RAISIO PLC'S FINANCIAL REVIEW 2005
Raisio plc Stock Exchange Release 9 February 2006 at 11.30 Finnish time
RAISIO PLCS FINANCIAL REVIEW 2005
RAISIOS RENEWAL STARTS OFF
Slight drop in operating result, excluding one-off items, over the
previous year.
· Turnover for 2005 was nearly the same as the previous year:
EUR 434.6 million (EUR 437.9 million in continuing operations in
2004).
· Operating result, excluding one-off items, amounted to EUR
9.1 million (EUR 10.6 million in continuing operations, excluding
one-off items in 2004). The recorded operating result in the
financial statements was EUR -10.9 million (EUR -18.4 million).
· Earnings per share, excluding one-off items, was EUR 0.05
(EUR 0.07). Reported earnings per share amounted to EUR -0.04 (EUR
-0.12). The Board of Directors proposes a dividend of EUR 0.05 per
share.
· Raisios renewal started with increased product development
inputs, investments and networking.
· Operating result for 2006 is expected to improve over the
previous year.
This financial review has been prepared in accordance with the
principles of the IFRS. Raisio adopted the International Financial
Reporting Standards as of the beginning of 2005.
In this review, figures for the comparison period have been
presented in brackets and they represent the continuing operations
unless stated otherwise.
Key figures, result
10-12/ 10-12/ 7-9/ 4-6/ 1-3/ 2005 2004
2005 2004 2005 2005 2005
Turnover,
EUR million 112.9 112.1 110.7 112.9 98.1 434.6 437.9
Operating result,
EUR million -1.7* 1.9* 3.8 2.9 4.1 9.1* 10.6*
% of turnover - 1.7* 3.4 2.6 4.2 2.1* 2.4*
Result before taxes,
EUR million -1.7* 2.6* 3.9 3.9 4.8 10.9* 10.7*
Earnings per share,
EUR 0.00* 0.01* 0.02 0.02 0.02 0.05* 0.07*
* Excluding one-off items
Key figures, balance sheet
31.12.2005 30.9.200530.6.200531.3.200531.12.2004
Return on investment, % -1.3 5.0 4.6 5.0 46.7
Equity ratio, % 76.8 76.6 78.1 71.8 76.4
Gearing, % -25.0 -28.2 -26.4 -39.7 -41.9
Equity per share, EUR 2.06 2.15 2.13 2.11 2.29
Fourth quarter
Raisios turnover grew slightly in the last quarter, totalling EUR
112.9 million (EUR 112.1 million). Raisio Nutritions turnover
increased to EUR 99.0 million (EUR 97.5 million), while Raisio
Life Sciences turnover fell slightly short of the comparison
period, amounting to EUR 15.1 million (EUR 16.1 million).
Turnover for business operations, EUR million
10-12/ 10-12/ 7-9/ 4-6/ 1-3/ 2005 2004
2005 2004 2005 2005 2005
RAISIO NUTRITION
Food 55.8 55.9 52.3 52.1 50.1 210.2 217.1
Margarine
products 31.9 32.8 29.1 28.6 28.3 117.9 121.6
Milling
products 20.7 16.9 19.7 18.5 18.1 77.0 75.1
Potato
products 4.0 4.9 4.2 5.7 4.6 18.5 21.2
Others - - - - - - 0.8
Internal sales -0.7 1.4 -0.7 -0.8 -0.9 -3.1 -1.7
Feed and malt 47.2 46.1 48.9 50.6 39.5 186.2 190.7
Feeds 40.5 42.2 42.9 43.9 36.2 163.6 165.2
Malt 6.7 3.9 6.1 5.7 3.0 21.4 24.7
Others 0.1 0.2 0.1 1.2 0.6 2.0 1.4
Internal sales -0.1 -0.2 -0.2 -0.2 -0.2 -0.8 -0.5
Internal sales for
business segment -4.0 -4.5 -3.8 -4.3 -3.8 -15.9 -17.9
Total 99.0 97.5 97.4 98.4 85.9 380.6 389.9
RAISIO LIFE SCIENCES
Ingredients 12.9 13.8 12.3 13.8 11.3 50.2 44.7
Diagnostics 2.3 2.4 2.1 2.4 2.1 8.8 8.6
Total 15.1 16.1 14.4 16.1 13.4 59.0 53.3
Business profitability decreased and considerable write-downs on
fixed assets pushed the result heavily into the red. The operating
result reported for the fourth quarter totalled EUR -21.6 million
(EUR 5.5 million), including one-off expenses of EUR 21.0 million
and one-off income of EUR 1.0 million. The report of the Board of
Directors and the press release issued by Raisio on 17 January
2006 describe the write-downs and their background in more detail.
