INTERIM REPORT JANUARY 1 - JUNE 30, 2007
LÄNNEN TEHTAAT PLC STOCK EXCHANGE RELEASE AUGUST 9, 2007 AT 8.30 AM
INTERIM REPORT JANUARY 1 - JUNE 30, 2007
April-June
- Second quarter profit totalled EUR 4.4 million (Q2 2006: 2.0 million).
- Earnings per share came to EUR 0.71 (0.34).
- Second quarter net sales for the Group's continuing operations came to EUR
68.0 (63.5) million, up 7.1% on Q2 2006.
- The continuing operations showed an operating profit/loss of EUR -0.5 (0.6)
million; the effect of non-recurring items was EUR 0.0 (0.3) million.
- The sale of the majority holding in Suomen Rehu Ltd was completed at the
start of June.
January-June
Profit for January-June was EUR 6.3 (2.5) million.
Earnings per share were EUR 1.01 (0.37).
Net sales of continuing operations amounted to EUR 139.5 (120.7) million, which
is 15.6% up on the comparison period.
The operating profit/loss of the continuing operations was EUR 0.0 (-0.6)
million; the effect of non-recurring items on the operating profit was EUR +0.1
(-0.4) million.
The information in the report is unaudited.
CHANGES IN GROUP STRUCTURE AND CORPORATE TRANSACTIONS IN THE SECOND QUARTER
On January 19, 2007 Lännen Tehtaat plc and SOK subsidiary Hankkija-Maatalous Oy
signed a share-purchase agreement under which 51% of the shares in Suomen Rehu
Ltd and Avena Nordic Grain would be transferred to the ownership of
Hankkija-Maatalous Oy. When the competition authorities studied the agreement,
it was evident that the integration of Avena Nordic Grain's business with the
grain trading business of Hankkija-Maatalous would, under competition
legislation, be viewed as leading to the creation of a strong market position,
and so both parties to the agreement decided to omit Avena Nordic Grain from the
deal.
The sale of the majority holding in Suomen Rehu Ltd was completed at the start
of June, when Suomen Rehu and its subsidiaries were transferred to
Hankkija-Maatalous Oy. Following this deal, Suomen Rehu Ltd is now an associated
company of Lännen Tehtaat, which retains a 49% holding in the company. More
details of the deal are given in the notes to the interim report.
Avena Nordic Grain was not part of the deal and will be reported as a separate
segment of the continuing operations.
The dismantling of the feed company ZAO Scandic Feed, jointly owned with Raisio
Nutrition, was completed at the end of the quarter. This had no significant
impact on the financial performance of Lännen Tehtaat.
KEY INDICATORS, EUR million
4-6/2007 4-6/2006 1-6/2006 1-6/2006
Group total
Net sales 94.3 102.8 206.7 199.7
Operating profit 4.5 2.5 7.8 2.0
Profit before taxes 4.5 2.7 7.0 3.7
Profit for the period 4.4 2.0 6.3 2.5
Earnings per share, EUR 0.71 0.34 1.01 0.37
Continuing operations
Net sales 68.0 63.5 139.5 120.7
Operating profit/loss -0.5 0.6 0.0 -0.6
Discontinued operations
Net sales 31.6 44.6 78.8 90.3
Operating profit 5.0 1.9 7.8 2.6
NET SALES AND PROFIT
April-June
In April-June, the operating profit for the Group totalled EUR 4.5 (2.5)
million. The profit before taxes was EUR 4.5 (2.7) million and the profit for
the period EUR 4.4 (2.0) million. Earnings per share were EUR 0.71 (0.34).
In April-June, net sales for the Group's continuing operations totalled EUR 68.0
(63.5) million, up 7.1% on the same quarter the previous year. The increase in
net sales was attributable to the Group's Grain Trading and Fish Products
Business. Net sales of the Frozen Foods Business were lower than in the
comparison period, while those of the Vegetable Oil Business were at the level
of the comparison period. Following the acquisition of Maritim Food, net sales
of the Fish Products Business increased by EUR 6.6 million.
Second quarter operating profit/loss for continuing operations, excluding
non-recurring items, was EUR -0.5 (0.3) million. Non-recurring items totalled
EUR 0.0 (0.3) million. The operating result in the Frozen Foods Business and in
Grain Trading was up on the figure for the same quarter a year earlier, whereas
the Fish Products Business and the Vegetable Oil Business recorded a poorer
result than in 2006. In Other Operations, the profit was at the level of the
comparison period.
January-June
In January-June, the operating profit for the Group totalled EUR 7.8 (2.0)
million. The profit before taxes was EUR 7.0 (3.7) million and the profit for
the period EUR 6.3 (2.5) million. Earnings per share were EUR 1.01 (0.37).
January-June net sales for the Group's continuing operations amounted to EUR
139.5 (120.7) million, up 15.6% on the same period a year earlier. Maritim Food
accounted for EUR 9.3 million of this total. Net sales in Grain Trading were up
by EUR 12.5 million.
Operating profit/loss for continuing operations, excluding non-recurring items,
was EUR -0.1 (-0.2) million. Non-recurring items totalled EUR 0.1 (-0.4)
million. Frozen Foods and Jams, Grain Trading and Other Operations all turned in
an improved result on the same quarter a year earlier, whereas the opposite was
true for the Fish Products Business and the Vegetable Oil Business.
DISCONTINUED OPERATIONS
The Suomen Rehu Group has been included under discontinued operations. To allow
comparison with the same period a year earlier, the latter has been divided into
continuing and discontinued operations as if Suomen Rehu had been discontinued
from the start of 2006.
