LÄNNEN TEHTAAT PLC Interim report 12 August 2008 8.30 a.m.
INTERIM REPORT 1 January - 30 June 2008
January-June
- Profit for the period was EUR 6.3 (6.3) million
- Earnings per share came to EUR 0.98 (1.01)
- Net sales for the continuing operations increased by 38% to EUR 191.9 (139.5)
million
- Operating profit for the continuing operations without non-recurring items
was EUR 2.3 (-0.4) million, non-recurring items were EUR 4.9 (0.1) million
- Profit for continuing operations was EUR 6.3 (-0.1) million
April-June:
- Net sales for the continuing operations increased by 49% to EUR 101.0 (68.0)
million
- The operating profit was EUR 1.8 (-0.4) million
The information in the interim report has not been audited.
CEO Matti Karppinen:
“All the business operations continued to increase their net sales in the second
quarter. There was particularly strong growth in Grain Trading, where volumes
and market prices were considerably higher than in the comparative period. The
greatest success was achieved by Avena Nordic Grain on international markets.
“The operating profit of the continuing operations was much better than the
comparative period as a result of the excellent performance by Grain Trading and
the improved performance by the Fish business.
“The growth rate of the world economy has slowed down, and a great deal of
uncertainty surrounds future economic development. The effects of this slowdown
and the deterioration in consumer confidence are expected to effect on
customers' purchasing behaviour. However, these effects on Lännen Tehtaat's
business operations are expected to be small.”
KEY INDICATORS, EUR million
4-6/2008 4-6/2007 1-6/2008 1-6/2007 1-12/2007
Continuing operations
Net sales 101.0 68.0 191.9 139.5 309.6
Operating profit 1.8 -0.4 7.2 -0.2 5.3
Operating profit without
non-recurring items 1.8 -0.4 2.3 -0.4 5.6
Profit before taxes 1.5 -0.3 6.5 -0.2 6.0
Profit for the period 1.3 -0.2 6.3 -0.1 5.6
Earnings per share, EUR 0.20 -0.03 0.98 -0.02 0.88
Discontinued operations
Profit for the period - 4.6 - 6.4 7.8
Earnings per share - 0.73 - 1.03 1.25
RESTRUCTURING AND CORPORATE ACQUISITIONS
The ownership arrangements of Avena Nordic Grain Oy and the sale of the jams
business agreed by Apetit Pakaste Oy, which have been carried out in the period
under review, are explained in the interim report for the first quarter.
CHANGE IN REPORTING PRACTICE
Lännen Tehtaat has altered its reporting practice in respect of the way in which
it presents its share of the profit/loss of associated companies from the start
of 2008. Under the new practice the share of the profit/loss of associated
companies related to the food businesses will be included in the operating
profit, and the share of the profit/loss of other associated companies will be
shown below the operating profit. The share of the profit/loss from Sucros Ltd
and Ateriamestarit Oy is included in Other Operations. The figures for the
previous year have been adjusted accordingly. The share of the profit/loss from
Sandanger AS from 1 March to 31 August 2007 is reported above the operating
profit for the Fish business.
Lännen Tehtaat's share of the profit from the associated company Suomen Rehu is
shown below the operating profit.
DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
In the consolidated balance sheet the assets and liabilities directly associated
with the discontinued operations and with assets held for sale are presented
separately from other assets and liabilities as non-current assets held for sale
and as liabilities associated with non-current assets held for sale.
In the balance sheet for the reporting period, the assets of Apetit Pakaste's
jams business are disclosed as non-current assets held for sale. The Suomen Rehu
Group has been presented in the income statement for the comparative period
under discontinued operations.
NET SALES AND PROFIT
January-June:
Continuing operations
Net sales of the continuing operations were EUR 191.9 (139.5) million in
January-June, an increase of 38%.
The operating profit reported in the period under review was EUR 7.2 (-0.2)
million. The operating profit without non-recurring items was EUR 2.3 (-0.4)
million. Non-recurring items totalled EUR 4.9 (0.1) million. The reported
operating profit includes EUR 5.4 (-0.3) million as the share of the associated
companies' profit/loss, which includes non-recurring items of EUR 5.0 (0.0)
million relating to the EU's sugar reform.
The net financial expenses of the continuing operations amounted to EUR 1.1
(0.0) million. Included in this total is the dividend right belonging to the key
employees of Avena Nordic Grain Oy, EUR 0.4 million, based on Avena Nordic Grain
group's profit for the period.
The share of the profit of the associated company Suomen Rehu was EUR 0.4 (0.1)
million. Only the figure for June is shown for the comparative period.
The profit before taxes amounted to EUR 6.5 (-0.2) million, and the profit for
the period was EUR 6.3 (-0.1) million.
Discontinued operations
During the comparative period, the discontinued operations included the Suomen
Rehu Group. The net sales of the discontinued operations in the comparative
period amounted to EUR 78.8 million and the profit for the period was EUR 6.4
million, including the profit from Suomen Rehu for January-May (EUR 2.3 million)
and the profit on the sale of majority shareholding (EUR 4.1 million).
