HKScan Corporation STOCK EXCHANGE RELEASE 6 August 2009 at 8am
HKSCAN GROUP INTERIM REPORT 1 JANUARY - 30 JUNE 2009
* EBIT for the first half of 2009 stood at EUR 22.5 million. HKScan achieved
positive and improved results in all market areas.
* Performance continued to develop favourably in Q2, with EBIT rising to EUR
14.3 million.
* Owing to changes in exchange rates, net sales in euro showed a decline in the
first half of the year, yet rose by roughly 4% at fixed rates.
HKSCAN GROUP
(EUR million)
--------------------------------------------------------------------------------
| | Q2/2009 | Q2/2008 | Q1-Q2/09 | Q1-Q2/08 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 541.6 | 591.9 | 1 033.6 | 1 102.0 | 2 294.6 |
--------------------------------------------------------------------------------
| EBIT | 14.3 | 4.4 | 22.5 | 10.5 | 38.1 |
--------------------------------------------------------------------------------
| - EBIT margin, % | 2.6 | 0.7 | 2.2 | 1.0 | 1.7 |
--------------------------------------------------------------------------------
| Profit/loss before | 9.4 | -2.3 | 11.1 | -2.4 | 9.0 |
| taxes | | | | | |
--------------------------------------------------------------------------------
| Earnings per | 0.18 | -0.09 | 0.18 | -0.11 | 0.12 |
| share, EUR | | | | | |
--------------------------------------------------------------------------------
Q2, APRIL-JUNE 2009
* Net sales came to EUR 541.6 million (EUR 591.9m in Q2/2008). The reduction of
8.5% was mainly due to a major decline in the Group's central currencies since
autumn 2008. Using fixed exchange rates, net sales increased by just under two
percent.
* EBIT for the quarter came to EUR 14.3 million (EUR 4.4m). In evaluating the
increase, it should be noted that the first half and Q2 in particular of the
comparison year 2008 were exceptionally weak.
* The strongest improvement was seen in Finland, as anticipated, with EBIT
coming in at EUR 6.7 million (EUR -0.5m).
* EBIT in Sweden was EUR 3.0 million (Q2/2008: EUR 3.3m). The figure includes
EUR 0.5 million in non-recurring charges.
* In the Baltics, EBIT rose to EUR 3.5 million (EUR 2.7m), a year-on-year
increase of 28.8% despite the extremely difficult economic situation in the
Baltic countries.
* EBIT in Poland improved considerably, coming in at EUR 2.5 million (Q2/2008:
EUR -0.2m).
* Group EBIT for the current year is estimated to clearly surpass that for 2008.
CEO MATTI PERKONOJA:
“The second quarter on the whole was a period of steady development, as
anticipated. HKScan's business continued along the favourable lines first seen
in late 2008.
Performance in Finland picked up as anticipated. HK Ruokatalo's robust EBIT
development was based on cost-effective operations and a strengthening of market
standing.
In Sweden, Scan's three-year business development programme, which was started
in March, progressed on track. Market standing was also maintained.
In the Baltics, vigorous adjustment measures and operational cost controls
enabled Rakvere Lihakombinaat and Tallegg to improve and boost their
competitiveness in a highly demanding business environment.
In Poland, Sokolów solidified its market standing while delivering improved
performance both domestically and in the export market.
The Group's business performance indicators continued to reflect exchange rate
fluctuation. Both the Swedish krona and the Polish zloty, which declined
considerably in autumn 2008, have yet to bounce back. This explains the decline
in the Group's euro-denominated net sales. Earnings were also weakened somewhat
by the fluctuations.
The Group's financing situation remained stable throughout the period under
review.
Despite the positive development seen in the first and second quarters of the
year, the Group's long-term financial targets still remain a ways off.”
MARKET AREA: FINLAND
(EUR million)
--------------------------------------------------------------------------------
| | Q2/2009 | Q2/2008 | Q1-Q2/09 | Q1-Q2/08 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 190.2 | 194.5 | 365.5 | 359.5 | 740.4 |
--------------------------------------------------------------------------------
| EBIT | 6.7 | -0.5 | 12.9 | 3.5 | 14.4 |
--------------------------------------------------------------------------------
| - EBIT margin, % | 3.5 | -0.3 | 3.5 | 1.0 | 1.9 |
--------------------------------------------------------------------------------
The positive development in the EBIT delivered by the market area of Finland was
built on the business and market standing of HK Ruokatalo continuing to grow
stronger through the second quarter. Net sales, on the other hand, fell from the
same period a year ago owing to a reduction in export revenues.
Earnings development was underpinned by several factors. Processed meat
deliveries, of great importance to the company, increased in terms of both
volume and value. Basic products in particular, such as ground meat products and
sausages, enjoyed robust demand. The sales of poultry products also rose.
Cost-efficiency in production was in line with target, and delivery reliability
stood at a very good level.
The focus in whole meat products was on the summer grilling season, catered for
with several new product launches as well. Greater in-store visibility was
achieved for seasonal summer products.
Owing to the overall economic situation in Finland and changes in consumption,
sales to customers in the HoReCa sector have declined somewhat.
The profitability of pork exports was eroded by the decline in world market
prices and reduced demand.
The first-half earnings include a non-recurring cost provision of EUR 1.1
million recognised in Q1 and relating to personnel cuts at HK Ruokatalo's Forssa
production facilities in 2006. The severance pay of EUR 1.3 million to HKScan
Corporation's former CEO is included in Q1 Group administration costs.
