Annual Report • Feb 24, 2017
Annual Report
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| Report by the Board of Directors 2016 | 2 |
|---|---|
| Group key figures and calculation of financial ratios | 8 |
| Shares and share capital | 11 |
| Financial statements | |
| Consolidated financial statements (IFRS) | |
| Consolidated income statement | 13 |
| Consolidated statement of financial position | 14 |
| Consolidated statement of cash flows | 15 |
| Consolidated statement of changes in equity | 16 |
| Notes to the consolidated financial statements | |
| Accounting policies for the consolidated financial statements | 17 |
| Notes to the consolidated income statement | 25 |
| Notes to the consolidated statement of financial position | 27 |
| Management of financial risks | 37 |
| Related party transactions | 41 |
| Other notes | 43 |
| Parent company's financial statements (FAS) | |
| Parent company's income statement | 44 |
| Parent company's balance sheet | 45 |
| Parent company's cash flow statement | 46 |
| Notes to the parent company's financial statements | 47 |
| Signing of Report by the Board of Directors and the financial statements | 52 |
| Auditor's report | 53 |
The principal line of business of Tokmanni Group Corporation is to sell administrative services to the other companies in the Tokmanni Group. These companies include Retail Leasing Oy, whose line of business is to own and lease property, plant and equipment to the other Group companies. Retail Leasing Oy is also the parent of Nordic Disco AB (Sweden) which, in turn, is the parent of Tokmanni Oy. Tokmanni Oy engages in wholesale, retail and speciality goods trade in collaboration with its subsidiary, Tarjousmaxi Oy. Taitomanni Oy is a company owned by Tokmanni Oy in which there was no activity during the financial period. The Group also includes Retail Property Investment Oy that engages in the property business by investing in its own property companies which, in turn, construct store premises for the use of the Group companies. At the end of the financial period, the company owned one property company, Kiinteistö Oy Tokmanni Närpiö.
Tokmanni developed according to expectations in 2016. Revenue grew 2.7% to EUR 775.8 million (755.3) and adjusted EBITDA totaled EUR 62.8 million (58.5), 8.1% of revenue (7.7%). Group EBIT totaled EUR 49.2 million (39.1).
The uncertainty of the Finnish economy continued to affect the Finnish retail market in 2016. Competition remained fierce and particularly department stores suffered from Finland's weak economic situation, and also from the growth in popularity of online retailers. In July the department store Anttila announced its bankruptcy and started its clearance sale.
Tokmanni Group Oy had 22,274,436 shares at the beginning of 2016. Tokmanni Group Corporation issued a bonus issue (a share split) in April 2016 where one new share was given to shareholders for each share (1:1). In total 22,274,436 shares were issued. Tokmanni Group Corporation was successfully introduced on the Nasdaq Helsinki stock exchange after the completion of its Initial Public Offering. In the IPO, Tokmanni Group Corporation issued 14,319,880 new shares and consequently, Tokmanni Group Corporation had 58,868,752 outstanding shares at the end of the year.
During 2016, the Group opened seven new and relocated stores in total, out of which four were opened in store space released by Anttila.
The uncertainty of the Finnish economy continued to affect the Finnish retail market in 2016. Competition remained fierce and particularly department stores suffered from Finland's weak economic situation, and also from the growth in popularity of online retailers.
The retail market recovered slightly for the full year 2016 and the sales of department stores and hypermarket chains grew 1.1%. Growth, which occurred for the first time since 2012, was based primarily on grocery sales growth. The liberalization of opening hours reshuffled market structures in 2016. This benefitted larger stores and hypermarkets, especially with regards to grocery sales, whereas it had a negative effect on smaller stores. Price competition in the grocery market remained high. The challenges in the non-grocery market continued and according to the FTGA the nongrocery market decreased by -1.4% in the review period January-December 2016.
Based on efficient roll-out and short ramp up of new stores, extending the store network is one of the drivers for the Group's revenue and earnings growth. Tokmanni Group has 162 (156) stores across Finland and has identified several additional locations suitable for new stores across Finland.
Tokmanni opened seven new and relocated stores in total in 2016 increasing its selling space by approximately 8,000 square meters, slightly lower than the target for 2016. The number includes the 2,500 square meter store space reduction of the Tammisto store, with the target to optimize sales per square meter. During 2017, the Group plans to open at least nine new stores and two relocated stores, in total eleven new or relocated stores, corresponding to approximately 22,000 square meters of additional selling space. In addition, Tokmanni is in negotiations regarding nine stores released by Anttila with the aim to sign some contracts in 2017. These stores would bring a good addition to Tokmanni's 2017 new store plan and would speed up the plan to grow the store network to approximately 200 stores.
Tokmanni's revenue for the financial period 2016 totaled EUR 775.8 million (755.3), a growth of 2.7%. Growth was based on the growth from stores opened and relocated in 2015 and 2016. Like-for-Like revenue remained at the previous year's level, -0.1%. The development was impacted by the third quarter market turbulence caused by Anttila's clearance sale. With the exception of the third quarter, the Group's Like-for-Like revenue has shown growth throughout the year, signaling that the measures taken to improve like-for-like revenue are progressing well. The number of baskets increased to 44.7 million, a growth of 3.4% compared to the corresponding period previous year (43.3). This shows that Tokmanni's brand awareness is continuously improving and that new customers are finding their way to the stores.
Through the smart shopping trend consumers have become pronouncedly price-conscious, actively comparing prices. The internet has increased the transparency of the retail market by introducing efficient tools for information gathering and price comparisons to consumers. The internet and online stores have become a natural part of consumers' and retailers' everyday life. Tokmanni's website has approximately 800,000 monthly visits on average and in December the site had a record high 1.3 million visits. The popularity of Tokmanni's online store is growing and an increasing amount of customers are frequenting the store. Tokmanni's online revenue grew approximately 45% in the review period January-December 2016.
The gross profit for the financial period 2016 totaled EUR 268.4 million (257.5), 34.6% (34.1%). Adjusted gross profit totaled EUR 267.9 million (258.1), a gross profit margin of 34.5% (34.2%).
In 2016 the share of direct imports remained at last year's level 22% (22%). The Group has focused on improving the sourcing efficiency and sourcing through its Shanghai office. In 2016 12% (10%) of sold products was sourced through Tokmanni's Shanghai sourcing office. Tokmanni will continue to increase the share as part of its strategy to improve profitability by increasing the share of direct sourcing and the share of private labels. In 2016 the PLNL products' (Private Labels, Non-branded products and Licensed products) share of sales was 34% (34%). In 2016 the private label's share of PLNL products increased, affecting Group gross margin positively.
Operating expenses for the review period financial period 2016 totaled EUR 207.4 million (207.7), 26.7% of revenue (27.5%). Adjusted operating expenses amounted to EUR 208.5 million (203.7), 26.9% of revenue (27.0%). The slight increase in operating expenses was due to the opening of new stores and lengthening of opening hours. Tokmanni has renegotiated some of its rental agreements, which has had a positive effect on operating expenses.
EBITDA for the financial period 2016 was EUR 64.3 million (53.9), 8.3% of revenue (7.1%). Adjusted EBITDA for the review period totaled EUR 62.8 million (58.5), 8.1% of revenue (7.7%). Tokmanni's profitability improvement was due to sourcing efficiency improvements, the increase of private labels, improved campaign management as well as good cost management. January-December 2016 EBIT amounted to EUR 49.2 million (39.1), 6.3% million of revenue (5.2%).
The financial expenses for the financial period 2016 amounted to EUR 15.3 million (21.3), which includes a one-off financial cost of EUR 4.4 million, which relates to activated, capitalized emission fees from previous loans, which have been released in conjunction with the refinancing. In conjunction with its listing, Tokmanni Group Corporation repaid its shareholder loans and related interest, EUR 96.0 million in refinanced it long term loans. Tokmanni Group Corporation's IPO costs EUR 5.8 million have been recorded in the Group's balance sheet, decreasing equity.
The profit before taxes for the financial period January-December 2016 totaled EUR 34.0 million (18.2). Taxes for the review period amounted to EUR 6.8 million (3.4). The net result for the financial period was EUR 27.2 million (14.8). Earnings per share was 0.50 euros (0.33). Return on Capital Employed (ROCE) was 14.5% (11.6%). Return on Equity (ROE) was 18.1% (12.0%).
The 2016 cash flow from operating activities was strong EUR 62.5 million (35.0). This was due to improved results and more efficient working capital management. Cash and cash equivalents at the end of the year 2016 totaled EUR 57.6 million (48.9)
At the end of the year 2016 Tokmanni Group had interest bearing debt of EUR 173.5 million (293.8). In the fourth quarter the Group made a voluntary prepayment of loan of EUR 25.0 million. In conjunction with its IPO, Tokmanni Group repaid its shareholder loans and related interest, EUR 96.0 million in total and refinanced its long term loans. The Group's net debt/adjusted EBITDA was 1.85 at the end of the review period and it decreased from 2.7 at the end of 2015. Tokmanni's target is to maintain a good capital structure where net debt/adjusted EBITDA is below 2.0. Tokmanni's equity ratio was 36.3% (2015: 29.6% including shareholder loans).
The net capital expenditure for the review period January-December 2016 totaled EUR 9.8 million (9.0), including EUR 2.4 million of unfinished construction work relating to the Närpiö store, and which by nature is not capital expenditure but temporary financing. In accordance with Tokmanni's practices, a sales-and-leaseback agreement will be made for the Närpiö property in 2017. Capital expenditure for 2017 is expected to be higher than previous years, due to the high selling space increase. Tokmanni will increase its selling space by at approximately 22,000 square meters. Opening a middle sized new store requires approximately EUR 0.5 million in capital expenditure. Depreciation amounted to EUR 15.1 million (14.8) in 2016.
Tokmanni's goal is to continue strengthening its position as the leading general discount retailer in Finland by leveraging its key competitive advantages: the strong perceived price image, an attractive and wide assortment and a good in-store customer experience.
Tokmanni aims to deliver stable and profitable growth over the long term by
The Board of Directors has adopted the following financial and other targets for Tokmanni:
Tokmanni is a significant employer in Finland and the Group had 3,224 (3,293) employees at the end of the year 2016. On average Tokmanni has 3,209 employees during the year. Out of the total number of employees 86.0% (84.9%) worked in the stores, 6.4% (7.8%) in the warehouse and 7.6% (7.3%) in support functions. During the third quarter 2016 the dispatch function of Tokmanni's logistics center in Mäntsälä was outsourced to Barona Logistics and as a consequence 35 employees were transferred to Barona. The aim of the cooperation is to ensure the accuracy of delivery times and lead times, while at the same time optimizing the use of resources in accordance with company needs Personnel costs for the review period totaled EUR 96.4 million (92.3), 12.4% of revenue.
Responsibility is part of the daily work of every member of Tokmanni's personnel. Tokmanni's key corporate responsibility focus areas are business integrity, responsible sourcing and products, fair treatment and efficient use of resources. Tokmanni's responsibility issues are covered in depth in the the Group's corporate responsibility report which will be published in week 8. The report has been prepared in accordance with the G4 guidelines of the Global Reporting Initiative (GRI).
Tokmanni Group Oy had 22,274,436 shares at the beginning of 2016. Tokmanni Group Corporation issued a bonus issue (a share spit) in April 2016 where one new share was given to shareholders for each share (1:1). In total 22,274,436 shares were issued. Tokmanni Group Corporation was successfully introduced on the Nasdaq Helsinki stock exchange after the completion of its Initial Public Offering. Trading in Tokmanni Group Corporation's shares started on the pre-list of Nasdaq Helsinki on 29 April 2016 and on the official list on 3 May 2016. In the IPO company issued 14,319,880 new shares and consequently, Tokmanni Group Corporation had 58,868,752 outstanding shares at the end of the year. Tokmanni Group Corporation received approximately EUR 95.9 million in proceeds from the listing, which net of costs related to the IPO, increased company's equity. During 2016, 51.667.656 Tokmanni Group Corporation shares were traded on Nasdaq Helsinki and the value of shares traded was EUR 375.6 million.
At the end of the review period Tokmanni Group Corporation's biggest shareholders were Cidron Disco S.a.r.l 30.50%, Rockers Tukku Oy 15.01%, Elo Pension Company 4.59%, Varma Mutual Pension Insurance Company 4.54% and Mandatum Life Insurance Company Limited 3.99%.
Tokmanni Group Corporation has one share series and all shares carry equal voting rights at the general meeting. The share has no nominal value. Corporation does not hold any of its own shares.
On 12 April 2016, the extraordinary general meeting of shareholders of the Tokmanni Group Corporation decided to increase the number of members on the Board of Directors to seven, and elected Kati Hagros and Thérèse Cedercreutz as new members. Both new members are independent of the Company and the Company's significant shareholders. The change in the number of the members of the Board of Directors and the election of the new members of the Board of Directors entered into force immediately upon the commencement of trading in the shares on the pre-list of the Helsinki Stock Exchange on April 29th 2016.
The Board of Directors of Tokmanni Group Corporation has established a Finance and Audit Committee and a Nomination Committee. The Board has appointed the following members to the Committees:
Finance and Audit Committee: Robert Furuhjelm, Christian Gylling, Kati Hagros
Nomination Committee: Robert Furuhjelm, Christian Gylling, Seppo Saastamoinen
Tokmanni Group Corporation publishes a separate Corporate Governance and statement and remuneration report for 2016 in accordance with the Securities Market Association Corporate Governance Code 2015. The statement will be published during week 8 on the corporate website.
LL.M Sirpa Huuskonen has been appointed Group HR Director and member of the Executive Group as of May 2nd 2016. Executive Group member M. Sc. (Econ.), Business Development Director, Jari Laine left Tokmanni as of August 10th 2016. M.Sc. (Econ.)Hanna Nikoskelainen has been appointed Business Development Director and Executive Group member as of January 30th 2017. Sales Director and Executive Group member Panu Porkka left Tokmanni at the end of 2016. M.Sc. (Econ.) Mathias Kivikoski has been appointed Sales Director and Executive Group member as of January 16th 2017.
Changes in Tokmanni's insider and disclosure policies
As a consequence to the Market Abuse Regulation ((EU) No 596/2014,"MAR"), which came into effect on July 3rd 2016, Tokmanni Group Corporation has made changes to its insider and disclosure policies. As of July 3rd 2016, Persons Discharging Managerial Responsibilities (PDMR) Tokmanni are the members of Tokmanni Group's Board of Directors, the CEO, the deputy to the CEO and the CFO.
Tokmanni Group Corporation's risk management is guided by its risk management policy confirmed by the Board of Directors. The objective of Tokmanni's risk management is to support the Group's values, strategy and business continuity by anticipating and managing potential risks involved in the activities. The aim is to assess the risks systematically in order to promote the in-depth planning and decision-making process.
The responsibility for the practical implementation of risk management lies with Group management. Risks are assessed on a regular basis and managed holistically. Tokmanni Group Corporation's risks are discussed in Tokmanni's Board of Directors' Finance and Audit Committee semi-annually.
The chairman of the Finance and Audit Committee regularly reports on risk management to the Board. The most significant risks and uncertainty factors are disclosed to the market in the report by the Board of Directors and any material changes to these risks in the business reviews and half year financial reports.
Tokmanni's business performance and profitability are exposed to consumer behavior in the Finnish retail market. The overall poor economic situation which has continued for a long time in Finland and among others the increase in unemployment have affected the consumer purchasing power and has led to a drop in demand. In the retail market in turn, this has been reflected in more aggressive price competition, especially in the grocery segment. If the weak economic conditions would continue and the price competition would increase also in the non-grocery market it could have a negative impact on Tokmanni's business. To manage market risks Tokmanni monitors the market as part of the Group's everyday business operations, and adapt sales promotion measures and pricing strategies as a response to changing market conditions.