The result of the discontinued operations includes that of the Suomen Rehu Group
from the beginning of January 1 untill the beginning of June, 2007 and the fixed
sales price component of the sales proceeds from the majority shareholding in
Suomen Rehu Ltd, and the expenses incurred in the transaction. The tax-free
sales profit on the majority shareholding recongnised in the second quarter
amounted to EUR 4.1 million. The parties to the deal are still determining the
adjustment item affecting the final sales price. The adjustment for the majority
shareholding will be no more than EUR 1.8 million and will be reported in the
third quarter. In accordance with IFRS rules, no depreciation according to plan
has been recorded on discontinued operations after January 19, 2007. This
unrecorded depreciation improved the profit for the first part of the year in
the Suomen Rehu Group by EUR 1.0 million and correspondingly reduced the profit
made on the share deal by about EUR 0.5 million.
For the Group's discontinued operations, a profit of EUR 4.6 (1.1) million was
recorded in April-June and EUR 6.4 (1.3) million in January-June.
INVESTMENT
Gross investment in non-current assets in January-June, excluding corporate
acquisitions, amounted to EUR 3.1 (2.8) million. Investment by the Frozen Foods
Business was EUR 1.1 (0.5) million, by the Fish Products Business EUR 1.1 (0.1)
million, by the Vegetable Oil Business EUR 0.3 (0.2) million and by the Feeds
segment, now sold, EUR 0.6 (2.1) million.
Investment in shares in January-June totalled EUR 11.1 (1.5) million. This
entire sum was for the purchase of shares in the Norwegian fish products company
Maritim Food AS. More details about this are given in the notes to the interim
report.
FINANCING
The Group's financial position and liquidity continued to be good throughout the
period.
Cash flow from operations after interest and taxes stood at EUR 4.8 (4.9)
million for April-June. Net cash flow from investments was EUR 23.0 (-2.6)
million. A total of EUR 5.3 (4.6) million was paid in dividends.
For January-June, cash flow from operations after interest and taxes totalled
EUR 10.3 (9.6) million. Cash flow from investments was EUR 12.8 (0.1) million.
The Group's financing structure changed at the start of June as a result of the
sale of the majority shareholding in Suomen Rehu Ltd. At the end of the review
period, the Group's interest-bearing liabilities came to a total of EUR 29.9
(40.5) million and liquid assets to EUR 25.2 (10.9) million. Net
interest-bearing liabilities amounted to EUR 4.7 (29.6) million. The
consolidated balance sheet total stood at EUR 177.2 (201.2) million. The equity
ratio was 67.9 (55.3)%. Commercial papers issued for the Group's short-term
financing stood at EUR 23.0 (19.0) million at the end of the period under
review. Liquidity is secured with committed credit facilities. At the end of the
period under review there were no credit facilities in use.
The net financial income of the Group's continuing operations came to EUR 0.0
(0.3) million in April-June and EUR 0.0 (2.7) million in January-June. The
financial income for the corresponding period a year earlier included sales
profits of approximately EUR 2.6 million on the sale of shares not comprising
part of the Group's business operations.
SHARE OF ASSOCIATED COMPANIES' PROFITS
The profit recorded for the Group's continuing operations in April-June includes
a proportion of the profits of associated companies. This proportion amounted to
a total of EUR 0.2 (0.2) million. In January-June the corresponding figure was
EUR -0.2 (-0.2) million. This includes a 49% share of the Suomen Rehu Group
profit for June 2007.
TAXES AND PROFIT FOR THE PERIOD
In April-June, the Group's continuing operations recorded a figure of EUR -0.3
(1.1) million as profit/loss before taxes and EUR -0.2 (0.9) million as profit
for the period. The taxes on the profit/loss for the period totalled EUR 0.1
(-0.2) million. In January-June, profit/loss before taxes came to EUR -0.2 (1.8)
million and the profit/loss for the period was EUR -0.1 (1.1) million. The taxes
on the profit/loss for the period were EUR 0.1 (-0.7) million.
The April-June result for continuing and discontinued operations showed a profit
of EUR 4.4 (2.0) million. The corresponding figure for January-June was EUR 6.3
(2.5) million.
PERSONNEL
The average number of personnel in the Group's continuing operations in
January-June was 673 (650). The number of people working in the Frozen Foods
Business was an average of 246 (259), in the Fish Products Business (including
the staff of Maritim Food AS as of March 1, 2007) 351 (306), in the Vegetable
Oil Business 36 (35), in Grain Trading 29 (28) and in Other Operations 11 (21).
The number of people working in the Feeds segment, now sold, during January-May
was an average of 298 (324). In calculating the number of personnel, the figure
for personnel at Apetit Suomi Oy has been divided up between the Frozen Foods
Business and Fish Products Business in relation to the services charged. The
figure given for personnel in Other Operations in the same period in 2006
includes the personnel at Harviala Oy up to February 28.
SEASONAL NATURE OF OPERATIONS
The transition to IFRS reporting has had a noticeable impact on the accrual of
Lännen Tehtaat's profits over the financial year. With production linked to the
harvesting season and with inventories being valued in accordance with IAS 2,
most of the Group's annual profit accrues during the final quarter of the year.
The focus on the harvesting season means that the seasonality of operations is
most marked in the Frozen Foods Business and in the operations of the associated
company Sucros.
Apetit Kala's sales depend to a great extent on seasonal holidays. A major
proportion of the entire year's profit depends on the success of Christmas
sales.
The net sales of Grain Trading vary both annually and quarterly, depending on
supply and demand and on prices in Finland and on other markets.
