HK RUOKATALO GROUP?S INTERIM REPORT 1 JANUARY TO 30 JUNE 2005

HK Ruokatalo Group Oyj    STOCK EXCHANGE BULLETIN 5 Aug. 2005, 10:30am

HK RUOKATALO GROUP’S INTERIM REPORT 1 JANUARY TO 30 JUNE 2005

HK Ruokatalo Group group’s revenue rose to EUR 424.1 million, an
increase of more than EUR 95 million on the figure a year earlier.
Group operating profit was EUR 12.1 million and the pretax profit was
EUR 10.5 million.

The group switched over to IFRS-compliant financial reporting at the
start of 2005. This interim report and comparison information has been
prepared in compliance with IFRS recognition and measurement
principles. IFRS-compliant comparison information for 2004 was
disclosed on 29 April 2005.


REVENUE AND FINANCIAL PERFORMANCE
Consolidated revenue for the first six months of 2005 amounted to EUR
424.1 million, up by 29% on the corresponding figure last year. This
high increase is owing to Saturn Nordic Holding - in which HK
Ruokatalo Group has a 50% stake and which owns 80.4% of the shares in
Poland’s leading meat production and processing company Sokolów S.A. -
having been accounted for in HK Ruokatalo Group’s consolidated figures
using proportionate consolidation since 1 January 2005.

The operating profit for the first half of 2005 was EUR 12.1 million
(EUR 12.7m) and  the operating result before taxes was EUR 10.5
million, compared to EUR 11.7 million in 2004. These figures include
the group’s business in Finland, the Baltics and Poland.

During the first half of the year we performed well in our
international business, especially through our subsidiary Rakvere
Lihakombinaat in the Baltics and together with Danish Crown in Poland.
We also increased our share of the home market. HK Ruokatalo’s policy
in recent years has been to seek growth potential through
internationalisation. During the first six months of 2005, our
international business generated 33% of group revenue and 40% of
operating profit.


BUSINESS IN FINLAND
The first half of 2005 saw a slim growth in sales volume at home
compared to a year earlier. The pork and beef or so-called red meat
market was challenging. We were unable to pass on the full rise in the
price of pork raw material at home. Moreover, increase in meat import
to Finland eroded our profitability.

Despite a chilly spring and cool beginning to the summer delaying the
start of the ongoing barbecue season, sales have held up well. An
increase of almost four percentage points to 41.2% in HK Ruokatalo’s
share of the market for grilling sausages in May-June just nudges us
into market leadership (Source: A.C. Nielsen).

Pork raw material prices have been rising steadily across the EU,
which in turn has led to sales price pressure. Low sales prices,
especially in the Far East, have eroded export profitability compared
to earlier years.

During the early part of the year we increased temporarily exporting
poultry meat from Finland to the Baltics to safeguard Tallegg’s
supplies on its home market.

Imports, which were quite active at times, of poultry meat by some
companies into Finland have levelled off since the start of the year
and the competitiveness of imported meat has declined compared to
Finnish poultry meat.

Since processed meats form the cornerstone of HK Ruokatalo’s
Processing & Production Group, we are especially focusing on this area
to improve the competitiveness of our core process at home in the
current market. We continue to work closely with customers. Delivery
reliability was good during the first six months of the year.


BUSINESS IN THE BALTICS
Rakvere Lihakombinaat and its subsidiaries strengthened their position
in a tough market and intense competition for shelf space in Estonia,
Latvia and Lithuania. Rakvere’s performance during the first part of
the year exceeded targets.

We merged commercial operations for red and white meat to deliver
major synergetic advantages in Latvia and Lithuania.

Poultry company Tallegg ran in the structural changes introduced last
autumn. These included improving the entire poultry chain from primary
production to processing and marketing. During the spring, we embarked
on a project to bring the standard of hygiene and animal health at
Tallegg to the same level as in Finland and Sweden. The project is
being implemented together with the group’s Finnish poultry experts.
Our actions on this front resulted in occasional disruptions to
operations and additional costs, which will be reflected in the
figures for the Baltic Group during the current year.


BUSINESS IN POLAND
Cooperation with Danish Crown progressed well and in line with our
targets. HK Ruokatalo and Danish Crown’s 80.4% stake in Sokolów
provides a sound platform on which to exercise firm control of the
company. Sokolów has performed steadily throughout the first six
months of the year, with much faster growth in revenue and financial
performance than budgeted. The strategy guidelines confirmed in June
ensure the development of growth and profitability. The guidelines
simplify the division of roles between Sokolów’s production facilities
and brand positioning.