MARKET AREA: SWEDEN
(EUR million)
--------------------------------------------------------------------------------
| | Q2/2009 | Q2/2008 | Q1-Q2/09 | Q1-Q2/08 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 264.5 | 305.0 | 502.9 | 562.4 | 1 179.3 |
--------------------------------------------------------------------------------
| EBIT | 3.0 | 3.3 | 5.1 | 3.9 | 18.0 |
--------------------------------------------------------------------------------
| - EBIT margin, % | 1.1 | 1.1 | 1.0 | 0.7 | 1.5 |
--------------------------------------------------------------------------------
In Sweden, net sales in krona held steady at the level seen in the second
quarter of 2008. The weaker krona results in a 13.3-percent reduction in net
sales when translated into euro.
The three-year development programme launched in March 2009 progressed according
to plan. The aim is to bring the EBIT level of the Swedish business up to the
five-percent figure outlined in the Group's financial targets. Means employed to
achieve this aim include enhancing the company's cost structure, investing in
higher value-added and reorganising Scan's commercial operations. With regard to
meat raw material sourcing, the programme was implemented through the
establishment of sourcing company Svenska Livdjur & Service AB in order to
improve Scan's competitiveness at the beginning of the production chain.
Despite tighter competition and the ongoing development programme, Scan was able
to gain in market standing especially in the retail sector.
Personnel downsizing gave rise to non-recurring charges totalling EUR 1.7
million in the first half of the year. Of this sum, EUR 1.2 million was
recognised in Q1 and EUR 0.5 million in Q2.
Former deputy to the managing director Denis Mattsson was appointed managing
director of Scan AB effective 23 June 2009.
MARKET AREA: THE BALTICS
(EUR million)
--------------------------------------------------------------------------------
| | Q2/2009 | Q2/2008 | Q1-Q2/09 | Q1-Q2/08 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 40.9 | 43.0 | 78.2 | 81.0 | 168.2 |
--------------------------------------------------------------------------------
| EBIT | 3.5 | 2.7 | 4.5 | 4.2 | 6.4 |
--------------------------------------------------------------------------------
| - EBIT margin, % | 8.6 | 6.4 | 5.8 | 5.1 | 3.8 |
--------------------------------------------------------------------------------
The business environment in the Baltics presented more of a challenge than the
Group's other markets due to the deep recession and the ensuing erosion in
consumer purchasing power. Nonetheless, HKScan's Baltic Group delivered clearly
better performance than anticipated. The EBIT of EUR 1.0 million achieved in Q1
climbed to EUR 3.5 million in Q2.
Rakvere Lihakombinaat and Tallegg maintained their competitiveness and further
solidified their market standing. This success was built on adaptation of the
product range as well as rapid and vigorous adjustment and cost-cutting
measures.
A profound restructuring is underway in the Baltic meat industry.
MARKET AREA: POLAND
(EUR million)
--------------------------------------------------------------------------------
| *) | Q2/2009 | Q2/2008 | Q1-Q2/09 | Q1-Q2/08 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 60.9 | 69.3 | 117.3 | 130.4 | 270.9 |
--------------------------------------------------------------------------------
| EBIT | 2.5 | -0.2 | 4.1 | 0.7 | 4.2 |
--------------------------------------------------------------------------------
| - EBIT margin, % | 4.1 | -0.3 | 3.5 | 0.5 | 1.6 |
--------------------------------------------------------------------------------
*) The figures refer to HKScan's share (50%) of the Sokolów Group's figures.
In the Polish market, net sales in Q2 in zloty were up by roughly 14% from
previous year. Owing to the weaker zloty, net sales declined by 12.2% when
translated into euro.
Sokolów's profitability developed favourably. In the domestic market, its sales
to modern retail chains in particular increased considerably. Exports were also
on the rise, and the weaker zloty both increased export volumes and improved the
profitability of exports.
Subsidiary Pozmeat and primary production company Agro-Sokolów made headway in
the first half of the year towards achieving the planned level of business
activities.
CAPITAL EXPENDITURE AND FINANCE
The Group's gross investments in Q2 totalled EUR 11.8 million (Q2/2008: EUR
25.7m). Gross investments for the entire first half of 2009 totalled EUR 24.5
million (Q1-Q2/2008: EUR 53.6m) and were divided among production-related
investment in the market areas as follows: Finland EUR 7.1 million, Sweden EUR
9.9 million and the Baltics EUR 2.1 million. In Poland, HKScan's share of
Sokolów investments was EUR 5.4 million.
The installations of machinery and equipment continued at the new distribution
centre rising in Linköping, Sweden. No major investments were underway in
Finland or the Baltics.
The Group's interest-bearing debt at the end of June stood at EUR 495.6 million
(EUR 549.8m). The reduction is partly attributable to the weakening of the
Group's central currencies. Net financing costs in the half-year period fell by
roughly EUR 1 million year on year owing to lower interest rates and the
reduction in total loans. On the other hand, financing costs are burdened by
rising hedging expenditure. Untapped credit facilities at 30 June 2009 stood at
EUR 156.5 million (EUR 174m). In addition, the Group had other untapped
overdraft and other facilities of EUR 38.7 million (EUR 35m). The EUR 100
million commercial paper programme had been drawn upon in the amount of EUR 3
million (EUR 39m).
At the end of June, the equity ratio stood at 29.8 percent (28.3%). The
weakening of the Group's central currencies (SEK, PLN) is also evident in the
negative translation differences in equity. Stronger cash flow and reducing net
liabilities remain key priorities, to be achieved through means such as more
effective working capital management and extremely careful consideration of
which investments to implement.
TREASURY SHARES
In June, a total of 7 008 A Shares assigned to participants in the company's
Share Incentive Scheme 2006-2008 reverted gratuitously back to the company.
At 30 June 2009, the company held a total of 51 982 of its A Shares. These had a
market value of EUR 0.46 million and accounted for 0.13% of all shares and 0.04%
of all votes.