BUSINESS SEGMENTS
Frozen Foods Business
Net sales of the Frozen Foods Business in April-June were down EUR 2.6 million
to EUR 11.8 (14.4) million. The drop in sales was the result of the transfer of
sugar beet contract farming and associated sales of supplies to Sucros. Food
sales were at the same level as the previous year.
Sales of retail products were down about 7% on the previous period. Sales were
up in the potato and frozen pizza product groups. Sales of frozen foods and
vegetables remained at the previous level. Sales in the hotel, restaurant and
catering sector showed a positive trend with a growth of about 10%. Industrial
sales grew by around 20%, while exports remained at the previous level.
The Frozen Foods Business showed an operating profit of EUR 0.3 (0.2) million
for the period April-June.
Net sales for the period January-June were down EUR 2.1 million to EUR 25.1
(27.2) million. Sales of agricultural supplies were down EUR 2.6 million. Food
sales grew by over 1%.
The drop in sales of retail products was around 2.5% for the period
January-June. Most of the drop was in retailers' own brands. Sales in the hotel,
restaurant and catering sector grew by over 10% as too did industrial sales.
Exports were at the same level as the previous period.
The Frozen Foods Business showed an operating profit/loss of EUR 0.8 (-0.6)
million for the period January-June. Results were improved by changes in the
sales product structure and as a result of improvements in productivity and cost
efficiency.
Investments in the Frozen Foods Business were EUR 1.1 (0.5) million during the
period January-June, the most important ones being associated with the renewal
of freezing lines.
Fish Products Business
Net sales of the Fish Products Business for the period April-June were EUR 20.5
(15.6) million. Net sales were increased by acquiring the Maritim Food Group,
which became part of the Fish Products Business. Net sales of Apetit Kala were
down EUR 1.7 million.
The Fish Products Business made a loss of EUR -1.1 million (-0.0) in the second
quarter, mostly because of Apetit Kala. The Maritim Food Group made a small loss
as expected. Apetit Kala operations were affected in the second quarter by
machinery breakdowns at the Kuopio production plant, which caused delivery
problems and sales losses, and extra costs in production and logistics. There
were also delays from the planned timetable in starting up production
transferred to Kuopio from Kustavi causing overlapping costs in production.
Furthermore, preparing for the threat of a strike in the food industry at the
start of the period also caused extra costs.
Net sales of the Fish Products Business for the period January-June were
EUR 36.9 (29.0) million. The increase in net sales brought by the Maritim Food
Group was EUR 9.3 million. Net sales by Maritim Food grew a little under 10%
compared with the previous year. Net sales by Apetit Kala were down a little
under 5% compared with the same period the previous year. The Fish Products
Business made a loss of EUR -1.3 million (profit 0.4) for the period
January-June.
Investments in the Fish Products Business were EUR 1.1 (0.1) million during the
period January-June. They were associated with the factory extension and
replacement of the smoke ovens in Kuopio in line with the centralized production
programme.
Concentrating Apetit Kala production in Kuopio was implemented as far as the
transfer from Kustavi is concerned. The codetermination negotiations related to
the transfer of production and packaging operations from Kerava were concluded
in June. The aim of concentrating production is to generate substantial
improvements in production and cost efficiency.
Human resources in domestic fish operations were strengthened on August 1, 2007
with the appointment of Ari Laarne as managing director of Apetit Kala. He will
have special responsibility for developing the company's core processes and
operational management. Heljä Mantere was appointed as director in charge of the
company's production, productivity development and quality.
The integration of Maritim Food to Lännen Tehtaat has proceeded according to
plan, and at the beginning of April Anders Ahlberg started to work as director
in charge of Maritim Food Sweden and the integration work.
Vegetable Oil Business
Net sales for the Vegetable Oil Business for the period April-June increased by
over 2% to EUR 10.7 (10.5) million. The comparable operating profit was EUR 0.6
(0.9) million. The fall is the result of an expected drop in the refining
margin.
Net sales for the period January-June were EUR 20.7 (20.6) million, and the
comparable operating profit was EUR 1.0 (1.6) million.
Investments in the Vegetable Oil Business were EUR 0.3 (0.2) million. The most
important investment was the renewal of the ERP-system.
Grain Trading
The favourable development in the Grain Trading Business continued strongly in
the second quarter too. Net sales were EUR 25.1 (23.2) million, showing growth
of 8%. Exports grew substantially, and domestic sales were at the same level as
the previous period. Operating profit doubled on the previous period to EUR 0.9
(0.4) million.
Net sales for the period January-June grew 28% to EUR 57.2 (44.7) million. Net
sales were up in all market sectors, though mostly in exports. Growth in net
sales was also affected by the rise in market prices of grain. Operating profit
was EUR 1.7 (0.8) million.
Other Operations
The Other Operations segment is made up of the service company Apetit Suomi,
group administration, and various items that do not come under any particular
segment. The cost effect of services produced by Apetit Suomi is an encumbrance
on the operating result in proportion to the use of services.
Net sales for the segment for the period April-June were EUR 0.9 (0.0) million
and the operating loss was EUR -1.2 (-1.2) million.
Net sales for the period January-June were EUR 1.9 (0.0) million, and the
operating loss without one-off items was EUR -2.3 (-2.5) million. Non-recurring
items for the period totalled EUR +0.1 (-0.6) million.
RESOLUTIONS BY THE ANNUAL GENERAL MEETING
Dividend
The Annual General Meeting of Lännen Tehtaat plc on March 29, 2007 approved the
distribution of a dividend of EUR 0.84 per share in line with the proposal of
the Board. The total amount of the dividend, EUR 5.3 million, was transferred
from retained earnings to short-term non-interest-bearing liabilities in the
balance sheet at the end of March. The dividend was paid out on April 12, 2007.
