HK RUOKATALO GROUP GROUP?S IFRS COMPARISON FINANCIAL INFORMATION FOR 2004
HK Ruokatalo Group Oyj STOCK EXCHANGE RELEASE 29 Apr.2005, 9:30am
HK RUOKATALO GROUP GROUPS IFRS COMPARISON FINANCIAL INFORMATION FOR
2004
HK Ruokatalo Group Oyj adopted International Financial Reporting
Standards (IFRS) at the start of 2005. Prior to this the companys
financial statements were based on Finnish Accounting Standards (FAS).
HK Ruokatalo Group groups first IFRS-compliant consolidated financial
statements will be prepared for the financial year ending 31 December
2005. The interim reports for 2005 will be prepared in compliance with
IFRS recognition and measurement principles.
This bulletin shows the figures for 2004 based on FAS published
earlier and the comparative figures in compliance with IFRS. We
explain the significant effects on the consolidated financial
statements arising from the adoption of IFRS.
The IFRS-compliant financial information for 2004 has been prepared in
accordance with the rules valid at 31 March 2005. If there are changes
to these standards in 2005, adjustments may have to be made to IFRS-
compliant financial information.
(1) THE EFFECTS OF IFRS ON EARNINGS AND FINANCIAL HIGHLIGHTS FOR 2004
The most significant changes arising from the transition to IFRS
within the HK Ruokatalo Group group relate to pension arrangements and
the retraction of depreciation of goodwill.
Under IFRS principles, HK Ruokatalo Group consolidated profit for 2004
is EUR 5.5 million greater than according to FAS. Likewise the
operating profit is EUR 4.5 million higher. This figure includes a non-
recurring item of EUR 2.9 million that improves earnings as a result
of a change in the bases of calculating disability pension liabilities
under the Finnish TEL scheme. This has been recognised in earnings for
Q4 of 2004.
Under IFRS 3 (Business Combinations) goodwill on consolidation is not
depreciated but tested for impairment each year. Under Finnish
accounting standards, goodwill was depreciated during the period it
was effective. HK Ruokatalo Group groups goodwill has been tested for
impairment and there was no need for write-down at 1 January 2004 or
at 31 December 2004. Retraction of depreciation of goodwill under IFRS
increases the operating profit for 2004 by EUR 3.0 million.
Retraction of depreciation of associates goodwill incresed the result
moreover by EUR 0.3 million. The measurement of biological assets (IAS
41) at fair values increased the operating profit by EUR 0.3 million.
Under IFRS, the group share of associates results will be reported as
a separate item after operating profit. Under FAS, this item was shown
before operating profit.
Adoption of IFRS accounting principles increased the consolidated
balance sheet by EUR 2.0 million in the opening balance sheet at the
transition date of 1 January 2004 and by EUR 4.6 million in the
balance sheet dated 31 December 2004. The increase is largely related
to pension arrangements and the retraction of depreciation on
goodwill.
FINANCIAL HIGHLIGHTS
2004 2004
FAS IFRS
Revenue, EURm 680.4 680.4
Operating profit, EURm 31.3 35.8
Profit before taxes, EURm 26.1 32.7
Profit for the accounting period, EURm 20.5 26.0
EPS 1) 0.59 0.76
EPS 2) 0.70 0.88
Balance sheet total, EURm 425.1 429.7
Return on investment, % 10.2 12.3
Return on equity, % 11.4 14.6
Equity ratio, % 49.5 49.3
Equity per share, EUR 6.05 6.09
1) Based on number of shares at year-end: 34,463,193
2) Based on average number of shares during the accounting period:
29,428,181
3) Minority's share of equity excluded
(2) EFFECTS OF CHANGE IN FINANCIAL STATEMENT PRACTICE
Below, we explain the significant differences in the change in
financial statement practice that affect HK Ruokatalo Groups
consolidated figures.
Property, plant and equipment
The purchase method in compliance with IAS 16 is used to measure PPE.
PPE is stated at acquisition cost and depreciated in accordance with
their expected economic lives. Appreciation is included in reducing
balances. As acquisition cost of the Säkylä property at the transition
date of 1 January 2004 is used a revaluated value as allowed under
IFRS 1. Later the revaluated value will be depreciated according to
normal depreciation plan.
Leases
Under IAS 17, leases where a substantial part of the risks and
benefits of ownership have been transferred are classified as finance
leases. HK Ruokatalo Group groups Baltic units have already used
finance leases in previous financial statements and these have been
stated in the balance sheet under property plant and equipment and as
interest-bearing debt. HK Ruokatalo Group groups Finnish companies
have no significant finance leases.