The profit for the period for the continuing and discontinued operations in
January-June was EUR 6.3 (6.3) million and the earnings per share EUR 0.98
(1.01).
April-June:
Net sales for the continuing operations in April-June were EUR 101.0 (68.0)
million, an increase of 49% over the comparative period. Growth took place in
all the business operations.
The operating profit of the continuing operations was EUR 1.8 (-0.4) million in
April-June. The financial performance of the Fish business, Grain Trading and
the Other Operations segment was better than in the comparative period, whereas
in the Frozen Foods business and Vegetable Oils it was worse.
FINANCING AND CASH FLOW
The Group's financial position and liquidity remained good. The cash flow from
business operations, after interest and taxes, totalled EUR 17.5 (14.9) million
in January-June. The effect of the change in working capital was EUR 14.6 (17.0)
million. The net cash flow from investments totalled EUR 1.0 (8.2) million. The
cash flows from loans were EUR -16.3 (-25.5) million. Dividends paid amounted to
EUR 5.3 (5.3) million. The cash flows in the previous year include those of
discontinued operations. The net change in cash and cash equivalents was EUR 2.2
(-2.3) million.
At the end of the period under review interest-bearing liabilities came to EUR
23.4(29.9) million and liquid assets to EUR 11.3 (25.2) million. Net
interest-bearing liabilities totalled EUR 12.1 (4.7) million. The consolidated
balance sheet total stood at EUR 183.9 (177.2) million. The equity ratio was
69.7 (67.9)%. Commercial papers issued for the Group's short-term financing
totalled EUR 18.0 (23.0) million. The liquidity is secured with committed credit
facilities, and at the end of the period under review the credit facilities
available totalled EUR 25 (23) million.
INVESTMENT
In the period under review gross investment in non-current assets in the
continuous operations came to EUR 3.8 (2.6) million.
PERSONNEL
The average number of personnel in the continuing operations in the period under
review was 767 (652). The number of personnel working in Frozen Foods was 228
(228), in Fish 461 (348), in Vegetable Oils 35 (36), in Grain Trading 30 (29)
and in Other Operations 13 (11). The personnel at Apetit Suomi Oy are allocated
under both Frozen Foods and Fish in proportion to the services charged. The
increase in the number of personnel in the Fish business is mainly due to the
acquisition of Maritim Food and to the increase in the Kalatori personnel after
the transfer of the Kalatori service counters, which had previously been
operating under the franchise model, to the charge of Apetit Kala's own
personnel.
BUSINESS SEGMENTS
Frozen Foods
EUR million 4-6/2008 4-6/2007 1-6/2008 1-6/2007 1-12/2007
Net sales 12.5 11.8 26.0 25.1 49.3
Operating profit without
non-recurring items 0.2 0.3 0.6 0.8 3.5
Operating profit for the
period 0.2 0.3 0.5 0.8 3.3
The net sales of Frozen Foods in April-June grew by 6% on the comparative
period. Sales went up in all the distribution channels. Sales of retail products
rose by about 7%. The growth in the hotel, restaurant and catering sector and
sales to the food industry were about 5%. The growth in bakery sales was about
15% and in exports 12%.
The operating profit for Frozen Foods in April-June was as predicted. Price
increases to compensate for the rise in raw-material and energy costs were
implemented as planned.
The net sales for January-June grew by 4%. The growth in sales of retail
products was about 3.5%. The proportion of retailers' private label brands fell
slightly. The biggest increases in the Apetit's product groups came in the
frozen berry and potato products, jams and marmalades. In the frozen products a
new product (potato and soup vegetables) as well as creamed potatoes and mashed
potatoes were particularly successful. Sales in the hotel, restaurant and
catering sector, as in bakery sales and sales to the food industry, rose by
about 3%. The growth in exports was more than 20% because of the exports of
peas.
The slight fall in the operating profit for the first half of the year was as
forecast.
Investment by Frozen Foods came to EUR 2.6 (1.1) million in January-June, most
of it being related to the investment required by the transfer of production at
the Turku plant to Säkylä and the renewal of the enterprise resource planning
system.
Fish
EUR million 4-6/2008 4-6/2007 1-6/2008 1-6/2007 1-12/2007
Net sales 23.1 20.5 44.6 36.9 81.7
Operating profit without
non-recurring items -0.1 -1.1 -0.6 -1.2 -1.5
Operating profit for the
period -0.1 -1.1 -0.6 -1.2 -1.8
Net sales by the Fish business in April-June grew by 13% on the comparative
period. The business operations in Norway and Sweden had an effect of more than
EUR 3 million on the growth in net sales.
The financial performance was, as expected, an improvement on the comparative
period, but it still remained a slight loss. The financial performance was
better in Apetit Kala and the Maritim Food Group, a result in Finland of an
improvement in labour and raw-material productivity and delivery reliability.
The increase in the relative gross margin improved the financial performance of
the Maritim Group's Norwegian companies. In the Swedish business operations, the
financial performance deteriorated as a result of expensive shrimp raw material
and an increase in costs.