NOTICE OF CHANGE IN OWNERSHIP
Fund company Artio Global Management LLC announced, in accordance with Chapter
2:9 of the Securities Markets Act, that as a result of a share transaction
executed on 17 April 2009 its shareholding in HKScan Corporation had fallen to
zero.
RESOLUTIONS PASSED BY THE ANNUAL GENERAL MEETING
The Annual General Meeting held on 23 April 2009 adopted the parent company's
and consolidated financial statements and discharged the members of the Board of
Directors and the CEO from liability for 2008. It was decided to pay a dividend
of EUR 0.24 per share, i.e. a total of EUR 9.4 million, as recommended by the
Board of Directors.
The number of members of the Board of Directors was confirmed as five. Markku
Aalto, Tiina Varho-Lankinen, Matti Murto and Matti Karppinen were re-elected,
with Lars Hultström joining the Board as a new member. The Board re-elected
Markku Aalto as chairman and Tiina Varho-Lankinen as deputy chairman.
Authorised public accountants PricewaterhouseCoopers Oy, with APA Johan Kronberg
as principal auditor, and Petri Palmroth APA were appointed as HKScan's auditors
for the 2009 financial year. Mika Kaarisalo APA and Pasi Pietarinen APA were
appointed as the company's deputy auditors.
The authorisations granted by the Annual General Meeting to the Board are
presented below under "Board of Directors' existing authorisations".
BOARD OF DIRECTORS' EXISTING AUTHORISATIONS
(1) The AGM of 23 April 2009 authorised the Board to resolve on acquiring a
maximum of 3 500 000 Series A shares as treasury shares, equal to roughly 8.9%
of total registered shares and 10.3% of total A Shares.
Treasury shares may only be acquired using unrestricted shareholders' equity.
The company's own shares may be purchased for a price quoted in public trading
on the purchase day or for a price otherwise determined by the market.
The Board of Directors shall resolve upon the method of purchase. Among other
means, derivatives may be utilised in purchasing the shares. The shares may be
purchased in a proportion other than that of the shares held by the shareholders
(directed purchase). The authorisation is valid until 30 June 2010.
(2) The AGM also authorised the Board of Directors to resolve on an issue of
shares, option rights as well as other special rights entitling to shares as
referred to in Chapter 10:1 of the Limited Liability Companies Act. The Board
was authorised to resolve on the issue of a maximum of 5 500 000 A Shares,
corresponding to ca. 14.0% of all registered shares in the company and ca. 16.2%
of all A Shares.
The Board may resolve upon all the terms and conditions of the issue of shares
and other special rights entitling to shares. The authorisation to issue shares
shall cover the issuing of new shares as well as the transfer of the company's
own shares. The issue of shares and other special rights entitling to shares may
be implemented as a directed issue. The authorisation is valid until 30 June
2010.
The authorisations concerning purchases of treasury shares and share issue were
granted to provide the company's Board with flexibility in deciding on capital
market transactions necessary to the company, e.g. to secure its financing needs
or to execute mergers and acquisitions. A directed acquisition of own shares or
directed share issue can only be executed for reasons of weighty financial
consequence to the company and the authorisation cannot be exercised in
violation of the principle of shareholder equality.
EMPLOYEES
In the first six months of the year, the Group had an average workforce of 7 265
employees (7 536 in Q1-Q2/2008). The average number of employees in each market
area was as follows: 2 391 persons in Finland, 3 067 in Sweden and 1 807 in the
Baltics. In addition, Sokolów had 5 656 employees.
An analysis of employees by country at the end of June is as follows: Sweden
39.7%, Finland 34.3%, Estonia 19.4%, Poland (Scan) 2.7%, Latvia 2.6%, other
countries 1.3%.
RISKS AND UNCERTAINTY FACTORS IN THE NEAR FUTURE
The most significant business risks faced by the HKScan Group involve
developments in the price of raw materials and pork in particular, in future
possibly the availability of these as well. Country-specific uncertainties
involve the success of the business development programmes in Sweden and the
development of the national economies in the Baltics.
The current crisis in the international financial markets increases the risk of
customer credit losses. The problems experienced by customers are due to the
state of the economy in their country of operation as well as the availability
of financing. Ongoing major fluctuations in the Group's central currencies may
affect the Group's net sales, earnings and balance sheet. Any devaluation of
local currencies in particular may have a negative effect on the Group's Baltic
operations.
Changes in demand attributable to the financial climate may occur in the Group's
market areas or its export markets, which may erode Group net sales and
earnings.
The Group is currently involved in certain legal proceedings and civil
litigation. Though the cases remain pending, they are estimated to have no
significant impact on the Group's financial standing.
In the event of an escalation of the A(H1N1)v influenza epidemic, temporary
arrangements may need to be put into place in all of the Group's market areas to
ensure uninterrupted production.
FUTURE OUTLOOK
The conditions of exceptional uncertainty arising from the global economic and
financial situation continue to prevail. Consumer demand for food is nonetheless
anticipated to remain unchanged in Finland and in Sweden, which provides the
foundation for stable business development in the Group's main market areas.
Signs of sharp fluctuations in demand are visible in the Group's other market
areas as well as its export markets.
Based on business performance and the outlook in the near term, Group EBIT for
the current year is estimated to clearly surpass that for 2008.
