Annual Report • Mar 3, 2017
Annual Report
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Board of Directors' report 2016 in brief
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance
Board of Directors' report 2016 in brief
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance
Apetit Plc's Annual General Meeting will be held on Friday 24 March 2017 at 1.00 p.m. in Apetit Plc's Myllynkivi staff restaurant in Säkylä. Shareholders who on 14 March 2017 are registered in the company's register of shareholders maintained by Euroclear Finland Ltd will have the right to attend the Annual General Meeting.
Shareholders wishing to attend the Annual General Meeting must notify the company of this by 4.00 p.m. on 17 March 2017 through our website (www.apetitgroup.fi/agm), in writing to the address: Apetit Plc, Tuija Österberg, P.O. Box 100, FI-27801 Säkylä, by phone (+35810 4022110/Tuija Österberg) or by email ([email protected]). If notice is given by post, the letter must arrive before the end of the notification period. Any proxy documents should be delivered to the above-mentioned address before the end of the notification period.
If a holder of nominee-registered shares wishes to attend the Annual General Meeting, they must be registered for temporary entry in the company's shareholder register by the asset manager's account management organisation no later than 10.00 a.m. on 17 March 2017.
The Board of Directors proposes that a dividend of EUR 0.70 per share be paid for 2016 on the basis of the adopted balance sheet. The dividend will be paid to shareholders who are registered in the company's shareholder register maintained by Euroclear Finland Ltd on the record date of 28 March 2017. The Board of Directors will propose to the Annual General Meeting that the dividend be paid on 4 April 2017.
Apetit Plc released its financial statements bulletin for 2016 on 23 February 2017 at 8.30 a.m. The annual report was published on the company's website in the week beginning 27 February 2017.
The annual report, financial statements bulletin and interim reports will be published in Finnish and in English. These will be available on Apetit Plc's website (www.apetitgroup.fi > In English > Investors), and can also be downloaded in PDF format.
The printed annual publications in Finnish can be ordered from the company website at www.apetitgroup.fi/julkaisut. They will be mailed from 13 March 2017. The English language versions are only available in PDF format.
Shareholders are requested to give notification of any changes in their personal details to the bank that holds their book-entry account.
Share performance 2012–2016, index 2012=100
Apetit Oyj OMX Helsinki Price Index OMX Helsinki Consumer Goods
Board of Directors' report
Parent Company Financial Statements Corporate Governance 1
| Apetit in brief. . | 1 |
|---|---|
| Key indicators 2016. . | 2 |
| CEO's review . | 4 |
| Board of Directors' report 2016 . | 6 |
| Consolidated income statement. . | 12 |
|---|---|
| Statement of comprehensive income. . | 12 |
| Consolidated statement of financial position. . | 13 |
| Consolidated statement of cash flows. . | 14 |
| Statement of changes in shareholders' equity. | 15 |
| Notes to the consolidated financial statements | 16 |
| Parent company income statement, FAS. . | 45 |
|---|---|
| Parent company balance sheet, FAS. . | 45 |
| Parent company statement of cash flows, FAS. | 46 |
| Accounting principles, FAS. . | 47 |
| Notes to the parent company | |
| financial statements, FAS. . | 48 |
| Proposal of the Board of Directors for the | |
| distribution of profits . | 55 |
| Auditor's Report . | 56 |
|---|---|
| Statement by the Supervisory Board. . | 61 |
| Corporate Governance Statement of | |
|---|---|
| Apetit Plc 2016. . | 62 |
| Remuneration, insider issues. . | 68 |
| Supervisory Board and Auditors. . | 70 |
| Board of Directors. . | 71 |
| CEO and Corporate Management. . | 73 |
| Shares, share capital and dividend policy. . | 75 |
| Contact information. . | 76 |
People are increasingly opting for vegetables and foods with a high vegetable content. As well as being healthy and tasting good, vegetables are a sustainable choice. Apetit has more than 60 years of experience in the contract growing and processing of vegetables. Today, we are investing more than ever in quality, renewal and the development of new food solutions. We want to be number one in vegetables.
responsible farming methods.
human and animal consumption.
Oilseed Products
Food Solutions comprises frozen vegetable products, frozen ready meals, ready-to-use fresh vegetables and service sales. Our aim is to become the leading brand in vegetable-based food solutions. Most of the vegetables we freeze are grown on the farms of our contract growers in the Satakunta region of Finland using our unique,
We are Finland's most significant producer of vegetable oils and oilseed-based feeds. Our oil milling plant in Kirkkonummi uses 99.9 per cent of the oilseed, producing high-quality products with a very high added value for
We operate actively in the grain, oilseed and feed raw-material markets. We offer excellent customer service and tools for purchasers and vendors. Our main market is the European Union, particularly Finland, but we also trade internationally. Our success is based on our comprehensive expertise and experience and our strong market knowledge.
We produce many different delicacies from Norwegian salmon and rainbow trout, mainly for private labels, in Kelloniemi in Kuopio. The Maritim Food Group, part of the Apetit Group, processes and sells a wide variety of fish and shellfish products in Norway and Sweden. In Seafood, our goal is to be the preferred partner for customers who value high quality and reliability.
Apetit owns 20% of Finland's only sugar producer, Sucros Ltd, which produces sugar from Finnish sugar beet at its plant in Säkylä. Sucros's subsidiary, Suomen Sokeri Oy, based in Kirkkonummi, produces a range of sugar products for the food industry, the retail trade and other sales.
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements 2
Corporate Governance
| 2016 | 2015 | 2014 | |
|---|---|---|---|
| Net sales, EUR million | |||
| Food Solutions | 97.8 | 95.8 | 94.2 |
| Oilseed Products | 68.2 | 61.3 | 63.4 |
| Grain Trade | 159.7 | 170.5 | 171.6 |
| Seafood | 87.8 | 82.9 | 89.4 |
| Intra-group sales | –27.0 | –29.6 | –34.0 |
| Total | 386.5 | 380.8 | 384.7 |
| 2016 | 2015 | 2014 |
|---|---|---|
| Food Solutions | 5.7 | 4.3 | 1.5 |
|---|---|---|---|
| Oilseed Products | 1.9 | 1.0 | 0.5 |
| Grain Trade | 0.1 | 2.2 | 0.1 |
| Seafood | 2.0 | 1.6 | 0.5 |
| Total | 9.7 | 9.1 | 2.5 |
| –2.6 | –0.1 | 3.1 |
|---|---|---|
| 2.7 | 2.7 | 3.5 |
| 1.4 | 3.8 | 2.9 |
| –0.6 | –3.8 | –4.0 |
| 0.9 | 2.6 | 5.5 |
| Food Solutions | –2.6 | –0.1 | –1.5 |
|---|---|---|---|
| Oilseed Products | 2.7 | 2.7 | 2.8 |
| Grain Trade | 1.4 | 3.8 | 2.1 |
| Seafood | –0.9 | –7.4 | –11.1 |
| Total | 0.6 | –1.0 | –7.7 |
| Total | 729 | 725 | 723 |
|---|---|---|---|
| Seafood | 180 | 198 | 209 |
| Grain Trade | 55 | 53 | 49 |
| Oilseed Products | 42 | 40 | 39 |
| Food Solutions | 452 | 434 | 426 |
Board of Directors' report 2016 in brief
Net sales 2012–2016,
EUR million
Consolidated Financial Statements
EUR million
Operational EBIT 2012–2016,
Parent Company Financial Statements 3
452
Corporate Governance
Consolidated Financial Statements Board of Directors'
Parent Company Financial Statements Corporate Governance
4
The year 2016 marked a turnaround in the food industry in many ways. It will remain in history as the year when vegetables became a topic of conversation. People are increasingly including vegetables in their diets, and shops are including more vegetables in their selections. Vegetables also adorn product launches in the food business in all their colours.
As a food company specialising in vegetables, we identified the vegetable trend when it was emerging. In March, we published our strategy for 2016–2018 and set our sights on becoming a leader in vegetable-based food solutions. This vision is guiding our choices and investments in all of our operations. The first results can already be seen, but there are more on the way. Our journey has just begun.
With new generations taking over, the food business is entering a new era. The traditional food industry is being complemented by a start-up approach to developing products and services related to food and eating. A large scale and impressive volumes are no longer the only models for success. Consumers are more attracted by interesting, different products and a set of values that unites their users and producers, as well as brands with a good purpose.
Digitalisation is renewing and enriching our approaches to food, eating and well-being. Social media is becoming an environment for discussions that define good food and a good life. The change is not happening quickly, but it will be accelerated by new generations of consumers in the near future. We have decided to be involved in and contribute to this change on our part.
Parent Company Financial Statements
Corporate Governance
The increasing popularity of foods with a high vegetable content will support Apetit over the long term. In 2016, however, we did not receive much help from the market. In Food Solutions, we succeeded well in Frozen food sales, but the low net sales in Fresh products affected the profitability. In Grain Trade, the ample supply in the grain market caused prices and margins to decrease. In Seafood, the strong increase in the prices of raw materials reduced our sales volumes. Despite these challenges, we succeeded in improving Group's net sales year-on-year. Profitability was at a good level in frozen products and oilseed products and improved markedly in fish products. Overall, however, the Group's operating result was not satisfactory.
People have always been interested in the origin of their food. Our strengths include our committed contract growers, who enable us to ensure that we use fully traceable Finnish vegetable raw materials of a uniquely high quality in our products. For example, based on the information provided on a pack of Apetit peas, it is possible to trace their farm of origin and the growing conditions and cultivation measures. We also apply high quality and sustainability standards to the raw materials we purchase from outside Finland.
At the same time, we are further developing our expertise in growing field vegetables at our experimental farm in Köyliö, and transferring knowledge and skills directly to our contract growers. This ensures that pure, delicious, high-quality vegetables will continue to be grown in the Satakunta region and Finland. We are proud of this approach that distinguishes us from our competition.
In the future, Apetit's growth will rely on renewal and product development. With our new strategy, we have rethought and allocated more resources to our product development operations.
In the retail trade, we entered a new area: the vegetable section. We launched the Apetit Tuorekset product line of ready-to-use vegetables in August. It is a prime example of new business development, innovative product development and the creation of production, as well as commercialisation.
In frozen foods, we were able to regain growth after a long period of steady sales, thanks to high-selling new products and effective marketing. Our new product development has been boosted, and we introduced the Kasvisjauhis and Vegepops products in early 2017.
In Oilseed Products, our target is to raise the added value. We progressed as planned, and the Oilseed Products segment's net sales increased in 2016. In June, we inaugurated the packaging plant extension to our oil milling plant in Kantvik, which enables us to increase the share of net sales represented by packaged and special products. We also made use of the additional capacity in exports.
Despite the challenging market, we were able to increase our delivery volumes in 2016.
In the Baltic countries, we successfully established a position in Latvia. Our long-term success is largely based on our goal to be the preferred partner for both sellers and buyers of grains.
In early 2016, we completed the profitability investments and process efficiency measures we had planned in the Seafood segment. Sales volumes decreased year-on-year as a result of the strong increase in the prices of raw materials. However, the segment's operational efficiency improved, and its result improved considerably. I am very glad that the segment regained a positive cash flow during the second half of the year.
2016 was the first year of our current strategy period. We started to implement measures aiming at renewal and profitable growth, and we made progress as a leader in vegetable-based food solutions. I am expecting this positive cycle of renewal to continue in 2017. I would like to take this opportunity to thank everyone at Apetit, as well as our customers, shareholders, contract growers and other partners, for their trust and cooperation in 2016.
Juha Vanhainen CEO
2016
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance 6
Apetit is a Finnish food industry company firmly rooted in Finnish primary production. Its product groups include frozen vegetables and frozen ready meals, pre-prepared fresh fruit and vegetable products, vegetable oils and expeller meal, and fresh fish and fish products. In addition, the company is active in the Finnish and international grain, oilseeds and feed raw-materials markets. The company's businesses are Food Solutions, Oilseed Products, Grain Trade and Seafood, which also are the Group's reporting segments. Apetit's shares have been quoted on Nasdaq Helsinki since 1989, and the company is domiciled in Säkylä.
Food Solutions consists of Apetit Ruoka Oy, Apetit Suomi Oy and the Service Sales functions of Apetit Kala Oy. Avena Nordic Grain Oy and its subsidiaries are responsible for Grain Trade and Oilseed Products. Seafood consists of Apetit Kala Oy and the companies of the Maritim Food Group in Norway and Sweden. Apetit Plc's, which is the
parent company, administration costs have been allocated equally between the segments.The associated company Sucros (20% holding) has been reported after operating profit in the income statement. Caternet Finland Oy and Apetit Ruoka Oy were merged to create Apetit Ruoka Oy on 1 April 2016.
At the beginning of March 2016, Apetit announced its Board-approved strategy for the period 2016–2018, financial targets for the strategy period and the Group's new segment structure and dividend policy. These were announced by means of a stock exchange release and presented at a Capital Market Day event on 1 March 2016.
The goal of the strategy is to improve Apetit's profitability and make the company a leader in vegetable-based food solutions. Renewal will be accelerated by investing in
completely new food solutions and product development in current product lines, and in increasing added value, as well as service development, by means of digitisation in particular. In the grain, oilseed and feed raw-materials trade, our goal is to achieve growth in the Baltic region. In Seafood, our goal is to become the most efficient producer of volume and added-value products as a retail trade partner. Apetit has a strong balance sheet, and we aim for a more efficient use of capital. We will increasingly invest in growth, higher added value and efficiency in our product groups.
The comprehensive Capital Market Day 2016 presentation materials about Apetit Plc's strategy are available on our website.
Consolidated net sales increased to EUR 386.5 (380.8) million. Net sales increased in all segments, with the exception of Grain Trade.
Operational EBIT was EUR 0.9 (2.6) million. The result includes EUR 0.4 million recognised as income with regard to the additional purchase price related to the ownership arrangement concerning Taimen Oy. Operational EBIT in the comparison period was improved by a gain of EUR 0.7 million from the sale of a property in the Länsi-Säkylä industrial estate and EUR 0.4 million in profit from the associated company Taimen Oy.
Operating profit was EUR 0.6 (–1.0) million. This includes EUR –0.3 million in expert fees related to the development of the business structure of the Seafood segment. The operating profit for the comparison period includes a loss of EUR 3.6 million from ownership arrangements made with the associated company Taimen Oy.
The share of the profit of the associated company Sucros was EUR 0.7 (–1.0) million.
| EUR million | 2016 | 2015 | Change | 2014 |
|---|---|---|---|---|
| Net sales | 386.5 | 380.8 | 1% | 384.7 |
| Operating profit | 0.6 | –1.0 | –7.7 | |
| Operating profit, % | 0.1% | –0.3% | –2.0% | |
| Operational EBIT | 0.9 | 2.6 | 5.5 | |
| Operational EBIT, % | 0.2% | 0.7% | 1.4% | |
| Profit before taxes | 0.3 | –3.5 | –8.1 | |
| Profit for the period | 1.2 | –4.6 | –8.7 | |
| Earnings per share, EUR | 0.19 | –0.69 | –1.29 | |
| Equity per share, EUR | 19.00 | 19.53 | 20.70 | |
| Equity ratio, % | 64.1% | 61.1% | 69.7% | |
| Return on equity (ROE), % | 1.0% | –3.7% | –6.5% | |
| Return on capital employed (ROCE), % | 0.9% | –1.5% | –4.2% |
Other key figures are presented in Note 27 to the Financial Statements. The formulas for calculating the key figures are presented in Note 28 to the Financial Statements.
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance 7
Financial income and expenses came to a total of EUR –0.9 (–1.5) million. Financial expenses include EUR –0.5 (–0.8) million as the share of the Avena Nordic Grain Group's profit attributable to the employee owners of Avena Nordic Grain Oy. In the comparison period, financial income and expenses included EUR –0.3 million in non-cash valuation items resulting from changes in foreign exchange rates related to internal loans to the Maritim Food Group.
The profit before taxes was EUR 0.3 (–3,5) million, and taxes on the profit for the period came to EUR 0.8 (–1.1) million. The profit for the period was EUR 1.2 (–4.6) million, and earnings per share were EUR 0.19 (–0.69).
In the third and fourth quarters, Apetit recognised a total of EUR 1.0 million in deferred tax assets previously not recognised taxable losses. The taxable losses arose mainly from the Finnish Seafood business. Receivables were recognised based on the improved profit outlook of the Seafood business, combined with changes in the Group structure that make it easier for the Group companies to use the Group contribution. The Group still has a total of EUR 1.4 million in unrecognised deferred tax assets from taxable losses.
The Group's liquidity was good, and its financial position is strong.
The cash flow from operating activities after interest and taxes amounted to EUR 21.9 (–17.1) million in January– December. The impact of the change in working capital was EUR 17.5 (–21.4) million. The effect of seasonality on the change in working capital is presented below under 'Seasonality of operations'.
The net cash flow from investing activities was EUR –9.0 (–3.0) million. The cash flow from financing activities was EUR –21.6 (19.8) million, including EUR –4.3 (–4.3) million in dividend payments, EUR 22.3 million in loan repayments (EUR 24.1 million in loan withdrawals) and a long-term loan of EUR 5 million taken out in the review period.
At the end of the period, the Group had EUR 19.1 (36.5) million in interest-bearing liabilities and EUR 4.6 (13.4) million in liquid assets. Net interest-bearing liabilities totalled EUR 14.5 (23.0) million.
The consolidated balance sheet total stood at EUR 183.7 (197.9) million. At the end of the period, equity totalled EUR 117.7 (121.0) million. The equity ratio was 64.1 (61.1) per cent, and gearing was 12.4 (19.0) per cent. The Group's liquidity is secured with committed credit facilities, with EUR 40 (45) million being available in credit at the end of the period. The total of commercial papers issued stood at EUR 11.0 (32.0) million.
The Group's gross investment in non-current assets came to EUR 9.7 (9.1) million and was divided as follows: EUR 5.7 (4.3) million in Food Solutions, EUR 1.9 (1.0) million in Oilseed Products, EUR 0.1 (2.2) million in Grain Trade and EUR 2.0 (1.6) million in Seafood.
Apetit's personnel strategy was revised to support the achievement of its targets for the strategy period 2016–2018. The goal of the personnel strategy is to lay the foundation for a unified Apetit. The strategy focuses on inspiring, goal-oriented leadership, an encouraging atmosphere in a safe work environment, the best and
relevant competencies and capabilities, a culture of bold innovation and experimentation, and a well-known, attractive employer brand.
The key themes for 2016 included strengthening supervisory work and skills and creating a culture of health management and occupational safety.
The focus was increasingly on occupational safety issues. The number of occupational accidents varies significantly between locations, jobs and units, which indicates differences between occupational safety and management practices within the Group. During the year, we embarked on systematically improving our communication about safety at work, as well as our management system and leadership culture. In 2016, there were 43 (41) occupational accidents that led to at least a one-day absence.
At the beginning of the year, we introduced a consistent Group-wide health management model. The key improvement is a new model of active support in aid of health management that enables supervisors and the occupational health unit to rapidly respond to changes in an employee's working capacity or health through timely intervention. The tools introduced in the first phase included a health helpline for the entire personnel that can be contacted in the event of acute illness and short sickness absences, as well as a system for supervisors to monitor absences.
Apetit Suunta, our two-year training programme for all Group supervisors, continued during the year. Its goal was to strengthen supervisors' managerial and interaction skills, harmonise management styles and practices and support supervisors in change management. All Group supervisors will take part in the training.
The results of the employee well-being survey were discussed in all Group functions in early 2016. The development needs of each function and the Group as a whole were determined in the sessions. At the Group level, the principal areas requiring improvement were physical well-being, communication and the meaningfulness of work. The equality plans were updated in late 2016.
Consolidated Financial Statements Board of Directors'
Parent Company Financial Statements Corporate Governance
The organisational structure of the Apetit Group was simplified and its management structure was clarified during the year. Major changes were discussed with employee representatives. Changes took place in the Apetit Group's management in 2016. In October, Sami Saarnio, MSc (Econ.), started work as the Apetit Group's CFO and a member of its Corporate Management with responsibility for the Group's financial administration and finance operations. At the same time, Eero Kinnunen was appointed as Vice President, Strategic Projects.
| Change, | ||||
|---|---|---|---|---|
| 2016 | 2015 | % | 2014 | |
| Food Solutions | 452 | 434 | 4% | 426 |
| Oilseed Products | 42 | 40 | 5% | 39 |
| Grain Trade | 55 | 53 | 4% | 49 |
| Seafood | 180 | 198 | –9% | 209 |
| Total | 729 | 725 | 1% | 723 |
The salaries and other remuneration paid to the Group's employees in 2016 amounted to EUR 30.5 (30.1) million.
Matters concerning the personnel are presented in more detail in the personnel report, which can be downloaded from the corporate responsibility section of the Group's website.
Net sales in Food Solutions rose to EUR 97.8 (95.8) million. In the frozen foods group, sales increased with regard to all customers. Sales declined in fresh products.
In Food Solutions, operational EBITDA was EUR 1.3 (3.5) million, and operational EBIT was EUR –2.6 (–0.1) million, which was a decline from the comparison period.
Investment in Food Solutions totalled EUR 5.7 (4.3) million and was mainly related to the construction of production
lines for consumer-packaged, pre-prepared vegetables at the Kivikko production plant in Helsinki and to production equipment at the frozen food plant in Säkylä.
As a result of the earlier start and greater volume of the harvest in comparison with the previous year, the amount of fixed costs capitalised in inventories was EUR 1.0 million higher than in the comparison year.
report
Supported by an increase in delivery volumes, net sales rose to EUR 68.2 (61.3) million in January–December. Operational EBITDA was EUR 3.5 (3.4) million, and operational EBIT was EUR 2.7 (2.7) million.
Investment during the period totalled EUR 1.9 (1.0) million and was mainly related to the construction of the extension to the packaging plant at the Kirkkonummi vegetable oil milling plant.
Net sales in January–December were down on the previous year and amounted to EUR 159.7 (170.5) million. Operational EBIT decreased to EUR 1.4 (3.8) million due to the reduced margins resulting from the ample supply in the international grain markets.
Investment in the Grain Trade segment totalled EUR 0.1 (2.2) million.
Net sales in the Seafood segment in January-December came to EUR 87.8 (82.9) million. Net sales increased despite lower sales volumes, as the prices of Norwegian salmon and rainbow trout remained at a high level throughout the year.
Improved operational efficiency significantly supported profitability across the segment. The favourable development was slowed by the market effects of the high raw-materials prices of Norwegian salmon. In January–December, the segment's operational EBITDA was EUR 1.1 (–2.4) million, and its operational EBIT was EUR
–0.6 (–3.8) million. The operational EBIT in the comparison period includes EUR 0.4 million in profit from the associated company Taimen Oy.
Investment in non-current assets was EUR 2.0 (1.6) million and was mainly related to equipment to improve production efficiency.
The Group's research and development costs were EUR 0.9 (0.8) million, or 0.2 (0.2) per cent of net sales. In addition, EUR 0.4 (0.0) million in product development costs was capitalised on the balance sheet. The research and development operations were mainly related to developing new products and creating cooperation networks that support operations.
In line with its new strategy, Apetit embarked on strongly developing its R&D and product development resources and redesigning its product development model. The strengthening of competence and the acceleration of the product development process have rapidly resulted in the introduction of new products, among other outcomes. In addition, the company started research and development work with regard to vegetable protein products, and launched its first series of Kasvisjauhis products in early 2017.
