Oriola-KD Corporation Stock Exchange Release 31 October 2008 at
8.30am
This review presents the financial information for the Oriola-KD
Group (hereinafter Oriola-KD) for the period January-September 2008.
The retail and wholesale businesses Vitim & Co and Moron Ltd acquired
in Russia have been consolidated into Oriola-KD's accounts as of 1
April 2008. The interim report has been prepared in accordance with
IAS 34 and in keeping with the same accounting principles as were
applied in the annual financial statements for 2007. The figures are
unaudited.
Key figures 1 January - 30 September 2008
* Invoicing came to EUR 2,116.1 million (1-9/2007: EUR 1,884.5
million) and net sales to EUR 1,131.7 million (1-9/2007: EUR
1,045.7 million).
* Operating profit was EUR 20.6 million (1-9/2007: EUR 22.1
million).
* Net profit was EUR 15.1 million (1-9/2007: EUR 17.8 million).
* Earnings per share were EUR 0.11 (1-9/2007: EUR 0.12).
* Return on capital employed was 13.4 per cent (1-9/2007: 15.1 per
cent)
* Future outlook unchanged
President and CEO Eero Hautaniemi: "The result and business of
Oriola-KD proceeded to plan in the January-September period. Good
progress was made in the takeover of the Russian companies and a
profit was recorded from the operations in Russia in the third
quarter. The turbulence of the global financial market is not
anticipated to have a negative effect on our end-year operations. We
will continue our long-term strategic ventures in Russia and Sweden.
Oriola-KD's operating profit for 2008, inclusive of the additional
expenditure arising from strategic ventures and the effects of the
acquisition in Russia, is anticipated to exceed that for the previous
year."
Financial performance
Oriola-KD's invoicing in January-September 2008 was EUR 2,116.1
million (EUR 1,884.5 million) and net sales were EUR 1,131.7 million
(EUR 1,045.7 million). Third-quarter invoicing came to EUR 716.2
million (EUR 605.2 million) and net sales to EUR 398.4 million (EUR
333.8 million).
Operating profit for January-September 2008 came to EUR 20.6 million
(EUR 22.1 million) and profit after financial items came to EUR 20.2
million (EUR 23.6 million). During the review period, Oriola-KD
invested heavily in strategic growth ventures, the execution and
takeover of the Russian acquisition and the business opportunities
offered by the potential deregulation of the Swedish pharmacy market.
The strategic growth ventures gave rise to additional expenditure of
EUR 1.6 million in the period under review. Third-quarter operating
profit came to EUR 7.9 million (EUR 8.0 million) and profit after
financial items to EUR 7.3 million (EUR 8.5 million).
Oriola-KD's financing expenses in January-September 2008 were EUR 0.4
million. In the corresponding period in 2007, financing income was
EUR 1.5 million.
Taxes in the review period amounted to EUR 5.1 million (EUR 5.8
million). Taxes corresponding to the result for the period under
review are accounted as taxes.
Net earnings in January-September 2008 were EUR 15.1 million (EUR
17.8 million).
Oriola-KD's earnings per share in the review period were EUR 0.11
(EUR 0.12). Return on capital employed was 13.4 per cent (15.1 per
cent) and return on equity 10.0 per cent (12.1 per cent).
Balance sheet, financing and cash flow
Oriola-KD's balance sheet total on 30 September 2008 stood at EUR
796.7 million (EUR 613.3 million). Cash assets at the end of
September 2008 were at EUR 20.4 million (EUR 96.6 million), and
equity was EUR 196.9 million (EUR 199.8 million). Oriola-KD's equity
ratio was 25.3 per cent (33.5 per cent).
At the end of the review period, interest-bearing net debt amounted
to EUR 39.0 million (EUR -79.6 million) and the gearing ratio was
19.8 per cent (-39.8 per cent). Interest-bearing debt stood at EUR
59.4 million on 30 September 2009 (EUR 17.0 million) and was made up
of drawings on the commercial paper programme and pharmacies' advance
payments in Finland. At the end of September, Oriola-KD had drawn EUR
41 million from the commercial paper programme at the end of the
review period. Credit facilities of approximately EUR 80 million with
banks to secure the programme remained untapped at the end of the
period under review.
Cash flow from operations in January-September 2008 was EUR -22.6
million (EUR 10.5 million), of which changes in working capital
accounted for EUR -43.3 million (EUR -15.6 million). Working capital
increased as a result of the expansion of the Russian companies and
changes in their terms of payment, and the temporary increase in
stocks and trade receivables in Sweden. The changes in the terms of
payment will improve the competitiveness and performance of the
businesses in Russia. Cash flow from investments was EUR -76.0
million (EUR -2.0 million). During the review period, cash flow after
investments was EUR -98.5 million (EUR 8.5 million). Cash flow from
financing includes a dividend of EUR 11.3 million paid in April.