In order to increase sales and coordinate the operating model, most of the
Kalatori service counters, which had previously been operating under the
franchise model, were transferred to the charge of Apetit Kala at the beginning
of April.
At the beginning of April, Apetit Kala Oy and Saarioinen Oy agreed on starting
cooperation in the hotel, restaurant and catering industry. According to the
agreement, from 1 September 2008 Saarioinen will sell and market products made
by Apetit Kala and Maritim Food on the Finnish market. The aim of the
cooperation is to increase the sale of products in the sector by a considerable
number.
Net sales by the Fish business in January-June increased by 21%. The growth in
net sales was generated by operations abroad. The effect of Maritim Foods, which
became part of the Lännen Tehtaat Group in March last year, and of Sandanger,
which joined the Group at the beginning of September, on the increase in net
sales was close to EUR 10 million. In Finland net sales fell by EUR 1.7 million
compared with the same period in the previous year as a result of lower purchase
and sales prices for salmon and rainbow trout than in the comparative period and
the poor availability of natural fish and whitefish.
As a result of a better second quarter, the financial performance of the Fish
business in January-June was much improved compared with corresponding figure in
the previous year.
In July, the European Union repealed the EC Regulation concerning a minimum
import price for Norwegian farmed salmon. In addition, the removal of the
anti-dumping duty on Norwegian rainbow trout is expected in the near future.
This could lead to lower raw-material prices for salmon and rainbow trout in
Finland. Reduced raw-material prices are expected to increase the overall market
for fish.
In the middle of April, Sami Haapasalmi started as head of the Group's Fish
business with responsibility for its profitability and the development and
expansion of the business through organic growth and acquisitions.
Investment by the Group's Fish business in January-June was EUR 1.0 (1.1)
million. In Finland, this mainly concerned the renewal of Apetit Kala's
enterprise resource planning system. Foreign units invested in machines and
equipment that improve productivity.
Vegetable Oils
EUR million 4-6/2008 4-6/2007 1-6/2008 1-6/2007 1-12/2007
Net sales 15.9 10.7 30.1 20.7 46.0
Operating profit without
non-recurring items 0.1 0.6 0.2 1.0 0.8
Operating profit for the
period 0.1 0.6 0.2 1.0 0.9
Vegetable Oils' net sales in April-June grew by 49% on the comparative period.
That resulted mainly from the dramatic increase in oil and protein feed prices.
Demand for Mildola products remained good, and the volume went up compared with
the previous year. The prices of vegetable oil raw materials were much higher
than in the comparative period. Because of the small stocks, the prices of the
old harvest rose in Europe, which increased the raw-material costs for Mildola
at the end of the period. The operating profit for the period went down because
it was not possible to fully absorb the increased raw-material costs in the
sales prices. Increased energy costs also reduced the profit.
The raw-material market for vegetable oils is still unsettled because prices are
being affected not only by harvest prospects and the demand situation in the
food industry but also by the price trend in bio-fuels and crude oil and price
speculation.
Net sales in January-June grew by 45% on the comparative period. That resulted
from higher raw-material and product prices than in the comparative period and
an increased volume.
Vegetable Oils' financial performance in January-June was much worse than in the
comparative period.
The area for cultivating domestic rapeseed has decreased from 90,000 hectares to
65,000 hectares, which will reduce the percentage of domestic seed in the
present harvest season. The increase in the proportion of imported rapeseed will
raise freight costs.
Vegetable Oils' profitability will be improved by developing new operating
models on the end-product and raw-materials market.
Erkki Lepistö was appointed head of the Vegetable Oils operations and managing
director of Mildola Oy as of 1 July 2008.
Investment by the Vegetable Oils business came to EUR 0.1 (0.3) million,
consisting of small replacement investments.
Grain Trading
EUR million 4-6/2008 4-6/2007 1-6/2008 1-6/2007 1-12/2007
Net sales 49.6 25.1 91.7 57.2 132.8
Operating profit without
non-recurring items 2.3 0.9 4.0 1.7 3.9
Operating profit for the
period 2.3 0.9 4.0 1.7 3.9
The strong growth in Grain Trading continued in the second quarter, and Avena
Nordic Grain's position strengthened on the market abroad in particular. Net
sales for April-June doubled compared with the previous year, the growth being
the result of the almost 50% increase in volume and higher prices than in the
comparative period. The business grew especially on international markets - in
trade between third countries and exports. Sales in Finland were slightly above
the level for the corresponding period in the previous year. The net profit for
the period showed a marked improvement and was EUR 2.3 (0.9) million.
The financial performance for the period showed a marked improvement on the
comparative period.
Net sales for January-June grew 60% that occurred in all the market areas, but
in particular in the trade between third countries and exports.
The financial performance in the period under review was a considerable
improvement on the comparative period and better than the level for all of 2007.