Apetit is improving its products and services and is creating new products to offer easy, delicious food solutions with a high vegetable content for different meal situations to people who value food that tastes good, is healthy and is produced responsibly.
In Food Solutions, product development is guided by the product policy. New products are developed to match Finnish preferences and nutritional recommendations, and for convenient everyday meals. Emphasising the high vegetable content, as well as the source and Finnishness of food, has become very important. In foods with a high vegetable content, we pay special attention to protein and energy content, in addition to taste. Fish, vegetables, vegetable oils and whole grains are also an important part of a healthy diet.
With regard to product development, the most important launch of the year was the introduction of the Tuorekset
Board of Directors' report 2016 in brief
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance 9
concept, which is based on ready-to-use vegetables. The high preservability of the vegetables in the store and at home is based on a profound consideration of their microbiological and physiological properties in product development and design, as well as a unique, breathable packaging solution developed in Finland. The Apetit Tuorekset packaging won a highly esteemed ScanStar Award in July 2016.
In Oilseed Products, we comprehensively studied further processing opportunities for rapeseed and continued our in-depth R&D operations. Research focuses on making use of the full potential of oilseeds as a source of vegetable-based protein and antioxidants. We also promoted the continuation of domestic oilseed cultivation in many ways.
In 2016 and 2017, Apetit is participating in the Pyhäjärvi Institute's Muuvi project, the main goal of which is to secure the outdoor cultivation of vegetables in the Satakunta region by taking proactive measures to adjust farming methods in response to a changing environment and providing farmers with the latest information and expertise. The project looks for alternatives to chemical pesticides and proposes ways to improve growing conditions in Finland. Methods to be tested include optimised crop rotation, the use of mulch films and insect nets, drip irrigation and drip fertilisation and mechanical weed separation.
In line with its new strategy, Apetit began to develop entirely new, digital solutions for food and services for the food supply chain from primary producers to consumers. The Finnish Funding Agency for Innovation (Tekes) decided to grant funding for the "Digital Services for Food" innovation project in early 2016. By means of digitisation, the goal is to create new types of services related to food and eating for consumers of the future who appreciate well-being, ease and sustainability in their daily lives. The development work progressed steadily during the year, and the services will reach the pilot phase in 2017.
The Apetit Group's operations are guided by policies and ethical principles that include responsible environmental
management and the management of environmental effects. The Group's environmental management system complies with the requirements of the ISO 14001 standard in the frozen foods and fresh products groups of Food Solutions. The goal is efficient and safe production that is in harmony with the environment. The Group's most important environmental impacts are related to organic waste from its production process and water and energy consumption in production, storage, transportation and buildings. Apetit is committed to continuous improvement with regard to environmental issues.
The environmental impacts of food production are related to energy and water consumption in the processes used and the treatment of production side streams and waste. In oilseed processing, the company uses a chemical-free mechanical method for vegetable oil milling. During vegetable oil milling, the environmental effects are mainly related to the combustion of odorous gases, the waste from weed separation at raw material reception and the bleaching clay used in processing. In addition, all operations generate a certain amount of packaging waste. Apetit has joined the energy efficiency agreement scheme for Finnish industry and is committed to implementing its action programme for the food industry. The target for improving energy use in the food industry is 9 per cent for the 2008–2016 agreement period.
All of Apetit's production plants that are required to have an environmental permit are in possession of a current permit. During the year, there were no interruptions or accidents with significant environmental effects at the production plants. The environmental permit decision from 2014 for the wastewater treatment plant in the Länsi-Säkylä industrial area requires the operator to investigate alternative discharge sites for wastewater, on its own or in cooperation with the other treatment plants in the area, by the end of 2017.
Apetit is not aware of any significant individual environmental risks on the balance sheet date. The Group's environmental costs were EUR 1.3 (1.1) million, or 0.3 (0.3) per cent of net sales.
Environmental matters are presented in more detail in Apetit's environmental report, which can be downloaded from the corporate responsibility section of the Group's website.
In accordance with the IAS 2 standard, the historical cost of inventories includes a systematically allocated portion of the fixed production overheads. With production focusing on harvest time, raw materials are mainly processed into finished products during the final quarter of the year. This means that more fixed production overheads are recognised on the balance sheet in the fourth quarter than during the other quarters of the year. Due to this accounting practice, most of the Group's annual profit is accrued in the final quarter. The seasonal nature of profit accumulation is most marked in the frozen foods group of the Food Solutions segment and in the associated company Sucros, where production reflects the crop harvesting season.
Harvesting seasons also cause seasonal variation in the amount of working capital tied up in operations. Working capital tied up in Grain Trade and Oilseeds Products is at its highest towards the end of the year and decreases to its lowest in the summer before the next harvest season. As the production of frozen products is also seasonal and follows the harvest period, the working capital tied up in operations is at its highest around the turn of the year in the Food Solutions segment.
In Finland, sales of fish products peak at weekends and in connection with public holidays. In the Seafood segment in Finland, a significant proportion of the full-year result depends on a successful Christmas season. Net sales in Grain Trade vary from one year and quarter to the next, even quite considerably, being dependent on the demand and supply situation and on the price level in Finland and other markets.
The Board of Directors of Apetit Plc has confirmed the Group's risk management policy and principles. All Group companies and business units regularly assess and report the
Board of Directors' report 2016 in brief
Consolidated Financial Statements Parent Company Financial Statements
10 Corporate Governance
risks related to their operations and the adequacy of controls and risk management methods. The risk assessments support the strategy work and decision-making and serve to ensure that sufficient measures are taken to control risks. The risk management framework, policies and principles are regularly assessed and developed as part of the Group's annual planning process. Risk management as a whole is evaluated regularly with the support of external specialists to ensure that its principles and operating models are in line with the best practices in the industry.
The Apetit Group's risks are divided into strategic, operational, financial and hazard risks. The Group's most significant strategic risks are related to the success of the development of its business portfolio in line with its strategy, and to changes in the Group's business sectors and customer relationships. There are significant concentrations of customers in the Group's fish products business in Norway and Finland.
The main operating risks concern the availability of raw materials, the time lags between purchasing and sale or use, and fluctuations in raw-material prices.
Price risk management is particularly important in Grain Trade, in the fresh products group in Food Solutions and in Seafood, where raw materials represent 65–85 per cent of net sales. The prices of grains, oilseeds and the main fish raw materials are determined in the world market. In Grain Trade, limits are defined for open price risks.
The Group operates in the international markets and is therefore exposed to exchange rate risks arising from fluctuations in exchange rates. Its main foreign currencies are the US dollar, the Norwegian krone and the Swedish krona. In accordance with the Group's risk management policy, all major open currency positions are hedged, with the exception of the Group's internal long-term loans. Financial risk management is discussed in more detail in Note 22 to the Financial Statements.
Fire, serious process disruptions, and defects in raw materials or final products affecting food safety can lead to major property damage, losses from production interruptions, liabilities and other indirect adverse effects on the company's operations. The Group companies guard against these risks by evaluating their processes through internal control and other systems and by taking corrective action where necessary. Insurance policies are used to cover all risks for which insurance can be justified on financial or other grounds.
The most significant short-term risks for the Apetit Group are related to the management of raw-materials price changes and currency risks, the availability of raw materials, the solvency of customers, the delivery performance of suppliers and service providers, and changes in the Group's business sectors and customer relationships.
The 2016 Corporate Governance Statement for Apetit Plc has been considered by the Apetit Plc Board of Directors and is published separately from the Board of Directors' report.
At its organisational meeting on 28 April 2016, Apetit Plc's Supervisory Board appointed Harri Eela as Chair and Marja-Liisa Mikola-Luoto as Deputy Chair of the Supervisory Board.
The Supervisory Board decided to elect 6 members to Apetit Plc's Board of Directors. Lasse Aho, Esa Härmälä, Aappo Kontu, Seppo Laine, Veijo Meriläinen and Niko Simula were elected as members of the Board of Directors. Veijo Meriläinen was appointed as Chair of the Board of Directors and Aappo Kontu as Deputy Chair. It was decided that the Board members be paid an annual remuneration of EUR 19,560 and that the Chair and Deputy Chair receive an annual remuneration of EUR 39,060 and EUR 24,120, respectively. A total of 50 per cent of the annual remuneration will be paid in cash and 50 per cent in the form of Apetit Plc's shares held by the company at the current value of the shares at the time of transfer. The remuneration will
be paid in four equal payments in euros in June, September, December and March. It was also decided that the Chair and members of the Board of Directors be paid a meeting allowance of EUR 510 and EUR 300, respectively.
Pasi Karppinen, APA, and PricewaterhouseCoopers Oy, Authorised Public Accountants, with Jari Viljanen, APA, as the principal auditor, were appointed as the company's auditors for the period ending at the close of the 2017 Annual General Meeting.
On 16 August 2016, Apetit Plc's Board of Directors decided to establish an Audit Committee and elect its members from among the Board members until the end of the Board's term of office. Seppo Laine was elected as Chair of the Audit Committee, and Esa Härmälä and Aappo Kontu were elected as its members.
On 25 March 2015, the Annual General Meeting authorised the Board of Directors to decide on share issues. The authorisation includes the right to issue new shares or transfer Apetit Plc shares held by the company. The authorisation covers a total of no more than 761,757 shares, consisting of no more than 635,470 new shares and 126,287 Apetit Plc shares held by the company.
The minimum subscription price for each new share will be the nominal value of the share (EUR 2). The minimum transfer price for Apetit shares held by the company will be the market value of the share at the time of transfer, determined by the price quoted in public trading on Nasdaq Helsinki. The Board of Directors will also have the right to issue shares against considerations other than cash. In the implementation of share-based incentive or reward schemes, shares can also be issued without consideration.
The authorisation includes the right to deviate from the shareholders' pre-emptive subscription right (directed share issue) if the company has an important financial reason for
doing so, such as the development of the company's capital structure, the financing and implementation of corporate acquisitions or other arrangements, or the implementation of a share-based incentive or reward scheme.
The authorisation is valid until the 2018 Annual General Meeting.
In accordance with a decision made by the Supervisory Board regarding the remuneration of the Board members, a total of 1,396 Apetit Plc shares held by the company were transferred to the Board members on 2 March 2016, a total of 1,389 shares were transferred on 2 June 2016, a total of 1,346 shares were transferred on 2 September 2016 and a total of 1,353 shares were transferred on 2 December 2016. The transfers were announced by means of stock exchange releases issued on each date of transfer.
The shares of Apetit Plc are all in one series. All shares carry the same voting and dividend rights. The Articles of Association specify that the number of votes a shareholder is entitled to exercise cannot be more than one-tenth of the votes represented at a general meeting. The nominal value of each of the company's shares is EUR 2. At both the beginning and the end of the financial year, the total number of shares issued by the company stood at 6,317,576, and the registered share capital totalled EUR 12,635,152. The minimum amount of share capital is EUR 10 million, and the maximum amount is EUR 40 million.
At the end of the review period, the company had in its possession a total of 116,805 of its own shares acquired during previous years. These treasury shares represent 1.8 per cent of the company's total number of shares and votes. The treasury shares carry no voting or dividend rights.
report in brief
Board of Directors'
Consolidated Financial Statements Parent Company Financial Statements
11 Corporate Governance
The number of Apetit Plc shares traded on the stock exchange during the review period was 560,709 (695,996), representing 8.9 (11.0) per cent of the total number of shares. The highest share price quoted was EUR 14.50 (16.80), and the lowest was EUR 11.64 (12.61). The average price of shares traded was EUR 12.97 (14.12). The share turnover for the period was EUR 7.3 (9.8) million. At the end of the period, the share price was EUR 12.97 (12.65), and the market capitalisation was EUR 81.9 (79.9) million. Other share-specific key indicators are presented in Note 27 to the Consolidated Financial Statements.
Note 29 to the Financial Statements presents the distribution of shareholdings by sector, as well as the major shareholders and the management's ownership.
Sales in the Finnish retail sector and professional food service sector are expected to pick up in comparison to the previous year, but the price competition is expected to remain intensive. Ample supply is expected to continue to prevail in the global grains market, keeping prices and margins at a low level. This situation is not expected to change significantly before a more specific outlook is available for the new harvest season.
The Group's full-year operational EBIT1) is expected to improve year-on-year (EUR 0.9 million in 2016). Due to the seasonal nature of the Group's operations, most of the annual profit is accrued in the second half of the year.
With regard to profitability, favourable development will be supported by higher added value and positive sales development in Food Solutions, improved operational efficiency in Seafood and increased sales volumes in Grain Trade in comparison to the previous year.
Due to the substantial effect of international grain market price fluctuations on the Group's net sales, Apetit will not issue any estimates of its expected full-year net sales.
1) Due to the amendments to the regulations of the European Securities and Markets Authority (ESMA), Apetit has replaced the key figure "operating profit excluding non-recurring items" with the key figure "operational EBIT" as of 2016. Operational EBIT does not include restructuring expenses, any significant impairment on goodwill or other balance sheet items or reversal of impairment, the profit of the associated company Sucros or other extraordinary and material items.
The Board of Directors of Apetit Plc aims to ensure that the company's shares provide shareholders with a good return on investment and retain their value. In line with its dividend policy, the company will distribute in dividends at least 40 per cent of the profit for the financial year but not less than EUR 0.70 per share.
The parent company's distributable funds totalled EUR 66,281,263.53 on 31 December 2016, of which EUR 3,332,724.66 is profit for the financial year.
The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.70 per share be paid. The Board will propose that a total of EUR 4,340,539.70 be distributed in dividends and that EUR 61,940,723.83 be left in equity. No significant changes have taken place in the financial standing of the company since the end of the financial year. The company's liquidity is good, and the Board deems that the company's solvency will not be jeopardised by the proposed distribution of dividends.
No dividend will be paid on shares held by the company.
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements
12 Corporate Governance
| EUR million | Note | 2016 | 2015* |
|---|---|---|---|
| Net sales | (2) | 386.5 | 380.8 |
| Other operating income | (3) | 1.6 | 2.2 |
| Materials and services | (6) | –305.8 | –299.9 |
| Employee benefit expenses | (4, 25) | –37.4 | –36.6 |
| Depreciation | (2, 7) | –6.6 | –6.0 |
| Impairments | (2, 7) | 0.0 | –0.3 |
| Other operating expenses | (3, 5) | –37.7 | –41.7 |
| Share of profits of associated companies | (2, 12) | – | 0.4 |
| Operating profit | (2) | 0.6 | –1.0 |
| Share of profits of associated companies | (12) | 0.7 | –1.0* |
| Financial income | (8) | 0.1 | 0.1 |
| Financial expenses | (8) | –1.0 | –1.7 |
| Profit before taxes | 0.3 | –3.5 | |
| Income taxes | (9) | 0.8 | –1.1 |
| Profit for the period | 1.2 | –4.6 | |
| Attributable to | |||
| Equity holders of the parent | (10) | 1.2 | –4.3 |
| Non-controlling interests | – | –0.3 | |
| Basic and diluted earnings per share, calculated of the profit attributable to the shareholders of the parent company, EUR |
(10) | 0.19 | –0.69 |
| comprehensive income | |
|---|---|
| EUR million | 2016 | 2015 |
|---|---|---|
| Profit for the period | 1.2 | –4.6 |
| Other comprehensive income | ||
| Items that may be reclassified subsequently to profit or loss: |
||
| Cash flow hedges | –0.2 | 0.0 |
| Taxes related to cash flow hedges | 0.0 | 0.0 |
| Translation differences | 0.1 | 0.1 |
| Total comprehensive income | 1.1 | –4.5 |
| Attributable to | ||
| Equity holders of the parent | 1.1 | –4.1 |
| Non-controlling interests | – | –0.3 |
* In connection to the segment renewal of 2016 profit from the associated company Sucros was transferred below operating profit.
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements
13 Corporate Governance
| 31 Dec | 31 Dec | |||
|---|---|---|---|---|
| EUR million | Note | 2016 | 2015 | |
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | (11) | 7.7 | 8.1 | |
| Goodwill | (11) | 0.4 | 0.4 | |
| Tangible assets | (11) | 47.7 | 43.8 | |
| Investment in associated companies | (12) | 23.1 | 22.6 | |
| Available-for-sale investments | (13) | 0.1 | 0.1 | |
| Receivables | (14) | 0.3 | 1.2 | |
| Deferred tax assets | (9) | 4.3 | 2.9 | |
| Total non-current assets | 83.6 | 79.1 | ||
| Current assets | ||||
| Inventories | (16) | 65.3 | 74.8 | |
| Income tax receivable | 0.1 | 0.3 | ||
| Receivables | (15) | 30.1 | 30.2 | |
| Cash and cash equivalents | (17) | 4.6 | 13.4 | |
| Total current assets | 100.1 | 118.8 | ||
| Total assets | (2) | 183.7 | 197.9 |
| EUR million Note |
31 Dec 2016 |
31 Dec 2015 |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| Equity attributable to the equity holders of the parent |
||
| Share capital | 12.6 | 12.6 |
| Share premium account | 23.4 | 23.4 |
| Own shares | –1.6 | –1.7 |
| Translation differences and other reserves | 7.3 | 7.1 |
| Retained earnings | 74.8 | 84.1 |
| Net profit for the period | 1.2 | –4.6 |
| Total equity attributable to the equity holders of the parent | 117.7 | 121.0 |
| Total equity (18) |
117.7 | 121.0 |
| Non-current liabilities | ||
| Deferred tax liabilities (9) |
3.7 | 4.3 |
| Long-term financial liabilities (20) |
4.9 | 1.2 |
| Non-current provisions (19) |
0.3 | 0.2 |
| Other non-current liabilities (21) |
0.2 | 0.2 |
| Total non-current liabilities | 9.0 | 5.9 |
| Current liabilities | ||
| Short-term financial liabilities (20) |
14.2 | 35.3 |
| Income tax payable | 0.0 | 0.0 |
| Current provisions (19) |
0.2 | 0.3 |
| Trade payables and other liabilities (21) |
42.5 | 35.5 |
| Total current liabilities | 57.0 | 71.0 |
| Total liabilities (2) |
66.0 | 76.9 |
| Total equity and liabilities | 183.7 | 197.9 |
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements
14 Governance
Corporate
| EUR million | Note | 2016 | 2015 |
|---|---|---|---|
| Net profit for the period | 1.2 | –4.6 | |
| Adjustments, total * | 5.7 | 12.8 | |
| Change in net working capital | 17.5 | –21.4 | |
| Interests paid | –1.7 | –1.7 | |
| Interests received | 0.1 | 0.1 | |
| Taxes paid | –0.9 | –2.2 | |
| Net cash flow from operating activities | 21.9 | –17.1 | |
| Investments in tangible and intangible assets | (11) | –9.7 | –9.1 |
| Proceeds from sales of tangible and intangible assets | 0.0 | 1.2 | |
| Investments in associated companies | – | –0.1 | |
| Proceeds from sales of associated companies | – | 3.8 | |
| Investments in other assets | – | –0.7 | |
| Proceeds from sales of other assets | 0.3 | 0.1 | |
| Dividends received from investing activities | 0.3 | 1.9 | |
| Net cash flow from investing activities | –9.0 | –3.0 | |
| Proceeds from/repayments of short-term loans | –21.0 | 25.5 | |
| Proceeds from/repayments of long-term loans | 5.0 | – | |
| Payments of finance lease liabilities | –1.3 | –1.4 | |
| Dividends paid | –4.3 | –4.3 | |
| Cash flows from financing activities | –21.6 | 19.8 | |
| Net change in cash and cash equivalents | –8.8 | –0.3 | |
| Cash and cash equivalents at the beginning of the period | 13.4 | 13.7 | |
| Cash and cash equivalents at the end of the period | 4.6 | 13.4 |
| EUR million | Note | 2016 | 2015 |
|---|---|---|---|
| * Adjustments to cash flow from operating activities: | |||
| Depreciation and impairments | (11) | 6.6 | 6.3 |
| Gains and losses on sales of fixed assets and shares | –0.3 | 2.8 | |
| Share of profits of associated companies | –0.7 | 0.6 | |
| Financial income and expenses | (8) | 0.9 | 1.5 |
| Income taxes | (9) | –0.8 | 1.1 |
| Other adjustments | 0.0 | 0.6 | |
| Total | 5.7 | 12.8 |
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements
15 Governance
Corporate
| EUR million | Share capital |
Share premium account |
Net unrealised gains |
Other reserves |
Own shares |
Translation differences |
Retained earnings |
Total | Non controlling interests (NCI) |
Total equity |
|---|---|---|---|---|---|---|---|---|---|---|
| Shareholders' equity 1 Jan. 2016 | 12.6 | 23.4 | 0.2 | 7.2 | –1.7 | –0.4 | 79.5 | 121.0 | – | 121.0 |
| Dividend distribution | – | – | – | – | – | – | –4.3 | –4.3 | – | –4.3 |
| Transactions with NCI | – | – | – | – | – | – | 0.0 | 0.0 | – | 0.0 |
| Other changes | – | – | – | – | 0.1 | – | 0.0 | 0.0 | – | 0.0 |
| Total comprehensive income | – | – | –0.2 | – | – | 0.1 | 1.2 | 1.1 | – | 1.1 |
| Shareholders' equity 31 Dec. 2016 | 12.6 | 23.4 | 0.1 | 7.2 | –1.6 | –0.3 | 76.3 | 117.7 | – | 117.7 |
| Shareholders' equity 1 Jan. 2015 | 12.6 | 23.4 | 0.2 | 7.2 | –1.7 | –0.5 | 86.8 | 128.1 | 1.2 | 129.4 |
| Dividend distribution | – | – | – | – | – | – | –4.3 | –4.3 | – | –4.3 |
| Transactions with NCI | – | – | – | – | – | – | 0.9 | 0.9 | –0.9 | – |
| Other changes | – | – | – | – | 0.1 | – | 0.3 | 0.4 | – | 0.4 |
| Total comprehensive income | – | – | 0.0 | – | – | 0.1 | –4.3 | –4.1 | –0.3 | –4.5 |
| Shareholders' equity 31 Dec. 2015 | 12.6 | 23.4 | 0.2 | 7.2 | –1.7 | –0.4 | 79.5 | 121.0 | – | 121.0 |
Consolidated Board of Directors'
Financial Statements
Parent Company Financial Statements
16 Governance
Corporate
Apetit plc is a Finnish public limited company established under Finnish law. Its registered office is in Säkylä and the registered address is PO Box 100, FI–27801 Säkylä, Finland. Business ID is 0197395–5. The company's name is Apetit Oyj, in Swedish Apetit Abp and in English Apetit plc.
On 22 February 2017, the Apetit plc Board of Directors approved the financial statements for publication.
Apetit plc is a food industry company listed on the Nasdaq Helsinki Ltd. The trading code of the share is APETI.
Apetit's reportable segments are Food Solutions, Grain Trade, Oilseeds Products and Seafood. Apetit's primary market is Finland.
report
Apetit Suomi Oy Environmental services Apetit Kala Oy Service sales
| Avena Nordic Grain Oy | Trade in vegetable oils and protein feed |
|---|---|
| Avena Kantvik Oy | Manufacture of vegetable oils and protein feed |
Apetit Kala Oy Fish products Maritim Food AS, Norway Shellfish and fish products Maritim Food Sweden AB, Sweden Shellfish Sandanger AS, Norway Fish products Parent Company
Apetit plc Group administration, business structure development and holdings of shares and properties. Costs are allocated evenly to operating segments.