AMENDMENT TO THE ARTICLES OF ASSOCIATION
Meeting on 23 February 2005, the extraordinary meeting of shareholders
voted to amend the company’s Articles of Association as a result of
changes made in the corporate structure. The most important item of
business was the proposal to change the name of the company from HK
Ruokatalo Oyj to HK Ruokatalo Group Oyj. At the same time, Article 2
was amended to reflect the company’s changing circumstances by the
addition to the company’s objects to include not only the possession,
letting and trading of land, buildings and shares, but also other
investment activities. Article 7 was amended so that general meetings
of shareholders can be held in Turku, Espoo, Eura, Forssa, Helsinki,
Pori, Tampere or Vantaa. The company’s new Articles of Association
came into force on 31 March 2005.


CHANGES IN GROUP STRUCTURE
September 2004 saw a start made on streamlining the legal structure of
the company’s business operations in Finland. Streamlining was
completed in two stages. In the first stage, HK Ruokatalo Group Oyj’s
fully-owned subsidiaries Broilertalo Oy, Food Kuljetus Oy, Koiviston
Teurastamo Oy and Pouttu Foods Oy merged with and into HK Ruokatalo
Group Oyj on 31 March 2005. In the second stage, the group’s Finnish
industrial operations, sales, marketing, logistics and transportation,
as well as the employees concerned, were transferred to a new
subsidiary known as HK Ruokatalo Oy. The business transfer from HK
Ruokatalo Group Oyj to HK Ruokatalo Oy took place on 1 April 2005.

Subsequent to the business transfer, HK Ruokatalo Group Oyj is
responsible for group management, finance and administration. HK
Ruokatalo Group Oyj owns the entire share capital of HK Ruokatalo Oy.
Until 1 September 2005, the companies have the same chief executive
and the same persons sit on the boards of directors of both companies.


INVESTMENTS AND FINANCE
Gross consolidated investments totalled EUR 25.7 million (EUR 12.6m)
during the period under review. Investments in Finland accounted for
EUR 21.3 million of this figure.

Work continued as planned on the extensive investment project to
replace the pork slaughtering line and to increase capacity at Forssa.
This investment is intended to take us to the cutting-edge of
efficiency in Europe. Progress was also made with the freezing plant
project at Forssa.

In Vantaa, we upgraded the order picking system and increased the
level of automation in the older part of the terminal.

Group interest-bearing debt totalled EUR 198.7 million (EUR 152.3m) at
30 June 2005, EUR 31.4 million of the increase in debt is a result of
consolidating the debt of joint venture Saturn Nordic Holding Group.
The share issue of November 2004 resulted in the equity ratio rising
to 44.9% (41.3%).


ANNUAL GENERAL MEETING
HK Ruokatalo Group’s Annual General Meeting held on 12 April 2005
adopted the accounts and discharged the Board of Directors and
management from liability for 2004. It was decided to declare a
dividend of EUR 0.29 per share.

Marcus H. Borgström, Agricultural Counsellor (Hon), Markku Aalto,
farmer, Kjeld Johannesen, managing director, Tiina Varho-Lankinen MSc
and Heikki Kauppinen BSc were all re-appointed to the Board. CEO Simo
Palokangas was appointed as a new member of the Board. Mr Borgström
and Mr Aalto were reappointed as chairman and deputy chairman
respectively.

Petri Palmroth was appointed the company’s second auditor for 2005 to
replace Kauko Lehtonen, who resigned. Authorised public accountants
PricewaterhouseCoopers Oy were appointed as the company’s auditors for
2006, with Jari Henttula as the principal auditor and Petri Palmroth.
Mika Kaarisalo and Pasi Pietarinen were reappointed as the company’s
deputy auditors.


APPOINTMENT OF NEW CEO
On 12 April 2005, the company’s Board of Directors appointed Kai
Seikku MSc (Econ. & Bus. Admin.) as HK Ruokatalo’s next CEO. Seikku
will join the company as managing director of HK Ruokatalo Oy, which
is responsible for the group’s industrial operations in Finland, on 1
September 2005. He will take up the post of CEO of the entire HK
Ruokatalo Group on 1 April 2006, when the present CEO, Simo
Palokangas, retires.


BOARD OF DIRECTORS’ AUTHORISATION TO INCREASE THE SHARE CAPITAL
Meeting on 12 April 2005, the Annual General Meeting of Shareholders
authorised the Board of Directors to decide whether to increase the
share capital through one or more rights issues, whether to issue one
or more convertible bond loans and/or warrants so that in a rights
issue or when issuing convertible bonds or warrants, a maximum of
2,000,000 of the company’s new Series A Shares having a nominal value
of EUR 1.70 may be issued and the company’s share capital may be
raised by no more than EUR 3,400,000.