In the latest harvest season, the market prices for grain, oilseeds and feed raw
materials remained high because of the smaller harvests in the main grain
production areas, low stock levels and increased demand. Prices at the beginning
of the second quarter came down on world markets in the positive atmosphere
created by the first forecasts for the new harvest. At this moment, the harvests
are expected to be very good in several important production areas, which, with
the start of the harvesting season, has brought prices down. However, stock
levels remain at a historical low in this harvest period too, because demand
continues to be strong. Regional harvest and price differences will create
opportunities for international grain traders such as Avena.
Other Operations
EUR million 4-6/2008 4-6/2007 1-6/2008 1-6/2007 1-12/2007
Net sales 0.4 0.9 1.4 1.9 4.4
Operating profit without
non-recurring items -0.6 -1.1 -1.9 -2.6 -1.8
Operating profit for the
period -0.6 -1.1 3.1 -2.5 -0.9
The Other Operations segment is made up of the service company Apetit Suomi Oy,
Group Administration, items not belonging to any of the other business segments,
and the associated companies Sucros Ltd and Ateriamestarit Oy. The cost effect
of services produced by Apetit Suomi Oy has a negative effect on the financial
performance in proportion to the use of services.
The segment's net sales reduced in April-June. The reduction is a consequence of
the termination of the service obligations of the sales and product development
operations with the transfer of these activities from Apetit Suomi Oy to the
business units. The operating loss of EUR -0.6 million for the period includes
shares of associated companies' profit amounting to EUR 0.5 (0.1) million.
The operating profit of EUR 3.1 million reported for January-June includes
shares in the associated companies' profit of EUR 5.4 (-0.3) million.
Investment by the segment of EUR 0.1 (0.1 million) was concentrated on renewal
the Group's enterprise resource management and reporting systems and on
environmental investment at the Säkylä industrial estate.
DECISIONS BY THE ANNUAL GENERAL MEETING
The Annual General Meeting of Lännen Tehtaat plc, held on 2 April 2008, approved
the financial statements of the parent company and the consolidated financial
statements and discharged the members of the Supervisory Board and the Board of
Directors and the CEO from liability for the 2007 financial year.
Dividend
The Annual General Meeting decided to distribute a dividend of EUR 0.85 per
share for the financial year 2007. The AGM decided to pay the dividend on 15
April 2008.
Amending the Articles of Association
The Annual General Meeting approved the Board of Directors' proposal concerning
an increase in the maximum age at which a person may be elected to the Board of
Directors and to the Supervisory Board.
Authorization to acquire Lännen Tehtaat shares
The Annual General Meeting authorized the Board of Directors to decide on the
acquisition of a maximum total of 250,878 Lännen Tehtaat shares for the company
using non-restricted equity.
The authorization is valid until the next AGM.
Authorizations for share issue
The Annual General Meeting authorized the Board of Directors to decide on the
issuing of new shares and on the transfer of Lännen Tehtaat shares held by the
company in one or more lots in a share issue to a total of no more than 947,635
shares. The share issue authorization covers all the Lännen Tehtaat shares
already held by the company (65,000 shares). The authorization further covers
all the Lännen Tehtaat shares to be acquired by the company under the
authorization, given on 2 April 2008, to acquire Lännen Tehtaat shares. The
maximum number of Lännen Tehtaat shares that may be acquired under this
authorization is 250,878.
The authorization is valid until the next Annual General Meeting. The
authorization will revoke the earlier authorization to issue shares given on 29
March 2007 and the authorization to transfer Lännen Tehtaat shares held by the
company given on the same date.
Information about the decisions of the Annual General Meeting is given in more
detail in a stock exchange release dated 2 April 2008 and in an interim report
published on 8 May 2008.
USE OF BOARD OF DIRECTORS' AUTHORIZATIONS
Share issue authorizations
The Board of Directors has not as yet used the authorization granted to it for
issuing new shares or for transferring Lännen Tehtaat shares held by the
company.
Acquisition of Lännen Tehtaat shares
On 8 May 2008, the Board of Directors of Lännen Tehtaat plc decided, on the
basis of the authorization granted on 2 April 2008, to acquire between 19 May
2008 and 29 August 2008 a maximum of 65,000 of the company's own shares using
non-restricted equity.
During the period under review, a total of 29,224 Lännen Tehtaat shares were
acquired in trading organized by OMX Nordic Exchange Helsinki Oy. The
acquisition cost was EUR 0.45 million. The average price of the acquired shares
was EUR 15.27 per share. The highest acquisition price was EUR 15.89 and the
lowest EUR 14.35 per share.
At the end of the period under review, the company held 94,224 its own shares
acquired in the period under review and earlier at a nominal value of EUR 0.188
million. Lännen Tehtaat's own shares represent 1.5% of the number of shares and
votes.
SHARES AND TRADING
During the period under review, a total of 762,832 (478,925) its own shares, or
12.1% (7.6)% of the total number of shares, were traded on the stock exchange.
The highest share price was EUR 16.46 (24.50) and the lowest EUR 13.20 (21.00).
The share turnover in January-June totalled EUR 10.9 (11.2) million. At the end
of the period, the market capitalization stood at EUR 94.8 (132.7) million.
