New segment reporting supporting our strategy – restated historical financial information
Scandi Standard AB (publ), the leading chicken provider in the Nordic region and Ireland, implements a new segment reporting with the two reportable segments Ready-to-cook and Ready-to eat. The new segment reporting is effective as of 1 January, 2021 and will be reported for the first time in the interim report for the first quarter 2021, published on 7 May, 2021. In addition, a new definition of items affecting comparability with stricter classification has been adopted. To facilitate comparability with historical periods, Scandi Standard is today releasing restated historical financial information for the new reportable segments, including restated historical financial information related to items affecting comparability.
Since the listing in 2014, Scandi Standard has presented stable growth, deriving from market-leading positions and well-known local brands for poultry products in the Nordic countries and in Ireland. Chicken consumption is expected to grow over the coming years, as a climate-smart, affordable, and healthy alternative in the protein industry. Furthermore, the trend of the strong end consumer preference for domestic produce is expected to increase further.
While Scandi Standard’s presence in five geographical markets provides a stable platform diversifying country-specific risk, an integral part of the strategy for continued growth and value creation is to share best practice, capitalize on product development and drive scale efficiencies across the group. In addition, Scandi Standard sees an opportunity to export best practice when adding new markets through potential strategic acquisitions and partnerships.
Scandi Standard’s matrix organisation consists of five country organisations, complemented with group functions supporting value creation. The successful expansion of the Ready-to-eat business, which has grown organically from net sales of SEK 500m to SEK 2bn since 2015, has accentuated the rationale to follow up Ready-to-cook and Ready-to-eat separately, as they largely represent different skill sets and production processes. In 2020, Scandi Standard conducted a comprehensive strategic review, which further strengthened the view that an increased focus on these two reportable segments will be a better way to identify, nurture and spread best practice to support continued growth and value creation.
Based on the strategic review, Scandi Standard’s internal organisation has been aligned, including internal reporting and decision-making processes. Consequently, with effect from 1 January, 2021, the segment reporting is updated to comprise the reportable segments Ready-to-cook and Ready-to-eat, as it best reflects how Scandi Standard primarily manages and monitors its operations.
Scandi Standard’s Group CEO Leif Bergvall Hansen will, in addition to his existing responsibilities, assume the role as Head of Ready-to-cook. Michael Budtz Berthelsen is assuming the role as Head of Ready-to-eat, in combination with his existing role as Group Supply Chain Director. Each of the five country organisations will remain with integrated responsibility for their overall domestic market as well as their respective client networks.
ESG KPIs disclosed on a quarterly basis
In line with Scandi Standard’s vision Better Chicken for a Better Life, the ambition is to be a clear ESG leader in the European poultry space, requiring continuous development of governance, initiatives, and reporting to support progress in these areas. Starting from Q1 2021 KPIs regarding CO2-emissions, feed efficiency, use of antibiotics, animal welfare, critical complaints and LTI (Lost time from injuries) will be disclosed on a quarterly basis.
Summary of restated historical financial information
Group
Net sales for the group amounted to SEK 9,940 MSEK FY2020. The Ready-to-cook (RTC) segment represented approximately 77% of net sales, while the Ready-to-eat segment accounted for 19%, based on net sales FY2020. The average Adjusted EBITDA-margin for the last two years was 7,6%.
Ready-to-cook
The Ready-to-cook (RTC) segment is the Group’s largest product segment and consists of products that are either chilled or frozen, that have not been cooked. These include whole birds, cuts of meat, deboned and seasoned, or marinated products. Products are made available mainly via Retail and Foodservice sales channels to both domestic and export markets. The segment comprises RTC processing plants in all five countries, the feed business in Ireland, egg production in Norway, and the hatching business in Sweden. Net sales for the segment Ready-to-cook (RTC) include external net sales.
Ready-to-eat
The Ready-to-eat (RTE) segment consists of products that have been cooked during processing and are ready to be consumed, either directly or after being heated up. Products range from grilled and pre-sliced chicken fillets with different seasoning to chicken nuggets. Sales are mainly to Retail and Foodservice sales channels, and part of the production is exported. The segment comprises RTE processing plants in Sweden, Denmark and Norway, combined with third-party production. Net sales for the segment Ready-to-eat (RTE) include external net sales. Operating result for the segment includes the integrated result for the group without internal margins.