Authorizations by the Annual General Meeting
The Annual General Meeting authorized the Board to decide on a new share issue
and to sell the company's own shares held by the company either together or in
several lots in the form of a rights issue. The maximum number of new shares
that can be issued is 631,757, and the maximum number of shares held by the
company that can be sold is 65,000. The issue price of the new shares will be at
least the nominal share value, i.e. two (2) euros. The sales price of the
company's own shares will be at least the market price at the moment of sale,
defined on the basis of the trading price determined by public trading on the
Helsinki Stock Exchange (OMX). The authorization covers the right to depart from
the subscription priority of existing shareholders if there is a pressing
financial reason for so doing from the company's point of view; the right to
offer shares rather than money against apportionment as well, or on some other
specific condition or using right-of-setoff; and the right to decide the issue
price of the shares and any other conditions or matters associated with the
share issue.
The authorization will be in force until the next Annual General Meeting. This
authorization supersedes the share issue authorization given on March 29, 2006
and the authorization to sell the company's own shares given on the same date.
The Board has not, as yet, exercised the share issue authorization granted by
the Annual General Meeting.
SHARES AND SHARE TRADING
At the end of the period under review, the total number of the company's shares
in circulation was 6,317,576, and the registered share capital was
EUR 12,635,152. The company held 65,000 of its own shares, i.e. 1.0% of the
entire share stock. The nominal value of the company's own shares was
EUR 130,000. No changes in the share capital or in the number of the company's
own shares held by the company took place in the year under review or the
previous year.
During the year under review, 478,925 (945,386) of the company's shares were
traded on the stock exchange, i.e. 7.6% (15.0%) of the entire share stock. The
highest share price was EUR 24.50 (24.19) and the lowest EUR 21.00 (15.26).
Share trading during the period totalled EUR 11.2 (18.7) million. At the end of
the period, the market value of the entire share stock was EUR 132.7 (122.9)
million.
ANNOUNCEMENTS PURSUANT TO CHAPTER 2 SECTION 9 OF THE SECURITIES MARKET ACT
Lännen Tehtaat received no notices of disclosure pursuant to chapter 2 section 9
of the Securities Market Act during the period under review.
GOVERNANCE
At a meeting of the Supervisory Board of Lännen Tehtaat held on April 11, 2007,
the following were appointed members of the Board of Directors: Harri Eela,
Aappo Kontu, Matti Lappalainen, Hannu Simula, Soili Suonoja and Tom v. Weymarn.
Tom v. Weymarn was elected Chairman of the Board and Hannu Simula Deputy
Chairman.
IMPORTANT OCCURRENCES AFTER THE END OF THE PERIOD UNDER REVIEW
There were no important occurrences after the end of the period under review.
SHORT-TERM RISKS AND UNCERTAINTIES
The major risks for the Lännen Tehtaat Group are connected with the volume and
quality of the autumn harvests, the control of price changes of raw materials,
the success of the planned production transfer operations and the success of the
integration of the Maritim Group.
In the Fish Product Business and the Vegetable Oil Business, and in Grain
Trading, the most important raw material prices are determined by the global
markets. These raw materials include salmon, rainbow trout, shellfish, rapeseed,
soy beans and grain. Because of the tight competition on the markets, it is not
possible to pass on all rises in raw material prices to sales prices in full,
which would have a negative effect on Group profits.
FUTURE PROSPECTS
Third quarter
Net sales from continuing operations are expected to rise somewhat above the
2006 level during the third quarter because of the growth in net sales of the
Fish Products Business. Operating profit before non-recurring items is expected
to fall short of the level for the previous period and show a loss.
The profit of the Frozen Foods Business and Grain Trading is expected to remain
at the level of the comparison period in the third quarter. The results for
domestic fish operations will be encumbered by non-recurring costs stemming from
overlapping costs in production caused by the reconstruction. The positive
effect of concentrating production will still not be realised in the third
quarter. Results in the Vegetable Oil Business are being weakened by the fall in
the refining margin, which is due to the rise in raw material prices.
The year as a whole
The net sales of the Group's continuing operations are expected to increase over
2006 as a result of growth in the Fish Products Business and Grain Trading. The
operating profit of the continuing operations for the entire year, excluding
non-recurring items, is expected to be at the level of the comparison year.
Net sales for the Frozen Food Business are expected to be at the same level as
the previous year. Product sales are expected to grow about 5%. The transfer of
sugar beet cultivation to Sucros will cut sales of supplies by something
approaching EUR 3 million. Sales of own brands are expected to grow due to
volume growth and due to changes in the product mix. Favourable development in
the hotel, restaurant and catering sector and in industrial sales is expected to
continue. Sales of retailers' own brands and exports are expected to fall.
Operating profit before non-recurring items of the Frozen Food Business for the
year as a whole is expected to be better than in the previous year.
The market for industrially packaged fish is growing at an annual rate of about
10%. Because of delivery problems in the second quarter, Apetit Kala sales for
the entire year are expected to be at the previous year's level. It is estimated
that linking the Maritim Food Group with the Lännen Tehtaat Fish Products
Business at the beginning of March will have increased net sales for the Fish
Products Business for the year by more than EUR 20 million. Due to Apetit Kala's
weak first half-year and third quarter, the Fish Products Business before
non-recurring items is expected to remain weaker than the in previous year.
Net sales in the Vegetable Oil Business are expected to grow slightly from the
2006 level due to growth in volume and rises in product prices. As raw material
prices rose clearly more than product prices, the refining margin and operating
profit before non-recurring items are expected to remain below the exceptionally
good levels of 2005 and 2006.
