee:Olli Riikkala, ChairmanPauli KulvikJaakko UotilaAll members of the Board are independent of the company and its majorshareholders.RisksThe Board of Directors of Oriola-KD has approved the company's riskmanagement policy in which the risk management operating model,principles, responsibilities and reporting are specified. The Group'srisk management seeks to identify, measure and manage risks that maythreaten the operations of the company and the achievement of goalsset for them. The roles and responsibilities relating to riskmanagement have been determined in the Group.Oriola-KD's risks are classified as strategic, operational andfinancial. 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 andoperational risks in its business: * changes in bargaining position vis-à-vis suppliers and customers; * impact on business concepts as a result of changes in the structure of the Swedish market; * maintenance of cost-effectiveness and flexibility in costs; * provision of competitive products and services in expanding and consolidating markets; * expansion-related risks in new markets and businesses; and * commitment of key employees.The major financial risks for Oriola-KD involve currency exchangerates, interest rates, liquidity and credit. The anticipatedUSD-denominated purchase price of the remaining 25 per cent holdingin the Russian business acquisition has been hedged in accordancewith the Group's treasury policy.Oriola-KD's exposure to risks relating to new markets and businessesas well as financial risks has increased as a result of the company'sexpansion into the Russian pharmaceutical retail and wholesalemarket. Currency risks are the most significant of Oriola-KD'sfinancial risks in Russia, as any changes in the value of the ruble(RUB) will have an impact on Oriola-KD's financial performance andequity. Oriola-KD has used some EUR 90 million to acquire a 75 percent holding in the Russian companies and anticipates that finalprice for the remaining 25 per cent will be roughly EUR 49 million.In addition, by the end of September it had provided the companieswith long-term financing amounting to approximately EUR 61 million.The Russian companies have no loans external to the Group.Goodwill and intangible rights are subject to annual impairmenttesting, which may have a negative effect on Oriola-KD's financialperformance.Near-term risks and uncertainty factorsFactors significantly affecting Oriola-KD's outlook in the short termin Russia are the completion of the Russian acquisition, the pricecontrol system that will come into effect in the beginning of 2010and increasing competition. The change in the Swedish pharmacy marketis subject to uncertainty that may have a substantial effect onOriola-KD's Swedish business.OutlookOriola-KD's outlook for 2009 is based on external market forecasts,agreements with principals, the order intake and managementassessments. Long-term fundamentals and growth prospects are deemedto remain favourable in the healthcare market.Oriola-KD expects that the pharmaceutical market in Finland andSweden will grow by about 3-5 per cent annually over the next fewyears, which is in line with the longer-term average growth rate ofthese markets. The Russian pharmaceutical market is expected to seeannual growth of approximately 15-20 per cent in Russian rubles (RUB)in the next few years. Growth in the market for healthcare equipmentand supplies in Finland and Sweden is expected to outpace that of thepharmaceutical market.The introduction of the reference price system in Finland in April2009 will hamper the growth of net sales of the Pharmaceutical TradeFinland business segment in 2009. It is too early to foresee thedevelopment of net sales in Pharmaceutical Trade Sweden because ofthe effects of the deregulation of Sweden's pharmacy market. ThePharmaceutical Trade Russia business segment is expected to continuegrowing.Guidelines issued on 13 August 2009 concerning net sales andoperating profitOriola-KD's net sales and operating profit for 2009 are forecast