Investments
Investments in the period under review amounted to EUR 112.3 million
(EUR 4.9 million) and mainly concerned the business acquisition in
Russia, the acquisition of a 12.51 per cent minority holding in
Kronans Droghandel AB from Merck Sharp & Dohme (Sverige) AB, and
operative maintenance and PPE investments.
Personnel
At the end of the period under review, Oriola-KD had a payroll of
4,696 employees (1,389), 73 per cent of whom worked in Russia (0 per
cent), 14 per cent in Finland (57 per cent), 8 per cent in Sweden (26
per cent ) and 5 per cent in the Baltic countries and Denmark
combined (17 per cent).
Business segments
Oriola-KD has two business segments: The Pharmaceutical Trade
business segment and the Healthcare Trade business segment, which
includes the share of profits from the associated dental trade
company.
Pharmaceutical Trade business segment
The Pharmaceutical Trade business segment's invoicing in
January-September 2008 was EUR 1,969.9 million (EUR 1,682.0 million)
and net sales were EUR 1,019.2 million (EUR 865.0 million).
Third-quarter invoicing came to EUR 671.3 million (EUR 543.0 million)
and net sales to EUR 364.6 million (EUR 278.3 million).
The January-September 2008 operating profit came to EUR 17.1 million
(EUR 14.7 million), which includes the Russian business' operating
loss of EUR 0.8 million from the second and third quarters.
Third-quarter operating profit came to EUR 7.0 million (EUR 5.0
million), which includes the Russian business' operating profit of
EUR 0.2 million from the third quarter.
On 30 September 2008, the number of employees within the
Pharmaceutical Trade business segment was 4,298 (866).
Finland
The Pharmaceutical Trade business segment's invoicing in Finland in
January-September 2008 was EUR 772.8 million (EUR 721.5 million) and
net sales were EUR 389.8 million (EUR 347.9 million).
The Finnish pharmaceutical market grew by 6.7 per cent (4.7 per cent)
in the review period. Oriola-KD held a 47.8 per cent (46.3 per cent)
share of the pharmaceutical distribution market in Finland in
January-September 2008 (source: IMS Health).
Oriola-KD took over the distribution of Wyeth products in Finland at
the beginning of 2008. Wyeth's share of the Finnish pharmaceutical
market is roughly two per cent (source: IMS Health). Oriola-KD
retained all its major pharmaceutical principals in Finland during
the period under review.
Based on the situation at the end of the review period, Oriola-KD's
estimated share of the pharmaceutical wholesale market in Finland
will be approximately 47 per cent in 2008.
Sweden
The Pharmaceutical Trade business segment's invoicing in Sweden in
January-September 2008 was EUR 972.3 million (EUR 933.1 million) and
net sales were EUR 410.1 million (EUR 493.0 million). The decline in
net sales in Sweden was the result of the increase of the relative
share of pharmaceutical manufacturers' consignment agreements.
The Swedish pharmaceutical market grew by 4.9 per cent (6.7 per cent)
in January-September 2008. Oriola-KD held a 44.0 per cent (42.3 per
cent) share of the pharmaceutical distribution market in Sweden in
January-September 2008 (source: IMS Health).
Oriola-KD took over the distribution of McNeil products in Sweden at
the beginning of 2008. McNeil's share of the Swedish pharmaceutical
market is roughly two per cent (source: IMS Health).Oriola-KD
retained all its major pharmaceutical principals in Sweden during the
period under review.
Based on the situation at the end of the review period, Oriola-KD's
estimated share of the pharmaceutical wholesale market in Sweden will
be approximately 43 per cent in 2008.
The Swedish Government has proposed the deregulation of the pharmacy
monopoly in mid-2009. In the third quarter, Oriola-KD continued to
prepare for this proposed change in the pharmacy market.
In June, Oriola-KD increased its shareholding in the Swedish Kronans
Droghandel AB (KD) from 85.62 per cent to 98.13 per cent by acquiring
the minority holding of Merck Sharp & Dohme (Sverige) AB. Merck Sharp& Dohme (Sverige) AB held a 12.51 per cent minority in KD. The
minority holding in KD subsequent to the transaction consists of
Organon AB's 1.87 per cent holding.