Excluding one-off items, operating result for the fourth quarter
amounted to EUR -1.7 million (EUR 2.0 million). Operating result
was weakened especially in the Finnish food business by among
others the start-up costs for the soy-oat plant. The malt business
ran at nearly full capacity but growth in the share of lower-
margin export malt led to a weaker performance. The operating
result of Raisio Nutrition, excluding one-off items, decreased to
EUR -0.6 million (EUR 2.4 million). Raisio Life Sciences booked an
operating result, excluding one-off items, of EUR 1.8 million,
which was slightly better than in the comparison period (EUR 1.6
million). The operating result for other business operations,
which include Group-level research and development and other
corporate operations, amounted to EUR -2.8 million (EUR -2.1
million).
The result after taxes reported for the fourth quarter amounted to
EUR -15.6 million (EUR 3.3 million) and, excluding one-off items,
to EUR 0.5 million (EUR 1.1 million).
CEO Rabbe Klemets
The first part of the year promised good performance, but the
market outlook grew bleaker in many of our business areas toward
the end of the year. Profitability took a downturn especially in
the malt and potato businesses. The food diagnostics business was
expected to show an upswing at the end of last year, but the
narrow product portfolio and its competitiveness proved to be more
problematic than expected. Owing to the unprofitable results and
weaker outlook in the malt, potato and food diagnostics
businesses, the value of the balance sheet items for these
operations was adjusted in the fourth quarter by write-downs
totalling EUR 21 million. Cost-cutting measures to improve
profitability were adopted in all of the above-mentioned business
operations.
Despite the efficiency-boosting measures, Raisios result for
early 2006 is expected to fall clearly short of that recorded in
the corresponding period a year before. Performance is weakened,
for example, by the considerable marketing inputs targeting new
products. New products and the streamlining of operations will
have a positive impact on the outlook for the latter part of the
year, and overall profitability in 2006 is expected to improve
over the previous year.
RAISIO PLC
Taru Narvanmaa
Executive Vice President, Communications and Investor Relations
Further information:
Rabbe Klemets, CEO, tel. +358 400 821 614
Taru Narvanmaa, Executive Vice President, Communications and
Investor Relations, tel. +358 50 5909 398
Jyrki Paappa, CFO, tel. +358 50 5566 512
A press and analyst conference will be organised on 9 February
2006 at 3:30 p.m. Finnish time in the Helsinki WTC, at
Aleksanterinkatu 17, Helsinki.
A teleconference in English will be held on 9 February 2006 at
4:30 p.m. Finnish time, tel. +358 (0)9 8248 5090, PIN code 9898.
Raisio plcs annual report will be published week 11, and the
Annual General Meeting will be held on Thursday, 30 March 2006.
The interim report for JanuaryMarch will be published on 4 May
2006, for JanuaryJune on 2 August 2006 and for JanuarySeptember
on 1 November 2006.
No auditors report has been issued concerning the financial
review.
REPORT OF THE BOARD OF DIRECTORS 2005
Raisios strategic goal is to develop itself from a producer of
staple products into a provider of healthy plant-based foods that
offers added value to consumers. The company is aiming for growth
in the food business in the entire Baltic Sea region, while Russia
is the primary target for the feed business. The market for
functional ingredients and food diagnostics is global.
In 2005, Raisios geographic expansion and the renewal of its
product range picked up speed thanks to increased inputs in
research and development, investments in production, networking
and moderate acquisitions. In Russia Raisio proceeded in the plans
to establish feed business, while Polish operations ensured a
rapid expansion of the Benecol product family to include yoghurt
drinks. A joint venture was set up in Sweden to handle the sales
and marketing of Raisios new soy and oat-based fresh products in
both Sweden and Finland.
A strong balance sheet puts Raisio in a good position to develop
as a specialist in plant-based nutrition and a provider of safe
food.
TURNOVER
The Groups turnover in 2005 amounted to EUR 434.6 million (EUR
437.9 million in continuing operations in 2004). The turnover of
Raisio Nutrition decreased, while that of Raisio Life Sciences
increased.
Turnover from outside Finland represented 37.3% (35.9%) of the
total, or EUR 162.0 million (EUR 157.1 million).
RESULT
The Groups operating result, excluding one-off items, amounted to
EUR 9.1 million (EUR 10.6 million). Both Raisio Nutrition and
Raisio Life Sciences increased their results from operations
compared to the previous year but expenses from other operations
increased significantly, especially due to Group-level inputs in
research and development, the implementation of the new SAP ERP
system and the renewal of the IT environment.
Depreciation, allocated to operations in the income statement,
totalled EUR 24.5 million (EUR 24.2 million), excluding the one-
off depreciation generated by write-downs.
The Groups result before taxes, excluding one-off items, totalled
EUR 10.9 million (EUR 10.7 million), while earnings per share
amounted to EUR 0.05 (EUR 0.07).
The comparability of the reported result is weak due to the
considerable one-off items in the financial statements for both
2004 and 2005. The recorded operating result for continuing
operations in the review period was EUR -10.9 million (EUR -18.4
million) and cash flow from business operations EUR 5.6 million
(EUR 45.9 million). The Groups net financial expenses totalled
EUR 4.4 million (EUR -1.6 million). The financial result was
significantly increased by the smaller amount of average debt and
extensive financial assets. In addition, the profit from the sale
of shares in Lännen Tehtaat increased financial income by EUR 1.7
million.