Business combinations
HK Ruokatalo Group group has made use of the opportunity allowed under
IFRS 1 (First Time Adoption of IFRS) in the combination of companies.
The assets and liabilities of subsidiaries have not been stated
retrospectively at fair value but have been included in the balance
sheet at the date of transition at their value according to earlier
accounting practice.
Goodwill in group balance sheet
Under IFRS 3 (Business Combinations) goodwill is no longer regularly
depreciated but is subject to impairment each year or whenever a
particular need arises. Goodwill was tested at the transition date oft
1 January 2004 and in the situation at 31 December 2004 and no need
for impairment was found. The total of EUR 3.0 million depreciations
of goodwill in 2004 under FAS has been retracted. HK Ruokatalo Group
groups IFRS-compliant consolidated balance sheet dated 31 December
2004 includes goodwill of EUR 29.0 million.
Inventories
Inventories were already stated in the financial statements dated 31
December 2003 in accordance with a principle that required the
inclusion of fixed production overheads in the acquisition cost.
Biological assets been stated at fair value as required under IAS 41
(Agriculture). While there are few biological assets in the groups
Finnish operations, they are substantial in the groups companies in
Estonia.
Pension obligations and expenses arising from employee benefits
The groups pension arrangements are largely contribution based, which
means that the contributions paid are charged to the income statement
in the year to which they relate. An exception to this is the
disability pension under the Finnish TEL scheme, which has been a
benefit based scheme. A change in the basis of payment of disability
pensions covered by TEL insurance will enter into force at the start
of 2006. This change means that employment disability benefits covered
by TEL insurance will become contribution based. A benefit based
pension liability of EUR 4.9 million has been stated in the opening
balance sheet dated 1 January 2004. This figure is based on the
actuarial calculation provided by the insurance company. This
liability has been recognised as a non-recurring item of EUR 2.9
million in Q4 of 2004. The IFRS-compliant balance sheet dated 31
December 2004 shows a total of EUR 2.5 million to be outstanding on
pension obligations arising from disability benefits under TEL
insurance and liabilities arising from other insurance benefits.
Deferred tax assets and liabilities and income tax
Deferred taxes are calculated on all temporary differences in
bookkeeping and taxation. Under IFRS, deferred tax assets and
liabilities are stated as separate items in balance sheet assets and
liabilities. The effect of IFRS adjustments on deferred tax assets and
deferred tax liabilities in the opening balance sheet dated 1 January
2004 is EUR 1.4 million and EUR 1.1 million respectively. Likewise the
effect on deferred tax assets and deferred tax liabilities in the
balance sheet dated 31 December 2004 is EUR 0.5 million and EUR 1.1
million respectively. The largest temporary differences arise from
benefit based pension arrangements.
Share of associates' results
Under IFRS, the group share of associates results will be reported as
a separate item after operating profit. Under FAS this item was shown
before operating profit.
Segment reporting
The division of segments is based on the groups organisation and
Board of Directors and management reporting. The management of HK
Ruokatalo Group group tracks the profitability of business operations
by market area. The groups primary reporting segments are
geographical segments: Finland, the Baltics and Poland. The Polish
market area is to be presented as a separate segment from 1 January
2005 on.
HK Ruokatalo Group group has only one business segment: meat
processing.
Financial instruments
IAS 39 is introduced first on 1 January 2005. Currency derivatives are
nevertheless measured at fair values and are recognised in the profit
and loss account.
Minority interests
Minority interests are recognised separately in the balance sheet in
the consolidated equity whereas under Finnish accounting standards
they were stated as a separate item from the equity belonging to
shareholders of the parent company.
Translation differences
Translation differences arising from foreign units prior to the
transition to IFRS are not stated as a separate item of equity but
have been integrated into retained earnings at the transition date of
1 January 2004.
Research and development costs
There are no changes in the treatment of research and development
costs in consequence of the transition to IFRS. Research and
development costs are booked as an annual cost.
Cash flow statement
Because there are no material differences between FAS and IFRS
principles, no cash flow statement has been prepared for inclusion in
this bulletin.
(3) EFFECTS ON THE 2004 INCOME STATEMENTS AND BALANCE SHEETS
Below, we present the significant effects of the transition to IFRS on
the 2004 income statements and balance sheets. Separate
reconciliations of equity and profit for the accounting period are
given.