Other
Other includes ingredients, which is surplus products mainly for non-human consumption, and mainly used for industrial production of animal feed and other applications, in line with Scandi Standard’s ambition is to utilize the animal entirely, as it reduces production waste to almost zero and contributes to a lower carbon footprint. No individual part of Other is significant enough in size to constitute its own segment.
Group costs
The majority of the costs for group functions are allocated to Ready-to-cook, Ready-to-eat and Other (Ingredients). The remaining costs, which are booked under Group costs, are primarily related to overall management and governance of the Group including the cost of being a listed company.
Financial targets remain unchanged
-
Net sales:
Annual average organic growth in line with or above market growth. -
EBITDA margin, based on EBITDA adjusted for non-comparable items:
Exceed 10 per cent in the medium term -
Interest-bearing net debt/ adjusted EBITDA:
2.0-2.5 x adjusted EBITDA (LTM), may temporarily exceed this level to allow for capturing opportunities for organic growth and acquisitions -
Dividend policy:
Approximately 60 percent of profit for the year adjusted for non-comparable items on average over time.
Restated historical financial information
The financial information presented in the table ‘Restated historical financial information according to new segment reporting, including restated items affecting comparability’ attached hereto encompasses Net sales, Adjusted EBITDA, Adjusted EBITA, Adjusted operating income (Adjusted EBIT), Operating income (EBIT), Adjusted EBITDA margin, Adjusted EBITA margin, Adjusted operating margin (Adjusted EBIT margin), Operating margin (EBIT margin) and has been updated according to the new segment reporting effective as of 1 January 2021. The financial information also includes restated items affecting comparability (non-comparable items). The financial information has been updated for the last eight quarters.
Restated historical financial information related to items affecting comparability
Scandi Standard has decided to update its instruction for treatment of items affecting comparability with new definition implying a stricter classification of such items. Details on restated historical financial information related to items affecting comparability are attached hereto, with the changes per quarter for the last eight quarters.
Presentation of restated historic financial information
The restated historical financial information has been compiled and presented in accordance with Scandi Standard’s accounting policies as described in the Annual report for 2020.
Appendix
The enclosed appendix includes the following tables:
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A – Restated historical financial information according to new segment reporting, including restated items affecting comparability
-
B – Details on restated historical financial information related to items affecting comparability
The tables are also available in Excel-format in the Investor Relations section of Scandi Standard’s website.
For further information, please contact:
Leif Bergvall Hansen, Chief Executive Officer: +45 22 10 05 44
Julia Lagerqvist, Chief Financial Officer: +46 724 02 84 02
Henrik Heiberg, Head of M&A, Financing & IR: +47 917 47 724