Sucros group Manufacture, marketing and sales of sugar Foison Oy Holding in Avena Nordic Grain Oy
Apetit Ruoka Oy Frozen foods, Fresh produce and sales of fish, fruit and vegetables Kiinteistö Oy Kivikonlaita Holding company of Kivikko's real estates
Avena Nordic Grain Oy Trade in grains, oil seeds and animal feedstuff OOO Avena St. Petersburg, Russia Trade in grains, oil seeds and animal feedstuff UAB Avena Nordic Grain, Lithuania Trade in grains, oil seeds and animal feedstuff Avena Nordic Grain OÜ, Estonia Trade in grains, oil seeds and animal feedstuff TOO Avena Astana, Kazakhstan Trade in grains, oil seeds and animal feedstuff OOO Avena-Ukraine, Ukraine Trade in grains, oil seeds and animal feedstuff SIA Avena Nordic Grain, Latvia Trade in grains, oil seeds and animal feedstuff
Board of Directors' report 2016 in brief
Consolidated Financial Statements Parent Company Financial Statements
17 Governance
Corporate
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS). The IAS and IFRS standards and the SIC and IFRIC interpretations complied with are those valid on 31 December 2016. The International Reporting Standards refer to standards and their interpretations approved for adoption within the EU in accordance with the procedure enacted in EC regulation 1606/2002. The notes to the consolidated financial statements are also in accordance with Finnish bookkeeping and company legislation. The consolidated financial statements have been drawn up on the basis of historic acquisition costs, except for those financial assets and liabilities which are recognised in income at fair value and all derivative financial instruments, as they are measured at fair value.
Preparation of the financial statements in accordance with the IFRS standards requires the Group's management to make certain assessments and exercise judgement in applying the accounting principles. Details of the judgements made by the management in applying the accounting principles observed by the Group, and of those aspects which have the greatest impact on the figures reported in the financial statements, are given below under the heading 'Accounting principles requiring executive judgement and the main uncertainties concerning the assessments made'.
Subsidiaries are companies over which the Group exercises control. This control derives from the Group holding more than half of the voting rights or otherwise being in a position to exercise control or having the right to stipulate the principles of the company's finances and business operations. Mutual shareholdings have been eliminated using the acquisition cost method. The acquisition consideration, including deferred and contingent consideration,
as well as the identifiable assets acquired and liabilities assumed, is measured at the acquisition date fair values. The acquisition related costs are accounted as expenses for the period in which they are incurred. At the acquisition date the non-controlling interests are valued either at the acquisition date fair values or at non-controlling interests' proportionate share in the recognised amounts of the identifiable net assets. Valuation principle is determined separately for each acquisition. Subsidiaries acquired by the Group are consolidated into the financial statements from the time that the Group establishes its control, while subsidiaries disposed of are consolidated up to the time that the Group's control ceases. All intra-group transactions, receivables, liabilities and profits are eliminated on consolidation. Unrealized losses are not eliminated if the loss is due to impairment.
Net income for the period is disclosed in the income statement as an allocation to the shareholders of the parent company and non-controlling interests. The allocation of the comprehensive income to the shareholders of the parent company and non-controlling interests is presented in the statement of comprehensive income. Non-controlling interests are disclosed separately under consolidated total equity.
Associates are companies in which the Group exercises significant influence. Significant influence is exercised when the Group holds more than 20% of the voting rights in the company or otherwise exercises significant influence but not control. The associate companies have been consolidated into the financial statements using the equity method. If the Group's share of the losses of an associate exceeds the book value of the investment, the investment is recognised in the balance sheet at a valuation of zero, and losses that exceed the book value are not consolidated unless the Group has undertaken to meet the obligations of associates. Unrealized gains between the Group companies and associates have been eliminated according to the share of ownership. Any goodwill arising from the
acquisition of an investment in an associate is included in the investment.
The figures for the financial performance and standing of each of the Group's units are measured in the currency of the unit's principal operating environment ('functional currency'). The consolidated financial statements are presented in euros, which is the functional and reporting currency of the Group's parent company. Foreign currency transactions are recognised as amounts denominated in the functional currency using the rate prevailing on the transaction date. At the balance sheet date, monetary receivables and payables are translated using the closing rate. Exchange differences arising from translation are recognised in the income statement. Exchange gains and losses from operating activities are included in the corresponding items above the operating profit.
The income statements of foreign subsidiaries have been translated into euros using average rates for the reporting period, and their balance sheets translated using the closing rates. The exchange difference due to the use of average rates in the income statement translations and closing rates in the balance sheet translations is recognised as a separate item under shareholders' equity.
In preparing the consolidated financial statements, the translation difference due to exchange rate fluctuations, in regard to the shareholders' equity of the subsidiaries and associates, is recognised as a separate item in the translation differences for the consolidated shareholders' equity. If a foreign subsidiary or associate is disposed of, the accrued translation difference is recognised in the income statement under profit or loss.
Income is recognised on the basis of the fair value of the consideration received or receivable. An item is recognised as income when the risks and benefits of ownership pass
2016
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance
18
to the purchaser. Generally, this occurs when a production item is delivered. When net sales are calculated, indirect taxes and trade discounts are deducted from proceeds.
Interest income is recorded under the effective interest method and dividend income when the right to the dividend has been created.
A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
Past-service costs are recognised immediately in income.
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
A provision is recognised when the Group has a legal or constructive obligation based on a past event and it is probable that the fulfilment of this obligation will require a contribution, and the amount of the obligation can be reliably estimated. Provisions are valued at the present value of the costs required to cover the obligation.
Provisions are made in connection with operational restructuring, onerous contracts, litigation and environmental and tax risks. A restructuring provision is recognised when a detailed and appropriate plan has been drawn up for it, sufficient grounds have been given to expect that the restructuring will occur and information has been issued on it.
Income taxes recognised in the consolidated income statement comprise taxes levied on an accrual basis on the reporting period results of Group companies, based on the taxable profits calculated for each Group company in accordance with the local tax regulations, as well as tax adjustments from previous periods and changes in deferred tax.
Deferred tax assets and liabilities are calculated on the temporary differences between the taxable values and the book values of assets and liabilities, in accordance with the liability method. Deferred taxes are recognised in the financial statements using the tax rates that apply up to the balance sheet date.
The most material temporary differences arise from fixed assets, consolidation, inventories, unused tax losses and revaluation of derivative financial instruments. Deferred tax assets are recognised up to an amount where it is probable that they can be utilized against future taxable profits. Deferred taxes are not recognised on goodwill which is not tax deductible.
In the case of derivative financial instruments covered by hedge accounting and available-for-sale investments, the deferred taxes related to value adjustments recognised directly under the statement of comprehensive income are also recognised directly under the statement of comprehensive income.
Cash and cash equivalents in the balance sheet and cash flow statement comprise cash, bank deposits from which withdrawals can be made and other short-term highly liquid investments. Items classified under cash and cash equivalents have a maximum of three months maturity from the acquisition date.
Borrowing costs are recognised under the expenses for the period in which they arose. Directly attributable borrowing costs related to the acquisition, construction or production of a qualifying asset, for example, factory building, are capitalised. Where clearly linked to a specific loan, transaction costs arising directly from loans are included in the loan's original amortised cost and divided into a series of interest expenses using the effective interest method.
Key employees' share holdings in Foison Oy are treated as liability instruments in Apetit's Group balance sheet due to certain terms and conditions of repurchase. Foison Oy owns 20% of Avena Nordic Grain Oy's share capital. Group recognises financial expense related to the key employees' dividend right from Avena Group.
2016 in brief
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance
19
Research costs is expensed as incurred. Development costs are recognised on the statement of financial position when intangible asset satisfies all the following criteria:
Goodwill corresponds to that part of the cost of acquiring the company which is in excess of the Group's share of the fair value of the acquired company's net assets on the acquisition date. Goodwill is tested annually for impairment and has been allocated to each of the cash-generating units for this purpose. Goodwill is valued at historic acquisition cost less any impairment. In the case of associated company, goodwill is included in their investment value. Goodwill generated through acquisitions of foreign business combinations is measured in the currency of the foreign operations and translated using the period end rates.
An intangible asset is recognised in the balance sheet at the original acquisition cost in a case where the cost can be determined reliably and it is likely that an expected financial benefit derived from the asset will turn out to be to the company's benefit.
Patents, trademarks and other intangible assets with a limited useful life are recognised as expenses in the
balance sheet and amortised on a straight-line basis over the period of their useful lives. Intangible assets have not included assets with an unlimited useful life.
Depreciation period for intangible assets:
| Customer relationships | 15 years |
|---|---|
| Trademarks | 15 years |
| Other intangible assets | 5–10 years |
Assets whose useful life has not yet expired and fully depreciated fixed assets that are still used in operating activities are included in the acquisition cost of assets. Similar principles apply to accumulated depreciation.
Subsequent expenditure relating to intangible assets is recognised as an asset only if its financial benefit to the company exceeds the originally estimated level of performance. Otherwise the expenditure is recognised as a cost at the time it is incurred.
Property, plant and equipment have been measured at historic acquisition cost less depreciation and impairment. These assets are subject to straight-line depreciation over the period of their useful lives. Land is not subject to depreciation. The residual value of the assets and their useful lives are reviewed each time the financial statements are prepared and, when necessary, are adjusted to reflect any change in the economic benefits expected.
The estimated useful lives are as follows: Property and plant 10–40 years Machinery and equipment 5–15 years
Property, plant and equipment are no longer depreciated if they are classified as assets held for sale.
Assets whose useful life has not yet expired and fully depreciated fixed assets that are still used in operating activities are included in the acquisition cost of assets. Similar principles apply to accumulated depreciation. Repair and maintenance costs of tangible assets are recognised as expenses when incurred.
Government grants received for the acquisition of fixed assets are recognised as deductions in the book values for property, plant and equipment. The grants are released to profit through smaller depreciations during the use of the asset in question.
Leases in which the risks and benefits inherent in an asset are transferred in all essential respects to the company are classified as finance leases. Finance leases are recognised in the balance sheet at the lesser of the fair value at the inception of the leasing period and the present value of the minimum lease payments. The lease obligations of finance lease assets are included in discounted form under interest-bearing liabilities.
Assets acquired with finance leases are depreciated according to plan, and any impairment losses recognised. Depreciation is charged over the shorter of the relevant fixed asset depreciation period and the lease period. Leases to be paid are divided into financial cost and a decrease in debt during the lease term so that the interest on the remaining debt is the same each financial year. Lease obligations are included in interest-bearing liabilities. During the reporting period there were no situations in which the Group would have been categorized as the lessor of a finance lease asset.
Leases in which risks and rewards incident to ownership are not transferred to the lessee are classified as operating leases. Lease payments related to them are recognised in the income statement on a straight-line basis over the lease term.
The book values for assets are assessed for any signs of impairment. If there are signs of impairment, an estimate is determined for the amount recoverable on the asset. An impairment loss is recognised if the balance sheet value of the asset or the cash-generating unit exceeds the 2016
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements
20 Corporate Governance
recoverable amount. Impairment losses are recognised in the income statement.
The impairment loss of a cash-generating unit is first allocated to reducing the goodwill attributed to the unit, and then to reducing other assets of the unit on a pro rata basis.
The recoverable amount of intangible and tangible assets is determined at the higher of the fair value less costs to sell and the value in use. In determining the value in use, the estimated future cash flows are discounted to their present value on the basis of discount rates applying to the average pre-tax capital costs of the cash-generating unit in question. The discount rates also take into account any special risk associated with the cash-generating units.
Impairment losses on property, plant and equipment and on intangible assets other than goodwill are reversed if a change has occurred in the estimates used in determining the recoverable amount of the asset. The amount by which an impairment loss is reversed is no more than the book value (less depreciation) that would have been determined for the asset if no impairment loss had been recognised on it in previous years. Impairment losses recognised on goodwill are not reversed.
Inventories have been measured at the lower of acquisition cost and net realizable value. The net realizable value is the estimated selling price in the ordinary course of business, after deduction of the estimated costs of completion and the estimated costs necessary to make the sale.
The value of inventories has been determined using the weighted average price method and includes all direct costs of acquisition and other indirect costs to be allocated. The cost of each inventory item produced comprises not only the purchase costs of materials, direct labour costs and other direct costs, but also a proportion of production overheads, but not selling or financing costs. The value of inventories has been reduced for obsolescent assets.
Financial assets are classified to four categories: financial assets at fair value through profit or loss, available-for-sale financial assets, loans and receivables, and held-to-maturity investments. The classification is conducted based on the purpose of the financial asset and when the financial asset is originally acquired.
The group of financial assets to be recognised in income at fair value includes assets held for trading. Financial assets held for trading have been acquired primarily for the purpose of making a profit on short-term changes in market prices. Both unrealized and realized gains and losses from changes in fair value are recognised in the income statement for the period in which they occur.
Loans and other receivables are non-derivative assets with fixed or measurable payments, are not publicly quoted and the Group does not held them for trading. These assets are recognised at amortised cost.
Available-for-sale financial assets are not part of the derivative assets but are non-current assets, because the intention is to keep them for longer than 12 months following the balance sheet date. Publicly quoted shares are classified as available-for-sale investments and are measured at fair value, which is the market price on the balance sheet date. Changes in fair value are recognised directly in the statement of comprehensive income until the investment is sold or otherwise disposed of, when the changes in fair value are recognised in the income statement. Permanent impairment of assets is recognised in the income statement. Unquoted shares are presented at their acquisition price, because their fair values are not reliably available.
Financial liabilities are measured at amortised cost except derivative instruments. Financial liabilities are long or short term and can be interest-bearing or interest free. This item includes, for example, trade receivables and loans.
All financial assets and liabilities are recorded in the balance sheet at an acquisition cost corresponding to the original fair value. Transaction costs are deducted only when the item is not valued against the profit at fair value. Purchases and sales of financial assets are recognised using the trade date method.
Fair values are measured using publicly quoted prices. These instruments are mainly investments to funds and mainly all commodity derivatives. If publicly quoted prices are not available, fair value is measured based on discounted cash flows and price quotation of the counterparty. These instruments are usually currency derivatives. Short-term receivables or payables are not discounted.
The carrying amounts of the financial assets are tested to determine whether there is objective evidence of impairment. An impairment is recognised when there is objective evidence that receivables are not fully collectible. The impairment loss is reversed if in a subsequent period the fair value of the financial asset increases and this increase can be related objectively to events occurring after the impairment was recognised.
Derivative financial instruments are initially recognised at fair value on the date a contract is entered into and are subsequently re-measured at their fair value. The Group applies cash flow hedge accounting to certain forward currency and commodity derivative contracts. The hedged cash flow must be probable and the cash flow must ultimately have an impact on the income statement. The hedge must be effective when examined prospectively and retrospectively. For hedges that meet the terms for hedge accounting, the effective portion of the change in fair value of a hedge is recognised in the statement of comprehensive income, and any residual ineffective portion is recognised for currency derivatives to financial items and for commodity derivatives to other operating income or expenses. The cumulative change in fair value recognised under the statement of comprehensive income is recognised to purchases or sales or financial items based on their nature on the same date that the projected cash flow is recognised in the income statement. If a derivative
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance 21
financial instrument expires, is sold or does not meet the hedge accounting terms, the cumulative change in the fair value of the hedging instrument will remain in the hedge reserve and is recognised in income statement on the same date that the projected cash flow is recognised in the income statement. The cumulative fair values of the hedging instruments are transferred from the hedge reserve to other operating income or expense or financial items based on their nature immediately if the hedged cash flow is no longer expected to occur.
Despite certain hedging relationships fulfil the effective hedging requirements of the Group's risk management policy, the Group does not apply hedge accounting to all transactions done in hedging purpose. These instruments' fair value changes are recognised to other operating income and expense or financial items based on their nature.
Purchases of own shares are deducted from equity attributable to shareholders of the parent company up till the shares are cancelled or transferred back to circulation.
Dividend distribution to the company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the company's shareholders.
In preparing the consolidated financial statements in accordance with international accounting practices, the company's management has had to make assessments and assumptions that affect the amount of assets, liabilities, income and expenses recognised in the accounts and the contingencies presented. These assessments and assumptions are based on experience and on other reasonable suppositions that are believed to be realistic in the circumstances that constitute the basis for the estimates of
items recognised in the financial statements. The outcome may deviate from these estimates.
The Group tests annually goodwill for possible impairment and assesses any indication of impairment. The recoverable amounts of units that generate cash flow are based on value in use calculations. These calculations require the use of estimates.
Determination of the fair value of tangible and intangible assets acquired in business combinations requires estimations by management and is often based on assessment of asset cash flows.
Other assessments including management judgement are mainly related to restructuring plans, the extent of obsolescent inventories, environmental, litigation and tax risks and the use of deferred tax assets against future taxable profits.
The Group has not in these financial statements applied the following standards, amendments to standards or interpretations which were published by the balance sheet date and the application of which is not yet compulsory at this stage.
The following new standards and interpretations effective in 2017 will not have material effects to the Group's financial statements.
IFRS 9 replaces the current standard IAS 39 Financial Instruments – recognition and measurement. The standard includes revised guidance on the classification and measurement of financial instruments, a new expected loss model for calculating impairment on financial assets, and new general hedge accounting requirements. The Group may extend the use of hedge accounting. Group's credit losses have been small and change in measurement model is not expected to have material impact to the financial statements.
IFRS 15 establishes a new framework can revenue be recognised, how much and when. The standard replaces for example the IAS 18 Revenue and the IAS 11 Construction Contracts standards. The Group is not expecting material impact to revenue recognition methods.
Based on the IFRS 16 all rental agreements are recognized on the lessee's statement of financial position. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The nature of expenses related to those leases will change as the standard replaces operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities reported under financing expenses. Group assess that the impact to net profit is not material because Group's yearly rental expense is approximately three million euros. Rental commitments are about 11 million euros at the end of the period. The application of the new standard will increase assets and liabilities on the statement of financial position. The Group will assess the impact over the next twelve months.
Management is assessing the impact of the revisions and interpretations of 2018 or later years on the financial statements of the Group.
* not yet endorsed by EU
2016
Board of Directors' report in brief
Consolidated Financial Statements
Parent Company Financial Statements
22 Corporate Governance
The Group has four reportable segments. The operating segments offer different products or services and are managed separately.
The segment information is based on the Group's organisation and management reporting structure. Reportable segments are:
Food Solutions Oilseeds Products Grain Trade Seafood
Intra-group sales take place at arm's length prices. The assets and liabilities of a segment are such items of the business operations that the segment uses in its business operations or that can be allocated to a segment on reasonable basis. Tax and financing items together with items common to the whole Group are unallocated assets and liabilities. Reported figures are based on IFRS standards.
| EUR million | Food Solutions |
Oilseed Products |
Grain Trade |
Seafood | Total |
|---|---|---|---|---|---|
| Total segment sales | 97.8 | 68.2 | 159.7 | 87.8 | 413.5 |
| Intra-group sales | –0.9 | –0.2 | –13.3 | –12.6 | –27.0 |
| Net sales | 96.9 | 68.0 | 146.4 | 75.2 | 386.5 |
| Operating profit | –2.6 | 2.7 | 1.4 | –0.9 | 0.6 |
| Assets | 56.3 | 22.9 | 38.3 | 34.2 | 151.6 |
| Unallocated | 32.2 | ||||
| Total assets | 183.7 | ||||
| Liabilities | 13.1 | 5.2 | 11.9 | 12.9 | 43.2 |
| Unallocated | 22.8 | ||||
| Total liabilities | 66.0 | ||||
| Gross investments in non-current assets | 5.7 | 1.9 | 0.1 | 2.0 | 9.7 |
| Corporate acquisitions and other share purchases | – | – | 0.0 | – | 0.0 |
| Depreciations | 3.8 | 0.8 | 0.2 | 1.7 | 6.6 |
| Impairments | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Personnel | 452 | 42 | 55 | 180 | 729 |
report
Consolidated Financial Statements Board of Directors'
Parent Company Financial Statements
23 Corporate Governance
| Food | Oilseed | Grain | |||
|---|---|---|---|---|---|
| EUR million | Solutions | Products | Trade | Seafood | Total |
| Total segment sales | 95.8 | 61.3 | 170.5 | 82.9 | 410.4 |
| Intra-group sales | –2.6 | –0.2 | –16.7 | –10.1 | –29.6 |
| Net sales | 93.3 | 61.1 | 153.7 | 72.8 | 380.8 |
| Share of profits of associated companies included in operating profit |
– | – | – | 0.4 | 0.4 |
| Operating profit | –0.1 | 2.7 | 3.8 | –7.4 | –1.0 |
| Assets | 54.6 | 25.0 | 47.8 | 31.2 | 158.6 |
| Unallocated | 39.3 | ||||
| Total assets | 197.9 | ||||
| Liabilities | 12.5 | 3.2 | 9.4 | 11.0 | 36.1 |
| Unallocated | 40.8 | ||||
| Total liabilities | 76.9 | ||||
| Gross investments in non-current assets | 4.3 | 1.0 | 2.2 | 1.6 | 9.1 |
| Corporate acquisitions and other share purchases | – | – | 0.1 | – | 0.1 |
| Depreciations | 3.5 | 0.7 | 0.2 | 1.8 | 6.0 |
| Impairments | 0.3 | – | – | – | 0.3 |
| Personnel | 434 | 40 | 53 | 198 | 725 |
| Non-current Assets |
Non-current Assets |
|||
|---|---|---|---|---|
| EUR million | Revenue 2016 | Revenue 2015 | 2016 | 2015 |
| Finland | 203.9 | 238.8 | 78.0 | 73.5 |
| Norway | 34.4 | 33.0 | 4.3 | 4.6 |
| Germany | 13.4 | 15.2 | – | – |
| Sweden | 26.8 | 20.2 | 1.1 | 1.0 |
| Other countries | 108.0 | 73.6 | 0.1 | 0.0 |
| Total | 386.5 | 380.8 | 83.6 | 79.1 |
Revenues from one customer were EUR 110.5 (102.1) million or 28.6% (26.8%) of the net sales. Revenues from this customer were from all operating segments.
| EUR million | 2016 | 2015 |
|---|---|---|
| Other operating income | ||
| Government grants received | 0.2 | 0.2 |
| Gains from sales of non current assets |
0.1 | 0.8 |
| Gains from sales of investments | 0.3 | 0.1 |
| Additional purchase price, Taimen | 0.4 | – |
| Rental income | 0.2 | 0.3 |
| Fair value change based on derivative instruments, no hedge accounting |
0.1 | 0.0 |
| Other | 0.4 | 0.7 |
| Total | 1.6 | 2.2 |
| Other operating expenses | ||
| Rental expenses | 3.3 | 3.3 |
| Administrative expenses | 4.3 | 4.2 |
| Information technology expenses | 2.4 | 2.4 |
| Sales and marketing expenses | 17.7 | 18.0 |
| Maintenance expenses | 6.1 | 5.9 |
| Loss from sales of associated companies |
– | 3.6 |
| Fair value change based on derivative instruments, no hedge accounting |
0.1 | 0.5 |
| Other | 3.7 | 3.8 |
Total 37.7 41.7
The audit fees relate to the auditing of the annual accounts and to the statutory and obligatory functions closely attached to them. The non-audit fees are caused by services linked to the audit and aimed to assure the correctness of the financial statements and other advice.
report
2016 in brief
Board of Directors'
| 2016 | 2015 |
|---|---|
| 0.2 | 0.2 |
| 0.0 | 0.0 |
| 0.2 | 0.2 |
Consolidated
Financial Statements
| EUR million | 2016 | 2015 |
|---|---|---|
| Wages and salaries | 30.4 | 30.0 |
| Termination benefits | 0.1 | 0.1 |
| Pensions, defined contribution plans | 5.5 | 5.3 |
| Other personnel costs | 1.4 | 1.2 |
| Total | 37.4 | 36.6 |
Information on the remuneration and loans granted to the management is presented in Note 25 "Related party transactions". Information on the defined benefit plans is presented in Note 19 "Provisions".