Reported result after taxes in the review period amounted to EUR -
5.4 million (EUR -19,1 million or EUR 213.0 million, including the
profit gained from the divestment of the chemicals business),
while earnings per share stood at EUR -0.04 (EUR -0.12). Taxes for
the financial period were EUR 1.9 million positive due to tax
effect of EUR 4.1 million of the write-downs and the tax
receivables for 2004. Return on investment amounted to -1.3%
(46.7%).
ONE-OFF ITEMS IN THE FINANCIAL STATEMENTS
The prolonged weak outlook in the malt and potato businesses led
to a re-evaluation of the assets allocated to these operations. As
a result of the impairment tests carried out in compliance with
IFRS, Raisio wrote down the book value of the malting plants
intangible and tangible assets in their entirety as a one-off
depreciation of EUR 8.4 million. A one-off depreciation of EUR 7.5
million was made on the intangible and tangible assets of the
potato business.
The market also looks bleaker for certain products in the food
diagnostics business, which has led to a lower growth estimate for
the current product portfolio. Consequently, the goodwill related
to these products was written down by EUR 5.1 million. In addition
to these one-off expenses, Raisio booked a one-off profit of EUR
1.7 million from the sale of shares, as well as a one-off non-cash
affective income item of EUR 1.0 million resulting from the
dissolution of the technical reserves of its captive insurance
company.
ONE-OFF ITEMS (EUR million)
2005 2004
CONTINUING OPERATIONS
Raisio Nutrition
Sales profit - 3.3
Write-downs -15.9 -24.8
Cancellation of IFRS pension liability - 3.1
Raisio Life Sciences
Write-downs -5.1 -9.2
Other operations 1.0 -1.4
Impact on the operating result of
continuing operations -19.9 -29.0
Financial items 1.7 -2.0
DISCONTINUED OPERATIONS:
Sales profit - 228.3
Impact of one-off items on the Groups
result before taxes -18.2 197.3
INVESTMENTS
The Groups gross investments in 2005 totalled EUR 49.3 million
(EUR 22.1 million), or 11.3% (5.0%) of turnover. The gross
investments of Raisio Nutrition amounted to EUR 36.2 million (EUR
16.0 million), while those of Raisio Life Sciences were EUR 6.3
million (EUR 2.8 million) and other investments EUR 6.7 million
(EUR 3.2 million).
The main investments involved the construction of the soy-oat
plant and the R&D centre, the expansion to the capacity of the
stanol ester plant and the renewal of the ERP system.
BALANCE SHEET AND FINANCIAL POSITION
Raisios balance sheet total was EUR 452.5 million (EUR 514.3
million), while shareholders equity amounted to EUR 347.3 million
(EUR 392.8 million).
Groups interest-bearing debt at the end of the financial period
was EUR 36.1 million (EUR 49.5 million). The net interest-bearing
debt was EUR -86.6 million (EUR -164.6 million). The equity ratio
at the end of the year was 76.8% (76.4%), and the gearing ratio -
25.0% (-41.9%).
Working capital increased to EUR 86.6 million (EUR 57.7 million)
due to an increase in inventories.
BUSINESS AREAS
Raisio Nutrition
The turnover of Raisio Nutrition dropped 2.4% from the previous
year, totalling EUR 380.6 million (EUR 389.9 million). Strong
margarine sales and a successful product range expansion resulted
in significant growth in the Polish operations. Margarine and
cereal sales in Russia also grew significantly. In other markets,
turnover decreased in food, feed and malt operations. The turnover
of the milling business, however, improved thanks to successful
product launches. Although the sales volumes for feed increased,
lower raw material prices were transferred to sales prices and
thus decreased turnover.
The operating result of Raisio Nutrition, excluding one-off items,
amounted to EUR 8.6 million (EUR 8.6 million). Oil milling
business accounted for the most significant growth, thus
contributing to the good overall result of the feed business. In
the food business, profitability improved in Sweden and Poland,
while growth-oriented inputs kept Russian operations in the red.
Finnish food business posted a result close to zero. The result
was weakened by higher raw material expenses for potato products,
poor demand for frozen potato products and the start-up costs for
the soy-oat plant. Changes in the Russian market caused the malt
business to be unprofitable.
Raisio Nutritions reported operating result amounted to EUR -7.3
million (EUR -9.8 million), including a total of EUR 15.9 million
in write-downs on the fixed assets of malt and food potato
business operations.
Raisio Nutritions turnover, EUR million
2005 2004
Food 210.2 217.1
Margarine products 117.9 121.6
Milling products 77.0 75.1
Potato products 18.5 21.2
Others - 0.8
Internal Sales -3.1 -1.7
Feed and malt 186.2 190.7
Feeds 163.6 165.2
Malt 21.4 24.7
Others 2.0 1.4
Internal Sales -0.8 -0.5
Total 380.6 389.9
Foods
Raisios market position in the Finnish, Polish and Russian food
markets remained nearly unchanged. The market position in Sweden
weakened slightly due to the decrease in private label sales. The
Finnish market for yellow fats decreased slightly, while Poland
showed some growth. Market growth was strongest in Russia.