Failures in Tokmanni's product safety control or quality assurance of the supply chain may result in financial losses and loss of customer confidence. Different aspects of responsibility, manufacturing of products, responsible sourcing, the importance of fair and equal treatment of employees is becoming even more is even more pronounced to customers. Possible failures in implementing the responsibility aspects would cause negative publicity and affect Group reputation. The aforementioned quality and reputation risks are managed, among others through quality and sustainability audits, by requiring suppliers and other partners to comply with BSCI's and the Group's Code of Conduct, through internal audit measures as well as rigorous internal compliance training.
Dependence on information systems, telecommunications and external service providers has grown also at Tokmanni. Also the integration of networks, outsourcing services as well as online and mobile retail have increased the challenges related to effective information security control. Extended malfunctions in information systems, payment systems or in other parts of the supply chain can cause major losses in sales. Tokmanni focuses even more on identifying the risks associated with data security and in increasing data security capabilities.
Tokmanni increases the number of private label products in all product categories as part of its target to improve profitability. Tokmanni's private label products generally have a low price image and have higher margins than branded products. Tokmanni is also focusing on direct sourcing, leaving the middlemen out and doing business directly with the suppliers. Increasing direct sourcing can increase risks related to the availability of products, the need for working capital, as well as product quality and safety-related business risks. Failure to increase the Tokmanni's private labels and direct sourcing may also endanger the implementation of the strategic objectives, which can have a negative impact on Tokmanni's business and financial position. To manage the above mentioned risks, the Group among others takes advantage of its sourcing joint venture established in Shanghai, continues to develop and optimize its sourcing model and conducts manufacturing audits.
Tokmanni's Like-for-Like revenue growth is largely dependent on its advertising and the effectiveness and efficiency of marketing programs. The success of the advertising and marketing program requires that Tokmanni manages advertising and marketing costs effectively to keep the marketing investment returns at an acceptable level and to increase the number of customers through improved awareness. To manage the marketing risk, Tokmanni monitors the market and measures marketing and advertising efficiency constantly. Tokmanni's marketing processes have been developed to be agile and flexible, allowing for a very rapid response to potential negative effects.
Tokmanni's strategy implementation and strategic changes require new kind of competencies and skilled personnel. Tokmanni's ongoing development and the need for specialized expertise will increase the risk of key employees and reliance on the competence of individual people. Tokmanni focuses on essential competencies in recruitment, competence development, learning on the job and training to reduce key employee risks.
Tokmanni is exposed to currency risk through its purchasing practices. Unfavorable changes in currency exchange rates may increase the cost of the products purchased in currencies other than in euros and Tokmanni may not be able to transfer all such costs to its products. Tokmanni's main foreign currency is the US dollar. Of Tokmanni's products purchased during the review period ending December 31st, 2016 approximately 90 per cent were euro denominated and about 10 per cent US dollar denominated. Tokmanni hedges at least half of purchases made in USD for an average period of five months.
Tokmanni strives to improve working capital management with better processes and tools in sourcing, supply chain management and category management. If the Group fails to improve working capital management this can have a negative impact on the Group's financial position and profitability. Tokmanni continuously monitors the inventory turnover, product life cycles and assortment management as part of the Group's everyday business operations management and take corrective action if necessary.
In February, Tokmanni's Deputy CEO and CFO M.Sc. Sixten Hjort (61) announced that he will retire from the Group by the end of June. Tokmanni has initiated the successor recruitment process.
On February 9th 2017 Cidron Disco S.à r.l ("Cidron", a company ultimately owned by Nordic Capital Fund VII1), together with associated co-investment vehicles) sold 9 million shares in Tokmanni Group Corporation, corresponding to 15.29% of all Tokmanni Group Corporation shares and votes, in an accelerated book-building process. After the shares sale Cidron owns 8,952,301 Tokmanni Group Corporation shares, corresponding to 15.21% of all shares and votes.
During 2016 the Finnish economy has seen slight recovery which has been primarily based on the growth of private consumption. The Finnish Finance Ministry predicts that GDP will grow by 0.9% in 2017 and 1.0% in 2018, but that the growth of private consumption will temporarily slowdown in 2017 as among others a result of accelerating inflation, wage development due to the Competitive Pact (KiKy) as well as annual working time changes. Tokmanni expects the Finnish retail market to grow slightly, but tough competition to continue especially in the grocery market. At the same time specialty stores and online stores will continue to strengthen their position.
Although the weak economic situation has accelerated the growth of discount stores in the Finnish retail market as a whole, growth is expected to continue as the economy recovers. When customers have taken discount retailers as a regular shopping place and become accustomed to discount retailers and found the value for money of those products favorable they are likely to remain regular customers also when the economy recovers. The value for money trend which has prevailed internationally for a long time is therefore expected to continue.
The bankruptcy clearance sale of Anttila department store has ended and the last stores closed in December 2016. The bankruptcy caused a disturbance on the market in the second half of 2016 but in the longer term, Anttila's exit from the market creates opportunities for companies such as Tokmanni both regarding retail space as well as the redistribution of Anttila's customer base.
Tokmanni expects good revenue growth for 2017 based on the revenue from new stores opened in 2016 and 2017 and low single digit Like-for Like revenue growth. Profitability (adjusted EBITDA%) is expected to improve from the previous year. The Group continues to develop its business to improve competitiveness and profitability. In 2017 Tokmanni will increase its selling space by 22,000 square meters. Capital expenditure is expected to be at a higher level than previous years due to the high selling space increase.
Based on the strong cash flow and cash position, the Board of Directors proposes that a dividend of 0.41 euro per share in accordance with Tokmanni Group Corporation's dividend policy and an extraordinary dividend of 0.10 euro, 0.51 euro in total be paid for the financial period ending December 31st 2016. The parent company's distributable funds total 148,659,286.33 euro, which includes 34,006,856.80 euro in profit for the year. There are 58,868,752 shares with dividend rights. The dividend will be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Ltd on the record date 28 March 2017. The dividend payment date proposed by the Board is 4 April 2017. Tokmanni Group Corporations's liquidity is good and the proposed profit distribution does not endanger Tokmanni Group Corporation's solvency.
| Key figures | 1-12/2016 | 1-12/2015 | 1-12/2014 |
|---|---|---|---|
| Revenue, MEUR | 775.8 | 755.3 | 734.3 |
| Like-for-like revenue development, % | -0.1 | -0.6 | -0.3 |
| Number of baskets, M | 44.7 | 43.3 | 42.3 |
| Gross profit, MEUR | 268.4 | 257.5 | 248.6 |
| Gross margin, % | 34.6 | 34.1 | 33.9 |
| Adjusted gross profit, MEUR | 267.9 | 258.1 | 247.5 |
| Adjusted gross margin, % | 34.5 | 34.2 | 33.7 |
| Operating expenses | -207.4 | -207.7 | -195.7 |
| Adjusted operating expenses | -208.5 | -203.7 | -193.9 |
| EBITDA, MEUR | 64.3 | 53.9 | 56.5 |
| EBITDA, % | 8.3 | 7.1 | 7.7 |
| Adjusted EBITDA, MEUR | 62.8 | 58.5 | 57.1 |
| Adjusted EBITDA, % | 8.1 | 7.7 | 7.8 |
| Operating profit (EBIT), MEUR | 49.2 | 39.1 | 43.0 |
| Operating profit margin EBIT, % | 6.3 | 5.2 | 5.9 |
| Adjusted EBIT, MEUR | 47.7 | 43.7 | 43.6 |
| Adjusted EBIT, % | 6.1 | 5.8 | 5.9 |
| Net financial items, MEUR | -15.2 | -20.9 | -22.2 |
| Net capital expenditure, MEUR | 9.8 | 9.0 | 13.2 |
| Net debt / adjusted EBITDA | 1.8 | 2.7 | 3.0 |
| Net cash from operating activities, MEUR | 62.5 | 35.0 | 34.7 |
| Return on capital employed, % | 14.5 | 11.6 | 12.9 |
| Return on equity, % | 18.1 | 12.0 | 16.2 |
| Personnel at the end of the period | 3 224 | 3 293 | 3 118 |
| Personnel on average in the period | 3 209 | 3 193 | 3 086 |
* The amount of shares 2015 and 2016 has been adjusted with the effects of the bonus issue ('share split') carried out 04/2016.
| Per-share data | 2016 | 2015 | 2014 |
|---|---|---|---|
| Earnings per share (EUR/share)* | 0.50 | 0.33 | 0.37 |
| Dividend per share | 0.51 ** | - | - |
| Equity per share /** | 3.08 | 3.02 | 2.55 |
| Share price at 31 December | 8.50 | - | - |
| Highest price during the period | 9.88 | - | - |
| Lowest price during the period | 6.26 | - | - |
| Average price during the period | 7.62 | - | - |
| Share turnover (thousands) | 51 668 | - | - |
| Share turnover, % | 87.8 | - | - |
| Market capitalization at 31 December (MEUR) | 500.4 | - | - |
| Number of shares at 31 December (thousands) | 58 869 | 22 274 | 22 274 |
| Number of shares, weighted average during the financial period (thousands)* |
54 095 | 44 549 | 44 527 |
* The amount of shares 2016, 2015 and 2014 has been adjusted with the effects of the bonus issue ('share split') carried out 04/2016.
** Proposal by the Board of Directors to the Annual General Meeting
*** Including shareholder loans
| MEUR | 1-12/2016 | 1-12/2015 | 1-12/2014 |
|---|---|---|---|
| Gross profit | 268.4 | 257.5 | 248.6 |
| Changes in fair value of currency derivatives | -0.5 | 0.6 | -1.1 |
| Adjusted Gross Profit | 267.9 | 258.1 | 247.5 |
| Operating expenses | -207.4 | -207.7 | -195.7 |
| Changes in fair value of electricity derivatives | -1.1 | 0.3 | -0.2 |
| Brand harmonization costs | - | 3.5 | 2.0 |
| IPO costs* | - | 0.2 | - |
| Adjusted operating expenses | -208.5 | -203.7 | -193.9 |
| EBITDA | 64.3 | 53.9 | 56.5 |
| Operating profit (EBIT) | 49.2 | 39.1 | 43.0 |
| Changes in fair value of currency derivatives | -0.5 | 0.6 | -1.1 |
| Changes in fair value of electricity derivatives | -1.1 | 0.3 | -0.2 |
| Brand harmonization costs | - | 3.5 | 2.0 |
| IPO costs* | - | 0.2 | - |
| Adjusted EBITDA | 62.8 | 58.5 | 57.1 |
| Adjusted operating profit (adj. EBIT) | 47.7 | 43.7 | 43.6 |
*as of January 1st, 2016 IPO costs are recorded in the balance sheet
| Like-for-like revenue | = | Like-for like revenue growth: Like-for-like revenue growth is calculated by taking into account the revenue growth of stores that are not considered to be net new and relocated stores, as defined by Tokmanni to include: (i) new stores opened; (ii) store relocations where the store size changes by 30 percent or more; (iii) store expansions where the store size changes by 30 percent or more; and (iv) closed stores. If the store falls in one of these categories, it is regarded as a net new or relocated store in its opening year and in the following calendar year. |
|---|---|---|
| Number of baskets | = | Number of customer transactions during the relevant period |
| Gross profit | = | Revenue - Materials and services |
| Adjusted gross profit | = | Gross profit - Changes in fair value of currency derivatives |
| Operating expenses | = | Employee benefits expenses + Other operating expenses |
| Adjusted operating expenses | = | Operating expenses - (Changes in fair value of electricity derivatives + Brand harmonisation costs + Costs related to the Offering) |
| EBITDA | = | Operating profit + Depreciation and Amortisation |
| Adjusted EBITDA | = | EBITDA - (Changes in fair value of currency derivatives + Changes in fair value of electricity derivatives + Brand harmonisation costs + Costs related to the Offering) |
| Adjusted EBIT | = | EBIT - (Changes in fair value of currency derivatives + Changes in fair value of electricity derivatives + Brand harmonisation costs + Costs related to the Offering) |
| Net financial items | = | Financial income - Financial expenses |
| Net debt | = | Interest bearing debt - Shareholder loans - Cash and cash equivalents |
| Net debt / adjusted EBITDA | = | Net debt |
| Adjusted EBITDA |
| Net cash from operating activities |
= | Sum of changes in current non-interest bearing operating receivables, changes in inventories and changes in current non-interest bearing operating liabilities |
|---|---|---|
| Capital employed | = | Balance sheet total - Deferred tax liability and other non-interest-bearing liabilities |
| Return on capital employed, % | = | Profit before taxes + Interest and other financial expenses |
| Average capital employed | ||
| Return on equity, % | = | Net result for the financial period |
| Average equity including shareholder's loan | ||
| Number of personnel | = | Number of personnel at the end of the period |
| Number of personnel on average |
= | Number of personnel on average in the financial period |
| Equity ratio | = | Equity + Shareholder loans |
| Balance sheet total |
| Earnings Per Share | = Net profit |
|---|---|
| Number of shares weighted average during the financial period | |
| Equity per share | = Equity |
| Number of shares at the end of the reporting period | |
| Average price during the period | = Share turnover in euro terms divided by the number of shares traded during the period |
| Share turnover | = Number of shares traded during the period |
| Market capitalization at 31 December |
= Number of shares x share price on the balance sheet date |
| Number of shares at 31 December |
= Number of shares on the balance sheet date |
Tokmanni Group Oy had 22,274,436 shares at the beginning of 2016. The Group issued a bonus issue (a share split) in April 2016 where one new share was given to shareholders for each share (1:1). In total 22,274,436 shares were issued. Tokmanni was successfully introduced on the Nasdaq Helsinki stock exchange after the completion of its Initial Public Offering. Trading in Tokmanni's shares started on the pre-list of Nasdaq Helsinki on 29 April 2016 and on the official list on 3 May 2016. In the IPO Tokmanni issued 14,319,880 new shares and consequently, Tokmanni had 58,868,752 outstanding shares at the end of the year.