In Grain Trading, net sales for the whole year are expected to grow to over
EUR 100 million due to the growth in volumes and market prices. Because of the
growth in sales, the operating profit for Avena Nordic Grain is expected to
improve on the 2006 level.
Lännen Tehtaat's vision is to be one of the leading Finnish food companies. In
order to realize the vision, Lännen Tehtaat continues to evaluate potential
structural arrangements and acquisition targets within the food industry.
CONSOLIDATED INCOME STATEMENT
EUR million
4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2007 2006 2007 2006 2006
3 mths 3 mths 6 mths 6 mths 12 mths
Continuing operations
Net sales 68.0 63.5 139.5 120.7 244.5
Other operating income 0.3 0.4 0.6 1.0 2.0
Operating expenses -67.6 -60.9 -137.8 -119.8 -236.3
Depreciation -1,2 -2.4 -2.3 -2.5 -4.7
Impairments - - - - -0.2
Operating profit/loss -0.5 0.6 0.0 -0.6 5.3
Financial income and expenses 0.0 0.3 0.0 2.7 3.2
Share of profit of associated
companies 0.2 0.2 -0.2 -0.2 1.6
Profit/loss before taxes -0.3 1.1 -0.2 1.8 10.2
Income taxes 0.1 -0.2 0.1 -0.7 -2.7
Profit for the period,
continuing operations -0.2 0.9 -0.1 1.1 7.5
Discontinued operations
Profit for the period,
discontinued operations 4.6 1.1 6.4 1.3 5.6
Profit/loss for the period 4.4 2.0 6.3 2.5 13.1
Attributable to:
Equity holders of the parent 4.4 2.1 6.3 2.4 13.1
Minority interests - -0.1 - 0.1 -
Earnings per share, calculated of
the profit/loss attributable to the
shareholders of the parent company
Basic and diluted earnings per
share, EUR, continuing operations -0.03 0.17 -0.02 0.16 1.20
Basic and diluted earnings per
share, EUR, discontinued operations 0.73 0.17 1.03 0.21 0.90
CONSOLIDATED BALANCE SHEET
EUR million
June 30,2007 June 30,2006 Dec 31, 2006
ASSETS
Non-current assets
Tangible assets 38.8 71.0 67.4
Goodwill 6.7 17.4 17.4
Other intangible assets 3.4 1.6 1.5
Investment in associated
companies 41.9 21.3 23.1
Available-for-sale investments 0.1 0.3 0.1
Receivables 4.5 5.7 5.8
Deferred tax assets 0.9 1.0 0.3
96.3 118.3 115.6
Current assets
Inventories 32.1 37.1 65.3
Receivables 23.5 34.9 49.0
Financial assets at fair value
through profit and loss 20.1 - -
Cash and cash equivalents 5.2 10.9 7.5
80.9 83.0 121.9
Total assets 177.2 201.2 237.5
EQUITY AND LIABILITIES
Equity attributable to the
equity holders of the parent
company 120.3 108.8 119.2
Minority interest - 2.3 -
Total equity 120.3 111.1 119.2
Non-current liabilities
Long term financial liabilities 3.0 10.6 7.0
Deferred tax liabilities 4.4 6.7 7.0
Long-term provisions 0.1 0.9 -
Non-current liabilities total 7.5 18.2 14.0
Current liabilities
Trade payables and other
liabilities 22.5 41.0 55.2
Short-term financial liabilities 26.9 29.9 49.1
Short-term provisions - 0.9 -
Current liabilities total 49.4 71.9 104.3
Total liabilities 56.9 90.1 118.3
Total equity and liabilities 177.2 201.2 237.5
CONSOLIDATED CASH FLOW STATEMENT
EUR million
1-6/2007 1-6/2006 1-12/2006
6 mths 6 mths 12 mths
Net profit for the period 6.3 2.5 13.1
Adjusments, total -11.4 4.5 8.5
Change in working capital 17.0 6.0 -23.1
Interests paid from
operating activities -1.5 -0.9 -1.9
Interests received from
operating activities 0.5 0.1 0.3
Taxes paid -0.6 -2.6 -3.2
Net cash flow from operating
activities 10.3 9.6 -6.4
Investments in tangible and
intangible assets -3.1 -2.8 -7.7
Proceeds from sales of tangible
and intangible assets 0.1 0.0 4.6
Acquisition of subsidiaries
deducted by cash -8.8 -1.3 -2.8
Proceeds from sales of
subsidiareis 45.1 0.9 0.0
Acquisition of associated
companies -1.1 -0.1 -0.2
Proceeds from sales of
associated companies 0.6 0.0 0.0
Purchases of other investments -20.0 0.0 -0.1
Proceeds from sales of
other investments 0.0 3.4 3.4
Dividends received from
investing activities 0.0 0.0 0.0
Cash flow from investing
activities 12.8 0.1 -2.7
Raising of long-term loans 0.0 0.0 1.9
Raising of short-term loans 0.0 0.0 19.1
Repayments of short-term loans -18.5 0.0 0.0
Repayments of long-term loans -1.7 -5.4 -10.8
Payment of financial lease
liabilities 0.0 -0.1 -0.1
Dividends paid -5.3 -4.6 -4.6
Cash flows from financing
activities -25.5 -10.0 5.5
Net changes in cash and
cash equivalents -2.3 -0.3 -3.7
Cash and cash equivalents at the
beginning of the the period 7.5 11.2 11.2
Cash and cash equivalents at the
end of the period 5.2 10.9 7.5
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
EUR million
A = Share capital
B = Share premium account
C = Net unrealised gains
D = Other reserves
E = Own shares
F = Translation differences
G = Retained earnings
H = Attributable to equity holders of the parent company
I = Minority interest
J = Shareholders' equity total
A B C D E F G H I J
Shareholders'
equity at
Jan. 1, 2006 12.6 23.4 1.9 7.3 -0.8 -0.2 68.3 112.4 3.7 116.1