Russia
The retail and wholesale businesses Vitim and Moron that were
acquired in Russia have been consolidated into Oriola-KD's accounts
as of 1 April 2008. In April-September, the net sales of the acquired
companies grew by some 31 per cent to EUR 191.6 million. The Russian
retail and wholesale companies' operating loss for April-September
was roughly EUR 0.8 million, which includes EUR 0.4 million in
depreciation relating to the fair value allocation of the
acquisition. Operating profit for July-September was EUR 0.2 million.
The company focused on improving operating efficiency and
profitability in the third quarter, and as a result, the number of
pharmacies did not increase. The business in Russia is typically
seasonal in that performance in the first and fourth quarters of the
year is usually strong. Historically speaking, performance in the
fourth quarter of the year has been the strongest by a clear margin,
whereas the second and third quarters have been weaker than the other
quarters.
Oriola-KD confirmed the acquisition of the pharmacy and
pharmaceutical wholesale businesses Vitim and Moron on 21 April 2008.
The acquisition involved the establishment of a Finnish company,
Foreti Oy, which owns Vitim, a Moscow-based pharmacy retail company,
and Moron, a pharmaceutical wholesaler. Oriola-KD's holding in Foreti
Oy subsequent to the acquisition is 75 per cent while the founders of
the Russian companies, Igor Yankov and Oleg Yankov, hold 25 per cent.
Oriola-KD has agreed to buy out the remaining 25 per cent holding in
2010 for a consideration based on the companies' performance in 2009.
The Boards of Directors of Foreti Oy, Vitim and Moron are made up of
Eero Hautaniemi (Chairman), Kimmo Virtanen, Christian Ramm-Schmidt,
Igor Yankov and Oleg Yankov.
Other countries
The Pharmaceutical Trade business segment's invoicing in the Baltics
in January-September 2008 was EUR 30.6 million (EUR 27.4 million) and
net sales were EUR 27.6 million (EUR 24.1 million).
Healthcare Trade business segment
The Healthcare Trade business segment's invoicing in
January-September 2008 was EUR 146.2 million (EUR 202.6 million) and
net sales were EUR 112.6 million (EUR 180.7 million). Invoicing and
net sales in the Healthcare Trade business segment were reduced by
the merger of the Dental Trade business with and into Lifco Dental,
by the sale of the home distribution business in Sweden in 2007, and
by changes in principals in Finland. Third-quarter invoicing came to
EUR 44.8 million (EUR 62.2 million) and net sales to EUR 33.8 million
(EUR 55.5 million).
Operating profit in January-September 2008 was EUR 7.5 million (EUR
10.0 million). Third-quarter operating profit was EUR 2.1 million
(EUR 3.4 million).
The Healthcare Trade business segment had a payroll of 398 (523)
employees at the end of September 2008.
Finland
The Healthcare Trade business segment's invoicing in Finland in
January-September 2008 was EUR 61.4 million (EUR 61.5 million) and
net sales were EUR 55.7 million (EUR 57.6 million). Changes in
principals reduced invoicing and weakened profitability in Finland.
Sysmex haematology products transferred from Oriola-KD at the
beginning of 2008 and Zimmer orthopaedic products at the end of
March. The product range was augmented with Carl Zeiss Meditec's
ophthalmic surgery products in early 2008.
Sweden
The Healthcare Trade business segment's invoicing in Sweden in
January-September 2008 was EUR 75.5 million (EUR 97.3 million) and
net sales were EUR 47.6 million (EUR 81.3 million). The sale of the
home distribution business in Sweden in 2007 reduced both invoicing
and net sales. Profitability has improved in 2008 and the transition
from distribution to wholesaling business has proceeded according to
plan.
Other countries
The Healthcare Trade business segment's invoicing in the Baltics and
Denmark in January-September 2008 was EUR 9.3 million (EUR 8.6
million) and net sales were EUR 9.2 million (EUR 7.5 million).
Dental Trade
Dental Trade contributed EUR 0.0 million (EUR 35.2 million) to the
segment's invoicing, EUR 0.0 million (EUR 34.3 million) to its net
sales and EUR 1.3 million (EUR 1.3 million) to the segment's
operating profit in January-September 2008. Personnel numbered 85 on
30 September 2007. The merger of the dental business with and into
Lifco Dental was finalised on 2 January 2008 with the merger of the
businesses in Estonia, Latvia and Lithuania. Oriola-KD holds a 30 per
cent share of the merged dental business while Lifco has a 70 per
cent holding. Operating profit in dental trade has not met
expectations largely because of poor profitability in Finland and
several one-off items related to corporate acquisitions and
terminations of business.