FLAGGING ANNOUNCEMENTS
No flagging announcements were made during the period under review.
GOVERNANCE
In its organizational meeting on 7 April 2008, the Supervisory Board of Lännen
Tehtaat plc elected Helena Walldén as its chairman and Juha Nevavuori as deputy
chairman.
At the same meeting, the Supervisory Board elected Harri Eela, Heikki
Halkilahti, Aappo Kontu, Matti Lappalainen, Hannu Simula, Soili Suonoja and Tom
v. Weymarn as members of the Board of Directors of the company. Tom v. Weymarn
was elected chairman and Hannu Simula as vice chairman of the Board of
Directors.
SEASONAL NATURE OF OPERATIONS
Under the IAS 2 standard, the acquisition cost of inventories includes a
systematically allocated portion of the fixed production overheads. In
production based on seasonal harvests, raw materials are mostly processed into
finished products during the final quarter, which means that inventories and
their balance-sheet values peak at the end of the year. Because of the emphasis
on seasonal harvests, the seasonal nature of Lännen Tehtaat's operations is most
marked in the Frozen Foods business and the operations of the associated company
Sucros Ltd. In these business operations most of the profit accumulates towards
the end of the year.
Apetit Kala generates a considerable proportion of its sales during weekends and
public holidays. The full-year result for the Fish business depends to a great
extent on the success of Christmas sales.
Annual and quarterly net sales in the Grain Trading business depend very much on
demand and supply factors and on the price level in Finland and other markets.
RISKS AND UNCERTAINTIES IN THE NEAR FUTURE
The most significant near-future risks for the Lännen Tehtaat Group are
connected with the amount and quality of the domestic harvest of vegetables,
grain and oilseeds, the management of changes in raw material prices, changes in
customer relationships, the transfer operation of production at the Turku plant,
the introduction of the new enterprise resource planning system, and corporate
acquisitions and takeovers.
IMPORTANT EVENTS AFTER THE PERIOD UNDER REVIEW
The German company Nordzucker AG is in the process of becoming the principal
owner of Sucros Ltd, an associated company of Lännen Tehtaat. According to a
stock exchange release issued by Danisco A/S on 14 July 2008, it has agreed on
the sale of the sugar company Danisco Sugar A/S to Nordzucker AG. Danisco Sugar
A/S has a majority shareholding (80%) in Sucros Ltd. Lännen Tehtaat owns 20% of
the Sucros Group.
OUTLOOK FOR 2008
The net sales are expected to increase on the previous year because of the
growth in Grain Trading, Vegetable Oils and Fish businesses.
The operating profit excluding non-recurring items is expected to increase on
the previous year because of the good performance in Grain Trading and improved
profitability in Fish business. The financial performance for the period is also
favourably affected by the non-recurring items of the associated company Sucros
Ltd (EUR 5.0 million) recognized in the first quarter and the profit (about EUR
2.5 million before taxes) on the sale of the jams business that will be
recognized in the third quarter.
CONSOLIDATED INCOME STATEMENT
EUR million
4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2008 2007 2008 2007 2007
3 mths 3 mths 6 mths 6 mths 12 mths
Continuing operations
Net sales 101.0 68.0 191.9 139.5 309.6
Other operating income 0.3 0.3 0.6 0.6 1.4
Operating expenses -98.7 -67.6 -188.1 -137.8 -302.3
Depreciation -1.3 -1.2 -2.6 -2.3 -5.0
Impairments - - - - -0.5
Share of profit/loss of
accociated companies 0.5 0.1 5.4 -0.3 2.1
Operating profit 1.8 -0.4 7.2 -0.2 5.3
Financial income and expenses -0.4 0.0 -1.1 0.0 -0.8
Share of profit of associated
companies 0.1 0.1 0.4 0.1 1.4
Profit before taxes 1.5 -0.3 6.5 -0.2 6.0
Income taxes -0.3 0.1 -0.3 0.1 -0.4
Profit for the period,
continuing operations 1.3 -0.2 6.3 -0.1 5.6
Discontinued operations
Profit for the period,
discontinued operations - 4.6 - 6.4 7.8
Profit for the period 1.3 4.4 6.3 6.3 13.4
Attributable to:
Equity holders of the parent 1.3 4.4 6.2 6.3 13.3
Minority interests 0.0 - 0.1 - 0.1
Earnings per share, calculated of
the profit attributable to the
shareholders of the parent company
Basic and diluted earnings per
share, EUR, total 0.20 0.70 0.98 1.01 2.13
Basic and diluted earnings per
share, EUR, continuing operations 0.20 -0.03 0.98 -0.02 0.88
Basic and diluted earnings per
share, EUR, discontinued operations - 0.73 - 1.03 1.25
CONSOLIDATED BALANCE SHEET
EUR million
30 June 30 June 31 Dec
2008 2007 2007
ASSETS
Non-current assets
Intangible assets 5.5 3.4 4.7
Goodwill 7.1 6.7 7.0
Tangible assets 43.7 38.8 43.5
Investment in associated companies 45.2 41.9 39.2