The figures are unaudited
Reconciliation of profit for the accounting period
(EUR million)
1-3/04 1-6/04 1-9/04 1-12/04
Profit for the accounting period FAS 3.0 8.8 14.4 20.5
Effects of transition to IFRS
IAS 12 Income taxes 0.1 -0.1 -0.1 -1.0
IAS 16 Property, plant and equipment - -0.1 -0.1 -0.1
IAS 19 Employee benefits (pensions) - - - 2.9
IAS 28/31 Interests in joint ventures 0.1 0.1 0.2 0.3
IAS 38 Intangible rights 0.2 0.4 0.6 0.8
IAS 41 Agriculture 0.1 0.1 0.2 0.3
IFRS 3 Business combinations 0.5 1.0 1.6 2.3
Other adjustments -0.1 0.1 - -
IFRS adjustments, total 0.9 1.5 2.5 5.5
Profit for the accounting period IFRS 3.9 10.3 16.9 26.0
Summary of the effects of the transition to IFRS on capital and
reserves
(EUR million)
31.12. 31.3. 30.6. 30.9. 31.12.
2003 2004 2004 2004 2004
Equity under FAS 153.8 160.3 159.0 165.7 208.5
Effects of the transition to IFRS
IAS 12 Income taxes 0.4 0.5 0.3 0.3 -0.6
IAS 16 Property, plant and equipment - 0.0 -0.1 -0.1 -0.1
IAS 19 Employee benefits (pensions) -4.9 -4.9 -4.9 -4.9 -2.0
IAS 28/31 Interests in joint ventures -0.2 -0.2 0.4 0.2 0.3
IAS 38 Intangible rights - 0.2 0.4 0.6 0.8
IAS 41 Agriculture 0.7 0.8 0.8 0.9 0.7
IFRS 3 Business combinations - 0.5 1.0 1.6 2.3
Other adjustments - -0.1 - -0.1 -
IFRS adjustments, total -4.0 -3.2 -2.1 -1.4 1.5
Equity under IFRS 149.8 157.1 156.9 164.3 210.0
CONSOLIDATED OPENING BALANCE SHEET AT 1 JANUARY 2004
(EUR million)
1 Jan 2004 IAS/IFRS- 1 Jan 2004
FAS adjustments IAS/IFRS
ASSETS
Non-current assets
Intangible assets 4.7 - 4.7
Goodwill 27.2 - 27.2
Plant, property and equipment 193.3 - 193.3
Financial assets 21.4 -0.2 21.2
Deferred tax assets 0.0 1.4 1.4
Loans and other receivables 4.0 - 4.0
Total 250.5 1.2 251.8
Current assets
Inventories 39.7 0.7 40.5
Trade and other receivables 75.7 0.0 75.8
Cash at bank and in hand 12.1 - 12.1
Total 127.5 0.8 128.3
ASSETS, TOTAL 378.0 2.0 380.0
EQUITY AND LIABILITIES
Equity belonging to shareholders
of the parent company 153.8 -4.0 149.8
Minority interests 1.9 0.0 1.9
Equity, total 155.7 -4.0 151.7
Deferred tax liability 8.7 1.0 9.7
Non-current interest-bearing debt 97.8 - 97.8
Pension obligations 0.2 4.9 5.1
Current interest-bearing debt 51.5 0.1 51.6
Current zero-interest debt 64.1 - 64.1
EQUITY AND LIABILITIES, TOTAL 378.0 2.0 380.0
FIRST QUARTER = = = = = = = = = = =
CONSOLIDATED INCOME STATEMENT FOR 1 JANUARY TO 31 MARCH 2004
(EUR million)
FAS IFRS
Revenue 151.8 151.8
Share of associates' results 0.4 -
Operating profit 5.1 5.4
Share of associates' results - 0.5
Financial income and expenses -1.1 -1.1
Profit before taxes 3.9 4.7
Taxes -0.9 -0.8
Minority interests 0.0 -0.1
Result for the period under review 3.0 3.9
CONSOLIDATED INCOME STATEMENT FOR 1 JANUARY TO 31 MARCH 2004
(cumulative) (EUR million)
FAS IFRS
Revenue 151.8 151.8
Share of associates' results 0.4 -
Operating profit 5.1 5.4
Share of associates' results - 0.5
Financial income and expenses -1.1 -1.1
Profit before taxes 3.9 4.7
Taxes -0.9 -0.8
Minority interests 0.0 -0.1
Result for the period under review 3.0 3.9
CONSOLIDATED BALANCE SHEET AT 31 MARCH 2004
(EUR million)
FAS IFRS
ASSETS
Non-current assets
Intangible assets 4.1 4.1