Related parties
Related parties in the Oriola-KD Group are deemed to comprise parent
company Oriola-KD Corporation, subsidiaries and associated companies,
the members of the Board and the President and CEO of Oriola-KD
Corporation, other members of the Group Management Team of the
Oriola-KD Group, the immediate family of the aforementioned persons,
the companies controlled by the aforementioned persons, and the
Oriola Pension Foundation. The Group has no significant business
transactions with related parties, except for pension expenses
arising from defined benefit plans with the Oriola Pension
Foundation. The notes to the financial statements of Oriola-KD
Corporation provide additional information on intra-Group liabilities
and sureties given on behalf of Group companies. The Oriola-KD
Corporation has given no significant sureties on behalf of Group
companies.
Oriola-KD Corporation share
Trading volume of the Oriola-KD Corporation's Class A and B shares in
January-September 2008:
Trading volume Jan-Sep 2008 Jan-Sep 2007
Class A Class B Class A Class B
Trading volume, million 3.2 28.7 10.2 58.7
Trading volume, million euros 8.5 79.1 33.8 190.4
High, euros 3.03 3.10 3.70 3.68
Low, euros 2.00 1.94 2.64 2.57
Closing quotation on 30 Sep 2008, 2.00 2.00 3.35 3.30
euros
In the review period, the traded volume of Oriola-KD Corporation
shares, treasury shares excluded, corresponded to 22.5 per cent (48.7
per cent) of the total outstanding shares. The traded volume of Class
A shares in the period under review amounted to 6.3 per cent (19.0
per cent) of average outstanding stock and that of Class B shares,
excluding treasury shares, to 31.4 per cent (66.8 per cent).
Oriola-KD Corporation's market capitalisation on 30 September 2008,
treasury shares excluded, was EUR 283.8 million (EUR 468.7 million).
Under Article 3 of the Articles of Association, a shareholder may
demand conversion of Class A shares into Class B shares. During the
first half of 2008, a total of 2,553,202 Class A shares have been
converted into Class B shares
(4,949,682). At the end of the review period, the company had
48,692,203 Class A shares (51,344,958) and 93,215,625 Class B shares
(89,912,870).
The resolutions of Oriola-KD Corporation's Board of Directors taken
on 20 February 2008 pursuant to the authorisation granted by the
Annual General Meeting on 13 March 2007, concerning a bonus issue to
the company and a targeted bonus issue within the share incentive
scheme, were executed during the period under review. Oriola-KD
Corporation issued 650,000 new Class B shares to itself in the bonus
issue. In addition, the Board resolved on a targeted bonus issue in
which a total of 156,048 Class B shares held as treasury shares were
assigned to the company's President and CEO and other members of
Oriola-KD Corporation's Group Management Team. The issues were
executed and registered in the review period. In the context of the
targeted bonus issue, the company transferred 156,048 Class B shares
on 27 March 2008 into the book-entry accounts of persons covered
under the management incentive scheme.
Subsequent to the bonus issues, the company holds 493.952 treasury
shares, all of which are Class B shares. These account for 0.35 per
cent of the company's outstanding stock and 0.05 per cent of the
votes in the company.
Subsequent to a transaction executed on 29 July 2008, the share of
the votes produced by Oriola-KD Corporation's shares held by Maa- ja
Vesitekniikan Tuki ry and its subsidiary exceeded the one twentieth
threshold (1/20) referred to in Chapter 2, section 9, of the
Securities Markets Act. On 29 July 2008, their holding was 5.07 per
cent of the total votes conferred by Oriola-KD shares.
Risks
The Board of Directors of Oriola-KD has approved the company's risk
management policy in which the operational model, principles,
responsibilities and reporting in risk management have been
determined. The Group's risk management seeks to identify, measure
and manage risks that may threaten the operations of the company and
the achievement of goals set for them. The roles and responsibilities
relating to risk management have been determined in the Group.
Oriola-KD's risks are classified as strategic, operative and
financial. Risk management is a key element of the strategic process,
operative planning and daily decision-making at Oriola-KD.
Oriola-KD has identified the following most significant strategic and
operative risks in its business:
* changes in bargaining position vis-à-vis suppliers and customers
* impacts on business concepts from potential changes in the
structure of the Swedish market
* maintenance of cost-effectiveness and flexibility in costs
* provision of competitive products and services in expanding and
consolidating markets
* expansion-related risks in new markets and businesses
* commitment of key employees
The major financial risks for Oriola-KD involve currency exchange
rates, interest rates, liquidity and credit. The estimated
USD-denominated additional purchase price on the Russian business
acquisition and the USD-denominated purchase price of the remaining
25 per cent holding were hedged in July 2008 in accordance with the
Group's treasury policy.