CONSOLIDATED FINANCIAL STATEMENTS 1 JANUARY - 30 JUNE 2009
CONSOLIDATED INCOME STATEMENT
(EUR million)
--------------------------------------------------------------------------------
| | Q2/2009 | Q2/2008 | Q1-Q2/09 | Q1-Q2/08 | 2008 |
--------------------------------------------------------------------------------
| | | | | | |
--------------------------------------------------------------------------------
| NET SALES | 541.6 | 591.9 | 1 033.6 | 1 102.0 | 2 294.6 |
--------------------------------------------------------------------------------
| Operating income and | -513.7 | -573.6 | -983.9 | -1 064.4 | -2 202.5 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Depreciation and | -13.6 | -13.9 | -27.2 | -27.1 | -54.0 |
| impairment | | | | | |
--------------------------------------------------------------------------------
| EBIT | 14.3 | 4.4 | 22.5 | 10.5 | 38.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial income | 1.3 | 1.3 | 2.7 | 2.4 | 5.4 |
--------------------------------------------------------------------------------
| Financial expenses | -6.7 | -8.0 | -15.4 | -15.4 | -34.4 |
--------------------------------------------------------------------------------
| Currency exchange | -0.1 | -0.4 | 0.3 | -0.4 | -1.1 |
| gains and losses and | | | | | |
| changes in fair values | | | | | |
--------------------------------------------------------------------------------
| Share of associates' | 0.6 | 0.4 | 0.9 | 0.5 | 0.9 |
| results | | | | | |
--------------------------------------------------------------------------------
| PROFIT/LOSS BEFORE | 9.4 | -2.3 | 11.1 | -2.4 | 9.0 |
| TAXES | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income taxes | -0.9 | -0.7 | -2.2 | -1.3 | -1.4 |
--------------------------------------------------------------------------------
| PROFIT/LOSS FOR THE | 8.5 | -2.9 | 8.9 | -3.7 | 7.6 |
| FINANCIAL YEAR | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OTHER COMPREHENSIVE | | | | | |
| INCOME | | | | | |
| (after taxes): | | | | | |
--------------------------------------------------------------------------------
| Exchange differences | 4.0 | 2.1 | -3.3 | 3.5 | -28.9 |
| on translating foreign | | | | | |
| operations | | | | | |
--------------------------------------------------------------------------------
| Hedging of net | -1.2 | 0.5 | -0.3 | 0.2 | 7.1 |
| investment in a | | | | | |
| foreign unit | | | | | |
--------------------------------------------------------------------------------
| Available-for-sale | 0.4 | 0.0 | 0.2 | 0.2 | -0.2 |
| investments | | | | | |
--------------------------------------------------------------------------------
| Cash flow hedging | 0.7 | 1.6 | 0.1 | 1.1 | -2.0 |
--------------------------------------------------------------------------------
| TOTAL OTHER | 3.9 | 4.2 | -3.3 | 5.0 | -24.1 |
| COMPREHENSIVE INCOME | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL COMPREHENSIVE | 12.4 | 1.3 | 5.6 | 1.3 | -16.5 |
| INCOME FOR THE PERIOD | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PROFIT/LOSS FOR THE | | | | | |
| PERIOD ATTRIBUTABLE | | | | | |
| TO: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | 7.5 | -3.3 | 7.6 | -4.3 | 4.7 |
| parent | | | | | |
--------------------------------------------------------------------------------
| Minority interests | 1.0 | 0.4 | 1.3 | 0.6 | 2.9 |
--------------------------------------------------------------------------------
| Total | 8.5 | -2.9 | 8.9 | -3.7 | 7.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL COMPREHENSIVE | | | | | |
| INCOME FOR THE PERIOD | | | | | |
| ATTRIBUTABLE TO: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | 11.2 | 0.1 | 4.3 | 0.3 | -19.0 |
| parent | | | | | |
--------------------------------------------------------------------------------
| Minority interests | 1.2 | 1.2 | 1.3 | 1.0 | 2.5 |
--------------------------------------------------------------------------------
| Total | 12.4 | 1.3 | 5.6 | 1.3 | -16.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share | | | | | |
| calculated on profit | | | | | |
| attributable to equity | | | | | |
| holders of the parent: | | | | | |
--------------------------------------------------------------------------------
| EPS, undiluted (EUR), | 0.18 | -0.09 | 0.18 | -0.11 | 0.12 |
| continuing operations | | | | | |
--------------------------------------------------------------------------------
| EPS, diluted (EUR), | 0.18 | -0.09 | 0.18 | -0.11 | 0.12 |
| continuing operations | | | | | |
--------------------------------------------------------------------------------
In calculating the EPS figures, the interest on the hybrid bond has been
deducted from the profit for the period.