The authorisation allows the Board of Directors to disapply the pre-
emption rights of existing shareholders and to decide the issue price
and other terms and conditions of subscription and the terms and
conditions of a convertible bond loan or warrants. To date, the Board
of Directors has not exercised this authorisation.


EMPLOYEES
The group employed an average of 4,608 persons (4,838) in Finland and
the Baltics during the first six months of the year. An analysis of
employees by country at the end of June is as follows: Finland 64.2%,
Estonia 31.3%, Latvia 3.3%, Lithuania 1.1% and other countries 0.1%.


THE FUTURE
The group still aims at international expansion, whilst ensuring
business profitability and growth in the home market.

Investments currently under way in our Finnish Slaughtering and
Cutting Group and distribution logistics are scheduled for completion
during the second half of the year. These investments will deliver
added cost-effectiveness and operational capacity. Further improvement
in competitiveness will also require streamlining the production
structure in Finland.

The focal area for the rest of the year will be on improving meat
processing and production. This includes examining HK Ruokatalo’s
strategic options and making better use of the company’s acclaimed
brands: HK, Kariniemen and Popsi. A new brand strategy, which we have
been working on since the end of 2004, will be finished and introduced
towards the end of current year.

In the Baltics, we will continue to strengthen our competitiveness by
intensifying cooperation in the red and white meat processing chains
on both the operational and structural front. We will raise the
standard of hygiene of Tallegg’s production chain to a Nordic level
during Q3 of 2005. This will result in costs and lost margins during
the current year, but not in 2006.

In Poland, Sokolów has performed in line with expectations and we
expect similar progress to be made during the second half of the year.
Sokolów is the second largest meat processing company in Eastern
Europe, including Russia, and its position within the HK Ruokatalo
Group is gaining strength both financially and operatively.

HK Ruokatalo’s quest for growth in market areas it considers important
does not preclude corporate acquisitions.

Poland and neighbouring territories definitely offer the greatest
potential in this respect. The overall market in Finland and the
Baltics is expected to remain tough. Export prices are likely to
remain low. Given the tough outlook in our two main market areas,
there is every reason to be cautious in performance expectations for
the second half of the year. The comparative figures for 2004 are
enhanced by an additional imputed income during Q4 of EUR 2.9 million
arising from the recognition of pension liabilities. We expect group
earnings to fall short of last year’s performance.



CONSOLIDATED INCOME STATEMENT
(EUR mill.)
                           4-6/05  4-6/04   1-6/05   1-6/04  1-12/04
---------------------------------------------------------------------
Revenue                     227.0   177.0    424.1    328.8    680.4
Operating profit              6.3     7.3     12.1     12.7     35.8
Share of associates’ results  0.5     0.8      0.8      1.3      2.1
Financial income and expenses-1.3    -1.2     -2.4     -2.3     -5.2
Profit before taxes           5.4     6.9     10.5     11.7     32.7
Taxes                        -1.0    -0.4     -1.9     -1.2     -6.2
Result for the
accounting period             4.5     6.5      8.5     10.4     26.5
---------------------------------------------------------------------

Attributable to
Shareholders of parent company4.3     6.5      8.1     10.3     26.0
Minority interests            0.2     0.0      0.4      0.1      0.5
Total                         4.5     6.5      8.5     10.4     26.5

EPS, diluted, EUR            0.12    0.23     0.24     0.36     0.76



CONSOLIDATED BALANCE SHEET
(EUR mill.)


                                  30.6.2005    30.6.2004  31.12.2004
ASSETS
Non-current assets
Intangible assets                       3.7          4.1         4.0
Goodwill                               46.4         27.2        29.0
Property, plant and equipment         246.7        194.7       200.4
Financial assets                        6.7         23.3        46.1
Deferred tax assets                     0.6          1.3         0.6
Other non-current receivables           3.6          4.6         4.0

Current assets
Inventories                            60.6         41.9        44.7
Trade and other receivables           109.9         79.9        86.9
Cash at bank and in hand               15.2          6.7        13.9
ASSETS, TOTAL                         493.4        383.7       429.7

EQUITY AND LIABILITIES
Equity belonging to the shareholders
of parent company                     210.5        156.9       210.0
Minority interests                     11.1          1.7         1.9
Equity, total                         221.6        158.6       211.9
Deferred tax liability                 10.4          8.7         9.9
Non-current interest-bearing debt      75.2         98.2        82.2
Pension obligations                     2.3          4.9         2.3
Long-term provisions for liabilities    2.0          0.2         0.2
Current interest-bearing debt         123.5         54.1        50.3
Trade and other current payables       58.4         59.0        72.9
EQUITY AND LIABILITIES, TOTAL         493.4        383.7       429.7