Oriola-KD's exposure to risks relating to new markets and businesses
as well as financial risks increased in the second quarter as the
Company expanded to the Russian pharmaceutical retail and wholesale
market. Currency exchange rate risks are the main financial risks
related to Russia: possible changes of ruble's value has impact on
Oriola-KD's financial result. Goodwill and intangible rights are
subject to annual impairment testing which may affect Oriola-KD's
financial result.
Near-term risks and uncertainty factors
Factors with a material impact on Oriola-KD's near-term outlook are
the success of the takeover of the Russian acquisition, the
realization of the growth potential of the Russia-based businesses,
and general market trends in Russia. The uncertainty of the global
financial market may have an effect on Oriola-KD's near-term
business.
Events after the period under review
Cecilia Marlow, M.Sc. (Econ.) (b. 1960) has been appointed Managing
Director of Kronans Droghandel AB (KD) and a member of the Oriola-KD
Group Management Team as of 1 November 2008. Birgitta Gunneflo, KD's
current Managing Director and member of the Group Management Team,
will resign from her post on 1 November 2008. Cecilia Marlow started
as Vice President of Oriola KD's retail business in Sweden on 4
August 2008. In addition her principal duty is to prepare Oriola-KD's
Swedish businesses for the possible post-deregulated Swedish pharmacy
market.
Outlook
Oriola-KD's outlook for 2008 is based on external market forecasts,
agreements with principals, cumulative orders and management's
estimates. Long term fundamentals and growth prospects are deemed to
remain favourable in the healthcare market.
Oriola-KD estimates that the pharmaceutical market in Finland and
Sweden will grow by about 3-5 percent annually over the next few
years, which is in line with the longer-term average growth rate of
these markets. The Russian pharmaceutical market is estimated to see
growth of nearly 20 percent annually in the next few years. Growth in
the market for healthcare equipment and supplies in Finland and
Sweden is estimated to outpace that of the pharmaceutical market.
Invoicing in the Pharmaceutical Trade business segment in 2008 is
estimated to rise due to market growth and expansion to Russia.
Invoicing in the Healthcare and Dental Trade business segment is
projected as lower than in the previous year due to the merger with
and into Lifco Dental, the sale of the home distribution business in
Sweden in 2007 and changes in principals in Finland. Oriola-KD's
invoicing in 2008 is projected as clearly higher than in the previous
year.
Operating profit in the Pharmaceutical Trade business segment is
anticipated to see positive development in 2008. Oriola-KD is
investing in strategic growth ventures, the takeover of the Russian
acquisition and the business opportunities offered by the potential
deregulation of the Swedish pharmacy market, which are projected to
give rise to additional expenditure not exceeding three million euro
in 2008. Operating profit in the Pharmaceutical Trade business
segment in 2008 is estimated to improve owing to the Russian business
acquisition. Operating profit for 2008 in the Healthcare Trade
business is expected to fall from the previous year due to the
reported changes in principals in Finland. The merger in the Dental
Trade business is estimated to improve comparable operating profit
for 2008.
Oriola-KD's operating profit for 2008 inclusive of the additional
expenditure arising from strategic ventures and the acquisition in
Russia is anticipated to exceed that for the previous year.
Tabels
Income
Statement, 1.1.- 1.1.- 1.7.- 1.7.- 1.1.-
EUR million 30.09.2008 30.09.2007 30.09.2008 30.09.2007 31.12.2007
Net sales 1131.7 1045.7 398.4 333.8 1377.3
Cost of goods
sold -990.0 -937.4 -346.7 -300.0 -1232.0
Gross profit 141.8 108.3 51.7 33.8 145.2
Other
operating
income 2.6 1.5 0.5 0.6 2.3
Selling and
distribution
expenses -102.9 -77.0 -36.2 -23.3 -104.5
Administrative
expenses -22.2 -10.7 -8.5 -3.1 -14.9
Profit from
associated
company 1.3 0.0 0.3 0.0 1.0
Operating
profit 20.6 22.1 7.9 8.0 29.1
Financial
income
and expenses -0.4 1.5 -0.5 0.5 1.9
Profit before
taxes 20.2 23.6 7.3 8.5 31.0
Tax expense*) -5.1 -5.8 -1.9 -2.1 -7.3
Profit for the
period 15.1 17.8 5.4 6.4 23.7
of which
available for:
Parent company
shareholders 15.0 17.4 5.4 6.2 23.3
Minority
interest 0.1 0.3 0.0 0.2 0.4
Earnings per
share:
Basic earnings
per share
(EUR) 0.11 0.12 0.04 0.04 0.16
Diluted
earnings per
share (EUR) 0.11 0.12 0.04 0.04 0.16
*) The tax expense for the period
has been calculated as the proportional
share of the total estimated taxes for
the financial year.