Appendix A: Restated historical financial information according to new segment reporting, including restated items affecting comparability
|
Ready-to-cook, MSEK |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Net sales | 1,879 | 1,883 | 1,900 | 1,806 | 7,467 | 1,899 | 1,912 | 1,983 | 1,824 | 7,619 |
| Adjusted EBITDA | 151 | 155 | 165 | 150 | 621 | 138 | 170 | 175 | 139 | 622 |
| Adjusted EBITA | 99 | 103 | 112 | 97 | 411 | 81 | 111 | 117 | 74 | 382 |
| Adjusted EBIT | 87 | 92 | 99 | 84 | 362 | 68 | 98 | 105 | 63 | 333 |
| Non-comparable items | 0 | -7 | 0 | 0 | -7 | 0 | 0 | 0 | -7 | -7 |
| EBIT | 87 | 85 | 99 | 84 | 352 | 68 | 98 | 105 | 56 | 326 |
| Adjusted EBITDA margin, % | 8.0% | 8.2% | 8.7% | 8.3% | 8.3% | 7.3% | 8.9% | 8.8% | 7.6% | 8.2% |
| Adjusted EBITA margin, % | 5.3% | 5.5% | 5.9% | 5.4% | 5.5% | 4.2% | 5.8% | 5.9% | 4.0% | 5.0% |
| Adjusted EBIT margin, % | 4.6% | 4.9% | 5.2% | 4.7% | 4.8% | 3.6% | 5.1% | 5.3% | 3.4% | 4.4% |
| EBIT margin, % | 4.6% | 4.5% | 5.2% | 4.7% | 4.7% | 3.6% | 5.1% | 5.3% | 3.0% | 4.3% |
|
Ready-to-eat, MSEK |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Net sales | 489 | 498 | 542 | 514 | 2,042 | 476 | 426 | 532 | 476 | 1,911 |
| Adjusted EBITDA | 37 | 34 | 42 | 25 | 139 | 26 | 21 | 55 | 39 | 141 |
| Adjusted EBITA | 25 | 22 | 28 | 11 | 87 | 13 | 9 | 44 | 28 | 94 |
| Adjusted EBIT | 25 | 21 | 28 | 11 | 85 | 13 | 9 | 44 | 29 | 95 |
| Non-comparable items | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EBIT | 25 | 21 | 28 | 11 | 85 | 13 | 9 | 44 | 29 | 95 |
| Adjusted EBITDA margin, % | 7.7% | 6.8% | 7.8% | 4.9% | 6.8% | 5.4% | 5.0% | 10.4% | 8.2% | 7.4% |
| Adjusted EBITA margin, % | 5.2% | 4.3% | 5.2% | 2.2% | 4.2% | 2.8% | 2.2% | 8.2% | 5.8% | 4.9% |
| Adjusted EBIT margin, % | 5.1% | 4.2% | 5.2% | 2.1% | 4.2% | 2.8% | 2.2% | 8.2% | 6.1% | 5.0% |
| EBIT margin, % | 5.1% | 4.2% | 5.2% | 2.1% | 4.2% | 2.8% | 2.2% | 8.2% | 6.1% | 5.0% |
|
Other, MSEK |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Net sales | 91 | 91 | 99 | 100 | 381 | 103 | 110 | 106 | 92 | 411 |
| Adjusted EBITDA | 6 | 7 | 4 | 1 | 18 | 2 | 5 | 5 | 0 | 11 |
| Adjusted EBITA | 4 | 4 | 3 | 0 | 11 | 1 | 4 | 4 | -1 | 7 |
| Adjusted EBIT | 4 | 4 | 3 | 0 | 11 | 1 | 4 | 4 | -1 | 7 |
| Non-comparable items | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EBIT | 4 | 4 | 3 | 0 | 13 | 1 | 4 | 4 | -1 | 7 |
| Adjusted EBITDA margin, % | 6.5% | 7.3% | 4.3% | 0.8% | 4.6% | 1.8% | 4.3% | 4.4% | -0.5% | 2.6% |
| Adjusted EBITA margin, % | 4.3% | 4.5% | 2.9% | 0.1% | 2.9% | 0.6% | 3.3% | 3.6% | -1.6% | 1.6% |
| Adjusted EBIT margin, % | 4.3% | 4.5% | 2.9% | 0.1% | 2.9% | 0.7% | 3.3% | 3.6% | -1.2% | 1.7% |
| EBIT margin, % | 4.3% | 4.5% | 2.9% | 0.1% | 3.4% | 0.6% | 3.3% | 3.6% | -1.2% | 1.7% |
|
Group Cost, MSEK |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Net sales | - | - | - | - | 0 | - | - | - | - | 0 |
| Adjusted EBITDA | -5 | -8 | -5 | -7 | -24 | -6 | -4 | -3 | -5 | -18 |
| Adjusted EBITA | -5 | -9 | -5 | -8 | -26 | -7 | -6 | -6 | -7 | -26 |
| Adjusted EBIT | -5 | -9 | -5 | -8 | -26 | -7 | -6 | -6 | -7 | -26 |
| Non-comparable items | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -31 | -21 | -52 |
| EBIT | -5 | -9 | -5 | -8 | -26 | -7 | -6 | -37 | -28 | -78 |
| Adjusted EBITDA margin, % | - | - | - | - | - | - | - | - | - | - |
| Adjusted EBITA margin, % | - | - | - | - | - | - | - | - | - | - |