Tokmanni has one share series and all shares carry equal voting rights at the general meeting. The share has no nominal value. Tokmanni does not hold any of its own shares.
| 2016 | |
|---|---|
| Turnover, EUR | 375 640 988 |
| Volume | 51 667 656 |
| High | 9.88 |
| Low | 6.26 |
| WVAP | 7.62 |
| Last | 8.50 |
| Market cap 31.12.2016 | 500 384 392 |
| Number of shares | Shareholders | Shares | Votes | |||
|---|---|---|---|---|---|---|
| Number | % | Number | % | Number | % | |
| 1 - 100 | 1 730 | 29.056 | 108 784 | 0.185 | 108 784 | 0.185 |
| 101 - 500 | 2 706 | 45.448 | 751 719 | 1.277 | 751 719 | 1.277 |
| 501 - 1 000 | 801 | 13.453 | 647 966 | 1.101 | 647 966 | 1.101 |
| 1 001 - 5 000 | 548 | 9.204 | 1 178 292 | 2.002 | 1 178 292 | 2.002 |
| 5 001 - 10 000 | 56 | 0.941 | 404 178 | 0.687 | 404 178 | 0.687 |
| 10 001 - 50 000 | 60 | 1.008 | 1 316 868 | 2.237 | 1 316 868 | 2.237 |
| 50 001 - 100 000 | 18 | 0.302 | 1 256 814 | 2.135 | 1 256 814 | 2.135 |
| 100 001 - 500 000 | 16 | 0.269 | 3 659 720 | 6.217 | 3 659 720 | 6.217 |
| 500 001 - 999 999 999 999 | 19 | 0.319 | 49 544 411 | 84.161 | 49 544 411 | 84.161 |
| Total | 5 954 | 100.000 | 58 868 752 | 100.000 | 58 868 752 | 100.000 |
| Out of which nominee registered |
7 | 5 174 205 | 8.789 | 5 174 205 | 8.789 |
| Group | Nr of shareholders | % | Nr of shares | % |
|---|---|---|---|---|
| Private Corporations | 257 | 4.32 | 11 533 447 | 19.59 |
| Banks and insurance companies | 31 | 0.52 | 10 174 446 | 17.28 |
| Public sector entities | 10 | 0.17 | 8 498 374 | 14.43 |
| Non-profit organisations | 58 | 0.97 | 590 366 | 1.00 |
| Households | 5 576 | 93.65 | 4 650 088 | 7.90 |
| Outside Finland | 22 | 0.37 | 18 247 826 | 31.00 |
| Nominee registered | 5 174 205 | 8.80 | ||
| Total | 5 954 | 100.00 | 58 868 752 | 100.00 |
| Owner | Shares | % | |
|---|---|---|---|
| 1 | Cidron Disco S.A.R.L. | 17 952 301 | 30.50 |
| 2 | Rockers Tukku Oy | 8 836 825 | 15.01 |
| 3 | Elo Pension Company | 2 700 000 | 4.59 |
| 4 | Varma Mutual Pension Insurance Company | 2 675 000 | 4.54 |
| 5 | Mandatum Life Insurance Company Limited | 2 350 000 | 3.99 |
| 6 | Nordea Fennia Fund | 1 846 970 | 3.14 |
| 7 | Nordea Pro Finland Fund | 1 582 737 | 2.69 |
| 8 | Ilmarinen Mutual Pension Insurance Company | 1 275 000 | 2.17 |
| 9 | Evli Finnish Small Cap Fund | 762 195 | 1.29 |
| 10 | Veritas Pension Insurance Company Ltd. | 750 000 | 1.27 |
| 11 | Mandatum Life Unit-Linked | 707 078 | 1.20 |
| 12 | Etera Mutual Pension Insurance Company | 675 000 | 1.15 |
| 13 | Säästöpankki Korko Plus-Sijoitusrahasto | 661 312 | 1.12 |
| 14 | Kaleva Mutual Insurance Company | 650 000 | 1.10 |
| 15 | Fondita Nordic Small Cap Investment Fund | 600 000 | 1.02 |
| 16 | Väänänen Heikki | 600 000 | 1.02 |
| 17 | Säästöpankki Kotimaa | 537 107 | 0.91 |
| 18 | Sivula Harri | 450 000 | 0.76 |
| 19 | Kirkon Eläkerahasto | 363 931 | 0.62 |
| 20 | SEB Finland Small Cap Investment Fund | 287 000 | 0.49 |
| Consolidated income statement MEUR |
Note | 1 Jan - 31 Dec 2016 |
1 Jan - 31 Dec 2015 |
|---|---|---|---|
| Revenue | 775.8 | 755.3 | |
| Other operating income | 3 | 3.4 | 4.0 |
| Materials and services | -507.4 | -497.8 | |
| Employee benefits expenses | 6, 25 | -96.4 | -92.3 |
| Depreciation | 5 | -15.1 | -14.8 |
| Other operating expenses | 4 | -111.1 | -115.4 |
| Share of profit (loss) in joint ventures | 0.0 | 0.0 | |
| OPERATING PROFIT | 49.2 | 39.1 | |
| Financial income | 7 | 0.1 | 0.4 |
| Financial expenses | 7 | -15.3 | -21.3 |
| PROFIT/LOSS BEFORE TAX | 34.0 | 18.2 | |
| Income taxes Net result for the financial period |
8, 13 | -6.8 27.2 |
-3.4 14.8 |
| Profit for the year attributable to Equity holders of the parent company |
27.2 | 14.8 | |
| Consolidated statement of comprehensive |
|||
| income Net result for the financial period |
27.2 | 14.8 | |
| Other comprehensive income | |||
| Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations |
0.0 | 0.0 | |
| Comprehensive income for the financial period, net of tax | 0.0 | 0.0 | |
| Comprehensive income for the financial period | 27.2 | 14.8 | |
| Comprehensive income for the financial period attributable to | |||
| Equity holders of the parent company | 27.2 | 14.8 | |
| Earnings per share | 2016 | 2015 | |
| Equity holders of the parent company | 27.2 | 14.8 | |
| Number of shares, weighted avarage during the financial period | |||
| (thousands)* | 54 095 | 44 549 | |
| Undiluted earnings per share (EUR/share)* | 0.50 | 0.33 |
* The amount of shares 2016 and 2015 has been adjusted with the effects of the bonus issue ('share split') carried out 04/2016.
| Consolidated statement of financial position MEUR |
Note | 31 Dec 2016 | 31 Dec 2015 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Property, plant and equipment | 9 | 90.7 | 92.7 |
| Goodwill | 10 | 128.6 | 128.6 |
| Other intangible assets | 10 | 3.6 | 3.7 |
| Non-current receivables | 12, 18 | 0.1 | 0.1 |
| Investments in joint ventures and other financial assets | 11 | 0.2 | 0.2 |
| Deferred tax asset | 13 | 5.0 | 5.2 |
| NON-CURRENT ASSETS, TOTAL | 228.1 | 230.5 | |
| CURRENT ASSETS | |||
| Inventories | 14 | 155.2 | 160.0 |
| Trade and other receivables | 15, 18 | 17.0 | 14.4 |
| Income tax receivables | 0.7 | 1.2 | |
| Cash and cash equivalents | 16 | 57.6 | 48.9 |
| CURRENT ASSETS, TOTAL | 230.5 | 224.5 | |
| ASSETS, TOTAL | 458.6 | 455.0 | |
| EQUITY AND LIABILITIES | |||
| Equity attributable to the equity holders of the parent company | |||
| Share capital | 17 | 0.1 | 0.0 |
| Reserve for invested unrestricted equity | 17 | 110.0 | 18.8 |
| Translation differences | 0.0 | 0.0 | |
| Retained earnings | 56.5 | 29.3 | |
| EQUITY, TOTAL | 166.6 | 48.1 |
| EQUITY AND LIABILITIES, TOTAL | 458.6 | 455.0 | |
|---|---|---|---|
| CURRENT LIABILITIES, TOTAL | 108.4 | 111.7 | |
| Income tax liabilities | 21 | 1.7 | 0.0 |
| Trade payables and other current liabilities | 18, 21, 22 | 103.5 | 91.0 |
| Current interest-bearing liabilities | 18, 19, 22 | 3.2 | 20.6 |
| CURRENT LIABILITIES | |||
| NON-CURRENT LIABILITIES, TOTAL | 183.6 | 295.3 | |
| Non-current non-interest-bearing liabilities | 18, 22 | 8.1 | 16.1 |
| Non-current interest-bearing liabilities | 18, 19, 22 | 170.3 | 273.2 |
| Deferred tax liabilities | 13 | 5.3 | 6.0 |
| Consolidated statement of cash flows | Note | 1 Jan - 31 Dec | 1 Jan - 31 Dec |
|---|---|---|---|
| MEUR | 2016 | 2015 | |
| Cash flows from operating activities | |||
| Net result for the financial period | 27.2 | 14.8 | |
| Adjustments: | |||
| Non-cash items | 13.1 | 15.3 | |
| Financial income | 7 | -0.1 | -0.4 |
| Financial expenses | 7 | 15.3 | 21.3 |
| Income taxes | 8 | 6.8 | 3.4 |
| Change in current non-interest-bearing receivables | -2.4 | -0.4 | |
| Change in inventories | 4.7 | -8.5 | |
| Change in current non-interest-bearing liabilities | 13.1 | 7.4 | |
| Interest paid and other financial expenses | -11.5 | -12.6 | |
| Interest received | 0.1 | 0.1 | |
| Income taxes paid | -4.0 | -5.5 | |
| Net cash from operating activities | 62.5 | 35.0 | |
| Cash flows from investing activities | |||
| Purchases of tangible and intangible assets | -10.0 | -15.7 | |
| Proceeds from disposal of tangible and intangible assets | 0.2 | 6.4 | |
| Investments in subisidiary shares | 0.0 | 0.3 | |
| Net cash from investing activities | -9.8 | -9.0 | |
| Cash flows from financing activities | |||
| Proceeds from share issue | 90.1 | 0.0 | |
| Repayments of finance lease liabilities | -3.4 | -2.8 | |
| Proceeds from loans | 125.0 | 0.0 | |
| Repayment of loans | -255.8 | -26.7 | |
| Net cash from financing activities | -44.1 | -29.5 | |
| Net change in cash and cash equivalents | 8.7 | -3.5 | |
| Cash and cash equivalents at beginning of the financial period | 48.9 | 52.4 | |
| Cash and cash equivalents at end of the financial period | 57.6 | 48.9 |
| MEUR | Note | Share capital |
Reserve for invested unrestricted equity |
Translation differences |
Retained earnings |
Equity attributable to owners of the parent |
Total equity |
|---|---|---|---|---|---|---|---|
| Equity 1 Jan 2016 | 0.0 | 18.8 | 0.0 | 29.3 | 48.1 | 48.1 | |
| Comprehensive income | |||||||
| Net result for the financial period | 27.2 | 27.2 | 27.2 | ||||
| Translation differences | 0.0 | 0.0 | 0.0 | ||||
| Total comprehensive income for the financial | |||||||
| period | 0.0 | 27.2 | 27.2 | 27.2 | |||
| Share issue | 95.9 | 95.9 | 95.9 | ||||
| Bonus issue | 0.1 | -0.1 | 0.0 | 0.0 | |||
| Costs directly attributable to the issue of new | |||||||
| shares net of tax | -4.6 | -4.6 | -4.6 | ||||
| Equity 31 Dec 2016 | 0.1 | 110.0 | 0.0 | 56.5 | 166.6 | 166.6 |
| MEUR | Note | Share capital |
Reserve for invested unrestricted equity |
Translation differences |
Retained earnings |
Equity attributable to owners of the parent |
Total equity |
|---|---|---|---|---|---|---|---|
| Equity 1 Jan 2015 | 0.0 | 18.8 | 0.0 | 14.4 | 33.2 | 33.2 | |
| Comprehensive income | |||||||
| Net result for the financial period | 14.8 | 14.8 | 14.8 | ||||
| Translation differences | 0.0 | 0.0 | 0.0 | ||||
| Total comprehensive income for the financial period |
0.0 | 14.8 | 14.8 | 14.8 | |||
| Equity 31 Dec 2015 | 0.0 | 18.8 | 0.0 | 29.3 | 48.1 | 48.1 |
Accounting policies used in the consolidated financial statements
Tokmanni Group Corporation (Finnish limited liability company, business ID 2483212-7) is the parent company of the Tokmanni Group. The shares of the parent company are listed on the Nasdaq Helsinki exchange. Share trading started on the pre-list on 29 April 2016 and on the main list 3 May 2016.
The principal line of business of Tokmanni Group Corporation is to sell administrative services to the other companies in the Group. These companies include Retail Leasing Oy, whose line of business is to own and lease property, plant and equipment to the other Group companies. Retail Leasing Oy is also the parent of Nordic Disco AB (Sweden) which, in turn, is the parent of Tokmanni Oy. Tokmanni Oy engages in wholesale, retail and speciality goods trade in collaboration with its subsidiary, Tarjousmaxi Oy. Taitomanni Oy is a company owned by Tokmanni Oy in which there was no activity during the financial period.The Group also includes Retail Property Investment Oy that engages in the property business by investing in its own property companies which, in turn, construct store premises for the use of the Group companies. At the end of the financial period, the company owned one property company, Kiinteistö Oy Tokmanni Närpiö.
Tokmanni Group Corporation is domiciled in Helsinki and its registered address is Isolammintie 1, 04600 Mäntsälä. Copies of the parent company financial statements and the consolidated financial statements are available at the Group's head office at Isolammintie 1, 04600 Mäntsälä. At its meeting of 23 February 2017, the Board of Directors of Tokmanni Group Corporation approved the financial statements for publication. Under the Finnish Limited Liability Companies Act, the shareholders may either adopt or reject the financial statements at the Annual General Meeting held after their publication. In addition, the AGM may also decide to amend the financial statements.
These financial statements are compiled in accordance with the International Financial Reporting Standards (IFRS) and in particular with the IAS and IFRS standards and SIC and IFRIC interpretations in force on 31 December 2016. The term "International Financial Reporting Standards" refers to the standards adopted in the Finnish Accounting Act and provisions issued under it in accordance with the procedure under Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards in the EU. The notes to the consolidated financial statements also comply with Finnish accounting and company legislation that complements the IFRS provisions.
Unless otherwise specified in the present accounting policies, the information in the financial statements is based on historical cost. The consolidated financial statements are presented in euro which is the operating and reporting currency of the Group's parent company. The information is given in millions of euro unless otherwise mentioned.
The Group Management makes judgements on the choice of accounting policies and their application. In the financial statements at hand, the Management judgements relate to the valuation of inventories and the classification of lease agreements. Additional information on these judgements is available under "Accounting policies requiring management judgement and major sources of estimation uncertainty".
The consolidated financial statements include not only the parent company, Tokmanni Group Corporation, but also the subsidiaries controlled by the Group. Control is deemed to arise when the Group, while being involved with the entity, becomes exposed to the entity's variable returns or is entitled to such variable returns and the Group is able to affect those returns by exercising its power over the entity. In practice, control normally arises when the Group owns over half of the voting rights in the subsidiary. The acquired subsidiaries have been consolidated in the consolidated financial statements from the date at which the Group acquires control, until the moment at which this control expires.
All internal transactions, receivables and liabilities, unrealised profits and internal distribution of profit are eliminated at the preparation of the consolidated financial statements. Unrealised losses are not eliminated if the loss is caused by impairment of an asset.
Mutual share ownership within the Group is eliminated using the acquisition method. Considerations transferred and the identifiable assets as well as liabilities assumed of the acquiree are valued at their fair value of the date of acquisition. Acquisition-related costs are recognised as expenses, excluding the expenses incurred for the issuance of debt or equity securities. The consideration transferred does not include transactions treated separately from the acquisition, and the impact of such transactions is recognised in profit or loss at acquisition. On 31 December 2016 or on 31 December 2015, there were no non-controlling interests within the Group. The way to recognise the goodwill generated through subsidiary acquisitions and business acquisitions is described later in the policies under "Goodwill".
The Group also includes a joint arrangement operating in Hong Kong, classified as a joint venture (Tokmanni – Europris Sourcing Ltd.). A joint arrangement is one where two or several parties exercise joint control. Joint control means contractually agreed sharing of control over the arrangement, and it prevails only if decisions about relevant activities require unanimous consent of the parties sharing the control. A joint arrangement is either a joint operation or a joint venture. In a joint operation, the Group has rights based on the assets and obligations based on the liabilities in the arrangement, while a joint venture is an arrangement where the Group has rights to the net assets of the arrangement.
A joint venture is consolidated using the equity method. If the Group's share of the losses from the joint venture exceeds the carrying amount of the investment, it will be recognised in the statement of financial position at zero, while the losses in excess of the carrying amount are not consolidated unless the Group is committed to meeting the obligations of the joint venture. The Group's share of the net profit for the financial period of the joint venture, proportional to its ownership interest, is disclosed prior to the operating profit.
Transactions in foreign currencies are converted into the functional currency using the exchange rate of the transaction date. Gains and losses resulting from the translation of foreign currency transactions and items are recognised in profit or loss, disclosed after the operating profit in financial income and expenses. The following items included in the purchase costs of the financial period constitute an exception:
The income and expenses in the statement of comprehensive income and the separate income statement of a foreign subsidiary are translated into euro at the exchange rates of the transaction dates, while the statement of financial position is translated using the closing rates of the reporting period. The translation of the net profit for the financial period and of the comprehensive income by using different rates in the income statement / statement of comprehensive income on the one hand and in the statement of financial position on the other hand, gives rise to a translation difference recognised in equity, with the respective changes recognised under other comprehensive income. The translation differences arising from the elimination of the acquisition cost of a foreign subsidiary and the postacquisition equity items are recognised under other comprehensive income. When a subsidiary is disposed of, either in full or in part, the cumulative translation differences are recognised in profit or loss as a part of capital gains or losses.
Translation differences arising prior to 1 January 2013, the Group's date of transition to IFRSs, are recognised in line with the respective relief under IFRS 1 in retained earnings at the adoption of IFRS. Later, these items will not be recognised in profit or loss if a subsidiary is disposed of. Starting from the transition date, the translation differences arising at the preparation of the consolidated financial statements are disclosed as a separate item in equity.