Balance sheet,
EUR million 30.09.2008 30.9.2007 31.12.2007
Non-current assets
Property, plant
and equipment 58.2 58.3 56.3
Goodwill 104.3 34.6 33.9
Other intangible assets 46.3 5.0 4.5
Investments in associates
and available-for-sale investments 27.8 0.0 27.1
Other non-current receivables 9.7 10.0 10.6
Deferred tax assets 1.8 0.0 0.2
Non-current
assets total 248.0 108.0 132.5
Current assets
Inventories 251.5 184.5 180.9
Trade and other
receivables 276.9 224.2 201.0
Cash and cash
equivalents 20.4 96.6 131.0
Current assets total 548.8 505.2 512.9
ASSETS TOTAL 796.7 613.3 645.4
Balance sheet,
EUR million 30.09.2008 30.9.2007 31.12.2007
Non-current liabilities
Share capital 36.2 36.2 36.2
Other funds 30.1 30.1 30.1
Retained earnings 129.5 125.2 129.2
Net assets of the
parent company
shareholders 195.8 191.5 195.5
Minority interest 1.1 8.2 8.1
Net assets total 196.9 199.8 203.6
Non-current liabilities
Deferred tax liabilities 18.7 8.9 8.7
Pension liability 4.3 4.1 4.4
Provisions 0.0 0.0 0.0
Interest-bearing
non-current liabilities 0.2 0.4 0.3
Other non-current
liabilities 28.9 0.4 0.4
Current liabilities total 52.1 13.8 13.8
Current liabilities
Trade payables and
other current liabilities 488.5 382.1 387.4
Provisions 0.0 0.9 0.0
Interest-bearing current liabilities 59.2 16.6 40.7
Current liabilities total 547.8 399.7 428.1
EQUITY AND LIABILITIES TOTAL 796.7 613.3 645.4
Changes in
shareholder's
equity:
Equity of
the parent
EUR Share Other Translation Retained company Minority
million capital funds differences earnings shareholders interest Total
Shareholder's
equity
1.1.2007 36.2 30.1 0.0 116.9 183.3 8.5 191.8
Translation
differences -0.8 -0.8 -0.1 -0.9
Dividend
Paid -8.5 -8.5 -0.5 -8.9
Hedge on net
investment in
foreign
subsidiary -0.1 -0.1 -0.1
Change in
minority
interest
Other changes -0.1 -0.1 -0.1
Share based
payments 0.3 0.3 0.3
Taxes related
to items
booked
into equity
Items booked
into equity
Profit for
the
period 17.4 17.4 0.3 17.8
Shareholder's
equity
30.9.2007 36.2 30.1 -0.8 125.9 191.5 8.3 199.8
Shareholder's
equity
1.1.2008 36.2 30.1 -2.5 131.7 195.5 8.1 203.6
Translation
differences -3.8 -3.8 0.0 -3.7
Dividend
distribution -11.3 -11.3 -11.3
Hedge on net
investment in
foreign
subsidiary
Change in
minority
interest -7.1 -7.1
Other changes
Share based
payments 0.3 0.3 0.3
Taxes related
to
items booked
into equity
Items booked
into equity
Profit for
the period 15.0 15.0 0.1 15.1
Shareholder's
equity
30.09.2008 36.2 30.1 -6.3 135.7 195.8 1.1 196.9
Cash flow statement, 1.1.- 1.1.- 1.1.-
EUR million 30.09.2008 30.09.2007 31.12.2007
Operating profit 20.6 22.1 29.1
Depreciation 7.3 8.0 10.4
Change in working capital -43.3 -15.6 6.8
Cash flow from
financial items and taxes -7.3 -4.1 -5.5
Other adjustments 0.1 0.1 -1.9
Cash flow from
operating activities -22.6 10.5 39.0
Cash flow from
investing activities -76.0 -2.0 -19.1
Cash flow from
financing activities -10.9 -24.2 -0.7
Net change in cash
and cash equivalents -109.4 -15.7 19.1
Cash and cash
equivalents at
beginning of period 131.0 112.9 112.9
Foreign exchange
difference -1.2 -0.6 -1.0
Net change in
cash and cash
equivalents -109.4 -15.7 19.1
Cash and cash
equivalents at end
of period 20.4 96.6 131.0
Change in property,
plant and equipment
1.1.- 1.1.- 1.1.-
milj.EUR 30.09.2008 30.09.2007 31.12.2007
Carrying amount
at the beginning of
the period 56.3 63.3 63.3
Increase through
acquisition of
subsidiary share 6.8 0.0 0.0
Additions 3.0 4.3 5.1
Disposals -1.7 -3.0 -3.5
Depreciation -5.1 -5.6 -7.3
Translation differencies -1.0 -0.6 -1.4
Carrying amount
at the end of
the period 58.2 58.3 56.3
Key figures 1.1.- 1.1.- 1.1.-