Available-for-sale
financial assets:
transferred to
income statement
on sale - -2.1 - - - - -2.1 - -2.1
Cash flow hedges:
gains recorded
in equity - 0.6 - - - - 0.6 - 0.6
Taxes related to
items entered into
equity and removed
from equity - 0.4 - - - - 0.4 - 0.4
Other changes - - - - - -0.2 -0.2 - -0.2
Business combination - - - - - - 0.0 -1.5 -1.5
Dividend
distribution - - - - - -4.6 -4.6 - -4.6
Profit for the period - - - - - 2.4 2.4 0.1 2,5
Shareholders'
aquity at
June 30,2006 12.6 23.4 0.8 7.3 -0.8 -0.2 65.9 108.8 2.3 111.1
Shareholders'
aquity at
Jan. 1, 2007 12.6 23.4 0.4 7.3 -0.8 -0.2 76.5 119.2 - 119.2
Cash flow hedges:
gains recorded
in equity - 0.0 - - - - 0.0 - 0.0
Taxes related to
items entered into
equity and removed
from equity - - - - - - - - -
Translation
differences - - 0.3 0.3 - 0.3
Other changes - - -0.1 - - -0.1 -0.2 - -0.2
Dividend
distribution - - - - -5.3 -5.3 - -5.3
Profit for the
period - - - - 6.3 6.3 - 6.3
Shareholders'
equity at
June 30, 2007 12.6 23.4 0.4 7.2 -0.8 -0.1 77.4 120.3 - 120.3
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The interim financial statements have been prepared in accordance with IAS 34,
Interim Financial Reporting, as adopted by the EU. The accounting policies
adopted are consistent with those of the Group's annual financial statements for
the year ended 31 December 2006.
Lännen Tehtaat has adopted the following new amendments and interpretations to
published standards as well as new standards from January 1, 2007:
- IFRS 7 Financial Instruments: Disclosures.
- IAS 1 (Amendment) Capital Disclosures.
- IFRIC 9 Reassessment of Embedded derivatives
- IFRIC 10 Interim Financial Reporting and Impairment.
The adopted standards and interpretations have not had any significant effects
on this interim report.
SEGMENT INFORMATION
A Frozen Foods
B Fish
C Grain trading
D Vegetable Oil
E Other Operations
F Continuing operations total
G Discontinued operations
H Group total
Business segments 1-6/2007
EUR million A B C D E F G H
External sales
Product sales 25.2 36.7 54.3 20.7 - 136.9 78.8 215.7
Services sold - 0.2 2.9 - 1.9 5.0 - 5.0
Total external sales 25.2 36.9 57.2 20.7 1.9 141.9 78.8 220.7
Intra-group sales -0.1 -0.1 -0.5 0.0 -1.7 -2.4 11.6 -14.0
Net sales 25.1 36.8 56.7 20.7 0.2 139.5 67.2 206.7
Operating profit/loss 0.8 -1.3 1.7 1.0 -2.2 0.0 7.8 7.8
Share of profit/losses
of associated companies 0.0 0.1 - - -0.3 -0.2 0.1 -0.1
Assets 25.0 36.2 16.8 7.5 22.9 108.4 - 208.4
Unallocated 68.8
Total assets 177.2
Liabilities 4.3 7.0 5.3 2.7 2.3 21.4 - 21.4
Unallocated 35.5
Total liabilities 56.9
Gross investments in
non-current assets 1.1 1.1 - 0.3 0.1 2.6 0.6 3.1
Corporate acquisitions
and other share
purchases - - - - 11.1 11.1 - 11.1
Depreciations 0.8 0.6 0.1 0.3 0.5 2.3 0.2 2.5
Impairments - - - - - - - -
Personnel 246 351 29 36 11 673 250 923
Business segments 1-6/2006
EUR million A B C D E F G H
External sales
Product sales 27.2 29.0 41.6 20.6 0.0 118.4 90.3 208.7
Services sold - - 3.1 - - 3.1 3.1
Total external sales 27.2 29.0 44.7 20.6 0.0 121.5 90.3 211.8
Intra-group sales -0.1 0.0 -0.7 0.0 0.0 -0.8 -11.3 -12.1
Net sales 27.1 29.0 44.0 20.6 0.0 120.7 79.0 199.7
Operating profit/
loss -0.6 0.4 0.8 1.9 -3.1 -0.6 2.6 2.0
Share of profit/
losses of associated
companies 0.0 0.0 - - -0.2 -0.2 0.0 -0.2
Assets 31.2 16.9 9.0 10.6 20.1 87.8 79.5 167.3
Unallocated 33.9
Total assets 201.2
Liabilities 5.2 6.0 4.2 2.0 5.1 22.5 19.6 42.1
Unallocated 48.0
Total liabilities 90.1
Gross investments in
non-current assets 0.5 0.1 0.0 0.2 0.0 0.8 2.0 2.8
Corporate acquisitions
and other share
purchases - - - - 0.1 0.1 1.3 1.5
Depreciations 1.3 0.4 0.1 0.3 0.3 2.5 1.7 4.1
Impairments - - - - - - - -
Personnel 259 306 28 35 21 650 324 974
Business segments 1-12/2006
EUR million A B C D E F G H
External sales
Product sales 50.2 58.8 90.2 40.6 0.0 239.8 173.5 413.3
Services sold 0.0 0.1 6.1 - - 6.2 - 6.2
Total external sales 50.2 58.9 96.3 40.6 0.0 246.0 173.5 419.5
Intra-group sales -0.1 0.0 -1.4 0.0 0.0 -0.5 -9.3 -10.8
Net sales 50.1 58.9 94.9 40.6 0.0 244.5 164.2 408.7
Operating profit/
loss 1.7 1.6 2.0 3.0 -3.0 5.3 9.2 14.5
Share of profit/
losses of associated
companies 0.0 0.0 - - 1.6 1.6 0.1 1.7
Assets 28.0 25.2 30.0 14.2 18.1 115.5 90.5 206.0
Unallocated 31.5
Total assets 237.5
Liabilities 6.7 8.4 8.8 3.1 1.8 28.8 25.5 54.3
Unallocated 64.0
Total liabilities 118.3
Gross investments in
non-current assets 0.8 0.6 0.0 0.4 0.1 1.9 5.7 7.6
Corporate acquisitions
and other share
purchases - - - - 3.0 3.0 - 3.0
Depreciations 2.7 0.8 0.1 0.6 0.5 4.7 3.5 8.2
Impairments - 0.2 - - - 0.2 - 0.2
Personnel 275 303 29 36 19 662 319 981
Unallocated items include tax and financing items together with items common to
the whole Group.