Property, plant and equipment include land areas, buildings and refurbishment expenses related to them, as well as machinery and equipment. In the statement of financial position, property, plant and equipment are measured at cost less accumulated depreciation and eventual impairment losses.
Assets, with the exception of land, are depreciated over their useful lives using the straight-line depreciation method, while land is not subject to depreciation. Depreciation commences when the asset is ready for use and functioning in the way expected by Management. When an item in property, plant and equipment is classified as one held for sale in line with IFRS 5 Noncurrent assets held for sale and discontinued operations, depreciation is no longer recorded.
The estimated useful lives are as follows:
| Buildings and constructions | 15 | years |
|---|---|---|
| Machinery and equipment | 5 | years |
The capital gains and losses from retirements and disposals of property, plant and equipment are recognised in profit or loss and disclosed in other operating income or expenses. Capital gain or loss is defined as the difference between the sales price and the residual acquisition cost. The normal repair, service and maintenance expenses of property, plant and equipment are recognised as expenses in the income statement during the period in which they are incurred.
The residual value, useful life and depreciation method of an asset item are re-examined at least at the end of each financial period and adjusted, if necessary, to reflect the changes in the expected economic benefits.
The goodwill generated from business combinations is recognised as the excess of the aggregate of the consideration transferred, the non-controlling interests in the acquiree and any previous interest held, over the fair value of the acquired net assets. The goodwill generated from business combinations prior to 1 January 2013 corresponds to the carrying amount under the earlier FAS, used as the deemed cost under the IFRS standard 1.
Goodwill is not subject to amortisation, but is tested for impairment on an annual basis and also whenever there is an indication of impairment. Goodwill is recognised at deemed cost defined at the IFRS transition less impairment.
Intangible assets are recognised in the statement of financial position at their cost, on condition that the cost can be determined reliably and it is probable that the Group will receive the expected economic benefits from the asset. The other intangible assets of the Group are mainly IT software and licenses. They are recognised at acquisition cost less amortisation and impairment losses. The cost is the purchase price and all other expenses directly incurred for making the asset available for its intended use.
Intangible assets with definite useful lives will be amortised using the straight-line method over their known or estimated useful lives. Intangible assets with a fixed timeframe are amortised and recognised as expenses over the respective contract period. Once the intangible asset is classified as held-for-sale, amortisation is no longer recorded. The amortisation period for other intangible assets is five years on average.
The estimated useful lives and residual values are reviewed at least at the end of each financial period, and, if they differ significantly from earlier estimates, the amortisation periods are adjusted correspondingly.
Inventories are valued at the lower of cost or net realisable value. Cost is defined using the weighted average method. The cost of finished goods includes all costs of purchase, including direct transportation and handling costs and other costs. The net realisable value is the estimated sales price obtainable through normal business, less the estimated product expenses and the estimated indispensable expenses related to materialised sales.
The Group engages in considerable intra-Group lease operations related to property, plant, equipment and intangible assets, the respective economic impacts of which are eliminated in the consolidated financial statements. In addition, the Group has leased properties and cars from third parties.
The lease agreements on property, plant and equipment in which the Group carries a material share of the risks and benefits typical of ownership, are classified as finance leases.
An asset acquired through a finance lease is recognised in the statement of financial position at the commencement of the lease at the fair value of the leased asset at the inception of the lease, or at the present value of the minimum lease payments, whichever is lower.
Assets acquired through finance leases are depreciated over the shorter of their useful lives or the lease period. The leases payable are divided into finance expenses and debt repayments over the lease period, so that the residual debt at each period is subject to the same rate of interest. Contingent rents are recognised as expenses during the periods they are incurred. Lease obligations are included in financial liabilities.
Lease agreements in which the risks and benefits typical of ownership are substantially all carried by the lessor are accounted for as operating leases. The operating lease payments are recognised as expenses in profit or loss over the lease term. Contingent rents are recognised as expenses during those periods in which they are incurred.
When a lease agreement includes parts relating to both land and buildings, the classification of each item is made separately.
The Group is a lessor mainly in the intra-Group lease agreements, and the economic impacts of them are eliminated in the consolidated financial statement. Lease agreements outside the Group play an insignificant role.
When an arrangement starts, the Group looks at the substance of the arrangement to define whether it is a lease agreement or whether a lease agreement is included in the arrangement. A lease agreement exists if execution of the arrangement depends on the use of a particular asset and the arrangement gives the right to use the said asset. If the arrangement includes a lease agreement, it will be subject to the requirements under IAS 17. The other elements of the arrangements are subject to the respective IFRS provisions.
At the end of each reporting period, the Group estimates whether there are indications of the value of any asset being impaired. Should there be such indication, the respective recoverable amount will be assessed. The impairment testing of goodwill takes place at least once a year and also whenever there is an indication of impairment.
The recoverable amount is the higher of the fair value less the costs of disposal of the asset, or its value in use. The value in use refers to the future net cash flows, discounted to their present value, estimated to be obtained from the asset or cash-generating unit. The discount rate is the pre-tax rate which reflects the current assessment view on the time value of money and on the risks associated with the asset.
The impairment loss will be recognised immediately in profit or loss if the carrying amount of the asset item exceeds the recoverable amount. If the impairment loss relates to a cash-generating unit, it is first recognised as an element decreasing the goodwill allocable to the cashgenerating unit, followed by a decrease in other assets in the unit on a pro rata basis. Coinciding with this, the useful life of the asset subject to impairment is reassessed. The impairment loss recognised for an asset other than goodwill can be reversed if there has been a change in the estimates used for determining the recoverable amount for the asset in question. However, the reversal of the impairment loss cannot exceed the carrying amount of the assets without the earlier impairment loss recognition. The impairment loss of goodwill is not reversible.
The Group companies have defined contribution plans, with the related payments expenses in profit or loss during the period in which the contributions are paid. The Group does not have a legal or constructive obligation to make additional contributions in the event that the recipient of the premium payments is not able to pay out the pension benefits. All arrangements not meeting such criteria are defined benefit plans. At the end of the reporting or comparison period, the Group had no such arrangements.
On the above dates, the Group had no shared-based reward arrangements covered by the scope of IFRS 2 Share based payments.
A provision is recorded when the Group has a legal or constructive obligation as a result of an earlier event, and when the materialisation of the obligation is probable and its amount can be reliably estimated. Provisions are valued at the present value of the expenses required to cover the obligation. The discount rate used for the calculation of the present value is chosen to reflect the current market view of the time value of money and the risks associated with the obligation. If it is possible to have compensation for part of the obligation from a third party, the compensation is recognised as a separate asset when the reimbursement in virtually certain. The amounts of the provisions are estimated at each closing of the accounts, and they will be adjusted to correspond with the best current estimate. Changes in provisions are recognised in the income statement under the same item where the original provision was recorded. The increase in the provision resulting from the passing of time is recognised as interest expenses. At the end of the reporting or comparison period, the Group did not have any provisions.
A contingent liability is a possible obligation arising from past events, the existence of which is confirmed only if an uncertain event beyond the Group's control occurs. A contingent liability is also deemed to be a present obligation where payment is not probable or the amount cannot be measured reliably. Contingent liabilities are specified in the Notes.
The tax expense is constituted by the current tax and the deferred tax. Taxes are recognised in profit or loss except when they are directly related to items under equity or other comprehensive income, in which case the tax is also recognised under such items. Current tax is calculated on the basis of taxable income using the valid tax rates.
Deferred taxes are calculated on the basis of temporary differences between the carrying amount and taxable value. The most significant temporary differences in the Group arise from property, plant and equipment (depreciation difference and finance leasing) as well as from goodwill that is deductible in taxation.
In the Group, the investments made in subsidiaries are subject to the recognition of deferred tax liability unless the Group is able to control the timing of the reversal of temporary differences and it is probable that the reversal will not occur in the foreseeable future. A deferred tax asset is recognised to the extent that it is probable that there will be taxable income in the future, against which the temporary difference can be used. The criteria for recognising deferred tax assets are always assessed at the end of a reporting period. Deferred tax liabilities are normally recognised in full in the statement of financial position.
Deferred taxes are calculated using the tax rates in force on the date of the financial statements, and, when the tax rates change, on the known new rates if they are substantively enacted by the end of the reporting period.
The Group is engaged in the wholesale, retail and specialty goods trade. Its revenue comes from the sale of goods and, when the revenue is calculated, the sales proceeds are adjusted for indirect taxes and sales adjustment items. Revenue from the sale of goods is recognised when the major risks, benefits and control from the ownership of the goods have been taken over by the buyer, and it is probable that the Group will obtain the economic benefits related to sales. Most of the sales are cash or credit card sales, and therefore the proceeds are recognised as revenue at the moment the products are delivered to the buyers. Other operating income includes mainly rental income and service sales proceeds.
The Group's financial assets are classified on initial recognition into the following categories: Financial assets at fair value through profit or loss and Loans and receivables. With respect to financial assets other than those recognised at fair value through profit or loss, the transaction costs are added to the historical cost. All purchases and sales of financial assets are recognised on the transaction date, which is the date on which the Group commits to the purchase or sale of the financial instrument. Derecognition of financial assets takes place when the Group has lost the contractual right to the cash flows or when it has transferred a significant part of the risks and income outside the Group.
This group includes financial assets that are classified on initial recognition at fair value recognised through profit or loss. The items classified in this group by the Group include derivatives that are not subject to hedge accounting. Financial assets that will mature within 12 months of the end of the reporting period are included in current assets. The items in this group are measured at fair value, based principally on the market price quoted at the end of the reporting period. Should an item not have a quoted market price, it is measured by using general valuation methods mainly based on observable market information. Any realised or unrealised gains and losses resulting from changes in the fair value are recognised in profit or loss during the financial period in which they arise.
This group includes non-derivative assets that have fixed or determinable payments and are not quoted on the active market. The Group does not hold them for sale or classify them on initial recognition as held-for-sale. They are measured on the basis of amortised cost using the effective interest method, and they are included, in line with their inherent nature, in either current or non-current assets.
Cash and cash equivalents include money in cash, demand deposits at banks and other current liquid investments readily convertible to an amount of cash known in advance, with a minor risk of change in value. The maximum maturity of the items classified in cash and cash equivalents is three months from the moment of acquisition.
At the end of each reporting period, the Group reviews items measured at amortised cost to assess whether there is objective evidence of the impairment of the financial asset or group in question. For each significant item, the impairment analysis is made separately based on empirical evidence.
The Group will recognise an impairment loss on trade receivables once it has objective evidence that the receivable cannot be collected in full. Significant economic difficulties, probable bankruptcy, payment defaults or delay in payments by the debtor constitute evidence of impairment of trade receivables. The amount of the impairment loss, recognised in profit or loss, is determined as the difference between the carrying amount of the receivables and the expected future cash flows. Should the amount of the impairment loss diminish in a later period and the decrease can be objectively associated with an event after the recognition of the impairment, the recognised loss is reversed in profit or loss.
The Group's financial liabilities are classified on initial recognition as either financial liabilities at fair value through profit or loss, or financial liabilities measured at amortised cost. For financial liabilities other than those recognised at fair value through profit or loss, the transaction costs are deducted from the historical cost. All financial liability transactions are recognised on the contract date, or the date on which the Group commits to the contractual terms of the financial liability. The derecognition of financial liabilities takes place when the Group's contractual obligation has been met or cancelled or the obligation has expired.
The arrangement fees related to loan commitments are recognised as transaction costs to the extent that it is probable that the entire loan commitment or part of it will be drawn out, and in this case the fee will be recognised in the statement of financial position until the loan is drawn out. The arrangement fee related to loan commitments at the withdrawal is recognised under transaction costs. To the extent that it is probable that the loan commitment will not be drawn out, the arrangement fee is recognised as an advance payment for liquidityrelated services and is amortised over the loan commitment period.
The policies determining the fair values of all financial assets and liabilities are outlined in Note 18.
The Group concludes derivative contracts only for the purpose of hedging, but does not apply hedge accounting. The derivatives include electricity derivative contracts and currency derivatives. Electricity derivative contracts are used as a hedge against variation in electricity prices, to the maximum of the Group's own electricity consumption. The Group can use interest rate swap agreements to hedge against interest flow risks caused by long-term loans from credit institutions. Currency derivatives and options provide hedging against the changes in the cash flows of forecast purchases in foreign currencies. Derivative contracts are measured at fair value when the Group becomes a contractual party, and later they are further measured at fair value. The gains and losses thus arising are accounted for in line with the purpose of use of the derivative contract.
The share capital disclosed is based on the nominal value of the shares. The expenses associated with the issuance or purchase of equity instruments is disclosed as an item decreasing equity. If equity instruments are repurchased, their acquisition cost is deducted from equity.
IAS 1 Presentation of Financial Statements provides no definition for the concept of operating profit. The Group defines operating profit as revenue plus other operating income less purchase expenses and changes in inventory. Moreover, the expenses incurred for
employment benefits, depreciation and amortisation, any impairment losses and other operating expenses are deducted. Other income statement items are disclosed below operating profit. Exchange differences are included in financial items, with the exception of the following items included in the purchase costs of the financial period:
When preparing the financial statements, it is necessary to make certain assessments and assumptions about the future, although the actual outcomes may prove different. Moreover, Management must use its judgement in choosing and applying the accounting policies.
The Group Management makes judgements on the choice of accounting policies and their application. This applies, in particular, to the cases where the currently effective IFRS norms allow for alternative ways to recognise measure or disclose the items. The most significant areas where Management has used judgement are related to the classification of the Group's lease agreements and measurement of its inventories.
When classifying the leases, the Group has assessed the cases in which the risks and benefits associated with ownership and related to the leases can be deemed to have been transferred to the Group. These leases are accounted for as finance leases. Lease agreements in which the risks and benefits typical of ownership are substantially all carried by the lessor are recorded as operating lease. The most important classification criteria are the following:
examining this criteria, the Group Management must likewise base its decision on judgements.
When classifying leases, each lease is seen as a whole, considering also other impacting factors.
The items included in the Group's inventories are classified in different categories based on their turnover times, and the products with the slowest turnover times are subject to impairment loss recognition. Impairment recognition calls for judgements and estimates based on issues such as the future demand for the products. Changes in these assessments may impact the measurement of inventories in future financial periods.
The major assumptions about the future and the key sources of uncertainty related to estimations concerning the end of the reporting period, associated with a risk of changes in the carrying amount of assets and liabilities during the following period, are hereunder:
In impairment testing, the Group must assess indications of impairment based on both internal and external sources of information. The Group Management must make assessments while analysing the information obtained from these sources and making its conclusions. When determining the value in use, the Group estimates future market trends, such as the growth rate and profitability. The most impacting factors underpinning the estimates are the average EBIT margin (EBIT/revenue) and the discount rate. Changes in these assumptions may have a material impact on the estimated future cash flows. Note 10 Goodwill includes additional information on the sensitivity of the recoverable amount to the changes in the assumptions made.
The Group has applied as from 1 January 2016 the following new and amended standards that have come into effect:
Amendment to IAS 1 Presentation of Financial Statements: Disclosure Initiative (effective for financial years beginning on or after 1 January 2016). The amendments clarify the guidance in IAS 1 in relation to applying the materiality concept, disaggregating line items in the balance sheet and in the statement of profit or loss, presenting subtotals and to the structure and accounting policies in the financial statement. The amendments have had a minor impact on the presentation of Tokmanni Group Corporation's consolidated financial statements.
Amendments to IFRS 11 Joint Arrangements Accounting for Acquisitions of Interests in Joint Operations (effective for financial years beginning on or after 1 January 2016): The amendments require business combination accounting to be applied to acquisitions of interests in a joint operation that constitutes a business. The amendments have had no impact on Tokmanni Group Corporation's consolidated financial statements.
The Group has not yet adopted the following new and amended standards and interpretations already issued by the IASB. The Group will adopt them as of the effective date or, if the date is other than the first day of the financial year, from the beginning of the subsequent financial year.