and rations 30.09.2008 30.09.2007 31.12.2007
Equity ratio, % 25.3% 33.5% 33.7%
Equity per share, EUR 1.38 1.36 1.38
Return on capital
employed (ROCE), % 13.4% 15.1% 14.2%
Return on equity, % 10.0% 12.1% 12.0%
Net interest
bearing debt, Me 39.0 Me -79.6 Me -90.0 Me
Gearing, % 19.8% -39.8% -44.2%
Earnings per share, EUR 0.11 0.12 0.16
Average number
of share, tpcs 141 385 141 258 141 258
Forward contracts and
contingent liabilities
30.9.2008
Positive Negative Nominal values
EUR million fair value fair value of contracts
Hedging of a net investment
in an independent foreign unit 0.0
Other forward and currency
swap contracts -0.3 64.0
FX options purchased
30.9.2007
Positive Negative Nominal values
EUR million fair value fair value of contracts
Hedging of a net
investment in an
independent foreign unit 0.0
Other forward and
currency swap contracts 0.0 21.5
EUR million 30.9.2008 30.9.2007 31.12.2007
Contingent for
own liabilities
Guarantees given 35.1 2.6 3.1
Real-estate
mortgages given 2.0 1.0 2.0
Mortgages on
company assets 21.1 22.5 21.9
Other guarantees
and liabilities 2.6 2.1 1.9
Total 60.9 28.2 28.9
Contingent for
liabilities of
other parties
Guarantees given
on behalf of
external parties 0.0 0.0 0.0
Leasing-liabilities
(operating liabilities) 0.5 0.4 0.3
Rent contingent 30.4 5.5 5.0
Invoicing by business 1.1.- 1.1.- 1.1.-
segment, EUR million 30.09.2008 30.09.2007 31.12.2007
Pharmaceutical Trade
business segment 1969.9 1682.0 2253.4
Healthcare Trade 146.2 167.4 234.7
Dental Trade 0.0 35.2 36.5
Group Total 2116.1 1884.5 2524.5
Oriola-KD has two business segments:
the Pharmaceutical Trade business segment
and the Healthcare Trade business segment,
which includes the share of profits from the
associated company.
Net sales by
business segment, 1.1.- 1.1.- 1.1.-
EUR million 30.09.2008 30.09.2007 31.12.2007
Pharmaceutical Trade
business segment 1019.2 865.0 1135.8
Healthcare Trade 112.6 146.4 205.9
Dental Trade 0.0 34.3 35.6
Group Total 1131.7 1045.7 1377.3
Operating profit by
business segment, 1.1.- 1.1.- 1.1.-
EUR million 30.09.2008 30.09.2007 31.12.2007
Pharmaceutical Trade
business segment 17.1 14.7 17.4
Healthcare Trade 6.2 8.8 12.6
Dental Trade 1.3 1.3 2.2
Group items -4.0 -2.7 -3.2
Group total 20.6 22.1 29.1
Average number of personnel 3 513 1 475 1 432
Number of personnel
at the end of the period 4 696 1 389 1 302
Invoicing by
business segment, 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
EUR million 2008 2008 2008 2007 2007 2007 2007
Pharmaceutical Trade
business segment 671.3 706.5 592.1 571.4 543.0 575.9 563.2
Healthcare Trade 44.8 49.7 51.6 67.3 52.1 56.7 58.6
Dental Trade 0.0 0.0 0.0 1.3 10.2 11.8 13.2
Group Total 716.2 756.2 643.6 640.0 605.2 644.4 634.9
Net sales by
business segment, 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
EUR million 2008 2008 2008 2007 2007 2007 2007
Pharmaceutical Trade
business segment 364.6 377.2 277.3 270.7 278.3 295.5 291.3
Healthcare Trade 33.8 38.1 40.6 59.5 45.6 49.2 51.7
Dental Trade 0.0 0.0 0.0 1.3 9.9 11.5 12.9
Group Total 398.4 415.4 318.0 331.6 333.8 356.1 355.8
Operating profit by
business segment, 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
EUR million 2008 2008 2008 2007 2007 2007 2007
Pharmaceutical Trade
business segment 7.0 4.3 5.9 2.7 5.0 4.6 5.1
Healthcare Trade 1.8 1.5 2.9 3.9 3.4 2.8 2.6
Dental Trade 0.3 0.4 0.6 1.0 0.1 0.2 1.1
Group items -1.2 -2.0 -0.8 -0.5 -0.5 -1.2 -1.0
Group total 7.9 4.2 8.5 7.0 8.0 6.3 7.8
Net sales
by market, 1.1.- 1.1.- 1.1.-
EUR million 30.09.2008 30.09.2007 31.12.2007
Finland 443.8 426.7 570.1
Other Nordic
countries 460.1 581.6 756.5