CONSOLIDATED BALANCE SHEET
(EUR million)
--------------------------------------------------------------------------------
| | 30.6.2009 | 30.6.2008 | 31.12.2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-CURRENT ASSETS | | | |
--------------------------------------------------------------------------------
| Intangible assets | 60.7 | 64.9 | 57.8 |
--------------------------------------------------------------------------------
| Goodwill | 83.7 | 85.0 | 81.7 |
--------------------------------------------------------------------------------
| Tangible assets | 467.5 | 502.1 | 479.3 |
--------------------------------------------------------------------------------
| Holdings in associates | 19.0 | 21.5 | 17.8 |
--------------------------------------------------------------------------------
| Trade and other receivables | 19.8 | 15.8 | 17.4 |
--------------------------------------------------------------------------------
| Available-for-sale investments | 10.0 | 11.4 | 9.9 |
--------------------------------------------------------------------------------
| Deferred tax asset | 9.7 | 8.3 | 10.1 |
--------------------------------------------------------------------------------
| NON-CURRENT ASSETS | 670.4 | 708.9 | 673.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CURRENT ASSETS | | | |
--------------------------------------------------------------------------------
| Inventories | 133.1 | 140.8 | 128.3 |
--------------------------------------------------------------------------------
| Trade and other receivables | 202.4 | 229.1 | 198.4 |
--------------------------------------------------------------------------------
| Income tax receivable | 1.4 | 6.0 | 1.5 |
--------------------------------------------------------------------------------
| Other financial assets | 2.2 | 3.6 | 2.2 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 57.8 | 47.5 | 92.2 |
--------------------------------------------------------------------------------
| CURRENT ASSETS | 396.9 | 427.0 | 422.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | 1 067.2 | 1 135.9 | 1 096.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY AND | | | |
| LIABILITIES | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY | | | |
--------------------------------------------------------------------------------
| Share capital | 66.8 | 66.8 | 66.8 |
--------------------------------------------------------------------------------
| Share premium reserve | 73.8 | 74.7 | 73.5 |
--------------------------------------------------------------------------------
| Treasury shares | -0.0 | -0.1 | -0.0 |
--------------------------------------------------------------------------------
| Fair value reserve and other | 108.5 | 82.3 | 106.0 |
| reserves | | | |
--------------------------------------------------------------------------------
| Translation differences | -27.3 | 5.3 | -25.1 |
--------------------------------------------------------------------------------
| Retained earnings | 90.5 | 90.2 | 97.0 |
--------------------------------------------------------------------------------
| Equity attributable to equity | 312.3 | 319.2 | 318.2 |
| holders of the parent | | | |
--------------------------------------------------------------------------------
| Minority interest | 5.3 | 2.4 | 5.4 |
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY | 317.6 | 321.6 | 323.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-CURRENT LIABILITIES | | | |
--------------------------------------------------------------------------------
| Deferred tax liability | 33.5 | 35.3 | 33.6 |
--------------------------------------------------------------------------------
| Non-current interest-bearing | 430.4 | 429.8 | 442.1 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Non-current non-interest bearing | 4.7 | 6.3 | 7.9 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Pension obligations | 3.6 | 3.1 | 3.7 |
--------------------------------------------------------------------------------
| Non-current provisions | 3.2 | 0.2 | 1.4 |
--------------------------------------------------------------------------------
| NON-CURRENT LIABILITIES | 475.3 | 474.7 | 488.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CURRENT LIABILITIES | | | |
--------------------------------------------------------------------------------
| Current interest-bearing | 65.2 | 120.0 | 82.4 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Trade payables and other | 206.1 | 218.0 | 199.4 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Income tax liability | 0.3 | 0.1 | 0.5 |
--------------------------------------------------------------------------------
| Current provisions | 2.6 | 1.4 | 1.9 |
--------------------------------------------------------------------------------
| CURRENT LIABILITIES | 274.3 | 339.5 | 284.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY AND | 1 067.2 | 1 135.9 | 1 096.5 |
| LIABILITIES | | | |
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
(EUR million)
--------------------------------------------------------------------------------
| | 1. | 2. | 3. | 4. | 5. | 6. | 7. | 8. | 9. | 10. |
--------------------------------------------------------------------------------
| SHAREHOLD | 66. | 73. | 8.1 | 66.7 | 20.0 | 11.2 | -25. | 0.0 | 97.0 | 318. |
| ERS' | 8 | 5 | | | | | 1 | | | 2 |
| EQUITY | | | | | | | | | | |
| 1.1.2009 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Income | | -0. | 0.0 | | | -0.3 | -2.2 | 0.0 | 6.8 | 4.3 |
| and | | 1 | | | | | | | | |
| expenses | | | | | | | | | | |
| recognise | | | | | | | | | | |
| d during | | | | | | | | | | |
| the | | | | | | | | | | |
| period, | | | | | | | | | | |
| total | | | | | | | | | | |
--------------------------------------------------------------------------------
| Recogniti | | 0.3 | | | | | | | | 0.3 |
| on of | | | | | | | | | | |
| expenses | | | | | | | | | | |
| relating | | | | | | | | | | |
| to | | | | | | | | | | |
| share-bas | | | | | | | | | | |
| ed | | | | | | | | | | |
| schemes | | | | | | | | | | |
--------------------------------------------------------------------------------
| Direct | | | | | | | | | -1.2 | -1.2 |
| recogniti | | | | | | | | | | |
| on in | | | | | | | | | | |
| retained | | | | | | | | | | |
| earnings* | | | | | | | | | | |
| ) | | | | | | | | | | |
--------------------------------------------------------------------------------
| Transfers | | | | | | 2.7 | | | -2.7 | 0.0 |
| between | | | | | | | | | | |
| items | | | | | | | | | | |
--------------------------------------------------------------------------------
| Purchase | | | | | | | | | | 0.0 |
| of | | | | | | | | | | |
| treasury | | | | | | | | | | |
| shares | | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | | | | | -9.4 | -9.4 |
| distribut | | | | | | | | | | |
| ion | | | | | | | | | | |
--------------------------------------------------------------------------------
| SHAREHOLD | 66. | 73. | 8.1 | 66.7 | 20.0 | 13.7 | -27. | 0.0 | 90.5 | 312. |
| ERS' | 8 | 8 | | | | | 3 | | | 3 |
| EQUITY | | | | | | | | | | |
| 30.6.2009 | | | | | | | | | | |
--------------------------------------------------------------------------------
COLUMNS: 1. Share capital, 2. Share premium reserve, 3. Revaluation reserve, 4.