New IFRS 15 Revenue from Contracts with Customers and amendments to IFRS 15 – Clarifications to IFRS 15 Revenue from Contracts with Customers* (effective for financial years beginning on or after 1 January 2018): IFRS 15 creates an extensive framework for revenue recognition, at what amounts and at what point of time. The new standard replaces current IAS 18 Revenue, IAS 11 –standards and related interpretations Construction Contracts and IFRIC 13 Customer Loyalty Programs. According to IFRS 15 revenue is 23ecognized when (or as) a company transfers control of goods or services to a customer either over time or at a point in time. The standard introduces also extensive new disclosure requirements. The Group has made a preliminary assessment of the impacts of IFRS 15 on Tokmanni Group Corporation's consolidated financial statements, according to which the impact will not be considerable on the financial statements. The Group's revenue consists of retail sales, where the customer gets control of the goods at the time of purchase. No variable considerations or separate performance obligations, that would have material significance when the goods are taken into use, have been identified. The Group has no loyalty program. When it comes to online sales the amount of returned goods has, based on experience, been minor. According to the preliminary plan Tokmanni Group Corporation will take the standard into use in the financial period starting 1 January 2018 applying the retroactive method.
IFRS 16 Leases* (effective for financial years beginning on or after 1 January 2019): The new standard replaces the current IAS 17-standard and related interpretations. IFRS 16 requires the lessees to recognize the lease agreements on the balance sheet as a right-of-use assets and lease liabilities. The accounting model is similar to current finance lease accounting according to IAS 17. There are two exceptions available, these relate to either short term contacts in which the lease term is 12 months or less, or to low value items i.e. assets of value USD 5 000 or less. The lessor accounting remains mostly similar to current IAS 17 accounting. The Group has started the assessment of the impacts of the standard, according to which the Group's assets and interest-bearing liabilities will increase substantially when the classification of leases as either finance leases or operating leases is eliminated The IFRS 16 standard also impacts the income statement, because unlike current accounting practice where the lease cost is recognized in the income statement, a depreciation charge for lease assets and an interest expense on finance lease liabilities will be recognized in the income statement. The standard will also impact the key figures and notes to the financial statements. The treatment of the Group lease agreements related to stores and equipment will change with the standard. According to the preliminary plan Tokmanni Group Corporation will take the standard into use in the financial period starting 1 January 2019. The Group's assessment of the euro impacts of the standard change will be clarified during 2017.
its Associate or Join Venture * (the effective date has been postponed indefinitely). The amendments address to clarify the requirements in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments have no impact on Tokmanni Group Corporation's consolidated financial statements.
The introduction of other standards or amendments to standards is not expected to impact Tokmanni Group Corporation's income, financial position or notes at adoption.
As a result of the nature of Tokmanni's operations, the Group only has one operating segment to report. This is based on the fact that the Group's purchasing and logistics are managed in a centralised manner, the opening of new and closing of existing stores is a Grouplevel decision, and the stores are deemed to be the Group's distribution channels. By the end of 2015, Tokmanni Group consolidated all seven stores brands operating under different chain names under one, Tokmanni brand. The Group only operates in Finland.
The chief operating decision-maker is the CEO, whose decision-making criterion in assessing performance and resource allocation is the Group EBITDA.
The Group's revenue is fully generated through the sale of goods, i.e. the group has no sale of services. All revenue is generated in Finland and all assets are also located in Finland. There are no single customers for which the revenues received amount to more than 10% of the Group's revenues.
| MEUR | 2016 | 2015 |
|---|---|---|
| Rental income | 0.3 | 0.8 |
| Income from services | 2.0 | 1.8 |
| Other operating income | 1.1 | 1.4 |
| Total | 3.4 | 4.0 |
Service commission includes slot machine income, income from Veikkaus Oy's pools and income arising from property use expenses charged from subtenants. Other income includes among others, income from the sale and leaseback arrangement of the Mäntsälä logistics centre as well as from sales of pallets.
| MEUR | 2016 | 2015 |
|---|---|---|
| Rental expenses | -44.6 | -45.7 |
| Marketing expenses | -14.1 | -15.9 |
| Real estate and store site expenses | -31.2 | -30.4 |
| Purchased services | -6.6 | -7.2 |
| Other expenses | -14.6 | -16.3 |
| Total | -111.1 | -115.4 |
| MEUR | 2016 | 2015 |
|---|---|---|
| Audit | -0.1 | -0.1 |
| Other services | -0.3 | -0.1 |
| Tax services | 0.0 | 0.0 |
| Total | -0.4 | -0.2 |
| MEUR | 2016 | 2015 |
|---|---|---|
| Intangible assets | ||
| IT software and licences | -1.7 | -1.7 |
| Other intangible assets | 0.0 | 0.0 |
| Total | -1.7 | -1.7 |
| Property, plant and equipment | ||
| Buildings and constructions | -6.4 | -5.6 |
| Machinery and equipment | -7.0 | -7.5 |
| Total | -13.4 | -13.1 |
| Total | -15.1 | -14.8 |
The Group has not recognised impairments for tangible or intangible assets in the 2015 and 2014 financial periods.
| MEUR | 2016 | 2015 |
|---|---|---|
| Wages, salaries and fees Pension expenses - defined contribution |
-77.0 | -74.5 |
| plans | -14.3 | -13.6 |
| Other social security expenses | -5.1 | -4.2 |
| Total | -96.4 | -92.3 |
| Number of personnel on average in the |
The information on Management's employment-related benefits is in Note 25, Related party transactions.
financial period 3 209 3 193
| MEUR | 2016 | 2015 |
|---|---|---|
| Interest income and other financial income | ||
| Interest income on financial assets at amortised cost Dividend income |
0.0 0.0 |
0.0 0.0 |
| Foreign exchange gains on cash and cash equivalents Gains in fair value of financial assets at fair value throw profit or loss |
0.1 | 0.1 |
| Interest rate derivatives, non-hedge accounting |
0.0 | 0.3 |
| Total | 0.1 | 0.4 |
| Interest expenses and other financial costs | ||
| Interest expenses on financial liabilities | ||
| at amortised cost | -11.2 | -17.1 * |
| Interest expenses on finance leases | -3.8 | -3.8 |
| Foreign exchange losses on cash and cash equivalents |
-0.1 | -0.1 |
| Other financial costs | -0.2 | -0.2 |
| Total | -15.3 | -21.3 |
| Total | -15.2 | -20.9 |
*2016 includes a one-off cost relating to activated, capitalized emission fees from previous loans.
Exchange rate differences are also recorded under purchases in the financial period. Changes in the fair value of currency derivatives are recognised as adjustments of purchases in the period by EUR 0.5 million (EUR -0.6 million). Changes in the fair value of commodity derivatives are recognised as adjustments of other operating expenses by EUR 1.1 million (EUR -0.3 million).
| MEUR | 2016 | 2015 |
|---|---|---|
| Income taxes for the financial period | -7.3 | -3.7 |
| Income taxes for previous financial periods | 0.0 | 0.3 |
| Change in deferred taxes | 0.5 | 0.1 |
| Total | -6.8 | -3.4 |
| Tax effects related to other comprehensive income | ||
| MEUR | 2016 | 2015 |
| Exchange differences on translating | ||
| foreign operations | 0.0 | 0.0 |
Reconciliation between the income tax expense in the income statement and the Group's tax expense at the Finnish tax rate of 20.0% (20.0%):
| MEUR | 2016 | 2015 |
|---|---|---|
| Profit/loss before tax Income taxes at Finnish tax rate 20,0 % (20,0 |
34.0 | 18.2 |
| %) | -6.8 | -3.6 |
| Differing tax rates of foreign subsidiaries | 0.0 | 0.0 |
| Tax-exempt income | 0.0 | 0.0 |
| Non-deductible expenses | 0.0 | 0.0 |
| Use of tax losses not recognised earlier Unrecognised deferred tax assets from losses |
0.0 | 0.0 |
| in taxation | 0.0 | 0.0 |
| Income taxes for previous financial periods | 0.0 | 0.3 |
| Total | -6.8 | -3.4 |
Property, plant and equipment 2016:
| Land and | Buildings | Machinery and | Prepayments | Total | |
|---|---|---|---|---|---|
| MEUR | waters | equipment | |||
| Acquisition cost as at 1 Jan | 0.1 | 84.2 | 48.7 | 0.0 | 133.0 |
| Additions | 0.1 | 4.5 | 4.8 | 3.3 | 12.8 |
| Disposals | 0.0 | -0.1 | -1.5 | -1.0 | -2.5 |
| Acquisition cost as at 31 Dec | 0.2 | 88.6 | 52.0 | 2.4 | 143.2 |
| Accumulated depreciation as at 1 Jan | 0.0 | -17.3 | -23.0 | 0.0 | -40.3 |
| Depreciation charge for the financial period | 0.0 | -6.4 | -7.0 | 0.0 | -13.4 |
| Accumulated depreciation of disposals | 0.0 | 0.1 | 1.1 | 0.0 | 1.1 |
| Accumulated depreciation as at 31 Dec | 0.0 | -23.6 | -28.9 | 0.0 | -52.5 |
| Carrying amount as at 1 Jan | 0.1 | 66.9 | 25.7 | 0.0 | 92.7 |
| Carrying amount as at 31 Dec | 0.2 | 65.0 | 23.1 | 2.4 | 90.7 |
Property, plant and equipment 2015:
| MEUR | Land and waters |
Buildings | Machinery and equipment |
Prepayments | Total |
|---|---|---|---|---|---|
| Acquisition cost as at 1 Jan | 0.6 | 72.7 | 40.6 | 2.5 | 116.4 |
| Additions | 0.3 | 11.7 | 9.0 | 5.9 | 26.9 |
| Disposals | -0.8 | -0.2 | -0.9 | -8.4 | -10.3 |
| Acquisition cost as at 31 Dec | 0.1 | 84.2 | 48.7 | 0.0 | 133.0 |
| Accumulated depreciation as at 1 Jan | 0.0 | -11.8 | -16.0 | 0.0 | -27.8 |
| Depreciation charge for the financial period | 0.0 | -5.6 | -7.5 | 0.0 | -13.1 |
| Accumulated depreciation of disposals | 0.0 | 0.1 | 0.6 | 0.0 | 0.7 |
| Accumulated depreciation as at 31 Dec | 0.0 | -17.3 | -23.0 | 0.0 | -40.3 |
| Carrying amount as at 1 Jan | 0.6 | 60.9 | 24.6 | 2.5 | 88.6 |
| Carrying amount as at 31 Dec | 0.1 | 66.9 | 25.7 | 0.0 | 92.7 |
Buildings and constructions also include related refurbishing costs of store properties.
Property, plant and equipment include assets acquired through finance leases as follows:
| MEUR | Buildings | Machinery and equipment |
Total |
|---|---|---|---|
| 31 Dec 2016 | |||
| Acquisition cost | 76.0 | 0.6 | 76.6 |
| Accumulated depreciation | -17.9 | -0.3 | -18.2 |
| Carrying amount | 58.1 | 0.3 | 58.4 |
| Buildings | Machinery and |
Total | |
| MEUR | equipment | ||
| 31 Dec 2015 | |||
| Acquisition cost | 72.8 | 1.2 | 73.9 |
| Accumulated depreciation | -13.5 | -0.6 | -14.1 |
The Group has leased the Mäntsälä logistics centre, certain store properties and cars from external parties.
Intangible assets 2016:
| MEUR | Goodwill | IT software and licences |
Other intangible assets |
Prepayments | Total |
|---|---|---|---|---|---|
| Acquisition cost as at 1 Jan | 128.6 | 9.4 | 0.0 | 0.0 | 138.0 |
| Additions | 0.0 | 1.5 | 0.1 | 0.0 | 1.6 |
| Disposals | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Acquisition cost as at 31 Dec | 128.6 | 10.9 | 0.1 | 0.0 | 139.6 |
| Accumulated depreciation as at 1 Jan Depreciation charge for the financial |
0.0 | -5.7 | 0.0 | 0.0 | -5.7 |
| period | 0.0 | -1.7 | 0.0 | 0.0 | -1.7 |
| Accumulated depreciation as at 31 Dec | 0.0 | -7.4 | -0.1 | 0.0 | -7.4 |
| Carrying amount as at 1 Jan | 128.6 | 3.7 | 0.0 | 0.0 | 132.3 |
| Carrying amount as at 31 Dec | 128.6 | 3.5 | 0.1 | 0.0 | 132.1 |
| Intangible assets 2015: | |||||
| Goodwill | IT | Other | Prepayments | Total | |
| software | intangible | ||||
| MEUR | and licences |
assets | |||
| Acquisition cost as at 1 Jan | 128.6 | 8.3 | 0.0 | 0.1 | 137.0 |
| Additions | 0.0 | 1.1 | 0.0 | 0.0 | 1.1 |
| Disposals | 0.0 | 0.0 | 0.0 | -0.1 | -0.1 |
| Acquisition cost as at 31 Dec | 128.6 | 9.4 | 0.0 | 0.0 | 138.0 |
| Accumulated depreciation as at 1 Jan Depreciation charge for the financial |
0.0 | -4.0 | 0.0 | 0.0 | -4.1 |
| period | 0.0 | -1.7 | 0.0 | 0.0 | -1.7 |
| Accumulated depreciation as at 31 Dec | 0.0 | -5.7 | 0.0 | 0.0 | -5.7 |
| Carrying amount as at 1 Jan | 128.6 | 4.3 | 0.0 | 0.1 | 132.9 |
| Carrying amount as at 31 Dec | 128.6 | 3.7 | 0.0 | 0.0 | 132.3 |
The Group does not have any intangible asset items acquired through finance leases.
For impairment testing purposes goodwill is allocated to the Group, which constitutes one group of cash-generating units and the Group's reporting segment.
The group of cash-generating units is tested for impairment by comparing the carrying amounts of the group of cashgenerating units with the respective recoverable amounts. The tested carrying amounts include property, plant and equipment, goodwill and other intangible assets and net working capital. The Group performs annual impairment testing on the goodwill during the last quarter of each reporting period. Impairment testing is also performed whenever there is an indication of the recoverable amount from an asset or the group of cash-generating units being less than the carrying amount. Besides goodwill, the Group has no other intangible assets deemed to have an indefinite useful life.
Impairment is the amount by which the asset's carrying amount exceeds the recoverable amount. An impairment loss is recognised immediately in profit or loss. Recognition of impairment loss has an adverse effect on the Group's result and thereby also on its equity, but does not influence the Group's cash flows. When an impairment loss is recognised, the useful life of the asset subject to impairment is re-evaluated.
No impairment loss has been recognized during the financial periods 2016 and 2015.
The recoverable amount is the higher of the fair value less costs of disposal of the asset, or its value in use. In testing the goodwill of Tokmanni, the recoverable amount is based on value in use (present value), determined by discounting the estimated net cash flows for the moment of review.
Estimated net cash flows are constituted of two elements: three-year cash flows based on the business plan adopted by Management, and the so-called terminal value after the forecast period. New stores are taken into account, so that new stores where investment decisions have been approved by the testing day, are included. The terminal value is determined by extrapolating the forecasted cash flows. In the calculations, the growth factor for the years after the forecast period is 1.0% which is not estimated to be in excess of long-term growth in the sector.
The assumptions of cash flow growth and improved profitability reflect Management's view of the development of sales and expenses during the forecast period. The cash flows calculated on the basis of the budget and forecasts have, however, been adjusted in impairment testing by eliminating the estimated cash flows that are estimated to be generated through rearrangements not yet committed to, and cash flows that are estimated to be generated through improving or enhancing the performance of an asset.
The assumptions used in impairment testing are mainly the same as those underpinning the business plan and forecasts. The assumptions used are based on historical trends and on market data from external information sources. In determining the future cash flow projections, the assumptions calling for major Management judgement are those related to market and profitability outlooks.
If the assumptions used for the calculation of the amounts change, the recoverable amount used in impairment testing may also change.