Goodwill on consolidation 26.5 27.2
Property, plant, and equipment 193.7 193.7
Financial assets 22.2 22.0
Deferred tax assets - 1.4
Other receivables 4.2 4.2
Current assets
Inventories 48.1 48.9
Trade and other receivables 71.5 71.5
Cash at bank and in hand 6.4 6.4
ASSETS, TOTAL 376.7 379.3
EQUITY AND LIABILITIES
Equity belonging to the shareholders
of parent company 160.3 157.1
Minority interests 2.0 2.0
Equity, total 162.3 159.1
Deferred tax liability 8.7 9.7
Non-current interest-bearing debt 98.0 98.0
Pension obligations 0.2 5.1
Current interest-bearing debt 56.1 56.1
Trade and other current payables 51.4 51.4
EQUITY AND LIABILITIES, TOTAL 376.7 379.3
SECOND QUARTER = = = = = = = = = = =
CONSOLIDATED INCOME STATEMENT FOR 1 APRIL TO 30 JUNE 2004
(EUR million)
FAS IFRS
Revenue 177.0 177.0
Share of associates' results 0.8 -
Operating profit 7.3 7.3
Share of associates' results - 0.8
Financial income and expenses -1.2 -1.2
Profit before taxes 6.1 7.0
Taxes -0.2 -0.4
Minority interests -0.1 -0.1
Result for the period under review 5.9 6.5
CONSOLIDATED INCOME STATEMENT FOR 1 JANUARY TO 30 JUNE 2004
(cumulative) (EUR million)
FAS IFRS
Revenue 328.8 328.8
Share of associates' results 1.2 -
Operating profit 12.4 12.7
Share of associates' results - 1.3
Financial income and expenses -2.3 -2.3
Profit before taxes 10.1 11.7
Taxes -1.1 -1.2
Minority interests -0.1 -0.1
Result for the period under review 8.8 10.3
CONSOLIDATED BALANCE SHEET AT 30 JUNE 2004
(EUR million)
FAS IFRS
ASSETS
Non-current assets
Intangible assets 4.1 4.1
Goodwill on consolidation 25.7 27.2
Property, plant, and equipment 194.8 194.7
Financial assets 22.9 23.3
Deferred tax assets - 1.3
Other receivables 4.6 4.6
Current assets
Inventories 41.1 41.9
Trade and other receivables 80.0 79.9
Cash at bank and in hand 6.7 6.7
ASSETS, TOTAL 379.9 383.7
EQUITY AND LIABILITIES
Equity belonging to the shareholders
of parent company 159.0 156.9
Minority interests 1.7 1.7
Equity, total 160.6 158.6
Deferred tax liability 7.8 8.7
Non-current interest-bearing debt 98.2 98.2
Pension obligations 0.2 5.1
Current interest-bearing debt 54.1 54.1
Trade and other current payables 59.0 59.0
EQUITY AND LIABILITIES, TOTAL 379.9 383.7
THIRD QUARTER = = = = = = = = = = =
CONSOLIDATED INCOME STATEMENT FOR 1 JULY TO 30 SEPTEMBER 2004
(EUR million)
FAS IFRS
Revenue 171.3 171.3
Share of associates' results 0.6 -
Operating profit 9.6 9.9
Share of associates' results - 0.7
Financial income and expenses -1.5 -1.5
Profit before taxes 8.1 9.1
Taxes -2.4 -2.5
Minority interests -0.1 -0.2
Result for the period under review 5.6 6.6
CONSOLIDATED INCOME STATEMENT FOR 1 JANUARY TO 30 SEPTEMBER 2004
(cumulative) (EUR million)
FAS IFRS
Revenue 500.1 500.1
Share of associates' results 1.8 -
Operating profit 21.9 22.6
Share of associates' results - 2.0
Financial income and expenses -3.8 -3.8
Profit before taxes 18.2 20.8
Taxes -3.5 -3.7
Minority interests -0.2 -0.2
Result for the period under review 14.4 16.9
CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2004
(EUR million)
FAS IFRS
ASSETS
Non-current assets
Intangible assets 3.8 3.9
Goodwill on consolidation 25.0 27.2
Property, plant, and equipment 195.8 195.9