CASH FLOW STATEMENT
(EUR million)
                                   1-6/2005     1-6/2004   1-12/2004
--------------------------------------------------------------------
Operating activities
Net cash inflow/outflow from
operating activities                   22.4         23.7        54.6
Change in net working capital         -19.0         -7.9        -5.6
Financial items and taxes              -4.3         -4.3       -10.4
Net cash inflow/outflow from
operating activities                   -0.9         11.5        38.6

Investing activities
Net cash inflow/outflow from
investing activities                  -21.3        -12.4       -50.7

Financing activities
Change in loans                        26.8         -0.7       -17.9
Dividends paid                        -10.0         -7.2        -7.2
Share issue                               0          3.5        39.2
Net cash inflow/outflow from
financing activities                   16.8         -4.4        14.0

Change in liquid assets                -5.4 *)      -5.4         1.9
--------------------------------------------------------------------
*) Taking into account Saturn Nordic Holding Group’s opening balance
at 31 December 2004.



ANALYSIS BY SEGMENT(EUR million)
Revenue and operating profit by main market area*)

                  4-6/2005   4-6/2004   1-6/2005  1-6/2004 1-12/2004
---------------------------------------------------------------------
Revenue
-Finland             154.7      149.4      287.5     277.0     573.6
-The Baltics          29.3       28.9       55.3      53.5     110.2
-Poland               44.9        0.0       84.8       0.0       0.0
-Between segments     -1.9       -1.3       -3.5      -1.7      -3.5
-Total               227.0      177.0      424.1     328.8     680.4

Operating profit
-Finland               3.7        5.0        7.3       9.1      29.7
-The Baltics           1.6        2.3        3.0       3.5       6.2
-Poland                1.0       0.0         1.8       0.0       0.0
-Between segments      0.0        0.0        0.0       0.0       0.0
-Total                 6.3        7.3       12.1      12.7      35.8
---------------------------------------------------------------------

*) Comparative information for the Polish market for 2004 is shown in
the Income Statement in the item "Share of associates’ results".



FINANCIAL INDICATORS         30 Jun 05   30 Jun 04        31 Dec 04

EPS                               0.24        0.36    0.76 1)  0.88 2)
Equity per share, 30 Jun, EUR 3)  6.43        5.47             6.15
Equity ratio, %                   44.9        41.3             49.3
Adjusted number of
shares                      34,463,193  28,634,113       34,463,193
Gross investments,
EUR mill                          25.7        12.6             52.3
Employees, end of month
average                          4,608       4,838            4,713

1) Based on number of shares at year-end: 34,463,193
2) Based on average number of adjusted shares during the accounting
period: 29,428,181
3) Includes minority interests



CONSOLIDATED CONTINGENT LIABILITIES
(EUR 1000)
                                  30.6.2005     30.6.2004 31.12.2004

Debts for which pledges or
mortgages given as surety
- pension loans                      14,584        16,426     14,584
- loans from financial institutions  72,901       112,678     79,530

For own debt
- pledges                            10,006        10,007     10,007
- real estate mortgages              50,916        89,088     52,928
- business mortgages                 22,125        22,056     22,125

For associates
- guarantees                            120           120        120

For others
- pledges                                17            40         17
- guarantees                          6,492         5,075      4,868

Other own commitments
Leasing commitments                     387           433        399
Other liabilities                        30         1,991      3,044

Liabilities arising from derivative instruments

Nominal values of derivatives
Currency derivatives
- forward exchange contracts          1,326           787          0
Commodity derivatives
- electricity derivatives             4,204         3,268      4,655

Market values of derivative instruments

Currency derivatives
- forward exchange contracts             17             2          0


The figures in this report are unaudited



Turku, 5 August 2005

HK Ruokatalo Group Oyj
Board of Directors



Simo Palokangas
CEO


DISTRIBUTION:
Helsinki Exchanges
Internet: www.hk-ruokatalo.fi

About Us

HKScan is a Nordic meat and meals company. We employ over 7 300 professionals in striving to serve the world ìs most demanding consumers, maintaining quality throughout the full chain of operations, From Farm to Fork. HKScan produces, markets and sells high-quality, sustainably produced pork, beef, poultry and lamb products, as well as charcuterie and meals, with strong consumer brands, including HK®, Scan®, Rakvere®, Kariniemen®, Rose®, Pärsons® and Tallegg®. Our customers are the retail, food service,industrial and export sectors, and our home market comprises of Finland, Sweden, Denmark and the Baltics. We export to close to 50 countries. In 2017, HKScan had net sales of EUR 1.8 billion, making us one of Europe’s leading meat and meals companies.www.hkscan.com

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