GEOGRAPHICAL SEGMENTS
A Finland
B Scandinavia
C Baltic countries and Russia
D Other countries
E Continuing operations total
F Discontinued operations
G Group total
Geographical segments 1-6/2007
EUR million A B C D E F G
Net sales 92.9 17.0 3.2 26.4 139.5 67.2 206.7
Assets 158.9 18.3 - - 117.2 - 177.2
Gross investments in
non-currents assets 2.5 0.1 - - 2.6 0.6 3.1
Corporate acquisitions
and other share
purchases - 11.1 - - 11.1 - 11.1
Geographical segments 1-6/2006
EUR million A B C D E F G
Net sales 95.5 4.8 1.0 19.4 120.7 79.0 199.7
Assets 121.7 - - - 121.7 79.5 201.2
Gross investments in
non-currents assets 0.7 - - - 0.7 2.1 2.8
Corporate acquisitions
and other share
purchases - - 0.1 - 0.1 1.3 1.5
Geographical segments 1-12/2006
EUR million A B C D E F G
Net sales 188.6 22.4 2.3 31.2 244.5 164.2 408.7
Assets 116.0 - 0.0 - 116.0 121.5 237.5
Gross investments in
non-currents assets 1.9 - - - 1.9 5.7 7.6
Corporate acquisitions
and other share
purchases 3.0 - - - 3.0 - 3.0
DISCONTINUED OPERATIONS
On January 19, 2007 Lännen Tehtaat plc and SOK subsidiary Hankkija-Maatalous Oy
signed a share-purchase agreement under which 51% of the shares in Suomen Rehu
Ltd and Avena Nordic Grain would be transferred to the ownership of
Hankkija-Maatalous Oy. When the competition authorities studied the agreement,
it was evident that the integration of Avena Nordic Grain's business with the
grain trading business of Hankkija-Maatalous would, under competition
legislation, be viewed as leading to the creation of a strong market position,
and so both parties to the agreement decided to omit Avena Nordic Grain from the
deal. The sale of the majority holding in Suomen Rehu Ltd was completed at the
start of June, when Suomen Rehu and its subsidiaries were transferred to
Hankkija-Maatalous Oy.
The price for the 51% of the shares was EUR 23.6 million and Group's profit on
the sale was EUR 4.1 million.
Lännen Tehtaat is entitled to share price adjustment based on the change in
Suomen Rehu Ltd's assets and liabilities. The determination process is still
incomplete at the time the interim report is published and due to this Lännen
Tehtaat has not been able to determine the share price adjustment reliably. The
adjustment has not been recognized in the bookkeeping and it is at the most EUR
+1.8 million related to the sold 51% shareholding.
In connection with the sale of the majority shareholding an option scheme has
also been agreed under which Lännen Tehtaat will, if it wishes, have the right
to sell the remaining 49% of the shares in Suomen Rehu Ltd to
Hankkija-Maatalous. The latter, for its part, has a purchasing option for the
remaining shares, which it will be able to put into effect at the earliest 15
months after the purchase of the majority holding.
In the case of option exercise, Lännen Tehtaat receives the same price per share
for the remaining 49 % ownership as for the sold majority shareholding in Suomen
Rehu Ltd, including the share price adjustment. In addition, the sale price is
affected by the financial result of Suomen Rehu Ltd from the beginning of June
2007. The calculatory value of the result based sale price component is reported
quarterly in the interim reports.
Suomen Rehu Ltd is presented as discontinued operations apart from continuing
operations of Lännen Tehtaat till the point of sale. From the beginning of June
Lännen Tehtaat's 49% ownership in Suomen Rehu Ltd is presented as an associated
company.
EUR million 1-5/2007 1-6/2006 1-12/2006
5 mths 6 mths 12 mths
Profits 83.6 91.1 176.7
Costs -76.4 -89.2 -169.1
Profit before taxes 7.2 1.9 7.6
Income taxes -0.8 -0.5 -2.0
Profit for the period
discontinued operations 6.4 1.3 5.6
EUR million 1-5/2007 1-6/2006 1-12/2006
5 mths 6 mths 12 mths
Cash flows from operating activities 7.6 3.0 5.4
Cash flows from investing activities -0.6 -3.4 1.4
Cash flows from financing activities -6.9 -2.8 -10.5
Total financing activities 0.1 -3.2 -3.7
The change in the net working capital has a significant effect on the operating
cash flows.
ACQUISITIONS
Lännen Tehtaat did not have business combinations during the second interim
period.