Raisios turnover in foods was EUR 210.2 million (EUR 217.1
million).
Raisio acquired a 25% share of Obory, a Polish dairy company, and
ensured a rapid growth of Benecol product range in Poland and its
neighbouring countries.
Raisio and Finn Cereal agreed on the manufacture of pure oat
products, developed especially for people with celiac disease. New
products will be launched in spring 2006.
Production facilities for fresh soy and oat-based products were
constructed in Turku at the end of 2005. For Raisio, the
investment is a significant step in the renewal and product range
development process defined in the company's strategy.
Raisio and the Swedish Cerealia Foods & Bread established GoGreen
AB, a 50/50-owned joint venture, with a product range including,
for example, fresh soy and oat-based products. The joint venture
provides an excellent channel into the North European markets,
where soy products have enjoyed exceedingly fast growth, achieving
annual rates of more than 20%.
Raisio initiated contract farming and commercialisation of
Camelina oil plant. Camelina offers Raisio significant new
opportunities to develop health-promoting, functional foods and
their ingredients.
Feed and malt
In terms of volume, the Finnish farm feed market grew slightly.
Raisio strengthened its market share in both farm and fish feeds.
Exports of farm feeds increased over the previous year. The volume
of fish feeds remained at the previous years level but exports
grew significantly. Raisios turnover in the feed business was EUR
163.6 million (EUR 165.2 million).
Raisio and Lännen Tehtaat established a 50/50 owned joint venture,
which will be in charge of commencing farm feed production in
northwestern Russia. In these markets, the joint venture aims for
a significant market share in the next five years.
The oversupply of malt in the EU region and increased malting
capacity in Russia further intensified price competition in the
malt markets. While the Finnish malt market has remained unchanged
from the previous year, price competition has grown stiffer.
Raisios turnover in the malt business was EUR 21.4 million (EUR
24.7 million).
Raisio Life Sciences
Turnover in the Raisio Life Sciences business area increased by
10.7%, amounting to EUR 59.0 million (EUR 53.3 million) thanks to
the good development seen in the ingredients business. Turnover
from the diagnostics business also grew slightly over the previous
year.
Profitability improved and the operating result, excluding one-off
items, amounted to EUR 7.5 million (EUR 4.4 million). The result
was boosted by the continued growth in ingredients sales during
2005. The development of markets for sterol-based ingredients has
enabled Raisio to gain a strong foothold on the markets with its
Benecol ingredient and to put its skills to wider use throughout
the production chain for sterol-based ingredients. The diagnostics
business focused on enhancing operations and renewing the product
portfolio. Significant inputs made in product development pushed
the result of the diagnostics business into the red.
Raisio Life Sciences recorded an operating result of EUR 2.4
million (EUR -4.8 million), which included a write-down of EUR 5.1
million on the goodwill of the diagnostics business.
Raisio Life Sciences turnover, EUR million
2005 2004
Ingredients 50.2 44.7
Food diagnostics 8.8 8.6
Total 59.0 53.3
Ingredients
Market growth has continued especially in Europe where it has been
boosted by the increasing consumer awareness of health-related
issues and the launch of new user-friendly products. Raisios
ingredients sales growth equalled that of the market average,
increasing by 11.0% to EUR 50.2 million.
The company initiated an expansion to the capacity of its stanol
ester plant in Raisio, which is expected to be completed in early
2006. Raisio acquired the sales and marketing rights for Benecol
in China, Japan and Mexico from its cooperation partner McNeil
Nutritionals LLC in autumn 2005.
Food diagnostics
The market is expected to grow at an annual rate of 78%. Faster
growth, at an annual rate of 1215%, will be seen in the market
for rapid testing, which Raisios product development currently
focuses on. Raisios market share in Europe now ranges from 5 to
15%, depending on the product sector. The turnover of the
diagnostics business increased by 2.3%, amounting to EUR 8.8
million.
RESEARCH AND DEVELOPMENT
Research and development is one of Raisios strategic priorities.
In 2005, the company focused on increasing the share of value-
added products in its product range for food.
Resources in research centres for foods and food diagnostics were
strengthened, for example, by hiring new employees. A new research
centre that brings together the R&D resources at the Raisio site
was completed in late 2005.
The Groups research and development expenses in 2005 totalled EUR
10.3 million (EUR 8.4 million), or 2.4% (1.9%) of turnover.
Raisio Nutritions research and development expenses totalled EUR
3.8 million (EUR 4.2 million), or 1.0% (1.1%) of the business
areas turnover. Raisio Life Sciences spent a total of EUR 3.3
million (EUR 4.2 million), or 5.6% (7.8%) of the business areas
turnover on research and development. The Groups strategic R&D,
the expenses of which were recorded for other operations, amounted
to EUR 3.2 million.
CORPORATE RESPONSIBILITY
Raisio is committed to taking responsibility for its operating
environment. The goal is for operations to stand on an
ecologically, socially and financially solid basis now and in the
future. Raisios corporate responsibility report will be published
in conjunction with the Annual Report in March.