Available-for-sale investments 0.1 0.1 0.1
Receivables 3.3 4.5 4.6
Deferred tax assets 1.2 0.9 0.3
Non-current assets total 106.1 96.3 99.4
Current assets
Inventories 40.4 32.1 64.4
Receivables 25.3 22.8 28.6
Income tax receivable 0.1 0.7 0.4
Financial assets at fair value
through profit and loss 4.0 20.1 8.1
Cash and cash equivalents 7.2 5.2 5.1
Current assets total 77.1 80.9 106.6
Non-current assets classified
as held for sale 0.8 - -
Total assets 183.9 177.2 205.9
EQUITY AND LIABILITIES
Equity attributable to the equity
holders of the parent company 127.7 120.3 127.3
Minority interest 0.6 - 0.7
Total equity 128.3 120.3 128.0
Non-current liabilities
Deferred tax liabilities 4.1 4.4 4.8
Long-term financial liabilities 4.9 3.0 5.3
Non-current provisions 0.1 0.1 0.1
Non-current liabilities total 9.2 7.5 10.2
Current liabilities
Short-term financial liabilities 18.5 26.9 28,2
Income tax payable 1.3 1.1 0.7
Trade payables and other liabilities 26.8 21.4 38.7
Current liabilities total 46.5 49.4 67.6
Liabilities directly associated with
non-current assets classified as held for sale 0.0 - -
Total liabilities 55.7 56.9 77.9
Total equity and liabilities 183.9 177.2 205.9
CONSOLIDATED CASH FLOW STATEMENT
EUR million
1-6/ 1-6/ 1-12/
2008 2007 2007
6 mths 6 mths 12 mths
Net profit for the period 6.3 6.3 13.4
Adjustments, total -1.7 -6.8 -1.5
Change in working capital 14.6 17.0 -3.3
Interests paid from
operating activities -1.2 -1.5 -2.8
Interests received from
operating activities 0.3 0.5 0.7
Taxes paid -0.9 -0.6 -1.2
Net cash flow from operating activities 17.5 14.9 5.3
Investments in tangible and intangible assets -3.8 -3.1 -7.6
Proceeds from sales of tangible
and intangible assets 0.1 0.1 0.2
Acquisition of subsidiaries deducted by cash -0.4 -8.8*) -9.9
Proceeds from sales of subsidiaries - 40.5 42.0
Transactions with minority 1.5 - -
Acquisition of associated companies -0.4 -1.1*) 0.0
Proceeds from sales of associated companies - 0.6 0.6
Purchases of other investments 0.0 -20.0 -35.1
Proceeds from sales of other investments 4.0 - 27.0
Dividends received from investing activities - - 5.3
Net cash flow from investing activities 1.0 8.2 22.5
Raising of short-term loans - - -
Repayments of short-term loans -9.8 -18.5 -16.7
Repayments of long-term loans -0.5 -1.7 -8.1
Payment of financial lease liabilities -0.1 0.0 -0.1
Purchases of own shares -0.4 - -
Dividends paid to minority -0.3 - -
Dividends paid -5.3 -5.3 -5.3
Cash flows from financing activities -16.3 -25.5 -30.2
Net change in cash and cash equivalents 2.2 -2.3 -2.4
Cash and cash equivalents at the
beginning of the the period 5.1 7.5 7.5
Cash and cash equivalents at the
end of the period 7.2 5.2 5.1
*) Control over Sandanger AS was obtained during the third quarter in 2007 when
share ownership raised to 51% after additional share acquisition.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
EUR million
A = Share capital
B = Share premium account
C = Net unrealised gains
D = Other reserves
E = Own shares
F = Translation differences
G = Retained earnings
H = Attributable to equity holders of the parent company
I = Minority interest
J = Shareholders' equity total
A B C D E F G H I J
Shareholders'
equity at
1 Jan 2007 12.6 23.4 0.4 7.3 -0.8 -0.2 76.5 119.2 0.0 119.2
Cash flow hedges:
gains/losses
recorded in equity - - 0.0 - - - - 0.0 - 0.0
Taxes related to
items entered into
equity and removed
from equity - - 0.0 - - - - 0.0 - 0.0
Translation
differences - - - - - 0.3 - 0.3 - 0.3
Other changes - - - -0.1 - - -0.1 -0.2 - -0.2
Profit for the period - - - - - - 6.3 6.3 - 6.3
Total recognised
income and
expenses - - 0.0 -0.1 - 0.3 6.2 6.4 - 6.4
Dividend
distribution - - - - - - -5.3 -5.3 - -5.3
Shareholders'
equity at
30 June 2007 12.6 23.4 0.4 7.2 -0.8 0.1 77.4 120.3 0.0 120.3
Shareholders'
equity at
1 Jan. 2008 12.6 23.4 0.4 7.2 -0.8 0.1 84.5 127.3 0.7 128.0
Cash flow hedges:
gains recorded
in equity - - 0.0 - - - - 0.0 - 0.0
Taxes related to
items entered into
equity and removed
from equity - - 0.0 - - - - 0,0 - 0,0
Increase/decrease
in subsidiary - - - - - - 0.4 0.4 - 0.4
Translation
differences - - - - - -0.1 - -0.1 - -0.1
Other changes - - - - -0.4 - -0.4 -0.8 - -0.8
Profit for the
period - - - - - - 6.2 6.2 0.1 6.3
Total recognised
income and
expenses - - 0.0 - -0.4 -0.1 6.2 5.6 0.1 5.8
Dividend
distribution - - - - - - -5.3 -5.3 -0.3 -5.6
Shareholders'
equity at
30 June 2008 12.6 23.4 0.4 7.2 -1.2 0.0 85.3 127.6 0.6 128.3
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The interim report has been prepared in accordance with IAS 34, Interim
Financial Reporting, as adopted by the EU. The accounting policies adopted are
consistent with those of the Group's annual financial statements for the year
ended 31 December 2007.