The purchase price calculation presented in the first interim report of 2007 did
not have material changes as the final fair values were determined during the
second quarter.
An additional purchase price affected by the audited development of the assets
and liabilities between June 30, 2006 and the date of closing was EUR 0.6
million and it increased the goodwill. The final purchase price of the shares
will still be affected by the 2007 financial results of Maritim Food and
Sandanger AS, which has an effect between EUR 0 - 1.3 million. The effects of
this additional purchase price element have not yet been able to be determined
reliably and it is not included in the acquisition cost.
Fair value Acquiree's carrying
Feb 28, 2007 amounts
Feb 28, 2007
EUR million
Intangible assets 2.8 0.0
Tangible assets 4.2 3.6
Deferred tax assets 0.0 0.0
Inventories 3.6 3.1
Trade receivables and other receivables 2.6 2.6
Cash and cash equivalents 1.3 1.3
Total assets 14.5 10.7
Deferred tax liabilities 1.0 0.0
Long-term liabilities 5.7 5.7
Short-term liabilities 2.8 2.8
Total liabilities 9.5 8.6
Acquired portion of the net assets 5.0 2.2
Acquisition cost 11.1
Goodwill 6.1
Purchase consideration settled in cash 11.1
Cash and cash equivalents in subsidiary
acquired 1.3
Cash outflow on acquisition 9.8
The goodwill mainly compromises of synergies related sales, logistics, raw
material purchases and planned savings on the fixed costs.
The turnover of Lännen Tehtaat between January 1, - June 30, 2007 would have
increased by EUR 4.5 million, if Maritim Food acquisition would have taken place
on January 1, 2007. The corresponding effect to the net result would have been
EUR 0.0 million when taking into account the depreciations on the fair value
allocations and calculatory interest expense to purchase cost starting from
January 1, 2007.
KEY INDICATORS
June 30,2007 June 30,2006 Dec 31, 2006
Shareholders' equity per
share, EUR 19.25 17.77 19.06
Equity ratio, % 67.9 55.3 50.3
Gearing, % 3.9 26.6 40.7
Gross investments in non-
current assets, EUR million 3.1 2.8 7.6
Corporate acquisitions and other
share purchases, EUR million 11.1 1.5 3.0
Average number of personnel 923 974 981
Average number of shares, 1 000 6 253 6 253 6 253
The key figures in this interim financial report are calculated with same
accounting principles than presented in year 2006 annual financial statements.
CONTINGENT LIABILITIES
EUR million
June 30,2007 June 30,2006 Dec 31, 2006
Mortgages given for debts:
Real estate mortgages 27.1 40.7 37.5
Corporate mortgages 31.4 51.4 51.4
Share pledged 9.4 3.6 3.6
Non-cancellable other lease agreements,
minimum lease payments:
Real estate leases 5.4 2.6 2.8
Other leases 0.8 1.1 1.1
Contingent liabilities for own
commitments:
Repurchasing commitments 0.0 0.1 0.0
Estimated additional share
purchase price, Maritim 0.0-1.3 - -
Contingent liabilities on behalf
of the associated companies:
Guarantees 1.6 0.1 -
CONTINGENT ASSETS
Suomen Rehu Ltd, additional
purchase price element
change in assets and liabilities 0.0-1.8
SUOMEN REHU - OPTION SCHEME
The calculatory unrecognised value for the result based component included in
the option scheme as at June 30, 2007 is approximately EUR 0.1 million.
DERIVATIVE INSTRUMENTS
Outstanding nominal values of
derivative instruments
Forward currency contracts 0.8 0.4 4.5
Commodity derivative instruments 3.5 3.3 4.6
Interest rate swaps 25.0 25.0 25.0
INVESTMENT COMMITMENTS
Lännen Tehtaat has investment commitments in fish and frozen foods segments
total of EUR 2.0 million as of June 30, 2007.
TANGIBLE ASSETS
EUR million
1-6/2007 1-6/2006 1-12/2006
6 mths 6 mths 12 mths
Book value at the beginning
of the period 67.4 72.2 72.2
Acquisitions 3.1 2.8 7.3
Acquisitions of operations 3.2 - -
Disposals 0.0 0.0 -4.2
Disposals of operations -32.6 -0.4 -0.4
Depreciations and impairments -2.2 -3.8 -7.7
Other changes -0.1 0.2 0.2
Book value at the end of the period 38.8 71.0 67.4
TRANSACTIONS WITH ASSOCIATED COMPANIES AND JOINT VENTURES
EUR million
1-6/2007 1-6/2006 1-12/2006
6 mths 6 mths 12 mths
Sales of goods to
associated companies 0.9 0.1 1.0
Sales of goods to joint ventures 4.8 3.9 7.6
Sales of services to
associated companies 0.4 0.3 0.1
Sales of services to joint ventures 0.1 0.0 0.1
Purchase of goods from
associated companies 0.2 3.5 7.1
Purchase of services from
associated companies 5.7 7.6 12.2
Purchase of services from
joint ventures 0.0 0.0 0.3
Long-term receivebles from
associated companies 4.5 5.0 5.2
Trade receivables and other
receivables from associated companies 3.5 1.4 5.0
Trade receivables and other
receivables from joint ventures 0.7 0.8 0.6
Trade payables and other liabilities
to associated companies 0.1 2.8 3.7
The sale of goods and services to the associated companies and joint ventures
are based on valid price catalogues of the Group.
LÄNNEN TEHTAAT PLC
Board of Directors
More details: Matti Karppinen, CEO, tel. +358 10 402 4001
Distribution:
Helsinki Stock Exchange
Main media
www.lannen.fi