Pension coverage in the Group companies is provided in accordancewith the rules and practices in the respective countries. The disabilitycomponent of Finnish statutory pension system ("TyEL") is recognised in Finland as defined contribution plan. Apetit Plc and Apetit Ruoka Oy have defined contribution plans.
Parent Company Financial Statements
R & D expenses of the Group amounted to EUR 0.9 (0.8) million, representing 0.2% (0.2%) of the net sales.
| EUR million | 2016 | 2015 |
|---|---|---|
| Raw materials and consumables | 292.3 | 289.4 |
| Change in stocks | –0.4 | –4.4 |
| External services | 13.9 | 14.9 |
| Total | 305.8 | 299.9 |
Materials and services include foreign currency gains and losses a total of EUR 0.1 ( 0.5) million.
Net sales include foreign currency losses and gains a total of EUR 0.1 (–0.1) million.
The ineffective portion of the change in fair value of hedge instruments totalled EUR –0.1 (0.0) million.
24 Corporate Governance
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements 25
| EUR million | 2016 | 2015 |
|---|---|---|
| Depreciations | ||
| Intangible assets | 1.2 | 1.3 |
| Buildings | 2.3 | 2.2 |
| Machinery and equipment | 2.9 | 2.4 |
| Other tangible assets | 0.1 | 0.1 |
| Total | 6.6 | 6.0 |
| Impairments | ||
| Intangible assets | 0.0 | 0.0 |
| Tangible assets | 0.0 | 0.2 |
| Total | 0.0 | 0.3 |
| EUR million | 2016 | 2015 |
|---|---|---|
| Financial income | ||
|---|---|---|
| Interest income | 0.0 | 0.0 |
| Foreign currency gains | 0.0 | 0.1 |
| Other financial income | 0.0 | 0.0 |
| Total | 0.1 | 0.1 |
| Financial expenses | ||
| Interest expenses | –0.4 | –0.4 |
| Foreign currency losses | 0.0 | –0.4 |
| Avena Nordic Grain minority dividend |
–0.5 | –0.8 |
| Fair value change based on interest rate swaps, no hedge accounting |
0.0 | – |
| Other financial expenses | 0.0 | –0.1 |
| Total | –1.0 | –1.7 |
| EUR million | 2016 | 2015 |
|---|---|---|
| Current period taxes | –1.0 | –1.4 |
| Previous periods' taxes | 0.0 | 0.0 |
| Deferred taxes | 1.8 | 0.3 |
| Total | 0.8 | –1.1 |
| Reconciliation of income taxes | ||
| Profit before taxes | 0.3 | –3.5 |
| Tax calculated at the tax rate of the parent company 20.0% |
–0.1 | 0.7 |
| Effect of Avena Nordic Grain minority dividend |
–0.1 | –0.2 |
| Effect of associated company results | 0.1 | –0.3 |
| Sale of Taimen ownership | – | –0.6 |
| Recognised deferred tax receivables on taxable losses |
0.9 | – |
| Unrecognised deferred tax receivables on taxable losses |
– | –0.8 |
| Other items | 0.0 | 0.1 |
| Tax expenses in the income statement |
0.8 | –1.1 |
Board of Directors' report
Consolidated Financial Statements
Parent Company Financial Statements Corporate Governance
26
| 1 Jan. 2016 | Charge in income statement |
Charged to other compre hensive income |
31 Dec. 2016 |
|---|---|---|---|
| 2.3 | 1.3 | – | 3.7 |
| 0.2 | 0.0 | – | 0.2 |
| 0.3 | 0.0 | – | 0.3 |
| 0.1 | 0.0 | 0.0 | 0.1 |
| 2.9 | 1.4 | 0.0 | 4.3 |
| –1.4 | 0.4 | – | –1.1 |
| 0.5 | 0.0 | – | 0.5 |
| –1.9 | 0.2 | 0.0 | –1.7 |
| –0.6 | –0.1 | – | –0.7 |
| –0.2 | 0.0 | 0.2 | 0.0 |
| –0.1 | – | – | –0.1 |
| –0.5 | – | – | –0.5 |
| –0.2 | 0.0 | 0.0 | –0.1 |
| –4.3 | 0.4 | 0.2 | –3.7 |
The Group has not recognised deferred tax assets total of EUR 1.4 million at 31 December 2016 related to taxable losses. These taxable losses expire in 2020–2026. Recognised deferred tax assets on unused taxable losses EUR 2.9 million will expire in 2020–2026. Other unused taxable losses do not expire.
| EUR million | 1 Jan. 2015 | Charge in income statement |
Charged to other compre hensive income |
31 Dec. 2015 |
|---|---|---|---|---|
| Deferred tax assets | ||||
| Carry forward of unused tax losses | 2.5 | –0.2 | –0.0 | 2.3 |
| Intangible and tangible assets | 0.2 | 0.0 | – | 0.2 |
| Deferred depreciations | 0.3 | 0.0 | – | 0.3 |
| Other | 0.1 | 0.0 | –0.1 | 0.1 |
| Total | 3.1 | –0.1 | –0.1 | 2.9 |
| Deferred tax liabilities | ||||
| Accumulated depreciation difference | –1.4 | –0.1 | – | –1.4 |
| Valuation of assets in Avena Kantvik Oy's acquisition (netting company's accumulated depreciation difference) |
0.6 | –0.0 | – | 0.5 |
| Valuation of assets in acquisition cost allocation calculations |
–2.2 | 0.2 | 0.0 | –1.9 |
| Inventories | –0.7 | 0.1 | – | –0.6 |
| Derivative instruments | –0.3 | 0.1 | 0.0 | –0.2 |
| Goodwill | –0.1 | – | – | –0.1 |
| Tangible assets | –0.5 | – | – | –0.5 |
| Other | –0.2 | 0.1 | 0.0 | –0.2 |
| Total | –4.7 | 0.4 | 0.0 | –4.3 |
The Group has not recognised deferred tax assets total of EUR 2.1 million at 31 December 2015 related to taxable losses. These taxable losses expire in 2020–2025. Recognised deferred tax assets on unused taxable losses EUR 1.3 million will expire in 2020–2025. Other unused taxable losses do not expire.
Consolidated Financial Statements Board of Directors'
Parent Company Financial Statements 27
Corporate Governance
Basic earnings per share are calculated by dividing the profit for the financial year attributable to the shareholders of the parent company by weighted average number of the shares outstanding. The outstanding shares do not include treasury shares in possession of the company. Diluted earnings per share are calculated by dividing the profit for the financial year attributable to the shareholders of the parent company by diluted weighted average number of the shares outstanding.
The company has no such instruments that would cause a dilution effect on the earnings per share.
| EUR million | 2016 | 2015 |
|---|---|---|
| Profit attributable to the shareholders of the parent company, basic and diluted |
1.2 | –4.3 |
| Weighted average number of outstanding shares (1,000 pcs) |
6,198 | 6,192 |
| Diluted average number of shares outstanding (1,000 pcs) |
6,198 | 6,192 |
| Basic and diluted earnings per share (EUR per share) |
0.19 | –0.69 |
The cost of assets include the assets, whose useful lives have not ended and fully depreciated assets still used in operating activities. Similar principles apply to accumulated depreciation.
report
| EUR million | R & D expenses |
Goodwill | Customer relationships |
Other Intangible rights |
Advance payments |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan. | – | 20.2 | 10.7 | 8.5 | 0.3 | 39.7 |
| Additions | 0.2 | – | – | 0.4 | 0.2 | 0.8 |
| Disposals | – | – | – | –0.2 | – | –0.2 |
| Translation difference and other changes |
– | 0.0 | 0.1 | 0.2 | 0.0 | 0.2 |
| Transfers | 0.1 | – | – | 0.2 | –0.3 | – |
| Acquisition cost 31 Dec. | 0.3 | 20.2 | 10.7 | 9.1 | 0.2 | 40.5 |
| Accumulated depreciation 1 Jan. | – | –19.9 | –4.6 | –6.8 | – | –31.2 |
| Disposals, accumulated depreciation |
– | – | – | 0.0 | – | 0.0 |
| Depreciation for the period | 0.0 | – | –0.7 | –0.5 | – | –1.2 |
| Impairments | – | – | 0.0 | 0.0 | – | 0.0 |
| Accumulated depreciation 31 Dec. |
0.0 | –19.9 | –5.2 | –7.3 | – | –32.5 |
| Book value 31 Dec. 2016 | 0.3 | 0.4 | 5.5 | 1.8 | 0.2 | 8.1 |
report
Consolidated Financial Statements Board of Directors'
Parent Company Financial Statements Corporate Governance
28
| EUR million | R & D expenses |
Goodwill | Customer relation ships |
Other Intangible rights |
Advance payments |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan. | – | 20.2 | 10.7 | 7.2 | 0.6 | 38.7 |
| Additions | – | – | – | 0.7 | 0.3 | 1.0 |
| Disposals | – | – | – | – | – | – |
| Translation difference and other changes |
– | 0.0 | –0.1 | 0.1 | – | 0.0 |
| Transfers | – | – | – | 0.6 | –0.6 | – |
| Acquisition cost 31 Dec. | – | 20.2 | 10.7 | 8.5 | 0.3 | 39.7 |
| Accumulated depreciation 1 Jan. | – | –19.9 | –3.7 | –6.3 | – | –29.9 |
| Disposals, accumulated depreciation |
– | – | – | 0.0 | – | 0.0 |
| Depreciation for the period | – | – | –0.7 | –0.5 | – | –1.2 |
| Impairments | – | – | –0.2 | 0.0 | – | –0.2 |
| Accumulated depreciation 31 Dec. |
–19.9 | –4.6 | –6.8 | – | –31.2 | |
| Book value 31 Dec. 2015 | – | 0.4 | 6.1 | 1.7 | 0.3 | 8.5 |
Goodwill has been allocated to the following cashgenerating units or groups of units:
| EUR million | 2016 | 2015 |
|---|---|---|
| Frozen products | 0.4 | 0.4 |
| Total | 0.4 | 0.4 |
In goodwill impairment testing, the recoverable amount from operating activities is determined on the basis of value in use calculations. Expected future cash flows are based on management-approved forecasts and are given for a five-year period, and cash flows beyond this are extrapolated using a growth factor of 1%–2%.
The key variables in the value in use calculation are the budgeted gross margin, net sales and the discount rate. The pre-tax discount rates used in Frozen products group is 7.0% (7.0%). In Frozen products group the value in use exceeded the carrying amount of the tested assets by a wide margin and significant negative change in any of the key variables would not result to an impairment.
2016
Board of Directors' report in brief
Consolidated Financial Statements
Parent Company Financial Statements 29
Corporate Governance
At the time of testing, on 30 September 2016, the book value of the cash-generating unit in the fresh products group stood at EUR 19.1 million, including EUR 4.2 million in acquisition costs allocated to customer relationships. Due to weak business performance, the value in use had decreased close to the book value in the impairment testing of fresh products and that of customer relationships. The target for the fresh products group for the forecast period is an annual increase of 15–20% in net sales. The operating result improved as a result of enhanced operational efficiency, and an increase in volumes will significantly support performance in the forecast period. Net sales are expected to increase in terms of both retail and wholesale customers. Some of the increase will come from new products, such as the Apetit Tuorekset product line, which was introduced in 2016. The book value is subject to impairment risk if the outlook for net sales and performance becomes weaker.
| Land and | Buildings and |
Machinery and |
Other tangible |
Construction | ||
|---|---|---|---|---|---|---|
| EUR million | water areas | structures | equipment | assets | in progress | Total |
| Acquisition cost 1 Jan. | 3.3 | 51.8 | 49.4 | 1.1 | 1.6 | 107.2 |
| Additions | – | 2.8 | 4.7 | 0.4 | 1.1 | 8.9 |
| Disposals | 0.0 | 0.0 | –1.4 | – | 0.2 | –1.3 |
| Translation differences and other | ||||||
| changes | 0.0 | 0.0 | 0.2 | – | 0.1 | 0.3 |
| Transfers | – | 0.2 | 0.6 | 1.1 | –1.9 | – |
| Acquisition cost 31 Dec. | 3.3 | 54.7 | 53.4 | 2.6 | 1.2 | 115.2 |
| Accumulated depreciation 1 Jan. | –0.2 | –24.8 | –37.9 | –0.5 | – | –63.7 |
| Accumulated depreciation on disposals and transfers |
– | 0.0 | 1.2 | – | – | 1.2 |
| Depreciation for the period | – | –2.3 | –2.9 | –0.1 | – | –5.3 |
| Impairments | – | 0.0 | – | – | 0.0 | |
| Accumulated depreciation 31 Dec. |
–0.2 | –27.1 | –39.6 | –0.7 | – | –67.8 |
| Book value 31 Dec. 2016 | 3.1 | 27.7 | 13.8 | 1.9 | 1.2 | 47.7 |
Machinery and equipment includes assets acquired through finance leases totalling EUR 0.4 million.
2016 in brief Board of Directors' report
Consolidated Financial Statements
30 Corporate Governance
| EUR million | Land and water areas |
Buildings and structures |
Machinery and equipment |
Other tangible assets |
Construction in progress |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan. | 3.4 | 51.7 | 46.7 | 0.8 | 0.5 | 103.1 |
| Additions | – | 2.3 | 3.5 | 0.2 | 2.3 | 8.2 |
| Disposals | –0.1 | –2.3 | –2.0 | – | – | –4.3 |
| Translation differences and other changes |
0.0 | 0.1 | 0.3 | 0.0 | – | 0.3 |
| Transfers | – | 0.1 | 0.9 | 0.2 | –1.1 | – |
| Acquisition cost 31 Dec. | 3.3 | 51.8 | 49.4 | 1.1 | 1.6 | 107.2 |
| Accumulated depreciation 1 Jan. | –0.2 | –24.5 | –36.8 | –0.5 | – | –62.3 |
| Accumulated depreciation on disposals and transfers |
– | 1.9 | 1.6 | – | – | 3.5 |
| Depreciation for the period | – | –2.2 | –2.5 | –0.1 | – | –4.8 |
| Impairments | – | – | –0.1 | 0.0 | – | –0.1 |
| Accumulated depreciation 31 Dec. |
–0.2 | –24.8 | –37.9 | –0.5 | – | –63.7 |
| Book value 31 Dec. 2015 | 3.1 | 27.0 | 11.5 | 0.6 | 1.6 | 43.8 |
Machinery and equipment includes assets acquired through finance leases totalling EUR 0.5 million.
| EUR million | 2016 | 2015 |
|---|---|---|
| Book value 1 Jan. | 22.6 | 34.9 |
| Acquisitions, other additions | 0.2 | 0.4 |
| Share of profits for the period | 0.7 | –0.6 |
| Sales, deductions | –0.1 | –10.2 |
| Dividends | –0.3 | –1.9 |
| Book value 31 Dec. | 23.1 | 22.6 |
Groups associated companies are Sucros group and Foison Oy. Group sold its ownership in Taimen group on May and on September 2015. A loss of EUR 3.6 million was recognised in the sales transactions. Fish products group purchases trout from Taimen group, Apetit does not have significant business relations with the other associated companies. Sucros group's beet factory is situated at Säkylä industrial site where also is situated Frozen products group's factory. Associated companies are consolidated using the equity method and they do not have public quatations.
2016
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements
| Sucros group | Taimen group | ||||
|---|---|---|---|---|---|
| Group holding 20% | Direct group holding 30%, after cross ownership 23% |
||||
| EUR million | 2016 | 2015 | 2016 | 2015 | |
| Non-current assets | 21.9 | 20.7 | – | – | |
| Current assets | 140.7 | 124.3 | – | – | |
| Cash and cash equivalents | 4.9 | 2.3 | – | – | |
| Non-current financial liabilities | 5.4 | 5.4 | – | – | |
| Current financial liabilities | 32.5 | 17.8 | – | – | |
| Other current liabilities | 17.4 | 14.8 | – | – | |
| Net assets, 100% | 112.2 | 109.3 | – | – | |
| Share in net assets | 22.4 | 21.9 | – | – | |
| Goodwill | – | – | – | – | |
| Book value, 31 December | 22.4 | 21.9 | – | – | |
| Net sales | 208.4 | 148.7 | 22.3 | ||
| Other income and expenses | –201.9 | –154.3 | – | –20.1 | |
| Operating profit | 6.5 | –5.6 | – | 2.2 | |
| Interest income and expenses | 0.2 | 0.3 | – | –0.2 | |
| Taxes | –0.2 | 0.5 | – | –0.4 | |
| Profit or loss | 6.5 | –4.9 | – | 1.6 | |
| Book value, 1 January | 21.9 | 24.4 | – | 9.8 | |
| Profit or loss | 0.7 | –1.0 | – | 0.4 | |
| Dividends received | – | –1.6 | – | – | |
| Book value, 31 December | –0.1 | – | – | –10.2 | |
| Book value, 31 December | 22.4 | 21.9 | – | – |
The shares of unlisted companies are reported at acquisition cost as their values are not reliably available.
| EUR million | 2016 | 2015 |
|---|---|---|
| Investments in shares of unlisted companies |
0.1 | 0.1 |
| Total | 0.1 | 0.1 |
| EUR million | 2016 | 2015 |
|---|---|---|
| Capital loan receivable in accordance with the Finnish Limited Liability Companies Act chapter 12 |
– | 0.6 |
| Additional purchase price receivable | – | 0.3 |
| Connection fees | 0.3 | 0.4 |
| Total | 0.3 | 1.2 |
The fair values of the receivables are estimated to correspond to their book values.
| EUR million | 2016 | 2015 |
|---|---|---|
| Trade receivables | 27.3 | 24.6 |
| Receivables based on derivative instruments, hedge accounting |
0.0 | 0.7 |
| Receivables based on derivative instruments, no hedge accounting |
0.0 | 0.1 |
| Accrued income and deferred expenses |
1.5 | 1.5 |
| Other receivables | 1.2 | 3.1 |
| Receivables from associated companies and joint venturescompanies and joint ventures |
||
| Trade receivables | 0.1 | 0.2 |
| Other receivables | 0.0 | 0.0 |
| Total | 30.1 | 30.2 |
Board of Directors' report 2016 in brief
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance
32
| EUR million | Number of shares (1,000 pcs) |
Share capital |
Share premium account |
Total |
|---|---|---|---|---|
| 31 Dec. 2016 | 6,201 | 12.6 | 23.4 | 36.0 |
| 31 Dec. 2015 | 6,195 | 12.6 | 23.4 | 36.0 |
The fully paid and registered share capital of the company at the end of the financial year was EUR 12,635,152. The nominal value of a share is EUR 2.
booked to correspond the net realisation value.
| EUR million | 2016 | 2015 |
|---|---|---|
| Cash and bank receivables | 4.6 | 13.4 |
| Total | 4.6 | 13.4 |
EUR million 2016 2015
Materials and consumables 15.3 14.9 Work in progress 7.7 5.4 Finished goods 42.3 54.5 Total 65.3 74.8
A write-down of EUR 1.7 (2.0) million in inventory value was
The substantial items in the accrued income and deferred espenses and other receivables are related to raw material purchases and accruals of employment benefits.
The fair values of the receivables are estimated to correspond to their book values.
During the financial year the group recorded credit losses of EUR 0.0 (0.0) million on trade receivables.
Translation differences fund contains the translation differences arising from the translations of the financial statements prepared in foreign currency.
Revaluation reserve consists of two sub-reserves: fair value reserve for available-for-sale financial assets and hedging reserve for the revaluations of the fair values of derivative instruments used for cash flow hedges. Changes on the statement of changes in shareholder's equity relate only the revaluation reserve. Changes in the fair value reserve is null on both reporting periods.
Other reserves consist mainly of contingency reserve accounts. Contingency reserve includes the proportion transferred from retained earnings according to the decision by the Annual General Meeting. Contingency reserve totals EUR 7.2 (7.2) million.
Treasury shares include the acquisition cost of the own shares that are in the Group's possession.The company possessed 116,805 own shares that have been repurchased during 2000–2001 and 2008. 5,484 shares have been distibuted as part of the Board of Directors'remuneration in 2016. The treasury shares represent 1.8% of the company's share capital and votes. The acquisition cost of the repurchased shares totals EUR 1.6 million.
After the date of the financial statement the Board of Directors has proposed a dividend of EUR 0.70 per share to be paid.
Board of Directors' report 2016 in brief
Consolidated Financial Statements Parent Company Financial Statements
33 Corporate
| Governance | |
|---|---|
| 19. Provisions | |
|---|---|
| -- | ---------------- |
| 2016 | 2015 |
|---|---|
| 0.2 | 0.4 |
| 0.1 | –0.2 |
| 0.3 | 0.2 |
| 0.3 | 0.1 |
| –0.1 | 0.2 |
| 0.2 | 0.3 |
Provisions relate mainly to defined benefit pension plans.