Raisio has no financial environmental risks recorded in the
financial statements.
GOVERNANCE, MANAGEMENT AND PERSONNEL
The Annual Genaral Meeting approved in the second proceeding the
changes in the Articles of Association that were among others
based on the recommendation for the Corporate Governance. The AGM
also decided to change the company name to Raisio plc. The changes
became in force in April 2005.
Raisios Board of Directors in 2005 included Chairman Arimo
Uusitalo and members Jörgen Grandell, Erkki Haavisto, Jaakko
Ihamuotila, Rabbe Klemets, Kaarlo Pettilä, Michael Ramm-Schmidt
and Christoffer Taxell.
Jaakko Ihamuotila stepped down from the Board of Directors on 31
December 2005 due to the age restriction defined in the Articles
of Association. In addition, Raisios CEO Rabbe Klemets will not
continue as a member of the Board of Directors since the CEO is no
longer required to be a Board member following the amendment made
to the Articles of Association in spring 2005. Seppo Paatelainen
has been elected a new member of the Board as of 1 January 2006.
All of the Board members are independent of the company and of
significant shareholders.
The Chairman of Raisios Supervisory Board is Juha Saura and the
Vice Chairman, until 31 December 2005, was Ola Rosendahl. Holger
Falck was elected Vice Chairman as of 1 January 2006.
The president of Raisio Nutrition Olavi Kuusela was appointed
Chief Executive Officers deputy in May 2005.
On 31 December 2005, Raisio employed 1,396 people (1,412).
Employees working abroad accounted for 33% (32%) of the personnel
at the end of the year. The headcount was reduced by the
streamlining programmes carried out. The number of employees
increased due to the expansion in Polish business, the start-up of
the oat-soy plant in Finland, and new recruits in sales,
marketing, research and product development. At the end of the
year, Raisio Nutrition had 1,054, Raisio Life Sciences 141, R&D
115 and Group administration 86 employees.
IFRS-COMPLIANT FINANCIAL REPORTING
Raisios financial statements have been prepared in accordance
with the principles of the IFRS. Raisio adopted the International
Financial Reporting Standards as of the beginning of 2005. The
transition was described in a separate report on 22 April 2005.
SHARES AND SHAREHOLDERS
A total of 109.6 million (110.1 million) of Raisios free shares
were traded in 2005 on the Helsinki Stock Exchange. The value of
trading was EUR 250.4 million (EUR 180.1 million), and the average
price was EUR 2.28 (EUR 1.64). The closing price for free shares
in 2005 was EUR 2.26 (EUR 1.90). The price of series V shares rose
by 19% from the beginning of the year.
The 2005 trading volume of restricted shares on the Helsinki Stock
Exchange amounted to 1.5 million (1.5 million). The value of share
trading was EUR 3.5 million (EUR 2.5 million), and the average
price was EUR 2.33 (EUR 1.69). The closing price in 2005 was EUR
2.28 (EUR 1.85). The price of series K shares rose by 23% from the
beginning of the year.
On 31 December 2005, Raisio had 42,953 registered shareholders. Of
all shares, 16% (12%) were in foreign holding. Approximately 0.6%
of the shares remain outside the book-entry system.
Share repurchases made Raisio the second largest owner of the
company. Raisio plc acquired 3,768,200 of the companys shares in
2005.
Raisio has no share-based incentive systems and the Board of
Directors has no authorization to raise the share capital.
REPURCHASE OF COMPANY SHARES
The repurchase of shares, as authorized by the Board of Directors,
started in August and may continue, at the latest, until the
Annual General Meeting in spring 2006. Shares may be repurchased
to develop the capital structure of the company, to be used for
funding or implementing corporate acquisitions or other
arrangements, or to be otherwise further assigned or cancelled.
The share buy-back programme allows the purchase of a maximum of
6,529,289 free shares and a maximum of 1,728,162 restricted
shares, that is, a maximum of 5% of the companys share capital
and votes. If restricted shares are converted into free shares,
the maximum numbers for different share types will change. Share
repurchasing will be carried out at the price determined in the
open market on the Helsinki Stock Exchange and will not follow the
shareholders holding ratios.
Repurchasing started on 10 August 2005, and by 31 December 2005
the company had repurchased a total of 3,738,000 free shares at an
average price of EUR 2.31 and 30,200 restricted shares at an
average price of EUR 2.35.
The number of repurchased free shares accounts for 2.86% of all
free shares and the votes they represent, while the corresponding
percentage for restricted shares is 0.09%. The repurchased shares
represent 2.28% of all shares and 0.53% of overall votes. The book
value of repurchased free shares is EUR 628,683 and of restricted
shares EUR 5,079, accounting for a total of EUR 633,762, which
represents 2.28% of the share capital. The trade price for free
shares was EUR 8,635,798 and for restricted shares EUR 71,068, or
a total of EUR 8,706,866. Prior to these purchases, the company
and its subsidiaries did not hold Raisio plcs shares.