Financial assets 36.0 36.3
Deferred tax assets - 1.3
Other receivables 4.1 4.1
Current assets
Inventories 43.5 44.4
Trade and other receivables 73.6 73.6
Cash at bank and in hand 7.9 7.9
ASSETS, TOTAL 389.7 394.7
EQUITY AND LIABILITIES
Equity belonging to the shareholders
of parent company 165.7 164.3
Minority interests 1.8 1.8
Equity, total 167.5 166.1
Deferred tax liability 7.8 8.9
Non-current interest-bearing debt 107.2 107.2
Pension obligations 0.2 5.1
Current interest-bearing debt 50.3 50.3
Trade and other current payables 56.8 57.1
EQUITY AND LIABILITIES, TOTAL 389.7 394.7
FOURTH QUARTER = = = = = = = = = = =
CONSOLIDATED INCOME STATEMENT FOR 1 OCTOBER TO 31 DECEMBER 2004
(EUR million)
FAS IFRS
Revenue 180.3 180.3
Share of associates' results 0.0 -
Operating profit 9.4 13.3
Share of associates' results - 0.1
Financial income and expenses -1.5 -1.5
Profit before taxes 7.9 11.8
Taxes -1.7 -2.5
Minority interests -0.4 -0.4
Result for the period under review 6.1 9.1
CONSOLIDATED INCOME STATEMENT FOR 1 JANUARY TO 31 DECEMBER 2004
(cumulative) (EUR million)
FAS IFRS
Revenue 680.4 680.4
Share of associates' results 1.7 -
Operating profit 31.3 35.8
Share of associates' results - 2.1
Financial income and expenses -5.2 -5.2
Profit before taxes 26.1 32.7
Taxes -5.2 -6.2
Minority interests -0.4 -0.4
Result for the period under review 20.5 26.0
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2004
(EUR million)
FAS IFRS
ASSETS
Non-current assets
Intangible assets 4.0 4.0
Goodwill on consolidation 25.8 29.0
Property, plant, and equipment 200.5 200.4
Financial assets 45.9 46.1
Deferred tax assets 0.1 0.6
Other receivables 4.0 4.0
Current assets
Inventories 44.0 44.7
Trade and other receivables 86.9 86.9
Cash at bank and in hand 13.9 13.9
ASSETS, TOTAL 425.1 429.7
EQUITY AND LIABILITIES
Equity belonging to the shareholders
of parent company 208.5 210.0
Minority interests 1.9 1.9
Equity, total 210.4 211.9
Deferred tax liability 8.8 9.9
Non-current interest-bearing debt 82.2 82.2
Pension obligations 0.4 2.5
Current interest-bearing debt 50.3 50.3
Trade and other current payables 72.9 72.9
EQUITY AND LIABILITIES, TOTAL 425.1 429.7
ANALYSIS BY SEGMENT 2004 (cumulative)
(EUR million)
Turnover, operating profit and result before taxes by main market
area*)
1-3 1-3 1-6 1-6 1-9 1-9 1-12 1-12
FAS IFRS FAS IFRS FAS IFRS FAS IFRS
Group
-turnover 151.8 151.8 328.8 328.8 500.1 500.1 680.4 680.4
-oper. profit 5.1 5.4 12.4 12.7 21.9 22.6 31.3 35.8
-result 3.9 4.7 10.1 11.7 18.2 20.8 26.1 32.7
Finland
-turnover 127.2 127.2 277.0 277.0 420.8 420.8 573.6 573.6
-oper. profit 3.9 4.2 8.9 9.1 16.2 16.6 25.5 29.7
-result 3.0 3.7 7.1 8.6 13.2 15.5 21.2 27.5
The Baltics
-turnover 24.6 24.6 53.5 53.5 81.5 81.5 110.2 110.2
-oper. profit 1.1 1.3 3.5 3.5 5.7 6.0 5.8 6.2
-result 0.9 1.0 3.0 3.1 5.0 5.3 4.8 5.1
Transfers between segments
-turnover -0.4 -0.4 -1.7 -1.7 -2.2 -2.2 -3.5 -3.5
-oper. profit - - - - - - - -
-result - - - - - - - -
*) The figures for the Polish market are included in the operating
profit and earnings for Finland.
HK Ruokatalo Group Oyj
Simo Palokangas
CEO
DISTRIBUTION:
Helsinki Exchanges
Internet: www.hk-ruokatalo.fi