Apetit Group's most significant defined benefit plans are in the parent company. Parent company's plans include one employee and about 80 pensioners. Plans are administered in pension companies. Parent company's defined benefit obligation totals to EUR 2.3 (2.2) million and plan assets totals to EUR 2.0 (2.0) million. Net liability total to EUR 0.3 (0.2) million.
| The amounts recognised in the balance sheet are determined as follows: |
|||
|---|---|---|---|
| Present value of funded obligations | 2.3 | 2.2 | |
| Present value of unfunded obligations |
– | – |
EUR million 2016 2015
| Fair value of plan assets | 2.0 | 2.0 |
|---|---|---|
| Surplus (–) / deficit (+) | 0.3 | 0.2 |
| Unrecognised actuarial gains (+) and losses (–) |
0.0 | 0.0 |
| Net liability (+) / asset (–) | 0.3 | 0.2 |
| Defined benefit obligation in the beginning of the year |
2.3 | 2.7 |
|---|---|---|
| Current service cost | 0.0 | 0.0 |
| Interest cost | 0.1 | 0.1 |
| Actuarial gains (–) and losses (+) | 0.2 | –0.3 |
| Benefits paid | –0.3 | –0.3 |
| Defined benefit obligation at the end of the year |
2.3 | 2.2 |
| Plan assets in the beginning of the year |
2.1 | 2.3 |
|---|---|---|
| Interest income | 0.0 | 0.1 |
| Expected return of plan assets | 0.2 | –0.1 |
| Contributions paid into the plans | 0.0 | 0.0 |
| Benefits paid | –0.3 | –0.3 |
| Plan assets at the end of the year | 2.0 | 2.0 |
2016 in brief
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements
34 Corporate Governance
| Defined benefit expense in the income statement | ||
|---|---|---|
| Current service cost | 0.0 | 0.0 |
| Interest cost on pension obligation | 0.1 | 0.1 |
| interest income on plan assets | 0.0 | –0.1 |
| Pension expense recognised in the income statement |
0.1 | 0.0 |
| Demographic gains and losses | 0.0 | –0.3 |
|---|---|---|
| Gains and losses from change of financial assumptions |
0.1 | 0.0 |
| Experience gains and losses | 0.1 | 0.0 |
| Return on plan assets excluding interest |
–0.2 | 0.1 |
| Remeasurements of post employment benefit obligations |
0.0 | –0.1 |
| Discount rate (%) | 1.8 | 2.5 |
|---|---|---|
| Salary growth rate (%) | 2.5 | 2.5 |
| Pension growth rate (%) | 1.7 | 1.9 |
| Inflation (%) | 1.6 | 2.0 |
| Changes in the assumptions, sensitivity 2016 |
Liability Increase % |
Decline % |
|---|---|---|
| Discount rate, change 0,5% | –3.6 | 3.8 |
| Salary growth rate, change 0.5% | 0.0 | 0.0 |
| Pension growth rate, change 0.25% | 2.1 | –2.0 |
| Life expectancy, change 5% | –2.5 | 2.6 |
| Changes in the assumptions, | Assets Increase |
Decline |
| sensitivity 2016 | % | % |
|---|---|---|
| Discount rate, change 0.5% | –3.5 | 3.8 |
| Salary growth rate, change 0.5% | 0.0 | 0.0 |
| Pension growth rate, change 0.25% | 2.0 | –1.9 |
| Life expectancy, change 5% | –2.5 | 2.7 |
| EUR million | 2016 | 2015 |
|---|---|---|
| Non-current | ||
| Loans from credit institutions | 4.8 | 1.0 |
| Other loans | 0.1 | 0.2 |
| Total | 4.9 | 1.2 |
The loans from credit institutions are floating rate.The loan in 'Other loans' carries a fixed rate of 5% p.a. Interestbearing long-term loans are denominated in euros totalling EUR 4.5 (0.8) million and in Norwegian crowns totalling EUR 0.4 (0.4) million. It is assessed that the book values of the liabilities correspond to their fair values.
| EUR million | 2016 | 2015 |
|---|---|---|
| Current | ||
| Commercial papers and loans from credit institutions |
14.2 | 35.1 |
| Other loans | 0.0 | 0.2 |
| Total | 14.2 | 35.3 |
The fair values of the liabilities are estimated to correspond to their book values.
| EUR million | 2016 | 2015 |
|---|---|---|
| Non-current | ||
| Payables based on derivative instruments, hedge accounting |
0.1 | 0.2 |
| Other liabilities | 0.1 | 0.1 |
| Total | 0.2 | 0.2 |
| Current | ||
| Trade payables | 30.2 | 22.7 |
| Payables to associated companies and joint ventures |
0.3 | 0.3 |
| Payables based on derivative instruments, no hedge accounting |
0.0 | 0.0 |
| Payables based on derivative instruments, hedge accounting |
0.0 | 0.1 |
| Accrued expenses and deferred income |
8.3 | 8.5 |
| Other liabilities | 3.7 | 4.0 |
| Total | 42.5 | 35.5 |
The material items in accrued expenses and deferred income consist of personnel expenses and accruals of material purchases.
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements
The Apetit Group is exposed to various financial risks in its normal business operations. The aim of the Group's risk management is to minimize the adverse effects of changes in the financial markets on its financial performance. The main financial risks are the liquidity risk, currency risk, the interest rate risk and the funding risk. The Group uses derivative financial instruments, among other things, to hedge against currency and interest rate risks.
The financial risk management principles observed by the Group are subject to approval by the Board of Directors of Apetit plc, and the practical implementation of these principles is the responsibility of the Financing Department, which operates under the CFO.
The Group operates in international markets and is thus exposed to currency risks arising from changes in exchange rates. The Group's currency risks concern sales, purchases and balance sheet items denominated in foreign currencies (transaction risk), and also investment in foreign subsidiaries (translation risk). The most significant currency risk is caused by the US dollar, Swedish crowns and Norwegian crowns. Other currencies causing some currency risk is mainly Canadian dollar. Group's largest currency risk is from currency derivatives, cash balances and trade payables denominated in other currency than the operating currency in Maritim companies and Group's internal financing to Maritim companies.
On 31 December 2016 the most significant net investments to foreign subsidiaries are in Norwegian crowns EUR 2.0 million and Swedish crowns EUR 0.7 million. Apetit plc has intra-group loan receivables in Norwegian crowns EUR 7.2 million and in Swedish crowns EUR 3.1 million. Group's policy is not to hedge balances related to subsidiary ownership such as net investments in foreign operations
or intra-group loans. From the beginning of 2016, Internal loans to Norway and Sweden has been treated as part of the net investment and exchange rate differences recognised on statement of comprehensive income. Statement of comprehensive income include foreign currency losses total of EUR –0.3 (in previous year financial expenses –0.3) million related to the intra-group loans.
The principle followed by the Group is to hedge the original transaction risk in the case of all financially significant currency positions. The Group's financial policy is to look on open currency positions with a value in excess of EUR 100,000 as significant. Hedging can also be made against a probable future open currency position. The instruments available in currency hedging are forward currency contracts, currency options and currency swaps. The Group's business units are responsible for currency risk hedging. Currency hedging is guided by the risk management policy specifically defined for the purpose and this is monitored by the Group's Financing Department.
Currency risk (or foreign exchange risk) arises from financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of this IFRS, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.
If on 31 December 2016 (31 December 2015) Norwegian crowns would have been 10% stronger/weaker against euro, group's net profit would have increased / decreased by EUR 0.0/0.0 (0.6/–0.5) million and equity increased/ decreased by EUR 0.6/–0.5 (0.0/0.0) million. All other variables such as interest rates remain the same on the analyses.
If on 31 December 2016 (31 December 2015) US dollar would have been 10% stronger/weaker against euro, group's net profit would have increased/decreased by EUR 0.9/–0.8 (0.2/–0.2) million and equity decreased/increased by EUR 0.2/–0.1 (0.0/0.0) million. All other variables such as interest rates remain the same on the analyses.
If on 31 December 2016 (31 December 2015) Swedish crowns would have been 10% stronger/weaker against euro, group's net profit would have increased/decreased by EUR 0.0/–0.0 (0.4/–0.3) million and equity increased/ decreased by EUR –0.3/0.2 (–0.1/0.1) million. All other variables such as interest rates remain the same on the analyses.
At the end of the financial year, the Group had a total of EUR 4.9 (1.2) million in long-term floating rate loans from financial institutions, commercial papers EUR 11.0 (32.0) million, EUR 3.2 (3.3) million in other short-term liabilities and EUR 4.6 (13.4) million in liquid cash assets. The Group has hedged against long-term and short-term interest rate risk using interest rate swap with nominal value of EUR 5.4 (6.6) million.
With the balance sheet structure on 31 December 2016 (31 December 2015), a rise/decrease of one percentage point in interest rates would have decreased / increased Group's net profit by EUR –0.1/0.1 (–0.2/0.2) million and equity increased/decreased EUR 0.0/0.0 (0.0/0.0) million.
The Group is exposed to commodity risks associated with the availability of raw materials, the time difference between procurement and sales, and price fluctuations. The most significant single commodity risks concern Grains and Oil Seeds; wheat, barley, oats, soy and rapeseed. It seeks to reduce these risks by using certain quoted commodity futures, forward agreements and options. The Group's exposure to commodity risk and correspondingly the hedging instruments expire within 12 months. At the
Board of Directors' report 2016 in brief
Consolidated Financial Statements Parent Company Financial Statements
36 Corporate Governance
end of the year commodity derivatives totalled to EUR 15.0 (20.9) million. In frozen products, fish products and fresh products businesses commodity risk arises from store chains' pricing periods, where prices are fixed for the entire pricing period. Commodity risk is mostly controlled by purchase and sales functions' co-operation. The business units are responsible for managing their commodity risks in accordance with the risk management principles laid down for them. Hedge accounting is mostly applied when hedging the raw material risk.
The Apetit Group hedges against price variations in the electricity by agreeing fixed power supply price agreements up to two years. Management of the Group's electricity portfolio has been outsourced for Finnish companies. Management of the electricity risk is governed by a separate risk policy for the procurement of the electricity. There were no electricity derivatives at the end of the year.
If on 31 December 2016 (31 December 2015) derivative based commodity prices would have been increased/ decreased by 10%, Group's net profit would have increased/decreased by EUR –0.6/0.5 (–0.1/0.1) million and equity increased/decreased by EUR –0.9/1.1 (–1.3/1.3) million. When cash flow hedge accounting is applied, the change in the fair value of derivative financial instruments is assumed to be recorded fully in equity.
The sensitivity analysis presented may not be representative, since the Group's exposure to market risks also arises from other balance sheet items than financial instruments. For example, the currency risk analyses only reflect the change in fair value of derivative instruments. Cash flows from derivatives are materially offset by commodity purchase prices denominated in foreign currency even
though the Group does not apply IAS 39 hedge accounting to all transactions made in hedging purpose.
Derivative financial instruments are only entered into with domestic and foreign banks that have a good credit rating. Commodity derivative instruments can be entered into on the appropriate commodity exchanges if necessary. Liquid assets are invested within the approved limits in targets with a good credit rating.
To minimize the operational credit risk, the business units endeavour to obtain collateral security, as credit insurance, in the event that a customer's credit rating so requires.
The Group's management evaluates that there are no significant customer, geographical or counterparty concentrations in the Group's credit and counterparty risks.
| 2016 | 2015 |
|---|---|
| 30.1 | 30.1 |
| 0.0 | 0.1 |
| 0.0 | 0.0 |
Over 6 months past due 0.0 0.0 Total 30.1 30.2
Other Group's receivables do not include credit risk.
The liquidity risk is the risk that the company may not have sufficient liquid assets or be unable to acquire enough funds to meet the needs of its business operations. The aim of liquidity risk management is to maintain sufficient liquid funds and credit facilities to ensure that there is always enough financing for the Group's business operations. The cash flows of the Group companies are netted with the aid of the Group's internal bank and Group accounts. To manage liquidity, the Group has a commercial paper programme worth EUR 100 (50) million and also
long-term binding credit facilities agreed with financial institutions; a total of EUR 40 (45) million was available in credit on 31 December 2016. Credit facilities expire for EUR 25 million on June 2018, for EUR 15 million on June 2020 and for EUR 5 million on June 2022. The total amount of commercial papers issued were EUR 11.0 (32.0) million. Liquidity risk management is the responsibility of the parent company's Financing Department.
| EUR million | 0–3 months |
4–12 months |
1–5 years |
Over 5 years |
|---|---|---|---|---|
| Loans from financial institutions and other loans |
–11.0 | –0.9 | –4.7 | –0.7 |
| Trade payables | –30.5 | – | – | – |
| Derivative liabilities | 0.0 | 0.0 | –0.1 | – |
| Total | –41.5 | –0.9 | –4.8 | –0.7 |
Group's derivative liabilities and interest-bearing loan repayments and interest cash flows on 31 December 2015
| EUR million | 0–3 months |
4–12 months |
1–5 years |
Over 5 years |
|---|---|---|---|---|
| Loans from financial institutions and other loans |
–32.0 | –1.2 | –1.2 | –0.1 |
| Trade payables | –22.9 | – | – | – |
| Derivative liabilities | 0.0 | –0.1 | –0.2 | – |
| Total | –55.0 | –1.3 | –1.5 | –0.1 |
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements 37
Corporate Governance
The main objective for capital risk management is to secure the Group's operational preconditions in all circumstances. The capital structure of the Group is reviewed by the Board of Directors on a regular basis. Apetit plc does not have a public credit rating.
The amounts of the Group's interest bearing debts fluctuate significantly during the year due to a seasonality of the employed working capital. Normally the employed working capital is at highest level during the last quarter of the year and at lowest level during the spring and summer.
| EUR million | 2016 | 2015 |
|---|---|---|
| Interest bearing liabilities | 19.1 | 36.5 |
| Liquid assets | 4.6 | 13.4 |
| Interest bearing net debt | 14.5 | 23.0 |
| Equity | 117.7 | 121.0 |
| Interest bearing net debt and equity total |
132.3 | 144.0 |
| Gearing, % | 12.4 | 19.0 |
| Equity ratio, % | 64.1 | 61.1 |
| Liabilities secured by pledges | ||
|---|---|---|
| Loans from financial institutions 0.4 0.5 |
|---|
| ------------------------------------------------- |
| Real estate mortgages | 2.5 | 2.8 |
|---|---|---|
| Other securities given | 2.2 | 1.3 |
| Guarantees | 9.4 | 9.3 |
| Within one year | 3.9 | 3.5 |
|---|---|---|
| After one year but not more than five years |
4.9 | 2.3 |
| After more than five years | 1.8 | 1.9 |
| Total | 10.6 | 7.8 |
The present value of minimum lease payments includes real estate leases a total of EUR 9.6 (7.0) million.
| The present value of proceeds from the sale of shares in |
||
|---|---|---|
| the joint book-entry | 0.7 | 0.7 |
| Food Solutions | 1.0 | 2.2 |
|---|---|---|
| Oilseed Products | – | 0.7 |
| Seafood | – | 0.9 |
The group is liable to adjust value added tax deductions on 2008–2016 property investments, if taxable use of the properties decreases. The maximum value of the liability is EUR 2.0 (1.8) million and liability is valid untill 2026.
Board of Directors' report
Consolidated Financial Statements Parent Company
Financial Statements
38 Corporate Governance
| EUR million | 2016 | 2015 |
|---|---|---|
| Currency derivatives, no hedge accounting | 8.1 | 15.1 |
| Currency derivatives, hedge accounting | – | 1.6 |
| Commodity derivatives, no cash flow hedge accounting | 2.4 | 0.7 |
| Commodity derivatives, cash flow hedge accounting | 12.6 | 20.9 |
| Interest rate swaps, cash flow hedge accounting | 5.4 | 6.6 |
The Group applies cash flow hedge accounting to commodity and currency derivatives. Electricity derivatives expire in three years being more emphasized to the two subsequent years from the balance sheet date. Other derivatives become due within one year. Due to cash flow hedge accounting EUR –0.5 (–0.3) million was recognised in equity. Group's derivatives affected the profit and loss statement related to net sales EUR 0.0 (0.0) million, purchases and other operating income and expense EUR –0.4 (0.3) million, financial income and expenses EUR 0.1 (–0.1) million and taxes EUR 0.1 (0.0) million. Profit and loss statement effects of cash flow hedges are materially netted against the opposing fair value change of the hedged item.
| EUR million | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Assets 2016 | ||||
| Currency derivatives, no hedge accounting | – | 0.0 | – | 0.0 |
| Commodity derivatives, hedge accounting | 0.0 | – | – | 0.0 |
| Assets 2015 | ||||
| Currency derivatives, no hedge accounting | – | 0.1 | – | 0.1 |
| Commodity derivatives, no hedge accounting | 0.0 | – | – | 0.0 |
| Commodity derivatives, hedge accounting | 0.7 | – | – | 0.7 |
| 0.0 | ||||
| Commodity derivatives, no hedge accounting | 0.0 | – | – | 0.0 |
| Interest rate swaps, no hedge accounting | – | 0.1 | – | 0.1 |
| Interest rate swaps, hedge accounting | – | 0.0 | – | 0.0 |
| Liabilities 2015 | ||||
| Currency derivatives, hedge accounting | – | 0.0 | – | 0.0 |
| Commodity derivatives, hedge accounting | 0.2 | – | – | 0.2 |
| Liabilities 2016 Currency derivatives, no hedge accounting |
– | 0.0 | – |
Interest rate swaps – –0.1 – –0.1
During the year there has not been any transfers between levels 1 and 2.
Level 1 fair values are based on prices obtained from active markets.
Level 2 fair values are based on other input data and commonly accepted fair value models. The input data is based on observable market prices.
Level 3 fair values are mostly based on other input data that are not for the most part based on observable market prices, instead management estimates and commonly accepted fair value models.
Board of Directors' report
Consolidated Financial Statements
Parent Company Financial Statements Corporate Governance
39
| Parent company and subsidiary | Group's share of ownership |
Group's share of votes |
|
|---|---|---|---|
| relations of the Group | Domicile | % | % |
| Apetit plc (parent company) | Finland | ||
| Apetit Ruoka Oy | Finland | 100.0 | 100.0 |
| Apetit Kala Oy | Finland | 100.0 | 100.0 |
| Safu Oy, non operative | Finland | 100.0 | 100.0 |
| Kiinteistö Oy Kivikonlaita | Finland | 100.0 | 100.0 |
| Apetit Suomi Oy | Finland | 100.0 | 100.0 |
| Maritim Food AS | Norway | 100.0 | 100.0 |
| Maritim Food Sweden AB | Sweden | 100.0 | 100.0 |
| Sandanger AS | Norway | 100.0 | 100.0 |
| Avena Nordic Grain Oy | Finland | 90.0 1) |
90.0 1) |
| Avena Kantvik Oy | Finland | 90.0 1) |
90.0 1) |
| OOO Avena St. Petersburg | Russia | 90.0 1) |
90.0 1) |
| UAB Avena Nordic Grain | Lithuania | 90.0 1) |
90.0 1) |
| Avena Nordic Grain OÜ | Estonia | 90.0 1) |
90.0 1) |
| TOO Avena Astana | Kazakhstan | 90.0 1) |
90.0 1) |
| OOO Avena-Ukraine | Ukraine | 1) 90.0 |
1) 90.0 |
| SIA Avena Nordic Grain | Latvia | 90.0 1) |
90.0 1) |
| 1 non-operative company | Finland | 100.0 | 100.0 |
1) In addition Apetit owns indirectly through Foison Oy 3.0% of the shares in Avena Nordic Grain Oy.
The administrative bodies consists of the members of the Supervisory Board, the Board of Directors, the CEO and other members of the corporate management of the parent company.
The chairmans of the Supervisory Board was paid EUR 16,500 (16,200), the deputy chairmans EUR 12,780 (13,380) and the members EUR 300 to 1,200 (300 to 1,200) in fees and allowances.
The members of the Board of Directors and CEO were paid in salaries, wages and fringe benefits as follows:
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Veijo Meriläinen, chairman of the Board since 16 April 2015 | 46 | 35 |
| Aappo Kontu, chairman of the Board until 16 April 2015, deputy chairman of the Board since 16 April 2015 |
28 | 35 |
| Lasse Aho, member of the Board since 16 April 2015 | 23 | 17 |
| Esa Härmälä, member of the Board | 23 | 23 |
| Seppo Laine, member of the Board since 28 April 2016 | 17 | – |
| Tuomo Lähdesmäki, member of the Board until 28 April 2016 | 6 | 23 |
| Samu Pere, member of the Board until 16 April 2015 | – | 6 |
| Niko Simula, member of the Board since 16 April 2015 | 23 | 18 |
| Helena Walldén, member of the Board until 16 April 2015 | – | 6 |
| Veijo Meriläinen, CEO until 15 March 2015 | – | 75 |
| Juha Vanhainen, CEO since 16 March 2015 | 446 | 288 |
| Corporate management, six members, one employed since Fall 2016 | 861 | 698 |
The remuneration and incentive plans for management are made up of monetary remuneration, fringe and pension benefits, and performance-related compensation, by which the degree of success for the year is measured. The level of these plans as a whole is compared annually with the general market level. The Board of Directors of Apetit plc decides on the principles for the remuneration and incentive plans for the CEO and other members of the management. The Board also confirms annually the indicators to be used for the plans and their level in relation to the targets set. The indicators also include key figures connected with annual budgets as well as development targets selected on a function-specific basis. In 2016, indicators for the CEO and management were among others the Group´s and applicable business unit's operational EBIT. The maximum amount of performance-related compensation corresponds to 60 per cent of annual salary in the case of the CEO, and 50 per cent of annual salary for other management. The CEO and two member of the corporate management has separate operatinal EBIT based compensation scheme for periods 2015–2017 and 2016–2018, where the maximum compensation corresponds to yearly salary in the case of CEO and 8 months salary in the case of other members. Payment will take place at the end of the scheme in shares (50%) and in cash (50%). In addition, the CEO has acquired 10,000 Apetit Plc shares, and in return Apetit will compensate equivalent amount in shares (50%) and in cash (50%) after three years of employment.
The members of the Board do not have any pension agreements with the Group companies. The agreed retirement age for the CEO is 62 years.
Board of Directors' report 2016 in brief
Consolidated Financial Statements
Parent Company Financial Statements Corporate Governance
40
The Group is not aware of any events of material importance after the balance sheet date that might have affected the preparation of the financial statements.
| Post–employment benefits | ||
|---|---|---|
| EUR 1,000 | 2016 | 2015 |
| Pension benefits, amount transferred to income statement | ||
| Juha Vanhainen, CEO | 105 | 89 |
The key conditions of the CEO's terms of service are defined in his contract. The period of notice for the CEO is six months. Should the CEO be given notice by the company, he will be entitled to a severance package equivalent to 12 months' pay.
The Group did not have any loan receivables from the group key management.
| EUR million | 2016 | 2015 |
|---|---|---|
| Sales to associated companies | 0.8 | 1.1 |
| Purchases from associated companies | 3.0 | 7.8 |
| Trade receivables and other receivables from associated companies | 0.1 | 0.2 |
| Trade payables and other liabilities to associated companies | 0.3 | 0.3 |
The sales and purchases of goods and services to and from the associated companies are based on valid market prices.