Other Europe 36.2 36.3 49.1
Russia 191.7 0.1 0.1
Other countries 0.1 1.0 1.4
Total 1131.7 1045.7 1377.3
Net sales
by market, 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
EUR million 2008 2008 2008 2007 2007 2007 2007
Finland 144.6 150.5 148.7 143.4 135.3 143.4 148.1
Other Nordic
countries 145.1 158.5 156.5 174.9 187.1 199.6 195.0
Other Europe 10.9 12.5 12.7 12.8 11.3 12.5 12.5
Russia 97.9 93.8 0.0 0.0 0.0 0.0 0.0
Other countries 0.0 0.1 0.0 0.5 0.1 0.7 0.2
Total 398.4 415.4 318.0 331.6 333.8 356.1 355.8
CORPORATE ACQUISITIONS
Acquisition of Vitim & Co
and Moron Ltd
Oriola-KD announced in March that it would acquire 75 percent of
a Moscow-based pharmacy company (Vitim & Co) and of
a pharmaceutical wholesaler (Moron Ltd.)
The transaction was executed in April. In addition, Oriola-KD has
agreed
to buy out the remaining 25-percent holding in 2010 for a
consideration
based on the companies' performance in 2009. The additional purchase
price relating to the acquired 75-percent holding and the purchase of
the
remaining 25-percent holding are recognized as a liability,
the magnitude of which is based on the best estimate of management.
The acquisition cost is calculated on the basis of the companies'
provisional balance sheets as per 31 March 2008 prepared in
accordance
with IFRS and the Oriola-KD Group's accounting principles in respect
of
all material elements. The provisional balance sheets and acquisition
cost calculation are unaudited.
The acquisition is accounted for using provisional values as
permitted
under IFRS 3. Over the 12 months following the acquisition,
Oriola-KD will make the necessary adjustments to these provisional
values.
The balance sheets of the acquired companies have been consolidated
into
the Oriola-KD Group as of 1 April 2008 and the calculation below
includes
the acquisition of both companies.
Provisional details on the net assets
and goodwill acquires are as follows:
Carrying Fair
amount Fair value value
EUR allocations EUR
million EUR million million
Tangible assets 5.0 1.8 6.8
Other intangible
assets 3.5 41.5 45.0
Deferred tax assets 1.2 0.0 1.2
Inventories, advances
paid 68.5 0.0 68.5
Trade receivables 37.8 0.0 37.8
Other receivables 4.8 0.0 4.8
Cash and cash
equivalents 2.7 0.0 2.7
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 -103.7 0.0 -103.7
Interest-bearing
current liabilities -8.9 0.0 -8.9
Net indentifiable
assets 1.9 32.9 34.8
Acquisition price
Purchase price -64.0
Additional purchase
price
and purchase of the
remaining 25% -34.5
Costs related to
acquisition -4.4
Goodwill 68.1
Purchase price settled
in cash -64.0
Costs related to
acquisition -4.4
Cash and cash
equivalents acquired 2.7
Cash outflow on
acquisition for 2008 -65.8
Estimated purchase
price payable -34.5
Total cash outflow
on acquisition -100.3
The remaining goodwill arising from the acquisition,
is based on synergy benefits and widened new
market area possibilities and benefits.
Espoo, 30 October 2008
Board of Directors of Oriola-KD Corporation
Oriola-KD Corporation
Eero Hautaniemi
President and CEO
Kimmo Virtanen
Executive Vice President and CFO
Further information:
Eero Hautaniemi
President and CEO
tel. +358 (0)10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Kimmo Virtanen
Executive Vice President and CFO
tel. +358 (0)10 429 2069
e-mail: kimmo.virtanen@oriola-kd.com
Pellervo Hämäläinen
Vice President, Communications and IR
tel. +358 (0)10 429 2497
e-mail: pellervo.hamalainen@oriola-kd.com
Distribution:
NASDAQ OMX Helsinki
Key media
Released by:
Oriola-KD Corporation
Corporate Communications
Orionintie 5
FI-02200 Espoo, Finland
www.oriola-kd.com