The share repurchases are not expected to have a significant
impact on the distribution of share holdings or voting rights in
the company. Since the shares were repurchased in the open market
on the Helsinki Stock Exchange with no information about the
vendors, it is impossible to determine the portion of shares
purchased from insiders, as defined in Section 1:4.1 of the
Companies Act, of the companys share capital and voting rights.
The Annual General Meeting authorised the Board of Directors to
dispose the repurchased shares. This authorisation, in force until
the Annual General Meeting of spring 2006, has not been used to
date.
DIVIDEND PROPOSAL
It is Raisios objective to generate added value to all its
shareholders by developing its business operations and improving
business profitability, and by following a long-range dividend
policy. The objective is to annually distribute half of the per-
share earnings generated by continuing operations, provided the
dividend payment does not compromise the companys ability to meet
its strategic objectives.
Raisios Board of Directors proposes a dividend exceeding the
companys dividend policy, based on the distributable profits from
the divestment of the chemicals business in 2004. The Boards
proposal, presented to the Annual General Meeting on 30 March
2006, is EUR 0.05 per share.
STRATEGY UPDATE UNDER WAY
Raisios strategic policies were confirmed in 2004, which is when
the company decided to divest its chemicals business. The Group
structure was revised to match the new strategy in this
conjunction. Owing to the accelerated pace of change in the
business environment, Raisios management and Board of Directors
initiated an analysis aiming to further specify the strategy in
early 2006.
The 12% target set for return on investment will probably not be
achieved in all business operations in 2006. In addition, a low
and risk-free yield on cash ensuring a sound financial standing
decreases the company's return on investment.
Strategic evaluation now aims to ensure future growth and positive
performance development in ingredients, feed and Polish
operations, which have already achieved the target level, as well
as to identify structural and other solutions for business
operations that are performing weaker at the moment. A strong
balance sheet enables growth through the companys own product
development, as well as through acquisitions.
OUTLOOK FOR 2006
New product launches are expected to increase Raisios turnover in
the food business in Finland, Sweden, Poland and Russia. The
number of new product launches in Finland will more than double
from 2005. This will mean a considerable increase in the share of
value-added products in the product portfolio.
New products will also be launched by Raisio Life Sciences and its
partners. These include, for example, drinks containing the
Benecol ingredient, which were launched in Germany and the UK in
early 2006. The food diagnostics business will begin to market new
rapid testing applications in 2006.
The feed business expects to see growth especially in Russia,
while the market outlook for the malt business remains unchanged.
Inputs in growth and marketing burden profitability, and the
result for early 2006 is expected to fall clearly short of the
comparison period. Growth and enhancement of operations will
improve the outlook for the latter part of the year, and the
overall operating result for 2006 is expected to improve over the
previous year.
Raisio, 9 February 2006
Raisio plc
Board of Directors
INCOME STATEMENT (EUR million)
2005 2004
CONTINUING OPERATIONS:
Turnover 434.6 437.9
Cost of sales -363.4 -360.1
Gross profit 71.2 77.9
Sales and marketing expenses -39.3 -37.0
Administration expenses -30.0 -27.1
R&D expenses -10.3 -8.4
Other operating income
and expenses, net -2.4 -23.8
Operating result -10.9 -18.4
Financial income and expenses, net 4.4 -1.6
Share of result of associated
companies and joint ventures -0.8 -0.4
Result before taxes -7.3 -20.3
Income tax 1.9 1.2
Result for the period
from the continuing operations -5.4 -19.1
DISCONTINUED OPERATIONS:
Result for the period
from discontinued operations 0.0 232.1
RESULT FOR THE PERIOD -5.4 213.0
Attributable to:
Equity holders of the parent company -6.0 211.3
Minority interest 0.6 1.7
Earnings per share from the profit
attributable to equity holders
of the parent company (EUR) -0.04 1.28
Earnings per share from continued
operations (EUR) -0.04 -0.12
Earnings per share from discontinued
operations (EUR) 0.00 1.40
ONE-OFF ITEMS (EUR million)
2005 2004
CONTINUING OPERATIONS:
Raisio Nutrition
Sales profit - 3.3
Write-downs -15.9 -24.8
Cancellation of IFRS pension liabilities - 3.1
Raisio Life Sciences
Write-downs -5.1 -9.2
Other operations 1.0 -1.4
Impact on result for the period
from the continuing operations -19.9 -29.0
Financial items 1.7 -2.0
Impact on result from the continuing
operations -18.2 -31.0
DISCONTINUED OPERATIONS:
Sales profit - 228.3
BALANCE SHEET (EUR million)
31.12.2005 31.12.2004
Non-current assets
Intangible assets 13.4 10.2
Goodwill 11.6 17.0
Tangible assets 130.5 127.0
Shares in associated companies
and joint ventures 4.9 1.6
Financial assets available for sale 2.2 8.0
Receivables 6.2 6.7
Deferred tax assets 12.3 9.5
Current assets
Inventories 73.9 56.5
Accounts receivables and
other receivables 74.7 63.8
Financial assets at fair value
through profit or loss 117.0 210.4
Cash in hand and at banks 5.8 3.8
Total assets 452.5 514.3
Equity attributable to equity
holders of the parent company 332.0 378.1
Minority interest 15.3 14.7
Deferred tax liability 8.7 10.3
Pension liabilities 0.4 0.7
Non-current interest bearing liabilities 12.9 26.0
Accounts payable and other liabilities 60.5 61.8
Current interest bearing liabilities 22.8 22.8
Total equity and liabilities 452.5 514.3
CHANGES IN GROUP EQUITY (EUR million)
Sha- Sha- Re- Ot- Own Trans- Re- Re- To- Mino- To-
re- re- ser- her sha- lati- valu- tai- tal rity tal
ca- pre- ve- re- res on ati- ned in-
pi- mium fund ser- diffe- on ear- te-
tal acc- ves ren- re- nings rest
ount ces serve
Equity at
1.1.2004
27.8 2.9 88.8 0.2 0.0 0.0 0.0 69.9 189.5 23.1 212.6
Dividend
paid - - - - - - - -21.5 -21.5 -0.2 -21.7
Changes in
translation
differen-
ces - - - - - -0.7 - 0.0 -0.7 0.2 -0.5
Net profit
for review
period- - - - - - - 211.3 211.3 1.7 213.0
Translation
differences
booked in the
P&L in connection
to the divestment of
RC - - - - - -0.7 - - -0.7 - -0.7
Divestment of
RC - - -0.2 -0.2 - - - 0.4 0.0 -9.7 -9.7
Exchange
differences
from receivables
considered to be
net investments
from a foreign
unit - - - - - 0.1 - - 0.1 - 0.1
Tax of
previous
- - - - - 0.0 - - 0.0 - 0.0
Other
changes
- - 0.0 - - -0.8 - 0.9 0.1 -0.3 -0.2
Equity at
31.12.2004
27.8 2.9 88.6 0.0 0.0 -2.2 0.0 261.0 378.1 14.7 392.8
Equity at
1.1.2005
27.8 2.9 88.6 0.0 0.0 -2.2 0.0 261.0 378.1 14.7 392.8
Effects of
adopting
IAS 32 and IAS
39 - - - - - - 0.3 -0.3 0.0 - 0.0
Dividend
paid - - - - - - - -34.7 -34.7 - -34.7
Changes in
translation
differen-
ces - - - - - 3.8 - - 3.8 0.0 3.8
Repurchase
of own
sha-
res - - - - -8.7 - - - -8.7 - -8.7
Exchange differences
from receivables
considered to be
net investments
from a foreign
unit - - - - - -0.4 - - -0.4 - -0.4
Tax of
previous
- - - - - 0.1 - - 0.1 - 0.1
Cash flow
hedges
Transferred to
the equity
with taxes
deducted
- - - - - - 0.0 - 0.0 - 0.0
Transferred to
income statement
with taxes
deducted
- - - - - - -0.1 - -0.1 - -0.1
Investments available
for sale
Transferred to
the income statement
with taxes
deducted
- - - - - - -0.2 - -0.2 - -0.2
Net profit
for review
period- - - - - - - -6.0 -6.0 0.6 -5.4
Other
changes
- - - - - - - 0.1 0.1 0.0 0.1
Equity at
31.12.2005
27.8 2.9 88.6 0.0 -8.7 1.3 0.0 220.1 332.0 15.3 347.3
CASH FLOW STATEMENT (EUR million)
2005 2004
Cash flow before change in working capital 34.5 44.6
Change in working capital -27.0 13.1
Financial items and taxes -1.9 -11.9
Cash flow from business operations 5.6 45.9
Investments -48.6 -32.5
Proceeds from sale of fixed assets 8.3 406.3
Cash flow from investments -40.3 373.8
Change in non-current loans -14.0 -219.2
Change in current loans -0.3 0.3
Change in loan receivables 0.0 -1.0
Repurchase of own shares -8.6 -
Dividends paid -34.5 -21.7
Cash flow from financial operations -57.4 -241.6
Unallocated items -0.3 1.4
Change in liquid funds -92.4 179.5
Liquid funds at the beginning
of the period 214.1 34.6
Impact of change of market value on