2016
Board of Directors' report in brief
Consolidated Financial Statements
Finance and financial position
Parent Company Financial Statements
41 Corporate Governance
| EUR million | 2016 | 2015 | 2014 | 2013 | 2012 | EUR million | 2016 | 2015 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | 386.5 | 380.8 | 384.7 | 387.3 | 378.2 | Equity ratio, % | 64.1 | 61.1 | 69.7 | 70.3 | 60.6 |
| Net gearing, % | 12.4 | 19.0 | –1.3 | 8.4 | 22.0 | ||||||
| Exports from Finland | 69.6 | 74.7 | 82.7 | 64.0 | 73.0 | ||||||
| Non-current assets | 83.6 | 79.1 | 88.5 | 105.2 | 110.9 | ||||||
| Operating profit | 0.6 | –1.0 | –7.7 | 3.8 | 4.7 | Inventories | 65.3 | 74.8 | 53.8 | 64.0 | 79.4 |
| % of net sales | 0.1 | –0.3 | –2.0 | 1.0 | 1.2 | Other current assets | 34.8 | 44.0 | 43.4 | 35.2 | 42.6 |
| R & D expenses | 0.9 | 0.8 | 0.8 | 0.9 | 1.0 | Shareholders' equity | 117.7 | 121.0 | 129.4 | 143.6 | 141.5 |
| % of net sales | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | Distributable funds | 66.3 | 67.3 | 73.4 | 86.0 | 88.5 |
| Interest-bearing liabilities | 19.1 | 36.5 | 12.0 | 14.9 | 36.4 | ||||||
| Financial income (+)/ expenses (–), net |
–0.9 | –1.5 | –2.2 | –0.2 | –1.0 | Non-interest-bearing liabilities | 46.8 | 40.4 | 44.3 | 45.8 | 55.0 |
| Balance sheet total | 183.7 | 197.9 | 185.7 | 204.4 | 232.9 | ||||||
| Profit before taxes | 0.3 | –3.5 | –8.1 | 9.3 | 7.5 | ||||||
| % of net sales | 0.1 | –0.9 | –2.1 | 2.4 | 2.0 | Other indicators | |||||
| Profit for the period | 1.2 | –4.6 | –8.7 | 9.3 | 6.7 | EUR million | 2016 | 2015 | 2014 | 2013 | 2012 |
| % of net sales | 0.3 | –1.2 | –2.3 | 2.4 | 1.8 | ||||||
| Gross investments excluding acquisitions |
9.7 | 9.1 | 2.5 | 3.0 | 3.9 | ||||||
| Attributable to | % of net sales | 2.5 | 2.4 | 0.7 | 0.8 | 1.0 | |||||
| Shareholders of the parent company |
1.2 | –4.3 | –8.0 | 10.1 | 6.6 | ||||||
| Non-controlling interests | – | –0.3 | –0.7 | –0.8 | 0.1 | Acquisitions and other investments in shares |
0.0 | 0.1 | 0.0 | – | 9.7 |
| Return on equity, % (ROE) | 1.0 | –3.7 | –6.5 | 6.5 | 4.8 | % of net sales | 0.0 | 0.0 | 0.0 | – | 2.6 |
| Return on capital employed, % (ROCE) |
0.9 | –1.5 | –4.2 | 5.9 | 5.6 | Average number of personel | 729 | 725 | 723 | 782 | 721 |
Share indicators
2016 in brief
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements
42 Governance
Corporate
Effective dividend yield 2012–2016, %
Dividend / share 2012–2016, EUR
| 2016 | 2015 | 2014 | 2013 | 2012 | |
|---|---|---|---|---|---|
| Earnings and dividend | |||||
| Earnings per share, EUR | 0.19 | –0.69 | –1.29 | 1.63 | 1.07 |
| Dividend per share, EUR | 0.70 1) |
0.70 | 0.70 | 1.00 | 0.90 |
| Dividend per earnings, % | 368.4 | – | – | 61.3 | 84.1 |
| Effective dividend yield, % | 5.4 | 5.5 | 5.2 | 5.1 | 6.3 |
| P/E ratio | 68.3 | – | – | 11.9 | 13.4 |
| Shareholders' equity per share, EUR |
19.00 | 19.53 | 20.70 | 22.90 | 22.37 |
| Share performance, EUR | |||||
| Lowest price during the year | 11.64 | 12.61 | 13.56 | 14.41 | 12.38 |
| Highest price during the year | 14.50 | 16.80 | 21.63 | 19.64 | 16.77 |
| Average price during the year | 12.97 | 14.12 | 16.42 | 16.77 | 14.48 |
| Share price at the end of the year |
12.97 | 12.65 | 13.59 | 19.45 | 14.32 |
| Share turnover | |||||
| Share turnover (1,000 pcs) | 561 | 696 | 1,031 | 700 | 833 |
| Turnover ratio, % | 8.9 | 11.0 | 16.3 | 11.1 | 13.2 |
| Share capital, EUR million | 12.6 | 12.6 | 12.6 | 12.6 | 12.6 |
| Market capitalisation, EUR million |
81.9 | 79.9 | 85.9 | 122.9 | 90.5 |
| Dividends, EUR million | 4.3 1) | 4.3 | 4.3 | 6.2 | 5.6 |
| Number of shares | |||||
| Number of shares | 6,317,576 | 6,317,576 | 6,317,576 | 6,317,576 | 6,317,576 |
| Average adjusted number of shares |
6,197,815 | 6,192,435 | 6,188,416 | 6,220,618 | 6,187,576 |
| Adjusted number of shares at the end of the period |
6,200,771 | 6,195,287 | 6,190,298 | 6,187,576 | 6,187,576 |
| Number of own shares | 116,805 | 122,289 | 127,278 | 130,000 | 130,000 |
1) Board's proposal
Note is not part of the official consolidated financial statements.
report
43
| Profit/loss | ||
|---|---|---|
| Return on equity (ROE), % | = Total equity, average for the year |
× 100 |
| Return on capital | Operating profit + share of profits of associated companies = |
× 100 |
| employed (ROCE), % | Capital employed, average for the year | |
| Operational return on capital | Operational EBIT + share of profits of associated companies = |
× 100 |
| employed (ROCE), % | Capital employed, average for each quarter | |
| Equity ratio, % | Total equity = |
× 100 |
| Total assets – advance payments received | ||
| Gearing, % | Interest-bearing net liabilities = |
× 100 |
| Total equity | ||
| Interest-bearing net liabilities | = Interest-bearing liabilities – cash and cash equivalents – short term investments |
|
| Earnings per share | Profit/loss for the year attributable to the shareholders of the parent = |
|
| Weighted average number of outstanding shares | ||
| Dividend per share | Dividend for the period = |
|
| Basic number of outstanding shares on 31 December | ||
| Dividend per earnings, % | Dividend per share = |
× 100 |
| Earnings per share | ||
| Effective dividend yield, % | Dividend per share = |
× 100 |
| Share price at the end of the period | ||
| Price/earnings ratio (P/E) | Share price at the end of the period = |
|
| Earnings per share | ||
| Shareholders' equity per share | Equity attributable to the equity holders of the parent company = |
|
| Basic number of outstanding shares on 31 December | ||
| Market capitalisation | = Basic number of outstanding shares × share price at the end of the period |
|
| Operational EBITDA | = Operational EBIT – depreciations, impairments and profit of the associated companies |
|
| Operational EBIT | EBIT excluding restructuring expenses, any significant impairment on goodwill or other = balance sheet items or reversal of impairment, the profit of the associated companies not related to operating segments or other extraordinary and material items. |
2016
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements
44 Governance
Corporate
| Number of shares |
% | Number of votes |
% | |
|---|---|---|---|---|
| Jussi Capital Oy | 714,039 | 11.3 | 714,039 | 11.5 |
| Valio's Pension Fund | 520,108 | 8.2 | 520,108 | 8.4 |
| Eela Esko | 392,392 | 6.2 | 392,392 | 6.3 |
| Nordea Nordic Small Cap Fund | 347,860 | 5.5 | 347,860 | 5.6 |
| EM Group Oy | 214,520 | 3.4 | 214,520 | 3.5 |
| Central Union of Agricultural Producers and Forest Owners |
125,485 | 2.0 | 125,485 | 2.0 |
| Jussi Invest Oy | 101,000 | 1.6 | 101,000 | 1.6 |
| Norvestia Plc | 74,294 | 1.2 | 74,294 | 1.2 |
| Säkylä municipality | 59,822 | 0.9 | 59,822 | 1.0 |
| Ilmarinen Mutual Pension Insurance Company |
53,800 | 0.9 | 53,800 | 0.9 |
| Top 10 sub-total | 2,603,320 | 41.2 | 2,603,320 | 42.0 |
| Nominee-registered shares | 293,462 | 4.6 | 293,462 | 4.7 |
| Other shareholders | 2,916,645 | 46.2 | 2,916,645 | 47.0 |
| External ownership total | 6,200,771 | 98.2 | 6,200,771 | 100.0 |
| Shares owned by the company | 116,805 | 1.8 | ||
| Total | 6,317,576 | 100.0 |
| Shares | Number of | % of | Number of | % of shares |
|---|---|---|---|---|
| shareholders | shareholders | shares | ||
| 1–100 | 5,983 | 53.1 | 244,966 | 3.9 |
| 101–500 | 3,966 | 35.2 | 964,654 | 15.3 |
| 501–1,000 | 804 | 7.1 | 595,740 | 9.4 |
| 1,001–5,000 | 454 | 4.0 | 889,137 | 14.1 |
| 5,001–10,000 | 31 | 0.3 | 205,234 | 3.2 |
| 10,001–50,000 | 23 | 0.2 | 419,894 | 6.6 |
| 50,001–100,000 | 4 | 0.0 | 264,235 | 4.2 |
| 100,001–500,000 | 7 | 0.1 | 1,499,569 | 23.7 |
| 500,001– | 2 | 0.0 | 1,234,147 | 19.5 |
| Total | 11,274 | 100.0 | 6,317,576 | 100.0 |
Distribution of ownership on 1 February 2017
| % of share-holders | % of shares |
|---|---|
| 2.8 | 23.6 |
| 0.2 | 7.3 |
| 0.3 | 10.9 |
| 95.5 | 48.1 |
| 1.1 | 5.4 |
| 0.2 | 0.0 |
| 4.6 | |
| 100.0 | 100.0 |
Distribution of shareholdings percentage of shares, %
Note is not part of the official consolidated financial statements.
Board of Directors'
report
Consolidated Financial Statements
Parent Company Financial Statements
45 Corporate Governance
| EUR 1,000 | Note | 2016 | 2015 |
|---|---|---|---|
| Other operating income | (1) | 583 | 1,153 |
| Personnel expenses | (2) | –1,973 | –1,699 |
| Depreciation and impairments | (3) | –267 | –292 |
| Other operating expenses | (4) | –1,189 | –1,201 |
| Operating profit | –2,846 | –2,039 | |
| Financial income and expenses | (5) | 5,848 | –993 |
| Profit before appropriations and taxes | 3,002 | –3,033 | |
| Group contributions | (6) | – | 1,237 |
| Change in deferred tax assets | (7) | 330 | 54 |
| Net profit | 3,333 | –1,742 |
| 31 Dec. | 31 Dec. | ||
|---|---|---|---|
| EUR 1,000 | Note | 2016 | 2015 |
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | (8) | 139 | 189 |
| Tangible assets | (9) | 3,641 | 3,754 |
| Investments in Group companies | (10, 11) | 22,780 | 22,780 |
| Investments in associated companies | (10, 11) | 12,246 | 12,245 |
| Other investments and receivables | (10, 11) | 42 | 71 |
| Total non-current assets | 38,847 | 39,038 | |
| Current assets | |||
| Long-term receivables | (12) | 20,421 | 18,183 |
| Deferred tax assets | (14) | 918 | 588 |
| Current receivables | (13) | 59,138 | 70,634 |
| Cash and cash equivalents | 3,995 | 12,814 | |
| Total current assets | 84,472 | 102,219 | |
| Total assets | 123,319 | 141,257 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity | (15) | ||
| Share capital | 12,635 | 12,635 | |
| Share premium account | 23,391 | 23,391 | |
| Contingency reserve | 7,232 | 7,232 | |
| Retained earnings | 55,716 | 61,795 | |
| Profit for the period | 3,333 | –1,742 | |
| Total equity | 102,307 | 103,311 | |
| Appropriations | 10 | 10 | |
| Liabilities | (16) | ||
| Long-term interest bearing liabilities | 4,400 | 600 | |
| Long-term non-interest bearing liabilities | 103 | – | |
| Current interest bearing liabilities | 15,785 | 36,683 | |
| Current non-interest bearing liabilities | 714 | 653 | |
| Total liabilities | 21,002 | 37,935 | |
| Total equity and liabilities | 123,319 | 141,257 |
Consolidated Financial Statements Board of Directors'
Parent Company Financial Statements
46 Corporate Governance
report
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Cash flow from operating activities | ||
| Profit before extraordinary items | 3,002 | –3,033 |
| Adjustments 1) | –5,868 | 556 |
| Change in working capital | ||
| Change in non-interest-bearing current receivables | –996 | 1,343 |
| Change in non-interest-bearing current liabilities | 88 | –1,763 |
| Cash flow from operating activities before financial items and taxes |
–3,774 | –2,896 |
| Dividends received | 4,420 | 5,041 |
| Interests paid | –305 | –229 |
| Interests received | 1,175 | 1,050 |
| Taxes paid | – | – |
| Cash flow from operating activities (A) | 1,516 | 2,966 |
| Cash flow from investing activities | ||
| Investments in tangible and intangible assets | –104 | –108 |
| Proceeds from sales of tangible and intangible assets | 1 | 790 |
| Investments in subsidiaries | – | –1,729 |
| Investments in associated companies | – | –119 |
| Investments in other investments | 314 | – |
| Dividends received | 317 | 1,866 |
| Cash flow from investing activities (B) | 527 | 701 |
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Cash flow before financing | 2,044 | 3,667 |
| Cash flow from financing activities | ||
| Change in long-term loans | 3,903 | –1,200 |
| Change in short-term loans | –21,000 | 24,000 |
| Change in long-term subsidiary financing | –2,238 | 201 |
| Change in short-term subsidiary financing | 11,572 | –26,534 |
| Dividends paid | –4,337 | –4,334 |
| Group contributions, received | 1,237 | 4,315 |
| Cash flow from financing activities (C) | –10,863 | –3,551 |
| Net increase/decrease in cash and cash equivalents | –8,819 | 116 |
| Cash and cash equivalents at beginning of financial year | 12,814 | 12,698 |
| Cash and cash equivalents at end of financial year | 3,995 | 12,814 |
Change in receivables and liabilities of the Group account –971 (–344) is included in the change of the working capital.
1) Adjustments to cash flow from operating activities:
| Depreciation and impairments | 267 | 292 |
|---|---|---|
| Financial income and expenses | –5,848 | 993 |
| Gains and losses on sales of tangible and intangible assets | –285 | –729 |
| Other adjustments | –2 | 0 |
| Total | –5,868 | 556 |
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements
47 Corporate Governance
Fixed assets have been capitalised at their acquisition cost. Fixed assets have been depreciated on a straight line basis according to plan, based on useful economic life.
In 2015 an impairment in subsidiary shares a total of EUR 4.3 million have been recognised on the financial statements of the parent company. In 2015 financial expenses include subsidiary loan conversion to equity a total of EUR 4.1 million.
Receivables and payables denominated in foreign currencies have been translated into euros at the European Central Bank middle rate on the closing day. Exchange rate differences caused by short-term receivables and liabilities have been charged to the profit and loss account. Unrealised exchange rate losses and gains of long-term receivables and liabilities have also been charged to the profit and loss account.
Deferred tax liabilities and assets are calculated on the basis of the timing differences between the closing date and the taxation date, using the tax rate for subsequent years confirmed on the closing date.
In line with its risk management policy, Apetit uses a variety of derivatives for hedging against a number of risks arising from foreign currencies, interest rates and commodity prices. The market values of derivatives are entered under derivative contracts in the other notes to the accounts and indicate what the result would have been if the derivative position had been closed at market prices on the date of closing of the accounts.
Unrealised losses on derivative instruments are recognised on financial costs. Unrealised gains are not recognised on profit and loss statement, gains are recognised on financial income at the moment when derivative instrument is realised.
Statutory pension coverage for corporate personnel is covered by pension insurance. Special pension insurance policies provide additional pension coverage under the Trust rules for former employees and retired staff previously covered by the Lännen Tehtaat Staff Pension Trust.
The retirement age for the parent company's CEO has been set at 62 years.
Consolidated Financial Statements Board of Directors'
Parent Company Financial Statements
48 Governance
Corporate
report
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Gains from sales of non current assets |
285 | 729 |
| Rental income | 141 | 267 |
| Service fees | 146 | 145 |
| Other | 11 | 12 |
| Total | 583 | 1,153 |
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Personnel expenses | ||
| Wages and salaries | 1,639 | 1,493 |
| Pension expenses | 273 | 164 |
| Other social security expenses | 61 | 43 |
| Total | 1,973 | 1,699 |
Salaries, wages and benefits of the administrative bodies are presented in Note 25 of the Notes to the consolidated financial statements.
| Average number of personnel | 11 | 11 |
|---|---|---|
| ----------------------------- | ---- | ---- |
The retirement age of the CEO is 62 years.
Depreciation according to plan has been calculated from the original acquisition cost on a straight-line-basis. Tangible and intangible assets are subject to straightline depreciation over the period of their useful lives. Deprecitions begin from the month that they are available fo use.
| Intangible rights | 5 or 10 years |
|---|---|
| Other capitalised long-term expenses | 5 or 10 years |
| Buildings and structure | 20–30 years |
| Other buildings and constructions | 5 or 10 years |
| Machinery and equipment | 5 or 10 years |
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Depreciation according to plan | ||
| Intangible rights | 12 | 23 |
| Other capitalised long term expenses |
34 | 39 |
| Buildings and structure | 197 | 206 |
| Machinery and equipment | 16 | 18 |
| Total | 259 | 286 |
| Impairments | ||
| Immaterial goods | 1 | – |
| Other capitalised longterm expenses | 2 | – |
| Machinery and equipment | 4 | 6 |
| Total | 8 | 6 |
| Depreciation and impairments according to plan total |
267 | 292 |
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Rental expenses | 25 | 20 |
| Expenses of administration | 509 | 529 |
| Other operating expenses | 655 | 651 |
| Total | 1,189 | 1,201 |
| Audit fees | 76 | 67 |
report 2016 in brief
Consolidated Financial Statements Board of Directors'
Parent Company Financial Statements 49
Corporate Governance
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Dividend income | ||
| From Group companies | 4,416 | 5,027 |
| From associated companies | 317 | 1,866 |
| From others | 4 | 14 |
| Total | 4,737 | 6,907 |
| Interest income from long term investments |
||
| From Group companies | 193 | 234 |
| Other interest and financial income | ||
| From Group companies | 981 | 814 |
| From foreign currency gains | 266 | 47 |
| From others | 1 | 2 |
| Total | 1,248 | 863 |
| Financial income, total | 6,177 | 8,005 |
| Reduction in value of investments held as non-current assets |
– | 4,303 |
| Interest expenses and other financial expenses |
||
| To foreign currency losses | 25 | 366 |
| From interest expenses | 87 | 57 |
| To others | 218 | 172 |
| Subsidiary loan convertion to equity | – | 4,100 |
| Total | 329 | 4,694 |
| Financial expenses total | 329 | 8,998 |
| Financial income and expenses, total |
5,848 | –993 |
| 6. Appropriations | |
|---|---|
| ------------------- | -- |
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Group contributions, received | – | 1,237 |
| 7. Income taxes | ||
| EUR 1,000 | 2016 | 2015 |
| Income taxes on appropriations | – | –247 |
| Income taxes for the financial year | – | 247 |
| Change in deferred tax assets | 330 | 54 |
| Total | 330 | 54 |
50 Governance
Corporate
| EUR 1,000 | Intangible rights |
Other capitalised long-term expenses |
Assets under construction |
Total |
|---|---|---|---|---|
| Acquisition cost 1 Jan. | 162 | 463 | – | 625 |
| Additions | – | – | – | – |
| Disposals | – 2 |
–16 | – | –18 |
| Acquisition cost 31 Dec. | 160 | 448 | – | 608 |
| Accumulated depreciation 1 Jan. | –112 | –324 | – | –437 |
| Disposals, accumalated depreciation | 2 | 16 | – | 18 |
| Impairments | – 1 |
– 2 |
– | – 3 |
| Depreciation for the period | –12 | –34 | – | –46 |
| Accumulated depreciation 31 Dec. | –124 | –345 | – | –469 |
| Book value 31 Dec. 2016 | 36 | 103 | – | 139 |
| EUR 1,000 | Intangible rights |
Other capitalised long-term Assets under expenses construction |
Total | |
|---|---|---|---|---|
| Acquisition cost 1 Jan. | 103 | 322 | 195 | 624 |
| Additions | – | 18 | – | 18 |
| Disposals | – | –12 | – | –12 |
| Transfer difference and other changes | 59 | 136 | –195 | – |
| Acquisition cost 31 Dec. | 162 | 463 | – | 630 |
| Accumulated depreciation 1 Jan. | –89 | –297 | – | –392 |
| Disposals, accumalated depreciation | – | 12 | – | 12 |
| Depreciation for the period | –23 | –39 | – | –62 |
| Accumulated depreciation 31 Dec. | –112 | –324 | – | –442 |
| Book value 31 Dec. 2015 | 49 | 139 | – | 189 |
report 2016 in brief
Consolidated Financial Statements Board of Directors'
Parent Company Financial Statements
51 Governance
Corporate
| EUR 1,000 | Land and water areas |
Buildings and structures |
Machinery and equipment |
Other tangible assets |
Construc tion in progress |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan. | 2,260 | 4,769 | 339 | 57 | – | 7,425 |
| Additions | – | – | – | – | 104 | 104 |
| Disposals | – | – | –11 | – | – | –11 |
| Acquisition cost 31 Dec. | 2,260 | 4,769 | 328 | 57 | 104 | 7,518 |
| Accumulated depreciation 1 Jan. | – | –3,389 | –282 | – | – | –3,671 |
| Disposals, accumalated depreciation | – | – | 11 | – | – | 11 |
| Impairments | – | – | –4 | – | – | –4 |
| Depreciation for the period | – | –197 | –16 | – | – | –213 |
| Accumulated depreciation 31 Dec. | – | –3,586 | –291 | – | – | –3,877 |
| Book value 31 Dec. 2016 | 2,260 | 1,183 | 37 | 57 | 104 | 3,641 |
| EUR 1,000 | Total |
|---|---|
| Revaluation includes in book value of land and water areas. |
|
| Land and water areas 1 Jan. and 31 Dec. | 1,850 |
| EUR 1,000 | Land and water areas |
Buildings and structures |
Machinery and equipment |
Other tangible assets |
Construc tion in progress |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan. | 2,260 | 5,868 | 401 | 63 | – | 8,655 |
| Additions | – | 90 | – | – | – | 90 |
| Disposals | – | –1,190 | –63 | –6 | – | –1,258 |
| Acquisition cost 31 Dec. | 2,260 | 4,769 | 339 | 57 | – | 7,487 |
| Accumulated depreciation 1 Jan. | – | –4,350 | –318 | – | – | –4,730 |
| Disposals, accumalated depreciation | – | 1,167 | 54 | – | – | 1,222 |
| Depreciation for the period | – | –206 | –18 | – | – | –224 |
| Accumulated depreciation 31 Dec. | – | –3,389 | –282 | – | – | –3,733 |
| Book value 31 Dec. 2015 | 2,260 | 1,380 | 57 | 57 | – | 3,754 |
Board of Directors' report 2016 in brief
Consolidated Financial Statements
| EUR 1,000 | Holdings in Group companies |
Holdings in associated companies |
Other investments |
Other receivables |
Total |
|---|---|---|---|---|---|
| Acquisition cost 1 Jan. | 22,780 | 12,245 | 69 | 1 | 35,095 |
| Additions | – | 0 | – | – | 0 |
| Disposals | – | – | –29 | – | –29 |
| Impairments | – | – | – | – | – |
| Book value 31 Dec. 2016 | 22,780 | 12,245 | 40 | 1 | 35,066 |
| EUR 1,000 | Holdings in Group companies |
Holdings in associated companies |
Other investments |
Other receivables |
Total |
|---|---|---|---|---|---|
| Acquisition cost 1 Jan. | 25,354 | 12,126 | 69 | 31 | 37,580 |
| Additions | 1,729 | 119 | – | – | 1,848 |
| Disposals | – | – | – | –30 | –30 |
| Impairments | –4,303 | – | – | – | –4,303 |
| Book value 31 Dec. 2015 | 22,780 | 12,245 | 69 | 1 | 35,095 |
| EUR 1,000 | Domicile | Holding-% |
|---|---|---|
| Group companies | ||
| Apetit Ruoka Oy | Säkylä | 100.0 |
| Apetit Kala Oy | Kuopio | 100.0 |
| Apetit Suomi Oy | Säkylä | 100.0 |
| Avena Nordic Grain Oy | Helsinki | 90.0 |
| Maritim Food AS | Norway | 100.0 |
| 1 non-operative company | Säkylä | 100.0 |
| Associated companies | ||
|---|---|---|
| Sucros Ltd | Helsinki | 20.0 |
| Foison Oy | Helsinki | 30.0 |
| Book value EUR 1,000 |
|
|---|---|
| Shares and holdings | 40 |
| Connection fees, long term receivables |
1 |
| Total | 41 |
report
Board of Directors'
Consolidated Financial Statements
Parent Company Financial Statements
53 Corporate Governance
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Loans receivables from Group companies |
20,421 | 18,183 |
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Accounts receivable | 23 | 8 |
| Amounts owed by the Group companies |
||
| Accounts receivable | 96 | 104 |
| Loans receivable | 54,880 | 66,211 |
| Group account receivables | 3,979 | 2,905 |
| Group contribution receivables | – | 1,237 |
| Other receivables | 95 | 95 |
| Total | 59,049 | 70,553 |
| Amounts owed by the associated companies |
||
| Accounts receivable | 16 | 2 |
| Personel expenses | 3 | 55 |
| Other | 47 | 16 |
| Total | 50 | 71 |
Current receivables total 59,138 70,634
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Deferred tax assets, carry forward of unused tax losses |
918 | 588 |
Deferred tax asset of EUR 330,5 thousands has been recognised in 2016 for taxable losses.