SEGMENT INFORMATION
A Frozen Foods
B Fish
C Vegetable Oils
D Grain Trading
E Other Operations
F Continuing operations total
G Discontinued operations
H Total
Business segments 1-6/2008
EUR million A B C D E F G H
Total external sales 26.0 44.6 30.1 91.7 1.4 193.8 - 193.8
Intra-group sales -0.1 -0.1 0.0 -0.6 -1.1 -1.9 - -1.9
Net sales 26.0 44.6 30.1 91.1 0.3 191.9 - 191.9
Share of profit/loss
of associated companies
included in operating
profit/loss - - - - 5.4 5.4 - 5.4
Operating profit/loss 0.5 -0.6 0.2 4.0 3.1 7.2 - 7.2
Share of profit/loss
of associated companies - - - - 0.4 0.4 - 0.4
Gross investments in
non-current assets 2.6 1.0 0.1 0.0 0.1 3.8 - 3.8
Corporate acquisitions
and other share
purchases - - - 0.4 - 0.4 - 0.4
Depreciations 0.7 1.1 0.3 0.0 0.5 2.6 - 2.6
Impairments - - - - - - - -
Personnel 228 461 35 30 13 767 - 767
Business segments 1-6/2007
EUR million A B C D E F G H
Total external sales 25.2 36.9 20.7 57.2 1.9 141.9 78.8 220.7
Intra-group sales -0.1 -0.1 0.0 -0.5 -1.7 -2.4 -11.6 -14.0
Net sales 25.1 36.8 20.7 56.7 0.2 139.5 67.2 206.7
Share of profit/loss
of associated companies
included in operating
profit/loss - 0.1 - - -0.3 -0.3 - -0.3
Operating profit/loss 0.8 -1.2 1.0 1.7 -2.5 -0.2 7.8 7.5
Share of profit of
associated companies - - - - 0.1 0.1 0.1 0.1
Gross investments in
non-current assets 1.1 1.1 0.3 - 0.1 2.6 0.6 3.1
Corporate acquisitions
and other share
purchases - 11.1 - - - 11.1 - 11.1
Depreciations 0.8 0.6 0.3 0.1 0.5 2.3 0.2 2.5
Impairments - - - - - - - -
Personnel 228 348 36 29 11 652 245 897
Business segments 1-12/2007
EUR million A B C D E F G H
Total external sales 49.3 81.7 46.0 132.8 4.4 314.2 78.8 393.0
Intra-group sales -0.1 -0.1 0.0 -1.2 -3.2 -4.6 -11.6 -16.2
Net sales 49.2 81.6 46.0 131.6 1.2 309.6 67.2 376.8
Share of profit/loss
of associated companies
included in operating
profit/loss - 0.1 - - 2.1 2.1 - 2.1
Operating profit/loss 3.3 -1.7 0.9 3.9 -0.9 5.3 9.1 14.5
Share of profit of
associated companies - - - - 1.4 1.4 0.1 1.5
Gross investments in
non-current assets 1.6 4.1 0.4 - 0.8 6.9 0.6 7.5
Corporate acquisitions
and other share
purchases - 11.6 - - - 11.6 - 11.6
Depreciations 1.7 1.6 0.6 0.1 1.0 5.0 0.2 5.2
Impairments 0.2 0.3 - - - 0.5 - 0.5
Personnel 248 379 36 29 11 705 123 827
GEOGRAPHICAL SEGMENTS
Net sales
EUR million
1-6/ 1-6/ 1-12/
2008 2007 2007
6 mths 6 mths 12 mths
Finland 100.3 92.9 189.2
Scandinavia 39.7 17.0 45.8
Baltic states and Russia 3.7 3.2 10.0
Other countries 48.1 26.4 64.6
Continuing operations total 191.9 139.5 309.6
Discontinued operations - 67.2 67.2
Total 191.9 206.7 376.8
DISCONTINUED OPERATIONS
The sale of the majority holding in Suomen Rehu Ltd was completed at the start
of June 2007, when Suomen Rehu and its subsidiaries were transferred to
Hankkija-Maatalous Oy. Suomen Rehu Ltd is presented as discontinued operations
apart from continuing operations of Lännen Tehtaat till the point of sale. In
2007 the net profit from discontinued operations includes a sale profit related
to the sold 51% share ownership totalling EUR 5.6 million. From the beginning of
June 2007 Lännen Tehtaat's 49% ownership in Suomen Rehu Ltd is presented as an
associated company.