Reserve for invested unrestricted equity, 5. Other equity items, 6. Other
reserves, 7. Translation differences, 8. Treasury shares, 9. Retained earnings,
10. Total
*) Comprising a hybrid bond classified as equity and interest paid thereon
--------------------------------------------------------------------------------
| | 1. | 2. | 3. | 4. | 5. | 6. | 7. | 8. | 9. | 10. |
--------------------------------------------------------------------------------
| SHAREHOLD | 66. | 73. | 3.0 | 66.7 | 0.0 | 10.8 | 3.0 | -0.7 | 105. | 328. |
| ERS' | 8 | 4 | | | | | | | 5 | 5 |
| EQUITY | | | | | | | | | | |
| 1.1.2008 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Income | | 0.1 | 1.5 | | | 0.3 | 2.2 | | -3.7 | 0.3 |
| and | | | | | | | | | | |
| expenses | | | | | | | | | | |
| recognise | | | | | | | | | | |
| d during | | | | | | | | | | |
| the | | | | | | | | | | |
| period, | | | | | | | | | | |
| total | | | | | | | | | | |
--------------------------------------------------------------------------------
| Recogniti | | 0.3 | | | | | | | | 0.3 |
| on of | | | | | | | | | | |
| expenses | | | | | | | | | | |
| relating | | | | | | | | | | |
| to | | | | | | | | | | |
| share-bas | | | | | | | | | | |
| ed | | | | | | | | | | |
| schemes | | | | | | | | | | |
--------------------------------------------------------------------------------
| Direct | | | | | | | | | | 0.0 |
| recogniti | | | | | | | | | | |
| on in | | | | | | | | | | |
| retained | | | | | | | | | | |
| earnings | | | | | | | | | | |
--------------------------------------------------------------------------------
| Transfers | | 1.0 | | | | | | | -1.0 | 0.0 |
| between | | | | | | | | | | |
| items | | | | | | | | | | |
--------------------------------------------------------------------------------
| Purchase | | | | | | | | -0.1 | | -0.1 |
| of | | | | | | | | | | |
| treasury | | | | | | | | | | |
| shares | | | | | | | | | | |
--------------------------------------------------------------------------------
| Payments | | | | | | | | 0.8 | | 0.8 |
| made in | | | | | | | | | | |
| treasury | | | | | | | | | | |
| shares | | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | | | | | -10. | -10. |
| distribut | | | | | | | | | 6 | 6 |
| ion | | | | | | | | | | |
--------------------------------------------------------------------------------
| SHAREHOLD | 66. | 74. | 4.5 | 66.7 | 0.0 | 11.1 | 5.3 | -0.1 | 90.2 | 319. |
| ERS' | 8 | 7 | | | | | | | | 2 |
| EQUITY | | | | | | | | | | |
| 30.6.2008 | | | | | | | | | | |
--------------------------------------------------------------------------------
COLUMNS: 1. Share capital, 2. Share premium reserve, 3. Revaluation reserve, 4.
Reserve for invested unrestricted equity, 5. Other equity items, 6. Other
reserves, 7. Translation differences, 8. Treasury shares, 9. Retained earnings,
10. Total
CASH FLOW STATEMENT
(EUR million)
--------------------------------------------------------------------------------
| | 1-6/2009 | 1-6/2008 | 1-12/2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EBIT | 22.5 | 10.5 | 38.1 |
--------------------------------------------------------------------------------
| Adjustments to EBIT | -1.8 | -3.5 | -1.3 |
--------------------------------------------------------------------------------
| Depreciation and amortisation | 27.2 | 27.1 | 54.0 |
--------------------------------------------------------------------------------
| Change in provisions | 2.6 | -1.5 | 1.4 |
--------------------------------------------------------------------------------
| Change in net working capital | -8.7 | 2.0 | 1.3 |
--------------------------------------------------------------------------------
| Financial income and expenses | -12.5 | -13.3 | -29.9 |
--------------------------------------------------------------------------------
| Taxes | -2.2 | -1.3 | -1.4 |
--------------------------------------------------------------------------------
| Net cash flow from operating | 27.1 | 20.0 | 62.2 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investing activities | | | |
--------------------------------------------------------------------------------
| Gross investments in fixed | -26.0 | -53.7 | -84.1 |
| assets | | | |
--------------------------------------------------------------------------------
| Disposals of fixed assets | 1.5 | 8.4 | 12.0 |
--------------------------------------------------------------------------------
| Investments in subsidiary | -0.3 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Loans granted | 0.0 | 0.0 | -0.2 |
--------------------------------------------------------------------------------
| Repayments of loans receivable | 0.2 | 0.6 | 2.0 |
--------------------------------------------------------------------------------
| Net cash flow from investing | -24.6 | -44.7 | -70.3 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow before financing | 2.5 | -24.7 | -8.1 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financing activities | | | |
--------------------------------------------------------------------------------
| Capital loan payments received | 0.0 | 0.0 | 20.0 |
--------------------------------------------------------------------------------
| Current borrowings raised | 32.5 | 59.9 | 187.9 |
--------------------------------------------------------------------------------
| Current borrowings repaid | -44.9 | -31.3 | -164.2 |
--------------------------------------------------------------------------------
| Non-current borrowings raised | 28.7 | 1.3 | 27.4 |
--------------------------------------------------------------------------------
| Non-current borrowings repaid | -41.6 | 0.0 | -7.3 |
--------------------------------------------------------------------------------
| Interest on hybrid bond | -1.3 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Dividends paid | -9.4 | -10.6 | -10.6 |
--------------------------------------------------------------------------------
| Purchase of treasury shares | -0.0 | -0.1 | -0.1 |
--------------------------------------------------------------------------------
| Net cash flow from financing | -36.0 | 19.2 | 53.0 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash and cash | -33.5 | -5.5 | 44.9 |
| equivalents | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents at | 94.4 | 56.8 | 56.8 |
| 1.1. | | | |
--------------------------------------------------------------------------------
| Effect of changes in exchange | -1.0 | -0.2 | -7.3 |
| rates of cash and cash | | | |
| equivalents | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | 59.9 | 51.1 | 94.4 |
| 30.6. | | | |
--------------------------------------------------------------------------------
FINANCIAL INDICATORS
--------------------------------------------------------------------------------
| | 30.6.2009 | 30.6.2008 | 31.12.2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share | 0.18 | -0.11 | 0.12 |
--------------------------------------------------------------------------------
| Equity per share at 30.6, EUR 1) | 7.95 | 8.12 | 8.10 |
--------------------------------------------------------------------------------
| Equity ratio, % | 29.8 | 28.3 | 29.5 |
--------------------------------------------------------------------------------
| Adjusted average | | | |
--------------------------------------------------------------------------------
| number of shares, mill. | 39.3 | 39.3 | 39.3 |
--------------------------------------------------------------------------------
| Gross capital expenditure | | | |
--------------------------------------------------------------------------------
| on fixed assets, EUR million | 24.5 | 53.6 | 84.0 |
--------------------------------------------------------------------------------
| Employees, end of month | | | |
--------------------------------------------------------------------------------
| average | 7 265 | 7 536 | 7 421 |
--------------------------------------------------------------------------------
1) Excluding minority's share of equity.