| 2016 | 2015 |
|---|---|
| 12,635 | 12,635 |
| 12,635 | 12,635 |
| 23,391 | 23,391 |
| 23,391 | 23,391 |
| 7,232 | 7,232 |
| 7,232 | 7,232 |
| 61,795 | 72,573 |
| –1,742 | –6,444 |
| –4,337 | –4,334 |
| 55,716 | 61,795 |
| –1,742 | |
| 102,307 | 103,311 |
| 3,333 |
| Distributable funds | ||
|---|---|---|
| Contingency reserve | 7,232 | 7,232 |
| Retained earnings | 55,716 | 61,795 |
| Profit for the financial year | 3,333 | –1,742 |
| Distributable funds 31 Dec. | 66,281 | 67,285 |
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Non-current liabilities | ||
| Loans from financial institutions | 4,503 | 600 |
| Current liabilities | ||
| Loans from financial institutions | 1,200 | 1,200 |
| Commercial papers and loans from credit institutions |
11,000 | 32,000 |
| Trade payables | 127 | 178 |
| Amounts owed to Group companies |
||
| Other liabilities | 61 | 74 |
| Group account liabilities | 3,585 | 3,483 |
| Total | 3,647 | 3,557 |
| Amounts owed to associated companies |
||
| Trade payables | 13 | 12 |
| Other liabilities | ||
| Tax account payable | 17 | 34 |
| Accrued expenses and deferred income |
||
| Personnel expenses | 359 | 310 |
| Accruals of expenses | 136 | 43 |
| Total | 495 | 354 |
| Non-current liabilities, interest-bearing |
4,400 | 600 |
| Long-term non-interest bearing liabilities |
103 | – |
| Current liabilities, interest-bearing | 15,785 | 36,683 |
| Current liabilities, non interest-bearing |
714 | 652 |
| Total | 21,002 | 37,935 |
Board of Directors' report
Parent Company Financial Statements
54 Governance
Corporate
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Lease liabilities | ||
| Real estate lease liabilities | ||
| Falling due during the following year | 233 | 200 |
| Falling due at later date | 466 | – |
| Other lease liabilities | ||
| Falling due during the following year | 44 | 37 |
| Falling due at later date | 26 | 32 |
| Other liabilities | ||
| Guarantees | 72 | 62 |
| Contingent liabilities on behalf of the |
||
| Group companies | ||
| Guarantees | 9,319 | 9,221 |
| Liabilities total | 10,161 | 9,552 |
| Outstanding derivative instruments | ||
| Commodity derivatives | ||
| Nominal value of underlying instruments |
– | 756 |
| Market value | – | –218 |
| Interest rate swaps | ||
| Nominal value of underlying instruments |
5,418 | 6,618 |
| Market value | – | –60 |
| Currency derivates | ||
| Nominal value of underlying instruments |
– | 1,068 |
| Market value | – | –23 |
| Contingent assets | ||
| Proceeds from the sale of shares in the joint book-entry account. |
717 | 720 |
Board of Directors' report
Parent Company Financial Statements
55 Corporate Governance
The parent company's distributable funds totalled EUR 66,281,263.53 on 31 December 2016, of which EUR 3,332,724.66 is profit for the financial year.
The Board of Directors will propose to the Annual General Meeting that the distributable funds be used as follows:
| – distributed as a dividend of EUR 0.70 per share i.e. a total of | EUR | 4,340,539.70 |
|---|---|---|
| – retained in shareholders' equity | EUR | 61,940,723.83 |
Total EUR 66,281,263.53
No significant changes have taken place in the financial standing of the company since the end of the financial year. The company's liquidity is good, and the Board deems that the company's solvency will not be jeopardised by the proposed distribution of dividends.
Helsinki, 22 February 2017
Veijo Meriläinen Lasse Aho Esa Härmälä Chairman of the Board
Aappo Kontu Seppo Laine Simo Nikula
Juha Vanhainen CEO
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements Corporate Governance
(Translation of the Finnish Original)
To the Annual General Meeting of Apetit Oyj
In our opinion
We have audited the financial statements of Apetit Oyj (business identity code 0197395–5) for the year ended 31 December 2016. The financial statements comprise:
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We applied an overall group materiality of EUR 1,5 million, which amounts to some 0,4% of consolidated net sales. The result of Apetit group has fluctuated during the recent years and therefore net sales provides a more solid base for determining materiality than using the result as a benchmark.
The group audit scope encompassed in Finland five domestic subsidiaries in addition to the parent company. Additionally audit procedures were performed in subsidiaries in Norway and Sweden.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as set out in the table below. These, together with qualitative considerations, helped us to
Consolidated Financial Statements
Key audit matter
Parent Company Financial Statements 57
Corporate Governance
determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial statements as a whole.
| Overall group materiality |
EUR 1,5 million |
|---|---|
| How we determined it | 0.4% of consolidated net sales |
| Rationale for the materi ality benchmark applied |
The result of Apetit group has fluctuated and been at loss during the recent years. Therefore net sales provides a more solid base for determining materiality than using the result as a benchmark. In our view net sales is a benchmark against which the performance of the group is commonly measured by users. |
We tailored the scope of our audit, taking into account the structure of the Apetit group, the accounting processes and controls, and the industry in which the group operates.
The group operates mainly in Finland and through Maritim group entities in Norway and Sweden. The consolidated net sales accumulates mainly from the Finnish entities. The group audit scope encompassed the Finnish entities and two subsidiaries in Norway and one in Sweden. We determined that no risk for material misstatements relates to other foreign subsidiaries and therefore our procedures regarding these entities comprised only of analytical procedures performed at Apetit group level.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Accounting principles, note 2 to the consolidated financial statements
The group's net sales consist mainly of the sales of frozen food, fresh and fish products as well as grain and oilseed products. Revenue is recognized when the risks and rewards of ownership are transferred to the buyer. This ordinarily takes place as the product transfers to the buyer. Because of the nature of revenue, we focused on sales transactions that occurred during the financial period, especially on whether the recorded sales reflect real sales transactions.
We also focused on the accurate timing of revenue recognition (cut-off) of big shipments of grain sales. For other revenue streams of the group, the accurate timing of revenue recognition is not considered to be a key audit matter because of the nature of the operations and the relatively small monetary value of individual sales transactions.
Our audit procedures consisted of obtaining an understanding of the group's internal control as well as of testing of controls and substantive procedures performed on recorded sales transactions.
How our audit addressed the Key audit matter
Our audit relating to the group's internal control focused on testing of controls which ensure appropriate revenue recognition. We especially focused on controls ensuring the correct timing of revenue recognition (cut-off) and on controls ensuring that the recorded sales reflect real sales transactions (occurrence).
As part of substantive audit procedures relating to net sales we:
Tested the basis for selected journal entries posted to net sales.
Board of Directors' report 2016 in brief
the Key audit matter
Consolidated Financial Statements
Parent Company Financial Statements
58 Corporate
Governance
Accounting principles, note 9 to the consolidated financial statements.
Deferred tax assets recognized in the consolidated balance sheet totaled € 4,3 million. Deferred tax assets mainly consist of tax losses confirmed or to be confirmed. In addition, the group has unrecognized deferred tax assets of approximately € 1,4 million relating to tax losses confirmed or to be confirmed.
Deferred tax assets are recognized to the extent that it is probable that they can be utilized against taxable profit in the future. The valuation of deferred tax assets requires estimates by management, including the future operating profitability of operations.
Because of estimates involved in the valuation of deferred tax assets as well as their materiality we consider deferred tax assets to be a key audit matter. In particular, we focused on the risk of overstatement of deferred tax assets in the consolidated balance sheet.
We obtained an understanding of the company's processes relating to the calculation and valuation of deferred taxes. Our audit procedures were especially directed to the following:
Accounting principles, note 11 to the consolidated financial statements
The profitability of Fresh products group, which is part of Food Solutions business segment, has not been on the desired level. Profitability below expectations may be an indication of impairment of assets relating to the business. Where such indications are identified, the asset's estimated recoverable amount needs to be determined. An impairment loss is recognized, if the carrying amount of the asset or cash-generating unit in the balance sheet exceeds its recoverable amount.
The company's management has performed impairment test calculations at the level of customer relationships as well as at the level of the cash generating unit, Fresh products group. Recoverable amounts for impairment testing have been determined based on the value in use. Impairment test calculations involve, to a significant extent, estimates by management, especially relating to forecasts for growth as well as profitability. Because of the estimates involved as well as the potential materiality, we considered the risk of impairment of assets in the Fresh products group to be a key audit matter.
Our audit procedures included the following:
How our audit addressed the Key audit matter
We have no key audit matters to report with respect to our audit of the parent company financial statements.
59
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company's and the group's ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company's or the group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The Board of Directors and the Managing Director are responsible for the other information. The other information comprises information included in the report of the Board of Directors and in the Annual Report, but does not include the financial statements and our
Parent Company Financial Statements 60
Corporate Governance
auditor's report thereon. We obtained the report of the Board of Directors prior to the date of this auditor's report and the Annual Report is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other informa tion is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion
If, based on the work we have performed on the information included in the report of the Board of Directors, we conclude that there is a material misstatement of this other informa tion, we are required to report that fact. We have nothing to report in this regard.
Helsinki 22 February 2017
PricewaterhouseCoopers Oy Authorised Public Accountants
Jari Viljanen Pasi Karppinen Authorised Public Accountant (KHT) Authorised Public Accountant (KHT)
Board of Directors' report
Consolidated Financial Statements Parent Company Financial Statements
61 Corporate Governance
The Supervisory Board has today reviewed Apetit Plc's financial statements 2016 including the consolidated financial statements, the Board of Directors' report and the auditors' report provided by the Company's auditors. The Supervisory Board has no comments to make on these.
The Supervisory Board proposes that the parent company financial statements and consolidated financial statements be adopted and concurs with the proposal of the Board of Directors concerning the distribution of the profit funds.
The term of the following Supervisory Board members will end on the date of the Annual General Meeting: Jaakko Halkilahti, Mika Leikkonen, Marja-Liisa Mikola-Luoto, Petri Rakkolainen and Mauno Ylinen.
Säkylä, 24 February 2017
For the Supervisory Board
Chairman Secretary
Harri Eela Asmo Ritala
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements
62 Corporate Governance
This Corporate Governance Statement of Apetit Plc has been drawn up in accordance with the Finnish Corporate Governance Code 2015 of the Securities Market Association. The Corporate Governance Statement has been considered by Apetit Plc's Board of Directors and is issued separately from the Board of Directors' report. The company's auditors have confirmed that the Corporate Governance Statement has been issued and that the description it contains of the main features of the internal control and risk management systems pertaining to the financial reporting process is consistent with the financial statements.
Apetit Plc complies with the Finnish Corporate Governance Code 2015 published by the Securities Market Association, which came into effect on 1 January 2016.
The company does not follow recommendation 5 concerning the election of the Board of Directors. Recommendation 5 of the Corporate Governance Code states that the general meeting shall elect the members of the Board of Directors. Under Apetit Plc's Articles of Association, however, the Supervisory Board elects the members of the Board based on the proposals of the Nomination Committee, and decides on their remuneration. The company has chosen to deviate from the recommendation because the Supervisory Board, as the body that oversees the company's Board of Directors, is best placed to assess the composition of the Board of Directors and the attributes required of Board members.
The company deviates from the Corporate Governance Code recommendation (no. 9) on the composition of the Board of Directors, which states that both sexes shall be represented on the Board. Although the company considers it important that its Board of Directors should have a diverse composition, it has been necessary to deviate from the recommendation because in the selection process it was emphasised that candidates should have experience of the retail trade and of primary production. In the future, the company will put more emphasis on the search for representatives of both sexes for membership of the Board of Directors.
The Corporate Governance Code is publicly available on the website of the Securities Market Association at www.cgfinland.fi.
Under Apetit Plc's Articles of Association, the Supervisory Board decides the number of members of the Board of Directors and their remuneration based on the proposals of the Nomination Committee, and elects the members of the Board of Directors.
In accordance with the Articles of Association, Apetit Plc's Board of Directors consists of a minimum of five and a maximum of seven members. The Articles of Association do not limit the number of terms served by members of the Board of Directors nor is the Supervisory Boards decision-making power in the election of members of the Board of Directors restricted in any other way.
In the period up to 28 April 2016, Apetit Plc's Board of Directors comprised the six members elected by the
Supervisory Board on 15 April 2015. Lasse Aho, Esa Härmälä, Aappo Kontu, Tuomo Lähdesmäki, Veijo Meriläinen and Niko Simula formed the Board of Directors during 1 January–28 April 2016.
At a meeting held on 28 April 2016, the Apetit Plc Supervisory Board decided to elect six members to the Apetit Plc Board of Directors. Lasse Aho, Esa Härmälä, Aappo Kontu, Seppo Laine, Veijo Meriläinen and Niko Simula were elected as members of the Board of Directors.
Veijo Meriläinen, b. 1952, M.Sc. (Agric.), eMBA Principal occupation: Merive Oy, President Chairman since 2015, Deputy Chairman since 2013, member since 2012 CEO of Apetit Plc until 15 March 2015 Share ownership 31 December 2016: 2,702 shares
Lasse Aho, b. 1958, M.Sc. (Soc.) Principal occupation: CEO, Olvi plc Member since 2015 Share ownership 31 December 2016: 3,011 shares
Aappo Kontu, b. 1952, M.Sc. (Tech.) Principal occupation: Valor Partners Ltd, Senior Advisor Deputy Chairman since 2015, Chairman since 2013, Deputy chairman 2012, member since 2004 Share ownership 31 December 2016: 7,223 shares
Esa Härmälä, b. 1954, M.Sc. (Agric.) Principal occupation: Metsähallitus, General Director 2014–2016 Member since 2014 Share ownership 31 December 2016: 1,915 shares
2016
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements
63 Corporate Governance
Principal occupation: Professional board member Member since 2016 Share ownership 31 December 2016: 2,065 share
Tuomo Lähdesmäki, b. 1957, M.Sc. (Tech.), MBA Principal occupation: Boardman Ltd, partner, 2002– Member 2013–2016 Share ownership 31 December 2016: 3,000 shares
Niko Simula, b. 1966, L.L.M. with court training Principal occupation: farmer Member since 2015 Share ownership 31 December 2016: 1,368 shares
The company's Board of Directors has performed an evaluation of the independence of the Board's members in relation to the company and in relation to the major shareholders, in accordance with recommendation 10 of the Corporate Governance Code.
The evaluation found that all the Board members are independent of the company and of significant shareholders as referred to in the Corporate Governance Code recommendation.
The rules of procedure of the Board of Directors describe the following
The general function of the Board of Directors is to direct the operations of the company in such a way that in the long run the amount of added value for the capital invested is maximised, taking into account at the same time the expectations of the different stakeholders. The Board of Directors also monitors on a continuous basis the demands placed by shareholders on the Board of Directors and the general development of ownership policy.
For the purpose of performing its functions the Board of Directors:
Based on proposals presented by the CEO, the Board of Directors:
defines the company's dividend policy
approves the annual operating plan and budget on the basis of the strategy, and supervises their implementation
The Board of Directors draws up an operating plan for itself for the ensuing 12 months. The plan includes a schedule of meetings and, for each meeting, the most important issues for discussion.
The Board of Directors assesses its performance annually through a self-evaluation, and the evaluation results are submitted to the Supervisory Board for its information. The evaluation results are taken into consideration in the
2016
Board of Directors' report in brief
Consolidated Financial Statements Parent Company Financial Statements
64 Corporate Governance
preparation of proposals for the composition of the new Board of Directors.
Niko Simula 100%
The Apetit Plc Board of Directors convened 10 times in 2016. One of the meetings was held by written procedure. The meeting attendance rate of members was as follows: Veijo Meriläinen 100% Lasse Aho 100% Esa Härmälä 88.9% Seppo Laine 100% Tuomo Lähdesmäki 100% Aappo Kontu 100%
The Board of Directors has elected an Audit Committee from among its members. The Chairman of the Committee, established in August 2016, is Seppo Laine and the members of the Committee are Esa Härmälä and Aappo Kontu. The Committee convened once in 2016. All members attended the meeting.
financial statements and the consolidated financial statements and on the Group's financial reporting,
In accordance with the Articles of Association, the Supervisory Board comprises a minimum of 15 and a maximum of 18 members elected by the general meeting. In addition, the personnel choose from among its members a maximum of four Supervisory Board members at a time, and each of these members has a personal deputy. The members' term of office ends at the close of the third Annual General Meeting following their election.
The Supervisory Board elects the members, chairman and vice chairman of the Board of Directors, and decides on their remuneration in accordance with the preparation of the Nomination Committee.
The Supervisory Board is also responsible for supervising the corporate administration, issuing instructions to the Board of Directors, issuing an opinion on the financial statements, the Board of Director's report and the auditors' report, and other duties that are prescribed for it in the Limited Liability Companies Act.
In the period up to 31 March 2016 the Supervisory Board consisted of 18 members elected by the general meeting. On 31 March 2016, the Annual General Meeting decided to select 18 members to the Supervisory Board.
Harri Eela, b. 1960, wood-products industries technician, Sales Director
Chairman of the Supervisory Board since 2014, member since 2012
Marja-Liisa Mikola-Luoto, b. 1971, M.Sc. (Agric.), farmer Deputy Chairman of the Supervisory Board since 2011, member since 2005
Jaakko Halkilahti, b. 1967, farmer Member since 2011 Jussi Hantula, b. 1955, farmer
Member since 1995
Laura Hämäläinen, b. 1975, M.Sc. (Agric.), farmer Member since 2009
Aki Kaivola, b. 1960, M.Sc. (Agric.), farmer Member since 2015
Risto Korpela, b. 1949, M.Sc. (Econ. & Bus. Adm.), commercial counsellor Member since 2007
Jonas Laxåback, b. 1973, M.Sc. (Agric.), Secretary General Member since 2013
Mika Leikkonen, b. 1963, farmer , agrologist Member since 2008
Ilkka Markkula, b. 1960, farmer, agrologist Member since 2003
Jari Nevavuori, b.1966, M.Sc. (Agric.), Product Manager, farmer
Member since 2012
Pekka Perälä, b. 1961, M.Sc. (Admin.), CEO Member since 2016
Markku Pärssinen, b. 1957, M.Sc. (Agric.), Secretary General Member since 2012
Petri Rakkolainen, b. 1966, engineer, Managing Director, farmer
Member since 2014
Timo Ruippo, b. 1968, Agricultural Technician, farmer Member since 2013
Veli-Pekka Suni, b. in 1964, farmer, Bachelor of Natural Resources
Member since 2016
Johanna Takanen, b. 1973, BBA, Managing Director Member since 2015
Board of Directors' report 2016 in brief
Consolidated Financial Statements Parent Company Financial Statements
65 Corporate Governance
Mauno Ylinen, b. 1965, M.Sc. (Agric.) Member since 2005
Jari Heiskanen, b. 1979, shop steward Member since 2015 Deputy member Kirsi Turunen
Timo Hurme, b. 1959, shop steward Member since 2015 Deputy member Päivi Hakasuo
Mari Saarinen, b. 1982, shop steward Member since 2015 Deputy member Marika Palmén
Heikki Vesanto, b. 1949, shop steward Member since 2012 Deputy member Kirsi Roos
The Supervisory Board convened four times in 2016. The average attendance rate of members was 80.2%.
The Supervisory Board's Nomination Committee, which prepares the names for election to the Board of Directors, consists of two members chosen by the Annual General Meeting, the chairman of the Supervisory Board, the deputy chairman of the Supervisory Board and the chairman of the Board of Directors, in accordance with the Articles of Association. The Nomination Committee is chaired by the Supervisory Board's chairman, and in his/her absence, by the Supervisory Board's deputy chairman.
The Nomination Committee has the task of preparing proposals for the Supervisory Board on the number of members of the Board of Directors, the names of the members, chairman and deputy chairman of the Board of Directors and the remuneration payable to them. The Committee's tasks also include searching for successor candidates to replace members of the Board of Directors, as necessary. The Committee asks shareholders with significant voting power for their views concerning the proposals being put to the Supervisory Board.
In 2016 the Nomination Committee convened three times to discuss matters pertaining to the Committee's tasks. The average attendance rate of the Committee's members was 100%.
Chairman
Harri Eela, b. 1960, wood-products industries technician, Chairman of the Apetit Plc Supervisory Board
Sauli Lähteenmäki, b. 1960, agricultural engineer
Veijo Meriläinen, b. 1952, M.Sc. (Agric.), eMBA Apetit Plc Board Chairman
Marja-Liisa Mikola-Luoto, b. 1971 Deputy Chairman of the Apetit Plc Supervisory Board
Jorma Takanen, b. 1946, B.Sc. (Chem. Eng.)
Juha Vanhainen, b. 1961, M.Sc. (Tech.) Share ownership 31 December 2016: 12,500 shares
It is the CEO's duty to direct the operations of the company according to the instructions and provisions issued by the Board of Directors and to inform the Board about the development of the company's business operations and financial situation.
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The CEO is also responsible for arrangement of the day-to-day management of the company and for seeing that the company's accounts are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
The Group's Corporate Management is chaired by the CEO of Apetit Plc. Its members are:
Johanna Heikkilä, b. 1962, M.Sc. (Econ & Bus. Admin) HR Director Share ownership 31 December 2016: 0 shares
Eero Kinnunen, b. 1970, M.Sc. (Econ & Bus. Admin) Vice President, strategic projects Share ownership 31 December 2016: 750 shares
Anu Ora, b. 1973, M.Sc. (Econ & Bus. Admin.) Vice President, Food Business Share ownership 31 December 2016: 0 shares
Asmo Ritala, b. 1958, LL.M. Corporate Counsel Share ownership 31 December 2016: 0 shares
Sami Saarnio, b. 1973, M.Sc. (Econ & Bus. Admin.) Chief Financial Officer Share ownership 31 December 2016: 0 shares
Kaija Viljanen, b. 1952, M.Sc. (Econ & Bus. Admin.), eMBA Director of Grains and Oilseeds business Share ownership 31 December 2016: 0 shares
The Corporate Management does not exercise powers based on law or the Articles of Association. The Corporate Management is an advisory body appointed by Apetit Plc's CEO and has the task of discussing Group-wide development projects and Group-level principles and procedures as necessary. The CEO is responsible for choosing the members of the Corporate Management.
Apetit Plc's Board of Directors confirms the operating principles for the Apetit Group's internal control and assesses the state of internal control at least once a year.