tobe higher than in 2008.New guidelines concerning net sales and operating profitOriola-KD's net sales for 2009 is forecast to be higher than in 2008,while its operating profit is forecast to be substantially higher.TablesConsolidated Statement 1 Jan - 30 1 Jan - 1 July - 1 July - 1 Jan -31of Sep 30 Sep 30 Sep 30 Sep DecComprehensive Income(IFRS), EUR million 2009 2008 2009 2009 2008Net sales 1226.6 1131.7 410.8 398.4 1580.8Cost of goods sold -1052.9 -990.0 -356.6 -346.7 -1370.0Gross profit 173.7 141.8 54.2 51.7 210.8Other operating income 3.8 2.6 0.7 0.5 3.4Selling anddistribution expenses -120.1 -102.9 -38.4 -36.2 -146.7Administrativeexpenses -21.6 -22.2 -4.6 -8.5 -33.3Profit fromassociated company 2.7 1.3 0.8 0.3 2.2Operating profit 38.5 20.6 12.6 7.9 36.4Financial incomeand expenses -1.8 -0.4 0.0 -0.5 -1.8Profit before taxes 36.7 20.2 12.6 7.3 34.6Tax expense*) -8.0 -5.1 -2.7 -1.9 -7.2Profit for the period 28.7 15.1 10.0 5.4 27.5Other comprehensiveincome:Translationdifferences -2.9 -3.7 4.1 -2.8 -27.6Total comprehensiveincome for the period 25.8 11.4 14.0 2.6 -0.1Profit attributableto:Parent companyshareholders 28.7 15.0 10.0 5.4 27.4Minority interest 0.0 0.1 0.0 0.0 0.1Total comprehensiveincome attributableto:Parent companyshareholders 25.8 11.3 14.0 2.6 -0.2Minority interest 0.0 0.1 0.0 0.0 0.1Earningsper share:Basic earnings per share (EUR) 0.20 0.11 0.07 0.04 0.19Diluted earningsper share (EUR) 0.20 0.11 0.07 0.04 0.19*) The tax expense for the period hasbeen calculated as the proportionalshare of the total estimated taxes forthe financial year.Consolidated Statement ofFinancial Position (IFRS), EURmillionASSETS 30 Sep 2009 30 Sep 2008 31 Dec 2008Non-current assetsTangible assets 53.6 58.2 54.5Goodwill 127.7 104.3 105.1Other intangible assets 38.6 46.3 41.9Investments in associates 29.5 27.8 28.5Other non-current receivables 8.0 9.7 9.8Deferred tax assets 2.9 1.8 0.8Non-current assets total 260.3 248.0 240.5Current assetsInventories 261.2 251.5 250.7Trade and other receivables 281.8 276.9 252.9Cash and cash equivalents 52.3 20.4 46.5Current assets total 595.3 548.8 550.1ASSETS TOTAL 855.5 796.7 790.6EQUITY AND LIABILITIES 30 Sep 2009 30 Sep 2008 31 Dec 2008EquityShare capital 36.2 36.2 36.2Other funds 50.8 30.1 30.1Retained earnings 132.7 129.5 118.1Equity of the parentcompany shareholders 219.7 195.8 184.4Minority interest 0.0 1.1 1.0Equity total 219.7 196.9 185.5Non-current liabilitiesDeferred tax liabilities 13.8 18.7 16.5Pension liability 4.5 4.3 4.2Provisions 0.0 0.0 0.0Interest-bearing non-currentliabilities 0.2 0.2 27.9Other non-current liabilities 0.0 28.9 0.0Non-current liabilities total 18.6 52.1 48.5Current liabilitiesTrade payables and other currentliabilities 468.1 488.5 475.8Provisions 0.0 0.0 0.0Interest-bearing currentliabilities 149.2 59.2 80.8Current liabilities total 617.3 547.8 556.6EQUITY AND LIABILITIES TOTAL 855.5 796.7 790.6ConsolidatedStatement ofChanges inEquity(IFRS): Equity of the parent company Translation Retained share- Minority Share OtherEUR million capital funds differences earnings holders interest TotalEquity1 Jan 2008 36.2 30.1 -2.5 131.7 195.5 8.1 203.6Dividends -11.3 -11.3 0.0 -11.3Change inminorityinterest 0.0 -7.1 -7.1Share basedpayments 0.3 0.3 0.3Totalcomprehensiveincomefor theperiod -3.7 15.0 11.3 0.1 11.4Equity 30 Sep 2008 36.2 30.1 -6.2 135.7 195.8 1.1 196.9Equity 1 Jan 2009 36.2 30.1 -30.1 148.2 184.4 1.1 185.5Dividends -11.3 -11.3 -11.3Share issue 20.6 20.6 20.6Change inminorityinterest 0.0 -1.1 -1.1Share basedpayments 0.2 0.2 0.2Totalcomprehensiveincomefor theperiod -2.9 28.7 25.8 25.8Equity30 Sep 2009 36.2 50.8 -33.0 165.8 219.7 0.0 219.7Consolidated Statement of Cash 1 Jan - 30 1 Jan - 30Flows (IFRS), Sep Sep 1 Jan -31 DecEUR million 2009 2008 2008Operating profit 38.5 20.6 36.4Depreciation 7.1 7.3 9.8Change in working capital -26.2 -43.3 -52.2Cash flow from financialitems and taxes -13.1 -7.3 -6.8Other adjustments 0.1 0.1 -5.2Net cash from operatingactivities 6.4 -22.6 -18.1Net cash used in