NOTES TO THE GROUP'S INTERIM REPORT
ACCOUNTING PRINCIPLES
HKScan Corporation's interim report for 1 January - 30 June 2009 has been
prepared in compliance with IAS 34 Interim Financial Reporting. The same
accounting principles have been applied in the interim report as in the annual
financial statements for 2008. These accounting principles are explained in the
financial statements for 2008.
On 1 January 2009 the Group adopted the following new IFRS standards and
interpretations:
- IAS 1 (revised) Presentation of Financial Statements. The revision is aimed at
improving users' ability to analyse and compare the information given in
financial statements. The means to achieve this include separating changes in a
company's equity resulting from transactions with owners in their capacity as
owners from other changes in equity. Non-owner-related changes are presented in
the statement of comprehensive income.
- IAS 23 (revised) Borrowing Costs. The standard requires that borrowing costs
that are directly attributable to the acquisition, construction or production of
a qualifying asset, such as a production facility, are included in the cost of
that asset. The Group has previously recognised borrowing costs as an expense
during the period in which they are incurred, in the manner permitted. The
revised standard means that borrowing costs concerning construction projects
undertaken after 1 January 2009 are allocated to the project and capitalised in
the balance sheet.
- IFRS 8 Operating Segments. The standard replaces IAS 14 and requires adoption
of the ‘management approach' to presenting segment information, meaning that
information is reported in the same manner as in internal reporting. The
standard does not alter the Group's segment reporting breakdown.
The figures presented in the interim report are unaudited.
ANALYSIS BY SEGMENT (EUR million)
Net sales and EBIT by main market area
--------------------------------------------------------------------------------
| | Q2/2009 | Q2/2008 | Q1-Q2/09 | Q1-Q2/08 | 2008 |
--------------------------------------------------------------------------------
| NET SALES | | | | | |
--------------------------------------------------------------------------------
| -Finland | 190.2 | 194.5 | 365.5 | 359.5 | 740.4 |
--------------------------------------------------------------------------------
| -Sweden | 264.5 | 305.0 | 502.9 | 562.4 | 1 179.3 |
--------------------------------------------------------------------------------
| -Baltics | 40.9 | 43.0 | 78.2 | 81.0 | 168.2 |
--------------------------------------------------------------------------------
| -Poland | 60.9 | 69.3 | 117.3 | 130.4 | 270.9 |
--------------------------------------------------------------------------------
| -Between segments | -15.0 | -19.9 | -30.3 | -31.6 | -64.3 |
--------------------------------------------------------------------------------
| Group total | 541.6 | 591.9 | 1 033.6 | 1 102.0 | 2 294.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EBIT | | | | | |
--------------------------------------------------------------------------------
| -Finland | 6.7 | -0.5 | 12.9 | 3.5 | 14.4 |
--------------------------------------------------------------------------------
| -Sweden | 3.0 | 3.3 | 5.1 | 3.9 | 18.0 |
--------------------------------------------------------------------------------
| -Baltics | 3.5 | 2.7 | 4.5 | 4.2 | 6.4 |
--------------------------------------------------------------------------------
| -Poland | 2.5 | -0.2 | 4.1 | 0.7 | 4.2 |
--------------------------------------------------------------------------------
| -Between segments | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| -Group admin. costs | -1.4 | -0.9 | *) -4.1 | -1.8 | -4.9 |
--------------------------------------------------------------------------------
| Group total | 14.3 | 4.4 | 22.5 | 10.5 | 38.1 |
--------------------------------------------------------------------------------
*) Includes EUR 1.3 million in non-recurring severance pay relating to the
termination of the former CEO's employment and recognised in Q1.