Internal control refers to all the operating methods, systems and procedures with which the company's management seeks to ensure efficient, economical and reliable operations. Internal control comprises financial and other control. At Apetit, internal control is performed by the company's management and by all other personnel.
Risk management as part of internal control refers to the identification, assessment, restriction and monitoring of risks arising in business activities and risks that are materially related to this.
Apetit Plc's Board of Directors is responsible for arranging and maintaining sufficient and effective internal control within the Apetit Group.
As part of the arrangement of internal control and risk management, the company's Board of Directors regularly monitors the results and operating risks of the Group and its business units, and decides on the reporting, the procedures and the qualitative and quantitative indicators for assessing the efficiency and profitability of operations. The Group's Board of Directors confirms annually the Group's risk policy, risk management principles and key risk limits.
To ensure implementation of the Group's ownership policy towards the Group companies and to monitor the effectiveness of internal control, the boards of directors of the main Group companies include one or more members of the Group's Corporate Management. Group-level risk management and financial reporting are performed on a
centralised basis in the Group Administration, independent of the different business activities. The boards of directors of Group companies are responsible for the highest level of management duties related to the internal control of their respective companies. The operating organisation's management in each of the Group companies is responsible for the implementation of internal control and risk management in line with the pre-determined principles and operating guidelines, and for reporting on the company's operations, risk-bearing ability and risk situation in accordance the Group's management system.
The main principles of internal control observed within Apetit Plc and the Group companies are:
The basis for internal control is the function-specific line organisation that is further divided into departments, units and teams, as necessary. The organisational units are allotted defined tasks and responsibilities required for the company's operations. The task of the operating organisation's management, i.e. the managers of the Group's business areas and operations, is to set quantitative and qualitative targets for the various areas of the business in accordance with the business plan approved by the Board of Directors. For the units, decision-making bodies and people operating within the framework of the organisation there are separately defined decision-making and operating powers set out in work and job specifications, as well as obligations to report to one's superiors or otherwise to a higher organisational level. The task of the operating organisation's management is to ensure that those working under them are familiar with their own duties, and the management are required to create the right conditions for their personnel to be able to perform their work and achieve the targets.
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Significant commitments or other actions deemed to carry risks are subject to the approval of the Group's Board of Directors. Business units are responsible for formulating proposed decisions and for putting decisions into effect. Reporting on the implementation of decisions is made in connection with the management reporting.
Business activities and processes are guided within the confines of operating guidelines and descriptions, which are monitored to ensure they are complied with and kept up-to-date. All decisions taken are documented and archived. An essential aspect of risk management is the performance of daily controls in the operating chains and processes.
The internal and external risks of Apetit Plc and the Group companies that could have an adverse effect on achieving business targets are identified, assessed regularly and reported quarterly to the Group Board of Directors. The risks are contained and the confining limits are monitored.
The Group Administration's risk management has the task of monitoring, measuring and reporting risks and of maintaining, developing and preparing risk management principles for the Board of Directors' approval, and of drafting procedures for use in risk assessment and measurement. Roles and responsibilities are defined in Apetit's risk management policy and risk management principles, which are approved by the Group's Board of Directors.
The basis for business and other activities is provided by the accounting, information and business IT systems. The parent company and the Group companies have an IT strategy in accordance with currently assessed needs and sufficient and appropriately organised IT systems. The IT function ensures that the company's data resources can be utilised in the planning, management, execution and monitoring of the company's business.
The operating organisation's management has the primary responsibility for ensuring the implementation of practical measures for internal control. The management must constantly monitor the operations it is responsible for and must take the necessary development measures if action contrary to guidelines or decisions or action that is otherwise ineffective or inappropriate is observed. In a transparent and effective organisation the entire personnel are all responsible not only for the appropriate discharging of their own duties but also for the fluency of operations with the rest of the organisation.
Internal control is supported by appropriate reporting that allows monitoring of operations, results and risks. Achievement of the business targets and developments in the Group's financial situation are monitored with the aid of a Group-wide management system. The Group's accounting principles, controls and responsibilities are described in the Apetit Group's accounting manual. Reporting guidelines and timetables have been drawn up in writing for monthly reporting and preparation of interim reports and annual financial statements. The company's financial management unit constantly monitors the business units' reporting and develops and produces guidelines on the content of reporting, taking into account the needs of internal control. The Group prepares financial information for publication, complying with the international financial reporting standards (IFRS). Interim reports and annual financial statements are reviewed by the Group's Board of Directors and are subject to its approval.
The business units update the longer term financial estimates each year. The annual budgets are prepared on the basis of these strategic figures. The Group's Board of Directors assesses and approves the business units' annual budgets. In addition, on a quarterly basis or more often, the business units update the profit and balance sheet estimates to cover at least the ensuing 12 months.
Monthly reporting and related analysis for budgets and estimates constitute a key element of Apetit's management system and internal control. Financial figures are assembled from the business units' data systems every month for the Group's joint accounting system.
The outturn information and up-to-date estimates are reviewed monthly at Group level. The management system comprises the actual profit and balance sheet information, the key figures and the written management report of those responsible for the businesses. The management report covers the factors that affected the results given in the month's report, the measures planned for the immediate term and an assessment of the operating profit for the current quarter and the full year, consisting of best case, probable and worst case scenarios.
The Group CEO and members of the Corporate Management are issued with the reports, and the Group's Board of Directors is issued with a summary for the Group and summaries of the data for each business unit.
The business units' management groups examine their own financial outturn data at least once a month and compare them with budgets and estimates, and also examine the results of the various units' monitoring measurements used for business management purposes and compare them with estimates and targets, and the reasons for any significant discrepancies between these. In addition, the business units' results, estimates and state of business are reviewed at business unit review meetings, attended by members of Group management and those responsible for the business units based on the agenda in question. Per business unit, these meetings are held once a month or less frequently.
The internal audit unit functions objectively and independently in support of the Board of Directors, the CEO and Group Administration, for the purpose of assessing and developing the level of internal control in the Group's different units by providing an independent and objective
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monitoring processes within the organisation.
Internal audit is performed on the basis of a pre-determined plan. The internal audit is overseen by the Audit Committee, which submits the annual audit plan to the Group's Board of Directors for its approval.
The internal audit is performed by an external service provider.
On 31 March 2016, Apetit Plc's Annual General Meeting decided on the remuneration paid to the Supervisory Board as follows:
The Supervisory Board met four times in 2016. Members' average attendance rate was 80.2 per cent. The fees and allowances paid to the members of the Supervisory Board totalled EUR 48,780 in 2016.
The Supervisory Board decides on the remuneration of the members of the Board of Directors.
In accordance with the decision made by Apetit Plc's Supervisory Board on 28 April 2016:
• In addition, a meeting allowance of EUR 510 (510) is paid to the Chairman, and EUR 300 (300) to the members. The Board of Directors met nine times in 2016. Members' average attendance rate was 98.1%. The fees and allowances paid to the members of the Board of Directors totalled EUR 164,610 in 2016. The fees and allowances are itemised in Note 25 to the financial statements.
The Board of Directors appoints the CEO and Deputy CEO and releases them from their duties, determines their duties and decides on their terms of service and their incentive schemes.
Juha Vanhainen, MSc (Tech.), has served as the CEO since 16 March 2015. His key terms of service are defined in his CEO contract. The CEO has an additional defined contribution pension plan, with contributions totalling EUR 110,900 in 2016.
The salary and benefits paid to the CEO in 2016 amounted to EUR 446,148.
The Group's CFO Sami Saarnio, MSc (Econ. & Bus. Adm.), has served as Deputy CEO since 3 November 2016. His predecessor, Eero Kinnunen, MSc (Econ. & Bus. Adm.), served as Deputy CEO until 2 November 2016.
The insider guidelines confirmed by Apetit Plc's Board of Directors on 3 November 2016 are based on the provisions of the Market Abuse Regulation (MAR, 596/2014), the Market Abuse Directive (2014/57/EU), the Commission Delegated Regulation (EU) 2016/522, the Commission Implementing Regulations (EU) 2016/347 and (EU) 2016/626, the Criminal Code of Finland (39/1889) and the Securities Markets Act (746/2012) as they stand at any
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given time, in addition to the regulations of the Financial Supervisory Authority and the Guidelines for Insiders issued by Nasdaq Helsinki Ltd, which were approved by its Board of Directors and came into effect on 3 July 2016. The insider guidelines concern the employees and managers of the Group ('Company') consisting of Apetit Plc.
The Company's insiders include managers subject to the disclosure obligation and project-specific insiders.
The Company maintains a non-public register of its managers subject to the disclosure obligation and their related parties. The Company also maintains a non-public register of its project-specific insiders. The people entered into a project-specific insider register are notified of their inclusion and the related obligations in writing or by other verifiable means, such as email. Insiders must confirm receipt of the notification.
A person must submit a basic declaration to the keeper of the Company's insider register immediately after becoming a manager subject to the disclosure obligation. The basic declaration is provided using a form submitted by the Company. A manager who is subject to the disclosure obligation must submit a new declaration whenever changes occur in the circumstances declared on the form. The declaration of changes in circumstances must be provided without delay.
Project-specific insiders include everyone with access to insider information who works at the Company on the basis of an employment relationship or who is otherwise performing duties that provide them with access to insider information. A person becomes a project-specific insider after receiving unpublished information about the project and loses their insider status after the project has been made public or the cancellation of the project has been announced. The Company informs the people involved
about the establishment of a project and the related obligations and enters these people into a project-specific insider register. The project-specific insider register is updated whenever the grounds for including a person change, a new person gains access to insider information or a person no longer has access to insider information.
A trading restriction is in force within the company, which forbids its permanent insiders from trading in Apetit shares 30 days prior to the publication of Apetit's interim reports and the release of its financial statements bulletin. The trading restriction ends on the day following publication.
The Company maintains its insider register in the SIRE system of Euroclear Finland Ltd. The holdings of the members of the Board of Directors and the Group's management on 31 December 2016 are presented in conjunction with the presentation of the Board and management on pages 62–66 of the financial statements.
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Members elected by the Shareholders' meeting
Harri Eela, b. 1960, Wood Industry Technician, Sales Director
Chairman since 2014, Member since 2012 Principal occupation: Cursor Oy, Sales Director Main simultaneous positions of trust: Chairman of the Board: Finninno Oy, Oy Scanhomes Ltd. Finland
Marja-Liisa Mikola-Luoto, b. 1971, M.Sc. (Agric.) Deputy Chairman since 2011, Member since 2005 Principal occupation: Farmer Membership expires 2017 Main simultaneous positions of trust: Member of the Board: Säkylän Osuuspankki
Jaakko Halkilahti, b. 1967, Farmer Member since 2011 Membership expires 2017
Jussi Hantula, b. 1955, Farmer Member since 1995
Laura Hämäläinen, b. 1975, M.Sc. (Agr.), Farmer Member since 2009
Aki Kaivola, b. 1960, M.Sc. (Agr.), Farmer Member since 2015
Risto Korpela, b. 1949, M.Sc. (Econ. & Bus. Adm.), commercial councellor Member since 2007
Jonas Laxåback, b. 1973, M.Sc. (Agric.), Executive Director Member since 2013
Mika Leikkonen, b. 1963, Farmer Member since 2008, agrologist Membership expires 2017
Ilkka Markkula, b. 1960, agrologist, Farmer Member since 2003
Jari Nevavuori, b. 1966, M.Sc. (Agric.), Development Manager, Farmer Member since 2012
Pekka Perälä, b. 1961, M.Sc. (Admin), Managing Director Member since 2016
Markku Pärssinen, b. 1957, M.Sc. (Agric.), Executive Director Member since 2012
Petri Rakkolainen, b. 1966, B.Sc. (Eng.), Managing Director, Farmer Member since 2014 Membership expires 2017
Timo Ruippo, b. 1968, Agricultural Technician, Farmer Member since 2013
Veli-Pekka Suni, b. 1964, Farmer, Bachelor of Natural Resources Member since 2016
Johanna Takanen, b. 1973, Managing Director Member since 2015
Mauno Ylinen, b. 1965, M.Sc. (Agric.) Member since 2005 Membership expires 2017
Jari Heiskanen, b. 1979 Member since 2015 Personal Deputy Member Kirsi Turunen
Timo Hurme, b. 1959 Member since 2015 Personal Deputy Member Päivi Hakasuo
Mari Saarinen, b. 1982 Member since 2015 Personal Deputy Member Marika Palmén
Heikki Vesanto, b. 1949 Member since 2012 Personal Deputy Member Kirsi Roos
Pasi Karppinen M.Sc. (Econ. & Bus. Adm.), APA
PricewaterhouseCoopers Oy Authorised Public Accountants Auditor with Principal Responsibility Jari Viljanen M.Sc. (Econ. & Bus. Adm.), APA
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Veijo Meriläinen, b. 1952, M.Sc. (Agric.), eMBA Chairman of the Board since 2015, Member of the Board since 2012
Chairman of the Board: Merive Oy, A-lab Oy Memeber of the Board: HZPC Sadokas Oy, 4dBarn Oy
Apetit Plc, CEO 2014–2015
Valio Oy, management positions in international operations, international sales and commercialization of innovations 1999–2011, member of the group management team 1990–2011, management positions in production, product acquisition and cheese business 1990–1999, R&D management positions 1978–1990 Shareholding in Apetit: 2,712 shares (31.12.2016)
Aappo Kontu, b. 1952, M.Sc. (Tech.), Senior Advisor, Valor Partners Oy
Deputy Chairman of the Board since 2015, Chairman of the Board since 2013, Deputy Chairman of the Board in 2012, member of the Board since 2004
Chairman of the Board: Vahterus Oy, Anvia Oyj, Anvia Securi Oy, Kieku Oy, Adven Group Oy Employment history:
Empower Group Oy, President, 1999–2012 Pohjolan Voima Oy, Technical Director,
PVO-Engineering Oy, Managing Director, 1996–1998 TVS-Tekniikka Oy, Managing Director, 1993–1996 Teollisuuden Voimansiirto Oy, Director of Technical Department, 1989–1993
Teollisuuden Voima Oy, Head of Engineering Office, 1977–1989
Shareholding in Apetit: 7,223 shares (31.12.2016)
Esa Härmälä, b. 1954, M.Sc. (Agric.) Member of the Board since 2014 Principal occupation: Metsähallitus, General Director, 2014–2016
Ministry of Employment and the Economy, Director-General of the Energy Department, 2011–2014 Fertilizers Europe, Director General 2006–2010 Chairman of The Central Union of Agricultural Producers and Forest Owners (MTK) 1994–2006 EU accession negotiator, Ministry for Foreign Affairs of Finland 1993–1994
Special Adviser (Economic Policy) for the Prime Minister 1991–1992
Secretary and Head of Department for Trade Policy, The Central Union of Agricultural Producers and Forest Owners (MTK) 1987–1991
Shareholding in Apetit: 1,915 shares (31.12.2016)
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Niko Simula, b.1966, Master of Laws, Trained on the bench Member of the Board since 2015 Principal occupation: Farmer
Member of the Board, Finnamyl Oy, Lammaisten Energia Oy
Employed at law offices 1992–2011, attorney-at-law 1995–2011
Asianajotoimisto Niko Simula, 1999–2011 Asianajotoimisto Santala & Simula, 1994–1999 Asianajotoimisto Pekka Santala, 1992–1993 District Court of Kokemäki 1991–1992, notary, acting district court judge Farmer 1987– Shareholding in Apetit: 1,368 shares (31.12.2016)
Lasse Aho, b. 1958, M.Soc.Sc. Member of the Board since 2015 Principal occupation: CEO, Olvi plc, 2004–
Member of the Board, Finnish Hockey League, Genelec Oy, The Federation of the Brewing and Soft Drinks Industry,
Finnish Food and Drink Industries' Federation Vice President: The Brewers of Europe
MetroAuto Tampere Ltd, CEO 2000–2004 Linkosuon Leipomo Oy, CEO 1997–2000 Fazer Bakeries Ltd, Sales Director 1993–1997 Fazer Keksit Oy, Marketing Director 1985–1993 Atoy-yhtiöt, Product Manager 1984–1985 Shareholding in Apetit: 3,011 (31.12.2016)
Seppo Laine, b. 1953, Authorised Public Accountant Member of the Board since 2016 Principal occupation: Auditor, independent professional 2008–
Chairman of the Board: Cor Group Oy, Talenom Oyj, Lakkapää Oy, Joutsen Media Oy, Pohjaset Oy Board Member: Paikallis-Sähkö Oy, Partnera Oy, IKP Group Oy, Fysiopalvelu Easy Move Oy, Sievi Capital Oyj, FCG City Portal Oy
Elektrobit Corporation, CFO, 2000–2007 Auditing Company Ernst & Young Ltd, International Partner and Director at the Oulu regional office, 1995–2000 Oulun Laskenta Ltd, President, 1979–1995, Turun Muna Oy Jaakko Tehtaat, Financial Manager, 1977–1979 Tammerneon Oy, Financial Manager, 1975–1977
Shareholding in Apetit: 2,065 (31.12.2016)
2016
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Juha Vanhainen, b. 1961, M.Sc. (Tech.) CEO since 2015 Main simultaneous positions of trust: Member of the Board of Directors: Finnish Food and Drink Industries' Federation Employment history: Stora Enso Oyj, Member of the Group Leadership Team 2007–2015 Executive Vice President, energy, logistics, IT services and wood supply 2013–2015 Executive Vice President, paper business
area 2007–2013 Country Manager Finland 2008–2013 Chairman and Member of the Board of Directors of several international subsidiaries and associated companies Stora Enso International Office London,
Senior Vice President, uncoated fine paper 2003–2007 Stora Enso Oulu Mill, Mill Director 1999–2003 Enso Oy and Veitsiluoto Oy, Oulu Paper Mill, management, project and expert positions 1990–1998 Kemi Oy, department engineer 1988–1990 Shareholding in Apetit: 12,500 shares (31.12.2016)
Sami Saarnio, b. 1973, M.Sc. (Econ & Bus. Adm.) CFO since 2016, Deputy to the CEO Employment history: Onninen Ltd, CFO, 2011–2016 Onninen Ltd, Group Controller 2005–2011 Oriola Oy, Business Controller 2000–2005 Shareholding in Apetit: –
Johanna Heikkilä, b. 1962, M.Sc. (Econ. & Bus. Adm.) HR Director since 2005 Main simultaneous positions of trust: Member of the Supervisory Board: Elo Mutual Pension Insurance Company Employment history: Fazer Leipomot Oy, HR Director, 2003–2005 LU Suomi Oy, HR Director, 2002–2003 LU Suomi Oy (earlier Fazer Keksit Oy), HR Manager, 1995–2002 Fazer Suklaa Oy, HR Manager, 1992–1994 Fazer Suklaa Oy, HR specialist 1990–1991 Shareholding in Apetit: –
2016 in brief
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Corporate
Eero Kinnunen, b. 1970, M.Sc. (Econ. & Bus. Adm.) Vice President, Strategic Projects since 2016 Chief Financial Officer, 2006–2016 Employment history: Cloetta Fazer Suklaa Oy, Business Controller, 2004–2006 Cloetta Fazer Makeiset Oy, Category Expert, 2000–2004 Fazer Polska Sp.z.o.o., Business Controller, 1998–2000 Fazer Suklaa Oy, Controller 1996–1998 Shareholding in Apetit: 750 shares (31.12.2016)
report
Asmo Ritala, b. 1958, LL.M. Corporate Councel since 1995 Employment history: Avena Ltd, Corporate counsel, 1995–2002 Finnish Grain Board, lawyer, 1990–1994 Oy Esso Ab, superintendent, 1986–1990 Shareholding in Apetit: -
Kaija Viljanen, b. 1952, M.Sc. (Econ. & Bus. Adm.), B.A., EMBA Managing Director of Avena Nordic Grain Oy since 1995 and Managing Director of Mildola Oy since 2009
Member of the Board and various working groups; Coceral
Finnish Grain Board, Deputy Director, 1992–1995
The Central Union of Agricultural Producers and Forest owners (MTK), Project Manager, 1991–1992
Finnish-Russian Chamber of Commerce Moskow, Director, 1987–1991
Anu Ora, b. 1973, M.Sc. (Econ. & Bus. Adm.) Vice President, Food Business since 2015 Main simultaneous positions of trust: Member of the Board; Raskone Employment history: Suomen Lähikauppa Oy, Vice President, Commercial, 2012–2015 Suomen Lähikauppa Oy, Vice President, Category Management, 2011–2012 Suomen Lähikauppa Oy, Vice President, Category Management Processes, 2010–2011 Suomen Lähikauppa Oy, Purchasing Director, 2010 Boston Consulting Group, Project Leader & Principal, 2001–2009 Boston Consulting Group, Associate Consultant & Consultant, 1997–2001 Shareholding in Apetit: –
| $\equiv$ 2016 | Board of Directors' | Consolidated | Parent Company | Corporate |
|---|---|---|---|---|
| in brief | report | Financial Statements | Financial Statements | Governance |
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FI-27801 Säkylä
| Apetit Plc | Apetit Plc |
|---|---|
| Sörnäistenkatu 1A | Maakunnantie 4 |
| FI-00580 Helsinki | P.O.Box 100, |
Tel. +358 10 402 00 Tel. +358 10 402 00
Email: [email protected] www.apetitgroup.fi
Business ID: 0197395–5 Domicile: Säkylä, Finland
Apetit Ruoka Oy
SÄKYLÄ Maakunnantie 4 P.O.Box 130, FI-27801 Säkylä Tel. +358 10 402 4300
PUDASJÄRVI Teollisuustie 3 FI-93100 Pudasjärvi Tel. +358 10 402 4300
Maakunnantie 4 P.O.Box 100, FI-27801 Säkylä Tel. +358 10 402 4300
Apetit Kala Oy
Mastotie 7, FI-70460 Kuopio Tel. +358 10 402 4500
Råbekksvingen 5 NO-1617 Fredrikstad, Norja Tel. +47 6936 3700 firstname.surname@maritim-food. no www.maritim-food.no
Kallkärrsvägen 21–22 SE-455 61 Dingle, Sweden Tel. +46 5244 0047
NO-6083 Gjerdsvika, Norway Tel. +47 7002 6440
Sörnäistenkatu 1A FI-00580 Helsinki Tel. +358 10 402 02 [email protected] www. avena.fi
Ul. Korablestroitelej, d. 30, litera A, office 2.15 RU-199397 St. Petersburg, Russia Tel. +7 812 305 5795
L. Asanaviciutes str. 13B-56 LT-04300 Vilnius, Lithuania Tel. +370 5 243 0290
Tehnika 3, Türi EE-72213 Järvamaa, Estonia Tel. +372 5 038 151
Rajon Almaty, Baraeva str. 16 KZ-010000 Astana, Kazakhstan Tel. +7 7172 592 679
Corporate
g. Mirgorod, ul. Petrovskogo 15 UA-37600 Poltavskaja oblast, Ukraine
Tel. +380 5355 40262
Atmodas iela 19–345 Jelgava, LV-3007 Latvia
Satamatie 64 P.O.Box 21, FI-02401 Kirkkonummi Tel. +358 10 402 2300
Design: Kreab Press: Libris 2017 Papers: Multiart Silk 300 g, Multiart Silk 130 g
Consolidated Financial Statements Board of Directors' report Parent Company Financial Statements Corporate Governance 2016 in brief
Apetit Plc • www.apetitgroup.fi
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