In connection with the sale of the majority shareholding an option scheme has
also been agreed under which Lännen Tehtaat will, if it wishes, have the right
to sell the remaining 49% of the shares in Suomen Rehu Ltd to
Hankkija-Maatalous. The latter, for its part, has a right to buy for the
remaining shares, which it will be able to put into effect at the earliest 15
months after the purchase of the majority holding.
In the case of option exercise, Lännen Tehtaat receives the same price per share
for the remaining 49% ownership as for the sold majority shareholding in Suomen
Rehu Ltd, including the share price adjustment. In addition, the sale price is
affected by the financial result of Suomen Rehu Ltd from the beginning of June
2007.
NON-CURRENT ASSETS HELD OF SALE
Lännen Tehtaat's group company Apetit Pakaste Oy sells its jams and marmelades
business to Saarioinen group's Saarioinen Säilyke Oy. The sale transaction is
executed in fall 2008. Assets held for sale are presented separately on the
balance sheet apart from continuing operations' assets and liabilities.
KEY INDICATORS
30 June 30 June 31 Dec
2008 2007 2007
Shareholders' equity per share, EUR 20.51 19.25 20.36
Equity ratio, % 69.7% 67.9% 62.1%
Gearing, % 9.5% 3.9% 16.0%
Gross investments in non-current
assets, EUR million,
continuing operations 3.8 2.6 6.9
Corporate acquisitions and other
share purchases, EUR million,
continuing operations 0.4 11.1 11.6
Average number of personnel,
continuing operations 767 652 705
Average number of shares, 1 000 pcs 6 249 6 253 6 253
The key figures in this interim financial report are calculated with same
accounting principles than presented in year 2007 annual financial statements.
CONTINGENT LIABILITIES
EUR million
30 June 30 June 31 Dec
2008 2007 2007
Mortgages given for debts:
Real estate mortgages 9.5 27.1 7.3
Corporate mortgages 1.3 31.4 1.3
Shares pledged - 9.4 -
Other quarantees 4.9 - 7.7
Guarantees 5.2 1.6 5.1
Additional purchase price, estimate - 0.0-1.3 -
Non-cancellable other leases,
minimum lease payments:
Real estate leases 4.4 5.4 5.3
Other leases 0.7 0.8 0.8
CONTINGENT ASSETS
Suomen Rehu, purchase price adjustment,
change in assets and liabilities - 0.0-1.8 -
SUOMEN REHU - OPTION SCHEME
The calculatory unrecognised value for the result based component included in
the option scheme as of 30 June 2008 is approximately EUR 0.6 million.
DERIVATIVE INSTRUMENTS
Outstanding nominal values of
derivative instruments
Forward currency contracts 5.0 0.8 5.0
Commodity derivative instruments 6.7 3.5 2.6
Interest rate swaps - 25.0 25.0
INVESTMENT COMMITMENTS
Lännen Tehtaat has investment commitments in Frozen Foods segment a total of EUR
3.1 million as of 30 June 2008.
TANGIBLE ASSETS
EUR million
1-6/ 1-6/ 1-12/
2008 2007 2007
6 mths 6 mths 12 mths
Book value at the beginning of the period 43.5 67.4 67.4
Acquisitions 2.9 3.1 6.5
Acquisitions of operations - 3.2 7.6
Disposals -0.2 0.0 -0.2
Disposals of operations - -32.6 -32.6
Depreciations and impairments -2.4 -2.2 -5.1
Other changes -0.1 -0.1 -0.1
Book value at the end of the period 43.7 38.8 43.5
TRANSACTIONS WITH ASSOCIATED COMPANIES AND JOINT VENTURES
EUR million
1-6/ 1-6/ 1-12/
2008 2007 2007
6 mths 6 mths 12 mths
Sales to associated companies 8.8 1.3 14.3
Sales to joint ventures 4.0 4.9 8.1
Purchase from associated companies 0.3 5.9 12.0
Purchase from joint ventures 0.1 0.0 0.1
Long-term receivebles from associated
companies 2.6 4.5 3.9
Trade receivables and other
receivables from associated companies 2.7 3.5 3.1
Trade receivables and other
receivables from joint ventures 0.8 0.7 0.8
Trade payables and other liabilities
to associated companies 0.1 0.1 0.0
The sale of goods and services to the associated companies and joint ventures
are based on valid price catalogues of the Group.
LÄNNEN TEHTAAT PLC
Board of Directors
Further information: CEO Matti Karppinen, tel. +358 10 402 4001
Copies to:
OMX Nordic Exchange Helsinki
Principal media
www.lannen.fi