investingactivities -29.6 -76.0 -75.3Net cash used in financingactivities 28.6 -10.9 10.5Net change in cash and cashequivalents 5.5 -109.4 -82.9Cash and cash equivalentsat beginning of period 46.5 131.0 131.0Foreign exchange difference 0.3 -1.2 -1.6Net change in cash and cashequivalents 5.5 -109.4 -82.9Cash and cash equivalents atend of period 52.3 20.4 46.5 1 Jan - 30 1 Jan - 30Change in Tangible Assets Sep Sep 1 Jan -31 DecEUR million 2009 2008 2008Carrying amount at thebeginning of the period 54.5 56.3 56.3Increase through acquisitionof subsidiary share 0.0 6.8 6.9Additions 4.4 3.0 4.0Disposals -1.1 -1.7 -2.2Depreciation -4.8 -5.1 -6.7Translation differencies 0.5 -1.0 -3.7Carrying amount at the end ofthe period 53.6 58.2 54.5 1 Jan - 30 1 Jan - 30 Sep Sep 1 Jan -31 DecKey Figures 2009 2008 2008Equity ratio, % 26.4% 25.3% 25.1%Equity per share, EUR 1.46 1.38 1.30Return on capital employed(ROCE), % 15.5% 13.4% 13.5%Return on equity, % 18.9% 10.0% 14.1%Net interest bearing debt, Me 97.1 Me 39.0 Me 62.2 MeGearing, % 44.2% 19.8% 33.5%Earnings per share, EUR 0.20 0.11 0.19Average number of share, tpcs 145 812 141 385 141 393Forward Contracts andContingent Liabilities30 Sep 2009 Positive Negative Nominal values fair fair ofEUR million value value contractsCurrency forward and swapcontractsunder hedge accounting 0.5 45.2Other forward and currencyswap contracts -0.0 23.130 Sep 2008 Positive Negative Nominal values fair fair ofEUR million value value contractsCurrency forward and swapcontractsunder hedge accounting 35.2Other forward and currencyswap contracts -0.3 28.8FX options purchasedContingent for Own LiabilitiesEUR million 30 Sep 2009 30 Sep 2008 31 Dec 2008Guarantees given 32.5 35.1 37.8Real-estate mortgages given 2.0 2.0 2.0Mortgages on company assets 2.1 21.1 2.2Other guarantees andliabilities 1.4 2.6 1.2Total 37.9 60.9 43.2Guarantees given on behalf ofexternal parties 0.0 0.0 0.0Leasing-liabilities (operatingliabilities) 0.3 0.5 0.4Rent contingent 32.3 30.4 33.3 1 Jan - 30 1 Jan - 30 Sep Sep 1 Jan -31 DecNet Sales by OperatingSegments, EUR million 2009 2008 2008Pharmaceutical Trade Finland 378.9 389.4 533.4Pharmaceutical Trade Sweden 388.1 410.0 535.9Pharmaceutical Trade Russia 332.5 191.6 318.9Pharmaceutical Trade Baltics 25.4 28.1 37.4Healthcare Trade 101.7 112.6 155.2Dental Trade 0.0 0.0 0.0Group Total 1226.6 1131.7 1580.8Operating Profit by Operating 1 Jan - 30 1 Jan - 30Segments, Sep Sep 1 Jan -31 DecEUR million 2009 2008 2008Pharmaceutical Trade Finland 13.7 11.9 16.6Pharmaceutical Trade Sweden -2.8 4.7 6.0Pharmaceutical Trade Russia 22.8 -0.8 8.2Pharmaceutical Trade Baltics 0.6 0.8 1.1Healthcare Trade 6.6 6.2 7.9Dental Trade 2.6 1.3 2.1Group Administration andOthers -5.1 -3.6 -5.6Group total 38.5 20.6 36.4Average number of personnel 4 403 3 513 3 807Number of personnel at the endof the period 4 254 4 696 4 709Net Sales byOperatingSegments,EUR million Q3/2009 Q2/2009 Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008PharmaceuticalTrade Finland 120.4 131.9 126.6 144.0 129.1 132.7 127.6PharmaceuticalTrade Sweden 131.8 130.2 126.1 125.9 129.2 141.0 139.8PharmaceuticalTrade Russia 118.6 106.6 107.2 127.3 97.9 93.8 0.0PharmaceuticalTrade Baltics 8.0 8.8 8.6 9.2 8.4 9.8 10.0HealthcareTrade 31.9 34.9 35.0 42.7 33.8 38.1 40.6Dental Trade 0.0 0.0 0.0 0.0 0.0 0.0 0.0Group Total 410.8 412.3 403.5 449.1 398.4 415.4 318.0OperatingProfit byOperatingSegments,EUR million Q3/2009 Q2/2009 Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008PharmaceuticalTrade Finland 4.9 4.9 3.9 4.7 4.8 3.2 3.9PharmaceuticalTrade Sweden -0.4 -2.0 -0.4 1.3 1.4 1.6 1.7PharmaceuticalTrade Russia 6.6 8.6 7.6 8.9 0.3 -1.0 0.0PharmaceuticalTrade Baltics 0.2 0.2 0.1 0.3 0.2 0.3 0.3HealthcareTrade 1.9 3.0 1.7 1.7 1.8 1.5 2.9Dental Trade 0.8 0.7 1.1 0.8 0.3 0.4 0.6GroupAdministrationand Others -1.5 -2.0 -1.6 -1.9 -1.0 -1.8 -0.8Group total 12.6 13.5 12.4 15.8 7.9 4.2 8.5 1 Jan - 30 Sep 1 Jan - 30 Sep 1 Jan -31 DecNet Sales by Market, EURmillion 2009 2008 2008Finland 428.3 443.8 618.2Sweden 429.0 