The discount rate applied in determining the recoverable amount is the pre-tax weighted average cost of capital (WACC), calculated for Tokmanni. The elements of WACC are risk-free interest rate, equity beta, market risk premium, small company risk premium, credit margin, and the capital structure employed. The pre-tax WACC used was 10,3 % (11,0 %).
The key assumptions used in determining value in use are defined by the Management of Tokmanni. The most important assumptions are:
The assumptions are based on expectations of future events believed to be realistic under the current circumstances. The assumptions have been adopted by the Executive Group and Board of Directors.
Sensitivity analyses have been made on the assumption that the average EBIT margin will decrease both during the forecast period and thereafter, and that the discount rate will increase. The table below presents a change in the key assumption which (with other assumptions remaining unchanged) would cause the recoverable amount to equal the carrying amount.
| 2016 | Value used | Change |
|---|---|---|
| 1. Discount rate (before tax) | 10.3% | 9.6 percentage point increase |
| 2. Average operating profit margin (operating profit/revenue) | 6.9% | 2.4 percentage point decrease each year |
| 2015 | Value used | Change |
| 1. Discount rate (before tax) | 11.0% | 10.2 percentage point increase |
| 2. Average operating profit margin (operating profit/revenue) | 6.8% | 3.1 percentage point decrease each year |
The consequential effects of the change in the value of the above key assumptions on other variables have not been taken into consideration in the sensitivity analysis. In estimating the recoverable amount, Management did not find that a reasonably possible change in any of the core variables used would result in a situation where the recoverable amounts of units would be less than their carrying amounts.
| MEUR | 2016 | 2015 |
|---|---|---|
| Acquisition cost as at 1 Jan | 0.0 | 0.0 |
| Share of result for the financial period | 0.0 | 0.0 |
| Disposals | 0.0 | 0.0 |
| Translation differences | 0.0 | 0.0 |
| Acquisition cost as at 31 Dec | 0.0 | 0.0 |
Tokmanni Oy owns 50% of the shares of the Hong Kong based joint venture Tokmanni-Europris Sourcing Ltd. The joint venture owns the Tokmanni-Europris (Shanghai) Trading Co., Ltd., a Shanghai-based procurement company. The joint venture is consolidated by using the equity method. The Group's share of the net profit for the financial period of the joint venture, proportional to its ownership interest, is disclosed prior to the operating profit. The company is the cornerstone of goods procurements made in China and the Far East. The company's operations include identifying and selecting local suppliers, ensuring the correct quality, monitoring delivery times, and ensuring responsible operations on the part of suppliers.
| MEUR | 2016 | 2015 |
|---|---|---|
| Derivatives, non-hedge accounting | ||
| Commodity derivatives | 0.1 | 0.1 |
Change in deferred tax balances (2016):
| Recognised in | |||
|---|---|---|---|
| income | |||
| MEUR | 1 Jan 2016 | statement | 31 Dec 2016 |
| Deferred tax asset Deferred tax assets due to loss in the financial year 2015 |
0.1 | -0.1 | 0.0 |
| Fair value on derivatives Sale and lease back of Mäntsälä logistic centre |
0.4 1.8 |
-0.3 -0.1 |
0.1 1.7 |
| Other finance leases | 3.0 | 0.2 | 3.2 |
| Total | 5.2 | -0.2 | 5.0 |
| Deferred tax liabilities | |||
| Fair value on derivatives | 0.2 | 0.0 | 0.2 |
| Freight expenses related to inventories | 0.4 | 0.0 | 0.3 |
| Cumulative depreciation differences | 1.1 | -0.2 | 1.0 |
| Deductible goodwill amortization, reversal | 3.4 | 0.1 | 3.5 |
| Arrangement fees of financial liabilities paid | 1.0 | -0.8 | 0.2 |
| Total | 6.0 | -0.7 | 5.3 |
| Net deferred tax liabilities | 0.8 | 0.2 | |
| Change in deferred tax balances (2015): | |||
| Recognised in | |||
| income | |||
| MEUR | 1 Jan 2015 | statement | 31 Dec 2015 |
| Deferred tax asset | |||
| Deferred tax assets due to loss in the financial year 2015 | 0.0 | 0.1 | 0.1 |
| Fair value on derivatives | 0.3 | 0.1 | 0.4 |
| Sale and lease back of Mäntsälä logistic centre | 1.9 | -0.1 | 1.8 |
| Other finance leases | 2.7 | 0.3 | 3.0 |
| Total | 4.9 | 0.4 | 5.2 |
| Deferred tax liabilities | |||
| Fair value on derivatives | 0.2 | -0.1 | 0.2 |
| Freight expenses related to inventories | 0.3 | 0.0 | 0.4 |
| Cumulative depreciation differences | 1.2 | -0.1 | 1.1 |
| Deductible goodwill amortization, reversal | 2.5 | 0.8 | 3.4 |
| Arrangement fees of financial liabilities paid | 1.4 | -0.4 | 1.0 |
| Total | 5.7 | 0.3 | 6.0 |
On 31 December 2016, the Group did not have any unused tax-loss carry-forward.
| MEUR | 2016 | 2015 |
|---|---|---|
| Inventories | 155.2 | 160.0 |
| Total | 155.2 | 160.0 |
The financial statements include a write-down in inventories for obsolescent and slowly moving products, with the impairment per 31 December amounting to EUR 2.5 million (EUR 2.0 million).
| MEUR | 2016 | 2015 |
|---|---|---|
| Loans and other receivables | ||
| Trade receivables | 1.5 | 1.7 |
| Financial assets at fair value through profit or loss | ||
| Derivatives, non-hedge accounting | 0.9 | 0.7 |
| Other receivables | ||
| Prepayments and accrued income | 3.5 | 3.9 |
| Income tax receivables | 0.7 | 1.2 |
| Other receivables | 11.0 | 8.1 |
| Other receivables, total | 15.3 | 13.2 |
| Total | 17.7 | 15.6 |
The receivables are not associated with any significant credit risk concentrations, and the maximum credit risk corresponds to the carrying amount of the receivables at year's end. The impairment losses recognised in the Group's trade receivables are not significant. The other receivables item includes EUR 0.0 million (EUR 0.2 million) worth of advance payments for inventories and EUR 6.3 million (EUR 5.3 million) of invoiced annual bonus receivables.
| MEUR | 2016 | 2015 |
|---|---|---|
| Not overdue | 1.3 | 1.5 |
| Overdue | 0.2 | 0.2 |
| Less than 30 days | 0.2 | 0.1 |
| Between 31-60 days | 0.0 | 0.0 |
| Between 61-75 days | 0.0 | 0.0 |
| Over 75 days | 0.0 | 0.1 |
| Total | 1.5 | 1.7 |
| MEUR | 2016 | 2015 |
|---|---|---|
| Annual discounts | 0.5 | 0.9 |
| Receivable from occupational health care | ||
| payments | 0.8 | 0.8 |
| Receivables from Veikkaus | 0.2 | 0.1 |
| Prepayments | 0.4 | 0.3 |
| Consumables expenses | 0.9 | 1.1 |
| Other prepayments and accrued income | 0.8 | 0.7 |
| Total | 3.5 | 3.9 |
| MEUR | 2016 | 2015 |
|---|---|---|
| Cash and cash equivalents | 57.6 | 48.9 |
| Total | 57.6 | 48.9 |
| Number of shares | Share capital (MEUR) |
Reserve for invested non restricted equity (MEUR) |
Total (MEUR) | |
|---|---|---|---|---|
| 31 Dec 2014 | 22 274 436 | 0.0 | 18.8 | 18.8 |
| 31 Dec 2015 | 22 274 436 | 0.0 | 18.8 | 18.8 |
| Bonus issue | 22 274 436 | 0.1 | -0.1 | 0.0 |
| Share issue | 14 319 880 | 91.2 | 91.2 | |
| 31 Dec 2016 | 58 868 752 | 0.1 | 110.0 | 110.1 |
Tokmanni Group Corporation's general meeting on 12 April 2016 decided to authorize the Board of Directors to issue 20 000 000 new shares in a proportion other than that of the shareholders' current shareholdings in the company. The shares can be can be offered as referred to in Chapter 9 Section 3 of the Limited Liability Companies Act in a proportion other than the current shareholdings in connection with the company's Initial Public Offering (IPO). The shares can be offered to the Group employees as part of the IPO at a lower price. The Board has the right to decide on any other terms and conditions of the share issue. The authorization ended on 31 December and it was not used.
Tokmanni Group Corporation has one series of shares. The maximum number of the shares or the nominal value of the share has not been determined. Each share provides one voting right. All issued shares have been paid in full.
The descriptions of the equity reserves are hereunder.
The reserve for invested unrestricted equity includes other equity type investments and the subscription price of the shares less transaction costs to the extent that it has not by explicit decision been registered in the share capital.
The translation differences reserve contains the translation differences arising from the conversion of the financial statements of foreign companies. The changes in the reserve are disclosed in comprehensive income.
After the balance sheet date, the Board has proposed for the financial year ended on 31 December 2016 to distribute in accordance with the company's dividend policy, a dividend of EUR 0.41 per share and an extra dividend of EUR 0.10 per share, a total of EUR 0.51 per share. This dividend amounts to a total of EUR 30.0 million. The remaining part of the retained earnings be retained in unrestricted shareholders' equity.
Financial assets and liabilities 31 Dec 2016:
| MEUR | Financial assets and liabilities at fair value through income statement |
Loans and other receivables |
Other financial liabilites |
Carrying amounts of assets as per balance sheet |
Fair value | |
|---|---|---|---|---|---|---|
| Non-current financial assets | ||||||
| Derivatives, non-hedge accounting | 0.1 | 0.1 | 0.1 | |||
| Current financial assets | ||||||
| Derivatives, non-hedge accounting | 0.9 | 0.9 | 0.9 | |||
| Trade receivables | 1.5 | 1.5 | 1.5 | |||
| Cash and cash equivalents | 57.6 | 57.6 | 57.6 | |||
| Total | 1.0 | 59.1 | 60.1 | 60.1 | ||
| Non-current financial liabilities | ||||||
| Loans from financial institutions | 99.1 | 99.1 | 99.1 | * | ||
| Long-term finance lease liabilities | 71.2 | 71.2 | 71.2 | |||
| Derivatives, non-hedge accounting | 0.3 | 0.3 | 0.3 | |||
| Current financial liabilities | ||||||
| Loans from financial institutions | -0.3 | -0.3 | -0.3 | ** | ||
| Finance lease liabilities | 3.5 | 3.5 | 3.5 | |||
| Derivatives, non-hedge accounting | 0.3 | 0.3 | 0.3 | |||
| Trade payables | 64.3 | 64.3 | 64.3 | |||
| Total | 0.6 | 237.8 | 238.4 | 238.4 | ||
| Financial assets and liabilities, total | 0.4 | 59.1 | -237.8 | -178.2 | -178.2 |
* Loans from financial institutions, adjusted with arrangement fees paid.
** Long-term debt from financial institutions, adjusted by short-term emission fees carried forward
Financial assets and liabilities 31 Dec 2015:
| MEUR | Financial assets and liabilities at fair value through income statement |
Loans and other receivables |
Other financial liabilites |
Carrying amounts of assets as per balance sheet |
Fair value | |
|---|---|---|---|---|---|---|
| Non-current financial assets | ||||||
| Derivatives, non-hedge accounting | 0.1 | 0.1 | 0.1 | |||
| Current financial assets | ||||||
| Derivatives, non-hedge accounting | 0.7 | 0.7 | 0.7 | |||
| Trade receivables | 1.7 | 1.7 | 1.7 | |||
| Cash and cash equivalents | 48.9 | 48.9 | 48.9 | |||
| Total | 0.8 | 50.7 | 51.4 | 51.4 | ||
| Non-current financial liabilities | ||||||
| Loans from financial institutions | 115.4 | 115.4 | 115.4 | * | ||
| Other loans, shareholder loans | 86.5 | 86.5 | 86.5 | |||
| Long-term finance lease liabilities | 71.3 | 71.3 | 71.3 | |||
| Derivatives, non-hedge accounting | 0.9 | 0.9 | 0.9 | |||
| Current financial liabilities | ||||||
| Loans from financial institutions | 17.1 | 17.1 | 17.1 | * | ||
| Finance lease liabilities | 3.5 | 3.5 | 3.5 | |||
| Derivatives, non-hedge accounting | 1.0 | 1.0 | 1.0 | |||
| Trade payables | 52.4 | 52.4 | 52.4 | |||
| Total | 1.9 | 346.2 | 348.1 | 348.1 | ||
| Financial assets and liabilities, total | -1.1 | 50.7 | -346.2 | -296.7 | -296.7 |
* Loans from financial institutions, adjusted with arrangement fees paid.
The carrying amounts of current items are substantially all estimated to correspond to their fair values.
The following price quotes, assumptions and measurement models have been used in determining the fair values of the financial assets and liabilities given in the table:
The fair values of forward exchanges and options are determined using counterparty price quotations. Moreover, the Group has made its own verification calculation using generally accepted methods of valuation. The fair values of commodity derivatives are determined using publicly quoted market prices.
The fair value of financial lease liabilities is estimated by discounting future cash flows with a rate corresponding to that of the lease agreements.
The fair values of loans have been calculated on the basis of the present value of future cash flows, using the rates at the end of the financial period. Substantially all carrying amounts of the loans correspond to fair values, since the loans are floating-rate loans and the Group's risk premium has not changed to any essential degree. The loans are broken down by maturity in Note 22.
Trade receivables and other receivables, as well as trade payables and other liabilities
The initial carrying amounts of non-derivative receivables and liabilities correspond to their fair value since the impact of discounting is not material, considering the maturity of these receivables and liabilities.
Fair value hierarchy of the financial assets and liabilities measured at fair value
Level 1 instruments are subject to active trading in the market, and therefore their fair values are directly based on the market price. The fair value of the level 2 instruments is based on available market data. The fair value of level 3 instruments is not based on observable market information (unobservable inputs).
The Group's financial assets and liabilities measured at fair value (i.e., all of the Group's derivatives and lease liabilities) are level 2 of the fair value hierarchy as per IFRS 13. The fair value of these instruments at the end of the reporting period, 31 Dec 2016 was EUR 0.4 million (31 Dec 2015: EUR -1.1 million).