liquid funds 1.2 -
Liquid funds at the end of the period 122.9 214.1
GROUP TURNOVER BY SEGMENT (EUR million)
2005 2004
Raisio Nutrition 380.6 389.9
Raisio Life Sciences 59.0 53.3
Other operations 1.3 -
Interdivisional turnover -6.3 -5.3
Total turnover from
continuing operations 434.6 437.9
Discontinued operations - 192.7
Eliminations - -3.6
Total turnover 434.6 627.0
OPERATING RESULT BY BUSINESS SEGMENT (EUR million)
2005 2004
Raisio Nutrition -7.3 -9.8
Raisio Life Sciences 2.4 -4.8
Other operations -5.8 -3.9
Eliminations 0.0 0.1
Operating result from
continuing operations -10.9 -18.4
Discontinued operations 0.0 241.2
Total operating result -10.9 222.8
NET ASSETS BY BUSINESS SEGMENT (EUR million)
31.12.2005 31.12.2004
Raisio Nutrition 167.3 147.5
Raisio Life Sciences 57.0 47.0
Other operations and unallocated items 123.0 198.3
Total 347.3 392.8
GROUP INVESTMENTS BY SEGMENT (EUR million)
2005 2004
Raisio Nutrition 36.2 16.0
Raisio Life Sciences 6.3 2.8
Other operations 10.3 4.4
Eliminations -3.6 -1.2
Total investments from
continuing operations 49.3 22.1
Discontinued operations - 12.8
Total investments 49.3 34.8
TURNOVER BY MARKET AREA OF THE CONTINUING OPERATIONS (EUR million)
2005 2004
Finland 272.5 280.8
Poland 36.6 33.4
Russia 31.3 32.4
Other Europe 86.4 85.1
ROW 7.6 6.2
Total 434.6 437.9
QUARTERLY PERFORMANCE (EUR million)
10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2005 2005 2005 2005 2004 2004 2004 2004
Turnover of Raisio
Nutrition 99.0 97.4 98.4 85.9 97.5 99.0 105.4 88.0
Turnover of Raisio
Life Sciences 15.1 14.4 16.1 13.4 16.1 11.7 13.7 11.8
Turnover of other
operations 0.6 0.3 0.3 0.2 0.0 0.0 0.0 0.0
Interdivisional
turnover -1.7 -1.4 -1.8 -1.4 -1.5 -1.1 -1.5 -1.1
Total turnover 112.9 110.7 112.9 98.1 112.1 109.6 117.5 98.7
Operating result
of Raisio
Nutrition -16.5 3.4 3.2 2.6 4.3 3.4 -17.0 -0.5
Operating result
of Raisio Life
Sciences -3.3 1.7 1.7 2.2 1.6 0.8 -8.1 0.9
Operating
result
of other
operations -1.8 -1.5 -2.0 -0.6 -0.5 -0.5 -2.7 -0.2
Eliminations -0.1 0.2 0.0 -0.1 0.0 0.1 0.0 0.0
Total operating
results -21.6 3.8 2.9 4.1 5.5 3.8 -27.8 0.2
Share of result
of associated
companies -0.5 -0.3 0.0 -0.1 0.0 0.0 -0.3 -0.1
Segment results -22.1 3.5 2.9 4.0 5.5 3.7 -28.1 0.1
Financial income
and expenses, net 0.5 2.1 1.0 0.8 0.7 0.2 -1.3 -1.1
Result before
taxes -21.7 5.6 3.9 4.8 6.1 3.9 -29.4 -0.9
Income tax 6.1 -1.5 -1.4 -1.3 -2.8 7.1 -2.4 -0.7
Result for the period
from continuing
operations -15.6 4.1 2.5 3.5 3.3 11.0 -31.8 -1.6
KEY INDICATORS
31.12.2005 31.12.2004
Return on equity, ROE, % -1.5 70.4
Return on investment, ROI, % -1.3 46.7
Interest bearing liabilities
at end of period, EURm 36.1 49.5
Gross investments, EURm 49.3 34.8
Gross investments from
continuing operations, EURm 49.3 22.1
% of turnover from
continuing operations 11.3 5.0
R & D expenses, EURm 10.3 12.9
R & D expenses from
continuing operations, EURm 10.3 8.4
% of turnover from
continuing operations 2.4 1.9
Average personnel 1,414 2,005
Average personnel in
continuing operations 1,414 1,498
Equity ratio, % 76.8 76.4
Gearing, % -25,0 -41.9
Earnings/share, EUR* -0.04 1.28
Cash flow from operations/share, EUR* 0.03 0.28
Equity/share, EUR* 2.06 2.29
Average number of shares
during the period, in 1,000s*
Free shares 129,694 130,455
Restricted shares 34,556 34,694
Total 164,250 165,149
Average number of shares
at end of period, in 1,000s*
Free shares 126,848 130,585
Restricted shares 34,533 34,564
Total 161,381 165,149
Market capitalisation of shares
at end of period, EURm
Free shares 295,1 248.1
Restricted shares 78,8 63.9
Total 373,9 312.0
*Number of shares without own shares
CONTINGENT LIABILITIES (EUR million)
31.12.2005 31.12.2004
Assets given for security
For the company
Mortages on real estate 16.9 52.7
Securities pledged 0.0 0.5
Corporate mortgages 33.8 34.4
Contingent off-balance sheet
Non-cancellable other leases
Minimum lease payments 2.8 1.0
Contingent liabilities for the Company 1.5 2.1
Contingent liabilities for others
Guarantees 0.0 0.1
Other liabilities 1.6 -
DERIVATIVE CONTRACTS (EUR million)
31.12.2005 31.12.2004
Nominal values of derivative contracts
Raw material futures 2.6 0.8
Forward electricity contracts 0.0 5.6
Currency forward contracts 34.9 35.9