457.8 568.9Russia 332.5 191.7 319.0Baltics countries 31.9 36.1 48.2Other countries 4.9 2.4 26.5Total 1226.6 1131.7 1580.8Net Sales by Market, Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/EUR million 2009 2009 2009 2008 2008 2008 2008Finland 139.2 146.2 143.0 174.5 144.6 150.5 148.7Sweden 140.0 147.5 141.5 111.1 144.4 157.8 155.7Russia 118.6 106.6 107.2 127.3 97.9 93.8 0.0Baltics countries 9.8 11.1 11.0 12.1 10.9 12.5 12.7Other countries 3.2 1.0 0.8 24.1 0.8 0.8 0.8Total 410.8 412.3 403.5 449.1 398.4 415.4 318.0Consolidated Proforma net sales for thehe retail and wholesale businessesacquired in Russia was 96 EUR millionand consolidated ProformaEBIT -0.8 EUR million for the periodJanuary to March 2008.Corporate acquisitionsAcquisition of Vitim & Co and Moron LtdOriola-KD announced in March 2008 that it would acquire 75 percent ofa Moscow-based pharmacy company (Vitim & Co) and of a pharmaceuticalwholesaler (Moron Ltd.) The transaction was executed in April 2008.In addition, Oriola-KD has agreed to buy out the remaining 25-percentholding in 2010 for a consideration based on the companies'performance in 2009. The purchase of the remaining 25-percent holdingis recognized as a liability, the magnitude of which is based on thebest estimate of management.The initial purchase price allocation as of 31 March 2008 has beenfinalised during Q1 2009 as permitted by International FinancialReporting Standards. No material changes have been made compared tothe information disclosed in the Consolidated Financial statementsfor 2008, with the exception of the estimated purchase price for theremaining 25-percent holding. The initial purchase price allocationcalculated in rubles have been translated into euros by using theexchange rate from acquisition date. The balance sheets of theacquired companies have been consolidated into the Oriola-KD Group asof 1 April 2008 and the calculation below includes the acquisition ofboth companies.Details on the net assets and goodwill acquires are asfollows: Fair Carrying Fair value value amount EUR allocations EUR million EUR million million Tangible assets 5.0 1.8 6.9 Other intangible assets 5.4 41.5 46.9 Deferred tax assets 0.7 0.0 0.7 Inventories, advances paid 69.2 0.0 69.2 Trade receivables 39.6 0.0 39.6 Other receivables 5.0 0.0 5.0 Cash and cash equivalents 3.0 0.0 3.0 Deferred tax liabilities 0.0 -10.4 -10.4 Interest-bearing non-current liabilities -8.8 0.0 -8.8 Trade payables and other current liabilities -108.5 0.0 -108.5 Interest-bearing current liabilities -8.9 0.0 -8.9 Net indentifiable assets 1.7 32.9 34.7 Acquisition price Purchase price -64.0 Additional purchase price and purchase of the remaining 25% -70.8 Costs related to acquisition -4.4 Goodwill 104.6 Purchase price settled in cash -64.0 Paid additional purchase price -21.7 Costs related to acquisition -4.4 Cash and cash equivalents acquired 3.0 Cash outflow on acquisition as per 30 September 2009 -87.1 Estimated purchase price payable -49.1 Total cash outflow on acquisition -136.3The remaining goodwill arising from the acquisition, is basedon synergy benefits and widened new market area possibilities andbenefits.Espoo 28 October 2009Oriola-KD Corporation's Board of DirectorsOriola-KD CorporationEero HautaniemiPresident and CEOKimmo VirtanenExecutive Vice President and CFOFurther information:Eero HautaniemiPresident and CEOtel. +358 (0)10 429 2109e-mail: eero.hautaniemi(at)oriola-kd.comKimmo VirtanenExecutive Vice President and CFOtel. +358 (0)10 429 2069e-mail: kimmo.virtanen(at)oriola-kd.comPellervo HämäläinenVice President, Communications and Investor Relationstel. +358 (0)10 429 2497e-mail: pellervo.hamalainen(at)oriola-kd.comDistributionNASDAQ OMX Helsinki LtdPrincipal mediaPublished by:Oriola-KD CorporationCorporate CommunicationsOrionintie 5FI-02200 Espoo, Finlandwww.oriola-kd.comhttp://hugin.info/136732/R/1350941/326242.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 29.10.2009 - 07:31 Uhr
Sprache: Deutsch
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