Maturity of finance lease liabilities:
| MEUR | 2016 | 2015 |
|---|---|---|
| Gross finance lease liabilities | ||
| - minimum lease payments by maturity | ||
| No later than 1 year | 7.2 | 7.4 |
| Later than 1 year and no later than 5 years | 31.8 | 27.4 |
| Later than 5 years | 72.2 | 79.9 |
| Total | 111.3 | 114.6 |
| Future finance charges | -36.6 | -39.8 |
| Present value of finance lease liabilities | 74.7 | 74.9 |
| Present value of finance lease liabilities due as follows | ||
| No later than 1 year | 3.5 | 3.5 |
| Later than 1 year and no later than 5 years | 18.5 | 13.6 |
| Later than 5 years | 52.7 | 57.7 |
| Total | 74.7 | 74.9 |
The fair value of finance lease liabilities is estimated by discounting future cash flows with a rate corresponding to that of the lease agreements. Additional information on the assets leased with finance lease is in Note 9. Contingent rents paid on the basis of finance leases in 2016 amounted to EUR 0.1 million (2015: EUR 0.1 million). Contingent rents are recognised under other operating expenses.
| Fair value (MEUR) |
Underlying value (MEUR) |
Secured energy (MWh) |
|
|---|---|---|---|
| 31 Dec 2016 | |||
| Foreign exchange forward contracts and options | 0.8 | 15.2 | |
| Electricity derivatives | |||
| System price | -0.3 | 3.0 | 115.1 |
| Area price | -0.1 | 0.6 | 87.7 |
| Fair | Underlying | Secured | |
| value | value | energy | |
| 31 Dec 2015 | (MEUR) | (MEUR) | (MWh) |
| Foreign exchange forward contracts and options | 0.3 | 15.6 | |
| Electricity derivatives | |||
| System price | -1.8 | 2.7 | 131.5 |
| Area price | 0.4 | 1.0 | 87.7 |
| MEUR | 2016 | 2015 |
|---|---|---|
| Trade payables and other current non-interest-bearing liabilities | ||
| Current financial liabilities at amortised cost | ||
| Trade payables | 64.3 | 52.4 |
| Current financial assets at fair value through profit or loss | ||
| Derivatives, non-hedge accounting (liabilities), interest-free | 0.3 | 1.0 |
| Other liabilities | ||
| Other non-interest-bearing liabilities | 15.8 | 14.5 |
| Accrued liabilities | 23.2 | 23.1 |
| Income tax liabilities | 1.7 | 0.0 |
| Other liabilities, total | 40.6 | 37.6 |
| Trade payables and other current non-interest-bearing liabilities, | ||
| total | 105.2 | 91.0 |
| Current accrued liabilities | ||
| MEUR | 2016 | 2015 |
| Wages and salaries including social expenses | 6.3 | 6.6 |
| Holiday pay | 12.4 | 11.8 |
| Compulsory insurances | 3.6 | 3.3 |
| Current interest liabilities | 0.2 | 0.1 |
| Other accrued liabilities | 0.7 | 1.3 |
| Total | 23.2 | 23.1 |
| MEUR | 2016 | 2015 |
| Non-current non-interest-bearing liabilities | ||
| Non-current financial assets at fair value through profit or loss | ||
| Derivatives, non-hedge accounting | 0.3 | 0.9 |
| Other liabilities | ||
| Accrued liabilities, shareholder loans interest payable | 0.0 | 6.9 |
| Mäntsälä logistic centre, sale and leaseback arrangement | 7.8 | 8.3 |
| Other liabilities, total | 7.8 | 15.2 |
| Non-current non-interest-bearing liabilities, total | 8.1 | 16.1 |
In its normal business operations, the Group is exposed to many financial risks, the principal types of which are currency and interest-rate risks. The objective of the Group's risk management is to minimise the adverse effects of changes in the financial market on the Group's financial performance. The general principles of the Group's risk management are adopted by the Board of Directors. The responsibility for practical implementation of financial risk management is shouldered by the Group's CFO, with such management comprising the identification and assessment of the risks, and furnishing the Group with the necessary instruments of risk hedging. In risk management, the Group employs forward exchanges, currency options and electricity derivative contracts. The Group does not engage in hedge accounting under IAS 39.
The Group is exposed to currency risks from its purchases. The most significant foreign currency for the Group is the US dollar (USD). According to Tokmanni's hedging principles, about half of the purchases in USD are hedged for an average length of five months. Currency hedging takes place through forward exchanges and currency options. The Group's import and finance departments collaborate to draft a monthly updated estimate of the purchases in USD. Since the Group's non-current loans are fully in euro, financial liabilities do not involve any currency risk.
Currency derivatives are recognised at their acquisition value and are measured at the end of the financial period at their fair value in profit or loss.
The Group's foreign exchange positions (in euro) at the end of the reporting period:
| MEUR | 2016 | 2015 |
|---|---|---|
| Trade payables | 3.3 | 2.1 |
| Forecasted purchases in the next 6 months | 28.3 | 29.2 |
| Cash and cash equivalents | -0.1 | -0.6 |
| Total | 31.4 | 30.7 |
| Currency options | -15.2 | -15.6 |
| Position, total | 16.3 | 15.1 |
The table below shows the impacts on the Group's profit before taxes, as well as the impact on equity. Should the euro strengthen or weaken against the USD (+/- 10%), with the other factors remaining unchanged, the Group's profit before taxes would be affected by EUR 1.6 million (2015: EUR 1.5 million) positively or negatively. The sensitivity analysis is based on the currency position at the end of the reporting period.
| MEUR | 2016 | 2015 |
|---|---|---|
| Change | +/-10% | +/-10% |
| Effect on profit before tax | 1.6 | 1.5 |
| Effect on equity | 0.0 | 0.0 |
The Group's revenues and operational cash flows are largely independent of fluctuations in the market rates of interest, and, therefore, the Group's exposure to interest rate risks is mainly related to its external loan portfolio. According to its risk management principles, the Group aims to have at least two-thirds of the loans with fixed interest rates or hedged against interest rate changes, subject to discretion of the Board of Directors. The Board of Directors evaluates the Group's exposure to interest rate risks and the level of hedging on a regular basis and makes interest rate hedging decisions if needed. The average annual rate of the Group's interest-bearing liabilities was about 2.8% in 2016 (2015: 6.0%).
The following table shows the Group's interest position at the end of the reporting period:
| MEUR | 2016 | 2015 |
|---|---|---|
| Fixed interest rate | ||
| Financial liabilities | 74.7 | 161.4 |
| Floating interest rate | ||
| Financial liabilities | 100.0 | 137.4 |
| Floating interest rate position, total | 100.0 | 137.4 |
The table below shows the impacts on the Group's profit before taxes, as well as the impact on equity. Should the interests increase or decrease (+/- 0.5 percentage points), with the other factors remaining unchanged, the Group's profit before taxes would be affected by EUR 0.5 million (2015: EUR 0.7 million) negatively or positively. The sensitivity analysis is based on the risk position at the end of the reporting period.
| MEUR | 2016 | 2015 |
|---|---|---|
| Change | +/-0.5% | +/-0.5% |
| Effect on profit before tax | 0.5 | 0.7 |
| Effect on equity | 0.0 | 0.0 |
The Group's credit exposure is constituted of the credit risk related to the receivables from business operations, and the counterparty risk associated with other financial instruments.
The Group has no significant credit risk concentrations related to receivables because its clientele is widely spread, the sales are mainly retail sales against cash, and no single customer or group of customers is dominant from the Group's perspective. Note 15 presents the breakdown of trade receivables by maturity.The credit losses with impact on profit or loss incurred during the financial period were not significant. The maximum amount of the Group's credit loss corresponds to the carrying amount of financial assets at the end of the reporting period (note 18).
Part of the purchases from the Far East need to be paid in advance, and the respective risk is minimised by long-term cooperation with suppliers. In the autumn of 2013, the Group opened a procurement company in Shanghai, China together with the Norwegian discount store chain, Europris AS. The Shanghai company has 20 employees. The company is the cornerstone of goods procurements made in China and the Far East. The company's operations include identifying and selecting local suppliers, ensuring the correct quality, monitoring delivery times, and ensuring responsible operations on the part of suppliers.
During the reporting period, the uncertainty of the financial market has not increased the risks related to the availability of funding to any significant extent. The Group seeks to follow the financing required in business operations by analysing the sales cash flow forecasts in order to have sufficient liquid assets to fund the operations and to repay loans at maturity.
The availability and flexibility of the Group's financing is guaranteed through sufficient credit facilities, balanced maturity distribution of the loans and sufficiently long loan periods, and by using several financial institutions and forms for the procurement of funding. On December 31, 2016 the Group had EUR 34 million (EUR 34 million) in credit limit reserves and their maturity profile is linked to the maturity of underlying finance agreements In addition, the Group had EUR 25 million of undrawn long-term loans.
The Group has not identified any significant liquidity risk concentration in relation to its financial assets or sources.
Liability-related defaults and violations of contractual terms
Loans from financial institutions contain a covenant according to which the Group has to achieve a certain ratio of net debt in relation to adjusted EBITDA. Operations in accordance with the loan covenants are reported lenders on a quarterly basis. The Group's management monitors compliance with loan covenants on a regular basis. In 2016, Tokmanni has met the required covenants.
The following table illustrates the Group's financial liability maturity break down. The amounts are undiscounted and they include both the future interest payments and the principal repayments.
| MEUR | Carrying amount 31 Dec 2016 |
Cash flows based on agreements |
Less than 1 year |
1-2 years | 2-3 years | 3-4 years | Over 4 years | |
|---|---|---|---|---|---|---|---|---|
| Loans from financial institutions | 98.8 | 105.2 | 1.2 | 1.2 | 1.2 | 1.2 | 100.4 | * |
| Finance lease liabilities | 74.7 | 111.3 | 7.2 | 7.2 | 7.0 | 7.1 | 82.8 | |
| Trade payables | 64.3 | 64.3 | 64.3 | |||||
| Total | 237.8 | 280.7 | 72.7 | 8.4 | 8.2 | 8.3 | 183.2 | |
| MEUR | Carrying amount 31 Dec 2015 |
Cash flows based on agreements |
Less than 1 year |
1-2 years | 2-3 years | 3-4 years | Over 4 years | |
| Loans from financial institutions | 132.5 | 156.2 | 25.1 | 25.7 | 13.3 | 92.1 | 0.0 | * |
| Shareholder loans | 86.5 | 117.6 | 0.0 | 0.0 | 0.0 | 117.5 | 0.0 | |
| Finance lease liabilities | 74.9 | 114.6 | 7.4 | 6.9 | 6.8 | 6.7 | 86.8 | |
| Trade payables | 52.4 | 52.4 | 52.4 | |||||
* Loans from financial institutions, adjusted with arrangement fees paid.
The table above includes all the instruments in force at the closing of the accounts, as well as their contractual loan principals and interests. The Group does not have financial liabilities liable to be called in for repayment before their maturity.
| MEUR | Carrying amount 31 Dec 2016 |
Cash flows based on agreements |
Less than 1 year |
1-2 years | 2-3 years | 3-4 years | Over 4 years |
|---|---|---|---|---|---|---|---|
| Commodity derivatives Foreign exchange forward contracts |
0.6 | 0.6 | 0.3 | 0.2 | 0.1 | 0.0 | 0.0 |
| and options | 0.0 | 0.0 | 0.0 | ||||
| Total | 0.6 | 0.6 | 0.3 | 0.2 | 0.1 | 0.0 | 0.0 |
| Carrying amount 31 Dec 2015 |
Cash flows based on |
Less than 1 year |
1-2 years | 2-3 years | 3-4 years | Over 4 years | |
| MEUR | agreements | ||||||
| Commodity derivatives Foreign exchange forward contracts |
1.8 | 1.8 | 0.9 | 0.5 | 0.3 | 0.1 | 0.0 |
| and options | 0.1 | 0.1 | 0.1 | ||||
| Total | 1.9 | 1.9 | 1.0 | 0.5 | 0.3 | 0.1 | 0.0 |
The cash flows related to interest derivatives are disclosed in net. The cash flows related to currency and electricity derivative contracts are based on their fair values at the end of the reporting period with the maturity corresponding to the due date.
In its operations, the Group is exposed to a commodity risk caused by the possible impacts of the electricity price risk on the Group's energy costs. The Group hedges itself against electricity price changes through electricity derivative contracts in line with the policy determined by the Tokmanni Board. However, the maximum amount corresponds to the Group's estimated electricity consumption. The hedge level covers about 85% of the consumption for one year ahead, gradually decreasing over a period of about 3-4 years.
The changes in the value of the derivatives hedging the price of electricity supplied during the financial period are included in the adjustments of other operating expenses.
The carrying amount (EUR) of electricity derivative contracts at the end of financial period:
MEUR 2016 2015 Electricity derivative contracts -0.3 -1.4 The table below shows the impacts on the Group's profit before taxes, as well as the impact on equity. Should the prices of electricity increase or decrease (+/- 10%), with the other factors remaining unchanged, the Group's profit before taxes would be affected by EUR 0.4 million (EUR 0.4 million) positively or negatively. The sensitivity analysis is based on the risk position at the end of the reporting period.
| MEUR | 2016 | 2015 |
|---|---|---|
| Change | +/-10% | +/-10% |
| Effect on profit before tax | 0.4 | 0.4 |
| Effect on equity | 0.0 | 0.0 |
The objective of the Group's capital management function is to retain an optimal capital structure in line with the Group's strategy. By managing its capital, the Group ensures that its business operations will continue without interruption, thus guaranteeing cash flow financing under all circumstances, allowing for investments according to the Group's strategy and increasing shareholder value long-term.
| MEUR | 2016 | 2015 | |
|---|---|---|---|
| Interest-bearing liabilities | 173.5 | 293.8 | |
| Cash and cash equivalents | 57.6 | 48.9 | |
| Interest-bearing net debt | 115.9 | 244.9 | |
| Total equity according to IFRS | 166.6 | 48.1 | |
| Target level | 2016 | 2015 | |
| Net debt / adjusted EBITDA | < 2.0 | 1.8 | 2.7 |
| Equity ratio, incl. shareholder loans | 36.3% | 29.6% |
The Group has leased most of its store premises. The leases are in force from eight to twelve years on average. The agreements have varying renewal terms and other index terms.
Minimum lease payments payable based on other non-terminable leases:
| MEUR | 2016 | 2015 |
|---|---|---|
| No later than 1 year | 47.6 | 49.0 |
| Later than 1 year and no later than 5 years | 133.3 | 127.7 |
| Later than 5 years | 57.9 | 61.7 |
| Total | 238.7 | 238.4 |
Rental expenses paid based on operating leases amounted to EUR 44.4 million (EUR 45.1 million) recognised in profit or loss, with contingent rents accounting for EUR 42.6 million (EUR 43.7 million) of the whole. Contingent rents are recognised under other operating expenses.
The Group has sublet certain business premises. The rental expenses incurred for these premises, as well as the minimum lease payments obtainable in the future on the basis of the subleases, are not significant for the Group.
| MEUR | 2016 | 2015 |
|---|---|---|
| Loans for which property has been given as collateral | ||
| Loans from financial institutions | 100.0 | 137.4 |
| Collateral given | ||
| Business mortgages | 0.0 | 937.5 |
| Pledged subsidiary shares | 0.0 | 270.2 |
Leasing obligations related to Group operating lease agreements are presented in note 23.
The Group's related parties are the Board of Directors and Executive Group members, including the CEO and Deputy CEO, as well as subsidiaries and joint ventures. The owners related parties are defined by societies and persons who have control, joint control or significant influence in the Tokmanni Group .
The line of business of Retail Leasing Oy (a Tokmanni Group Corporation subsidiary) is to own and lease property, plant and equipment to the other Group companies. Retail Leasing Oy is the parent of Nordic Disco AB (Sweden), which in turn is the parent of Tokmanni Oy.
The disclosed transactions with related parties include those not eliminated in the consolidated financial statements of Tokmanni Group Corporation. All transactions with related parties are on market-based terms.
The Tokmanni - Europris Sourcing Ltd joint venture, which has been consolidated using the equity method, sells purchasing services to the Group.
The Group's parent and subsidiary relationships are as follows:
| Company | Domicile | Shareholding | Voting rights |
|---|---|---|---|
| Parent company Tokmanni Group | |||
| Corporation | Finland | ||
| Retail Property Investment Oy | Finland | 100% | 100% |
| Kiinteistö Oy Tokmanni Närpiö | Finland | 100% | 100% |
| Retail Leasing Oy | Finland | 100% | 100% |
| Nordic Disco AB | Sweden | 100% | 100% |
| Tokmanni Oy | Finland | 100% | 100% |
| Tarjousmaxi Oy | Finland | 100% | 100% |
| Taitomanni Oy | Finland | 100% | 100% |
Transactions during the financial period 2016 including receivables, payables and liabilities per 31 Dec 2016 carried out with related parties:
| Majority owner and related parties to majority |
Board of Directors and management |
Joint ventures | |
|---|---|---|---|
| MEUR | owner | ||
| Income statement | |||
| Revenue and other operating income | 0.0 | ||
| Other operating expenses | 1.6 | 0.8 | |
| Financial expenses | 2.1 | 0.5 | |
| Balance sheet Assets |
0.1 |
Transactions during the financial period 2015 including receivables, payables and liabilities per 31 Dec 2015 carried out with related parties:
| Majority owner and related |
Board of Directors and |
Joint ventures | |
|---|---|---|---|
| parties to | management | ||
| MEUR | majority owner |
||
| Income statement | |||
| Revenue and other operating income | 0.0 | ||
| Other operating expenses | 5.2 | 0.9 | |
| Financial expenses | 5.6 | 1.4 | |
| Balance sheet | |||
| Assets | 0.2 | ||
| Liabilities | 75.1 | 18.3 | |
| Shareholder loans | 69.5 | 16.9 | * |
| Interest liabilities, shareholder loans | 5.6 | 1.3 |
* The related parties have given shareholder loans as follows:
At the closing of the books on 31 December 2015, shareholder loans amounted to EUR 86.5 million, with the related parties accounting for EUR 86.4 million.