| Adjusted EBIT margin, % | - | - | - | - | - | - | - | - | - | - |
| EBIT margin, % | - | - | - | - | - | - | - | - | - | - |
|
TOTAL, MSEK |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Net sales | 2,458 | 2,472 | 2,541 | 2,420 | 9,891 | 2,479 | 2,448 | 2,621 | 2,393 | 9,940 |
| Adjusted EBITDA | 190 | 187 | 207 | 169 | 753 | 159 | 192 | 232 | 173 | 756 |
| Adjusted EBITA | 123 | 120 | 138 | 101 | 482 | 87 | 117 | 159 | 93 | 457 |
| Adjusted EBIT | 110 | 108 | 125 | 87 | 431 | 75 | 105 | 147 | 83 | 410 |
| Non-comparable items | 0 | -7 | 0 | 0 | -7 | 0 | 0 | -31 | -28 | -59 |
| EBIT | 110 | 101 | 125 | 87 | 424 | 75 | 105 | 116 | 56 | 351 |
| Adjusted EBITDA margin, % | 7.7% | 7.6% | 8.2% | 7.0% | 7.6% | 6.4% | 7.8% | 8.8% | 7.2% | 7.6% |
| Adjusted EBITA margin, % | 5.0% | 4.9% | 5.4% | 4.2% | 4.9% | 3.5% | 4.8% | 6.1% | 3.9% | 4.6% |
| Adjusted EBIT margin, % | 4.5% | 4.4% | 4.9% | 3.6% | 4.4% | 3.0% | 4.3% | 5.6% | 3.5% | 4.1% |
| EBIT margin, % | 4.5% | 4.1% | 4.9% | 3.6% | 4.3% | 3.0% | 4.3% | 4.4% | 2.3% | 3.5% |
Appendix B – Details on restated historical financial information related to items affecting comparability
Items affecting comparability (non-comparable items) are transactions or events that rarely occur or are unusual in the ordinary business operations, and hence are unlikely to occur again.
The tables below outline the bridge from items affecting comparability before restatement to after restatement. For completeness, the residual is listed under the heading
Specific explanatory items (exceptional items).Specific explanatory items (exceptional items) are transactions or events that do not qualify as items affecting comparability as they are likely to occur from time to time in the ordinary business operations. Disclosures about these items are provided to facilitate the understanding and assessment of the financial result.
Items affecting comparability (non-comparable items) in the operating income (EBIT) 2019-2020
|
SEK M |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Bird flu1) | -15 | -15 | ||||||||
| Earn-out Debt adjustment 2) | -31 | -21 | -52 | |||||||
| Covid-19 pandemic3) | -27 | -17 | -16 | -60 | ||||||
| Strategy project4) | -16 | -16 | ||||||||
| Restructuring5) | -6 | -5 | -12 | |||||||
| Restructuring of production6) | -7 | -7 | -7 | -7 | ||||||
| Transaction costs7) | -1 | -1 | ||||||||
| Costs for incorrect inserts goods8) | -6 | -6 | ||||||||
| Other | -4 | -4 | ||||||||
| Total | - | -13 | - | -16 | -30 | -42 | -17 | -31 | -59 | -150 |
Items affecting comparability (non-comparable items) in the operating income (EBIT) 2019-2020 Restated
|
SEK M |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Bird flu1) | ||||||||||
| Earn-out Debt adjustment 2) | -31 | -21 | -52 | |||||||
| Covid-19 pandemic3) | ||||||||||
| Strategy project4) | ||||||||||
| Restructuring5) | ||||||||||
| Restructuring of production6) | -7 | -7 | -7 | -7 | ||||||
| Transaction costs7) | ||||||||||
| Costs for incorrect inserts goods8) | ||||||||||
| Other | ||||||||||
| Total | - | -7 | - | - | -7 | - | - | -31 | -28 | -59 |
|
SEK M |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Ready-to-cook | -7 | -7 | -7 | -7 | ||||||
| Ready-to-eat | ||||||||||
| Other | ||||||||||
| Group cost | -31 | -21 | -52 | |||||||
| Total | - | -7 | - | - | -7 | - | - | -31 | -28 | -59 |
1) Cost related to bird flu - mainly inventory write-down.