CHANGES IN TANGIBLE AND INTANGIBLE ASSETS
--------------------------------------------------------------------------------
| | Q1-Q2/2009 | Q1-Q2/2008 | 2008 |
--------------------------------------------------------------------------------
| Carrying value at 1 Jan | 618.8 | 627.2 | 627.2 |
--------------------------------------------------------------------------------
| Translation differences | -3.8 | 4.8 | -36.0 |
--------------------------------------------------------------------------------
| Increase | 25.6 | 54.0 | 80.9 |
--------------------------------------------------------------------------------
| Increase (acquisitions) | 0.0 | 0.0 | 0 |
--------------------------------------------------------------------------------
| Decrease | -1.5 | -6.5 | -11.9 |
--------------------------------------------------------------------------------
| Depreciation and impairment | -27.2 | -27.5 | -50.3 |
--------------------------------------------------------------------------------
| Transfer to other balance sheet | 0.0 | 0.0 | 8.9 |
| item | | | |
--------------------------------------------------------------------------------
| Carrying value at 30 Jun | 611.9 | 652.0 | 618.8 |
--------------------------------------------------------------------------------
INVENTORIES
--------------------------------------------------------------------------------
| | Q1-Q2/2009 | Q1-Q2/2008 | 2008 |
--------------------------------------------------------------------------------
| Materials and supplies | 82.2 | 86.0 | 80.9 |
--------------------------------------------------------------------------------
| Unfinished products | 7.5 | 8.3 | 7.1 |
--------------------------------------------------------------------------------
| Finished products | 28.8 | 32.0 | 25.6 |
--------------------------------------------------------------------------------
| Goods | 0.1 | 0.1 | 0.0 |
--------------------------------------------------------------------------------
| Other inventories | 4.2 | 4.7 | 4.2 |
--------------------------------------------------------------------------------
| Prepayments | 2.1 | 0.8 | 2.2 |
--------------------------------------------------------------------------------
| Live animals, IFRS 41 | 8.2 | 8.9 | 8.2 |
--------------------------------------------------------------------------------
| Total inventories | 133.1 | 140.8 | 128.3 |
--------------------------------------------------------------------------------
NOTES TO SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
| Share capital | Number of | Share | Share | RIUE | Treasury | Tot. |
| and share | outstandi | capital | premium | | shares | |
| premium | ng shares | | reserve | | | |
| reserve | | | | | | |
--------------------------------------------------------------------------------
| 1.1.2009 | 39 301 | 66.8 | 72.9 | 66.7 | 0.0 | 206.4 |
| | 719 | | | | | |
--------------------------------------------------------------------------------
| Revert of | -47 508 | | | | 0.0 | 0.0 |
| treasury | | | | | | |
| shares | | | | | | |
--------------------------------------------------------------------------------
| 30.6.2009 | 39 254 | 66.8 | 72.9 | 66.7 | 0.0 | 206.4 |
| | 211 | | | | | |
--------------------------------------------------------------------------------
RIUE = Reserve for invested unrestricted equity
CONSOLIDATED CONTINGENT LIABILITIES
(EUR million)
--------------------------------------------------------------------------------
| | 30.6.2009 | 30.6.2008 | 31.12.2008 |
--------------------------------------------------------------------------------
| Debts secured by | | | |
--------------------------------------------------------------------------------
| pledges or mortgages | | | |
--------------------------------------------------------------------------------
| - loans from financial institutions | 37.2 | 42.4 | 41.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Given as security | | | |
--------------------------------------------------------------------------------
| - real estate mortgages | 47.3 | 65.6 | 36.0 |
--------------------------------------------------------------------------------
| - pledges | 23.2 | 5.5 | 15.4 |
--------------------------------------------------------------------------------
| - floating charges | 16.1 | 24.0 | 19.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| For associates | | | |
--------------------------------------------------------------------------------
| - guarantees | 5.5 | 8.4 | 5.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| For others | | | |
--------------------------------------------------------------------------------
| - guarantees and pledges | 12.7 | 10.2 | 9.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other contingencies | | | |
--------------------------------------------------------------------------------
| Leasing commitments | 19.0 | 21.3 | 23.0 |
--------------------------------------------------------------------------------
| Rent liabilities | 39.1 | 17.1 | 42.4 |
--------------------------------------------------------------------------------
| Other liabilities | 4.2 | 3.3 | 4.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Derivative instrument liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Nominal values of derivative | | | |
| instruments | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Foreign exchange derivatives | 110.8 | 63.3 | 84.4 |
--------------------------------------------------------------------------------
| Interest-rate derivatives | 177.0 | 206.3 | 276.8 |
--------------------------------------------------------------------------------
| Electricity derivatives | 8.6 | 5.7 | 8.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fair values of derivative | | | |
| instruments | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Foreign exchange derivatives | 0.1 | -0.9 | -2.0 |
--------------------------------------------------------------------------------
| Interest-rate derivatives | -13.4 | 3.7 | -11.5 |
--------------------------------------------------------------------------------
| Electricity derivatives | -1.5 | 2.7 | -1.9 |
--------------------------------------------------------------------------------
BUSINESS TRANSACTIONS WITH ASSOCIATES
--------------------------------------------------------------------------------
| | Q1-Q2/2009 | Q1-Q2/2008 | 2008 |
--------------------------------------------------------------------------------
| Sales to associates | 15.2 | 21.9 | 37.6 |
--------------------------------------------------------------------------------
| Purchases from associates | 18.3 | 21.5 | 37.0 |
--------------------------------------------------------------------------------
| Trade and other receivables | 1.4 | 2.2 | 2.2 |
--------------------------------------------------------------------------------
| Trade payables and other | 8.7 | 12.1 | 9.0 |
| liabilities | | | |
--------------------------------------------------------------------------------
Vantaa, 6 August 2009
HKScan Corporation
Board of Directors
Further information is available from HKScan CEO Matti Perkonoja. Please leave
any messages for him to call with Marjukka Hujanen on +358 (0)10 570 6218.
HKScan is one of the leading food companies in northern Europe with home markets
in Finland, Sweden, the Baltics and Poland. HKScan manufactures, sells and
markets pork and beef, poultry products, processed meats and convenience foods
under several well-known local brand names. Its customers are retail, the HoReCa
sector, industry and export customers. HKScan is active in nine countries and
has some 10,000 employees. Annual net sales are 2.3 billion euro.
DISTRIBUTION:
NASDAQ OMX, Helsinki
Financial Supervisory Authority FIN-FSA
Main media
www.hkscan.com