The principal, the interest and other credit can be paid at the dissolution or bankruptcy of the company only in subordination to other loans.
The annual interest rate of the shareholder loans are 8%, with the accumulated interest fully recognised in profit or loss.
The interests of the Management shareholder loans have been paid, while the accumulated interests for others have been capitalised.
The loan was reimbursed in 2016.
The key management personnel includes the members of the Board of Directors and Executive Group, and the CEO.
Heikki Väänänen has been appointed CEO of Tokmanni Group Corporation as of 1st of April, 2016 and before this he has acted as CEO of Tokmanni Oy and Tarjousmaxi Oy.
| EUR | 2016 | 2015 | ||
|---|---|---|---|---|
| Heikki Väänänen | CEO of the Group companies | 370 445 | 346 417 | |
| Harri Sivula | Chairman of the Board | 98 000 | 190 000 | |
| Robert Furuhjelm | Member of the Board | 31 500 | 20 000 | |
| Christian Gylling | Member of the Board | 32 500 | 20 000 | |
| Sven-Olof Kulldorff | Member of the Board | 34 500 | 20 000 | |
| Michael Haaning | Member of the Board | 0 | 20 000 | until 12 April 2016 |
| Seppo Saastamoinen | Member of the Board | 28 500 | 20 000 | |
| Kati Hagros | Member of the Board | 29 000 | 0 | from 12 April 2016 |
| Thérèse Cedercreutz | Member of the Board | 27 000 | 0 | from 12 April 2016 |
| CEO of the Group companies and members of the Board of Directors | 651 445 | 636 417 | ||
| Executive Group | 1 135 851 | 1 112 172 | ||
| Monetary salaries, fees and fringe benefits, total | 1 787 297 | 1 748 588 |
In Tokmanni Group Corporation, the pensions of the key management personnel are determined in line with the general provisions applied in Finland to employee pensions (Employee Pensions Act). The CEO's statutory pension cost was 63 828 EUR in 2016 (2015: 59 757 EUR).
If the company gives notice to the CEO of the Group companies, he will have the right to receive compensation corresponding to the maximum of 18 months' overall pay, including the six-month period of notice. Under corresponding circumstances, the other Executive Group members will have the right to compensation corresponding to the maximum of 6 months' overall pay.
No significant changes in the Groups business activities have occurred after the end of the reporting period.
| Parent company's income statement € |
1 Jan - 31 Dec 2016 |
1 Jan - 31 Dec 2015 |
|---|---|---|
| REVENUE | 457 200.00 | 1 384 700.00 |
| Other operating income | 1 065.45 | 4 063.94 |
| Wages, salaries and employee benefits Wages, salaries and fees Social security expenses |
-605 456.20 | -599 205.79 |
| Pension expenses | -50 589.85 | -113 227.20 |
| Other social security expenses | -10 356.66 | -20 971.75 |
| -666 402.71 | -733 404.74 | |
| Other operating expenses | -515 996.81 | -525 478.98 |
| OPERATING PROFIT | -724 134.07 | 129 880.22 |
| Financial income and expenses | ||
| Internal income from investments | 23 000 000.00 | 0.00 |
| Other interests and financial income From group companies From others |
5 314 102.61 92.24 5 314 194.85 |
6 179 071.00 0.60 6 179 071.60 |
| Interests and other finacial expenses To others |
-10 831 772.91 | -6 919 280.23 |
| Financial income and expenses | 17 482 421.94 | -740 208.63 |
| PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES | 16 758 287.87 | -610 328.41 |
| Appropriations Group contribution |
20 000 000.00 | 620 000.00 |
| Income taxes | -2 751 431.07 | -1 934.20 |
| NET RESULT FOR THE FINANCIAL PERIOD | 34 006 856.80 | 7 737.39 |
| Parent company's balance sheet € |
31 Dec 2016 | 31 Dec 2015 |
|---|---|---|
| ASSETS | ||
| NON-CURRENT ASSETS | ||
| Investments Holdings in group companies |
26 172 739.99 | 26 172 739.99 |
| NON-CURRENT ASSETS, TOTAL | 26 172 739.99 | 26 172 739.99 |
| CURRENT ASSETS | ||
| Non-current receivables Amounts owed by group companies |
212 840 746.43 | 82 526 643.82 |
| Current receivables Trade receivables Amounts owed by group companies Other receivables Prepayments and accrued income |
0.00 43 000 300.00 65 143.25 39 419.90 43 104 863.15 |
1 130.02 4 167 050.13 0.00 393 153.32 4 561 333.47 |
| Recevables, total | 255 945 609.58 | 87 087 977.29 |
| Cash in hand and at banks | 52 403 704.38 | 0.00 |
| CURRENT ASSETS, TOTAL | 308 349 313.96 | 87 087 977.29 |
| ASSETS, TOTAL | 334 522 053.95 | 113 260 717.28 |
| EQUITY AND LIABILITIES | ||
| EQUITY Share capital Reserve for invested unrestricted equity Retained earnings Net result for the financial period EQUITY, TOTAL |
80 000.00 114 629 589.41 22 840.12 34 006 856.80 148 739 286.33 |
5 600.00 18 777 160.17 15 102.73 7 737.39 18 805 600.29 |
| LIABILITIES | ||
| Non-current liabilities Loans from financial institutions Other liabilities Accruals and deferred income |
100 000 000.00 0.00 0.00 100 000 000.00 |
0.00 86 512 727.27 6 887 115.26 93 399 842.53 |
| Current liabilities Trade payables Amounts owed to group companies Other payables Accruals and deferred income |
39 257.73 83 635 462.93 25 758.33 2 082 288.63 85 782 767.62 |
471 827.26 61 133.63 195 668.35 326 645.22 1 055 274.46 |
| LIABILITIES, TOTAL | 185 782 767.62 | 94 455 116.99 |
| Parent company's cash flow statement | 1 Jan - 31 Dec 2016 |
1 Jan - 31 Dec 2015 |
|---|---|---|
| 1 000 € | ||
| Cash flows from operating activities | ||
| Profit/loss before taxes | 16 758 | -610 |
| Adjustments: | ||
| Financial income and expenses | -17 482 | 740 |
| Cash flow before change in working capital | -724 | 130 |
| Change in working capital: | ||
| Increase (-) / decrease (+) of current receivables | 895 | -932 |
| Increase (+) / decrease (-) of current non-interest bearing | ||
| liabilities | -348 | 765 |
| Cash flow from operating activities before financial items | ||
| and taxes | -178 | -38 |
| Interest and other financial expenses paid from operating | ||
| activities | -4 874 | -32 |
| Direct income taxes paid | -992 | -53 |
| Cash from operating activities | -6 044 | -122 |
| Cash flows from investing activities | ||
| Granted loans (+) | -125 000 | 0 |
| Cash from investing activities | -125 000 | 0 |
| Cash flows from financing activities | ||
| Change in internal bank account liabilities | 83 213 | 0 |
| Change in internal bank account receivables | 2 891 | -518 |
| Paid share issue deducted with IPO expenses | 90 123 | 0 |
| Proceeds from long-term loans | 125 000 | 25 |
| Repayments of long-term loans | -118 400 | 0 |
| Group contributions | 620 | 615 |
| Cash from financing activities | 183 447 | 122 |
| Change in cash in hand and at bank | 52 404 | 0 |
| Cash in hand and at bank at the beginning of the period | 0 | 0 |
| Cash in hand and at bank at the end of the period | 52 404 | 0 |
Tokmanni Group Corporation is a Finnish limited liability company and its shares are listed on the Nasdaq Helsinki exchange. Share trading started on the pre-list on 29 April 2016 and on the main list 3 May 2016.
Tokmanni Group Corporation's financial statements have been prepared in compliance with the Finnish Accounting Standards (FAS) and in accordance with the accounting regulation for listed companies.
Financial instruments are valued at acquisition cost.
The company has a Group account agreement in Nordea, which includes all Group companies' Nordea bank accounts. The Group companies' cash and cash equivalents shown in the group account is shown as asset or liability from the Group companies.
The company's pension cover is arranged by external pension insurance companies. Pension expenditure is recognised as an expense in the year in which it is accrued.
Income tax includes the income tax payments for the period based on the profit for the period, and taxes payable for prior periods, or tax refunds. Deferred taxes are not included in the parent company's income statement and balance sheet.
| Notes to the income statement 1 000 € |
1 Jan - 31 Dec 2016 |
1 Jan - 31 Dec 2015 |
|---|---|---|
| Breakdown of revenue by market area Finland |
457 | 1 385 |
| Personnel and members of administrative bodies | ||
| Average number of employees | 1 | 1 |
| Salaries of CEO and members of the Board of Directors | 605 | 599 |
| The CEO and members of the Board do not have pension plans that differ from the statutory provisions. | ||
| Monetary salaries, fees and fringe benefits by institution are defined in the Group Note 25 Related party transactions, " Monetary salaries, fees and fringe benefits" |
||
| Other operating expenses | ||
| Purchased services | 164 | 308 |
| Other expenses | 352 | 217 |
| Total | 516 | 525 |
| Group contribution | ||
| Group contribution received | 20 000 | 620 |
| Income taxes | ||
| Ordinary operations | 2 751 | 2 |
| Auditor's fees | ||
| Audit | 53 | 52 |
| Other fees and services | 256 | 98 |
| Tax councelling | 17 | 23 |
| Total | 326 | 173 |
Financial income for the review period include subsidiary dividend income EUR 23.0 million and financial expenses include EUR 5.8 million IPO expenses
All transactions involving related parties are executed on arm length basis.
| Investments | ||
|---|---|---|
| Holdings in group companies | ||
| Acquisition cost as at 1 Jan | 26 173 | 26 173 |
| Acquisition cost as at 31 Dec | 26 173 | 26 173 |
| Group companies | Shareholding | |
| Retail Property Investment Oy, Mäntsälä | 100 | 100 |
| Retail Leasing Oy, Helsinki | 100 | 100 |
| Group Companies | Carrying amount | |
| Retail Property Investment Oy, Mäntsälä | 1 000 | 1 000 |
| Retail Leasing Oy, Helsinki | 25 173 | 25 173 |
| CURRENT ASSETS | ||
| Non-current receivables | ||
| Amounts owed by group companies | ||
| Loan receivables | 207 527 | 76 348 |
| Prepayments and accrued income, interest receivables |
5 314 | 6 179 |
| Total | 212 841 | 82 527 |
| Current receivables | ||
| Amounts owed by group companies | ||
| Trade receivables | 0 | 656 |
| Other receivables, group dividend receivables | 23 000 | 0 |
| Other receivables, group contribution receivables | 20 000 | 620 |
| Other receivables, group account receivables | 0 | 2 891 |
| Total | 43 000 | 4 167 |
| Other receivables | ||
| Trade receivables | 0 | 1 |
| Other receivables | 65 | 0 |
| Prepayments and accrued income | 39 | 393 |
| Total | 105 | 394 |
| Current receivables | 43 105 | 4 561 |
| Prepayments and accrued income | ||
| VAT-receivable | 0 | 51 |
| Other prepayments and accrued income | 39 | 342 |
| Total | 39 | 393 |
| Share capital as at 1 Jan | 6 | 6 |
|---|---|---|
| Bonus issue | 74 | 0 |
| Share capital as at 31 Dec | 80 | 6 |
| Restricted equity | 80 | 6 |
| Unrestricted equity | ||
| Reserve for invested unrestricted equity as at 1 Jan | 18 777 | 18 777 |
| Bonus issue | 95 852 | |
| Reserve for invested unrestricted equity as at 31 Dec | 114 630 | 18 777 |
| Retained earnings as at 1 Jan | 23 | 15 |
| Net result for the financial period | 34 007 | 8 |
| Total | 34 030 | 23 |
| Unrestricted equity | 148 659 | 18 800 |
| Equity | 148 739 | 18 806 |
| CALCULATION OF DISTRIBUTABLE EQUITY | ||
| Retained earnings | 23 | 15 |
| Net result for the financial period | 34 007 | 8 |
| Reserve for invested unrestricted equity | 114 630 | 18 777 |
| Total | 148 659 | 18 800 |
| NON-CURRENT LIABILITIES | ||
| Shareholder loans | 0 | 86 513 |
| Shareholder loans, interest liabilities | 0 | 6 887 |
| Loans from financial institutions | 100 000 | 0 |
| Total | 100 000 | 93 400 |
| CURRENT LIABILITIES | ||
| Amounts owed to group companies | ||
| Trade payables | 150 | 1 |
| Accruals and deferred income | 272 | 60 |
| Other liabilities, internal account payable | 83 213 | 0 |
| Total | 83 635 | 61 |
| Accruals and deferred income | ||
| Amortised personnel costs | 207 | 318 |
| Interest payable | 154 | 0 |
| Income tax payable | 1 708 | 0 |
| Other accruals and deferred income | 12 | 9 |
| Total | 2 082 | 327 |
| Securities and contingent liabilities | 2016 | 2015 |
|---|---|---|
| 1 000 € | ||
| Collateral given by the parent company | ||
| related to loans from financial institutions | ||
| Business mortgages | 0 | 312 500 |
| Pledged subsidiary shares | 0 | 25 173 |
| Pledged loan receivables | 0 | 57 012 |
| Leasing liabilities | ||
| Payable during the next financial year | 14 | 14 |
| Payable subsequently | 5 | 20 |
| Total | 20 | 34 |
Mäntsälä, 23 February 2017
Harri Sivula Chairman of the Board
Sven-Olof Kulldorff Christian Gylling
Member of the Board Member of the Board
Robert Furuhjelm Seppo Saastamoinen Member of the Board
Member of the Board
Kati Hagros Thérèse Cedercreutz Member of the Board Member of the Board
Our auditor's report has been issued today.
Helsinki, 23 February 2017
KPMG Oy Ab
Ari Eskelinen Authorized Public Accountant
KPMG Oy Ab Töölönlahdenkatu 3 A PO Box 1 037 00101 Helsinki, FINLAND Telephone +358 20 760 3000 www.kpmg.fi
This document is an English translation of the Finnish aud¡tor's report. Only the Finnish version of the repoñ is legally binding.
To the Annual General Meeting of Tokmanni Group Oyj
We have audited the financial statements of Tokmanni Group Oyj (business identity code 2483212-7) for the year ended 31 December,2016. The financial statements comprise the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies, as well as the parent company's balance sheet, income statement, cash flow statement and notes.
ln our opinion
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 Sfafemenfs section of our report.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The scope of our audit was influenced by our application of materiality. The materiality is determined based on our professionaljudgement and is used to determine the nature, timing and extent of our audit procedures and to evaluate the effect of identified misstatements on the financial statements as a whole. The level of materiality we set is based on our assessment of the magnitude of misstatements that, individually or in aggregate, could reasonably be expected to have influence on the economic decisions of the users of the financial statements. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for qualitative reasons for the users of the financial statements.
Key audit matters are those matters that, in our professionaljudgment, 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.
We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud.
We involved KPMG valuation specialists and considered impairment of goodwill overall to determine whether an impairment had arisen. Our audit procedures included, among others:
We considered the disclosures in respect of impairment testing, including the presentation of the key assumptions used and the sensitivity analyses.
Our audit procedures included, among others:
inventory aging structure, for example. Therefore the write-offs recognized on inventories may subsequently prove insufficient.
We critically assessed the inventory valuation principles and the adequacy of the provisions made, taking into account historical company data.
Our audit procedures included, among others:
4
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 lnternational 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.
ln 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 a 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
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 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 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.
ln 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 information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwlse 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.
ln our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
lf, based on the work we have performed on the report of the Board of Directors, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Helsinki 23 February 2017
ARI ESKELINEN Authorised Public Accountant
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