2) Cost related to increased earn-out debt attributable to the acquisition of Manor Farm, mainly driven by the strong result development in Manor Farm in 2020 compared with the assessment made at the acquisition time.
3)Cost related to Covid-19 pandemic - Temporarily closing of production lines on products within Foodservice in Denmark (for the quarter and full year), provision for bad debt (for the quarter) and inventory write-down (for the quarter and full year).
4) Comprehensive strategy project in the Group aimed to review the business has resulted in a common Group strategy on medium-and long-term path.
5) Restructuring costs in Denmark in 2019.
6) For 2019, Closing of hatchery in Finland in the second quarter 2019. For 2020, costs due to restructuring of a Swedish subsidiary during the fourth quarter 2020, with terminating a long-term contract and write-downs of assets.
7) Deal fees mainly related to the acquisitions of Rokkedahl Food ApS in Denmark in 2018.
8) Costs incurred due to quality issues in purchased raw material that have not been covered by insurance.
Specific explanatory items (exceptional items) in the operating income (EBIT) 2019-2020
|
SEK M |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Bird flu1) | -15 | -15 | ||||||||
| Earn-out Debt adjustment 2) | ||||||||||
| Covid-19 pandemic3) | -27 | -17 | -16 | -60 | ||||||
| Strategy project4) | -16 | - | -16 | |||||||
| Restructuring5) | -6 | -5 | -12 | |||||||
| Restructuring of production6) | ||||||||||
| Transaction costs7) | -1 | -1 | ||||||||
| Costs for incorrect inserts goods8) | -6 | -6 | ||||||||
| Other | -4 | -4 | ||||||||
| Total | 0 | -6 | 0 | -16 | -23 | -42 | -17 | 0 | -31 | -91 |
|
SEK M |
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | 2020 |
| Ready-to-cook | -4 | -10 | -14 | -29 | -5 | -29 | -63 | |||
| Ready-to-eat | -2 | -6 | -8 | -12 | -13 | 0 | -3 | -27 | ||
| Other | -1 | -1 | ||||||||
| Group cost | -1 | -1 | ||||||||
| Total | 0 | -6 | 0 | -16 | -23 | -42 | -17 | 0 | -31 | -91 |
1) Cost related to bird flu - mainly inventory write-down.
2) Cost related to increased earn-out debt attributable to the acquisition of Manor Farm, mainly driven by the strong result development in Manor Farm in 2020 compared with the assessment made at the acquisition time.
3)Cost related to Covid-19 pandemic - Temporarily closing of production lines on products within Foodservice in Denmark (for the quarter and full year), provision for bad debt (for the quarter) and inventory write-down (for the quarter and full year).
4) Comprehensive strategy project in the Group aimed to review the business has resulted in a common Group strategy on medium-and long-term path.
5) Restructuring costs in Denmark in 2019.
6) For 2019, Closing of hatchery in Finland in the second quarter 2019. For 2020, costs due to restructuring of a Swedish subsidiary during the fourth quarter 2020, with terminating a long-term contract and write-downs of assets.
7) Deal fees mainly related to the acquisitions of Rokkedahl Food ApS in Denmark in 2018.
8) Costs incurred due to quality issues in purchased raw material that have not been covered by insurance.
About Scandi Standard
Scandi Standard is the leading producer of chicken-based food products in the Nordic region and Ireland. The company produces, markets and sells ready to eat, chilled and frozen products under the well-known brands Kronfågel, Danpo, Den Stolte Hane, Manor Farm and Naapurin Maalaiskana. Eggs are also produced and sold in Norway. We are approximately 3,000 employees with annual sales of more than SEK 9 billion. For more information, please visit www.scandistandard.com
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