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Atria Oyj

Annual Report Apr 14, 2009

3256_10-k_2009-04-14_f718b4af-1179-43fb-b2cf-4879198b9556.pdf

Annual Report

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Atria kasvaa ja kansainvälistyy Atria is growing and becoming more international

Atria-konserni on suurin lihanjalostaja Suomessa ja yksi johtavista ruoka-alan yrityksistä Pohjoismaissa, Venäjällä ja Baltian alueella. Atrian1) liikevaihto vuonna 2008 oli 1 356,9 miljoonaa euroa ja sen palveluksessa oli keskimäärin Atria Plc is a powerfully growing and internationalising Finnish food-industry company. Atria is the largest meat processor in Finland in the terms of sales and one of the leading food industry companies in the Nordic countries, Russia and the Baltic region.

6 135 henkilöä. Konserni jakaantuu neljään liiketoiminta-alueeseen. Ne ovat Atria Suomi, Atria Skandinavia, Atria Venäjä ja Atria Baltia. Atrian asiakasryhmiä ovat päivittäistavarakauppa, Food Service –asiakkaat ja alan teollisuus. Lisäksi Atria's1) net sales in 2008 was EUR 1,356.9 million and it employed an average of 6,135 persons. The Group is divided into four business areas: Atria Finland, Atria Scandinavia, Atria Russia and Atria Baltic.

sillä on omiin tuotemerkkeihin perustuvaa Fast Food -konseptiliiketoimintaa. Atrian juuret ulottuvat vuoteen 1903, jolloin perustettiin sen vanhin omistajaosuuskunta. Atria Oyj:n osakkeet listataan Nasdaq OMX Helsinki Oy:ssä. Atria's customer groups are retail trade, Food Service sector and industry. In addition it has a Fast Food concept business based on its own brands. Atria's roots go back to 1903, when its oldest owner co-operative was founded. Atria Plc's shares are listed on the Nasdaq OMX Helsinki Ltd.

Sisältö Table of contents

Atria-konsernin vuosi 2008 Atria Group's financial year 2008

Liiketoiminta-alueet ja tuotemerkit ................................. 1 Financial summary

Keskeiset tapahtumat 2
Business areas and brands 1
Toimitusjohtajan katsaus 4
Key events 2
Strategia 6
CEO's review 4
Strategiset toimenpiteet 8
Atria's strategy 6
Strategic operations 8

Atrian liiketoimintaympäristö......................................... 12 Review of operations

Atria Suomi 14
Atria's business environment 12
Atria Skandinavia 18
Atria Finland 14
Atria Venäjä 22
Atria Scandinavia 18
Atria Baltia 26
Atria Russia 22
Atria Baltic 26

Periaatteet ...................................................................... 30 Corporate responsibility

Ympäristövastuu 32
Principles 30
Atrian laatu-ja ympäristöjärjestelmät 33
Environment responsibility 32
Sosiaalinen vastuu 36
Atria's quality and environment systems 33
Tuotekehitys ja markkinointi 41
Social responsibility 36
Product development and marketing 45

Financial statement and annual report................ 44

Hallinnointiperiaatteet.................................................. 104 Corporate Governance

Atria Oyj:n hallinto 106
Corporate Governance Principles 104
Atria-konsernin organisaatio ja johtoryhmä 108
Atria Plc's administration 106
Sijoittajasuhteet ja analyytikot 110
Atria Group's organisation and management team 108
Yhteystiedot 112
Investor relations and analysts 110
Contact details 112

konsernia. Konsernin emoyhtiö on Atria Oyj. The Group's parent company is Atria Plc.

TA LOU DELLINEN YHTEEN V ETO FIN A NCI A L SUMMARY

Atria-konsernin avainluvut 2008 Atria Group key indicators 2008

2008 2008
2007
Net sales, EUR million
Liikevaihto, milj. euroa
1,356.9 1356,9
1,272.2
EBIT, EUR million
Liikevoitto, milj. euroa
38.4 38,4
94.5
Operative EBIT), EUR million
Operatiivinen liikevoitto
), milj. euroa
39.9 39,9
61.4
Operative EBIT %
Operatiivinen liikevoitto, %
2.9 2,9
4.8
Voitto ennen veroja, milj. euroa
Profit before tax, EUR million
16.7 16,7
80.6
Earnings per share, EUR
Osakekohtainen tulos, euroa
0.42 0,42
2.56
Equity ratio, %
Omavaraisuusaste, %
38.4 38,4
47.6
Gross investments, EUR million
Bruttoinvestoinnit, milj. euroa
152.6 152,6
284.1
Gross investments of turnover, %
Bruttoinvestoinnit liikevaihdosta, %
11.2 11,2
22.3
Henkilöstö keskimäärin
Average personnel
6,135 6135
5,947

*) Operatiivinen liikevoitto = liiketoiminnasta muodostuva liikevoitto ilman merkittäviä kertaluonteisia eriä. *) Operative EBIT = operating profit excluding significant non-recurring items

Varsinainen yhtiökokous Annual General Meeting

Atria Oyj:n varsinainen yhtiökokous pidetään 29.4.2009 Helsingissä, Finlandia-talossa. Atria Plc's Annual General Meeting will be held on 29 April 2009 in Helsinki at the Finlandia Hall.

Taloudelliset raportit vuonna 2009 Financial reporting in 2009

Atria Oyj julkaisee tulostietoja vuonna 2009 seuraavasti:
Atria Plc will publish financial results in 2009 as follows:
Tilinpäätöstiedote vuodelta 200825.2.2009
2008 Financial statement 25.2.2009
Vuosikertomus vuodelta 2008 viikolla 16
2008 Annual report week 16
Osavuosikatsaus Q1 (3 kk)28.4.2009
Interim report Q1 (3 months)28.4.2009
Osavuosikatsaus Q2 (6 kk) 30.7.2009
Interim report Q2 (6 months) 30.7.2009
Osavuosikatsaus Q3 (9 kk) 27.10.2009
Interim report Q3 (9 months)27.10.2009

Atrian taloudellinen informaatio julkaistaan ajantasaisesti yhtiön internetsivuilla osoitteessa Atria's financial information will be published in real time on the company website at www.atria.fi/konserni.

Net sales Net sales by business area

EBIT Operative EBIT

Gross investments Average personnel

Atria's business areas and production plants

Atria Finland

Nurmo (1), Karkkila (2), Kuopio (3), Kauhajoki (4), Forssa (5)

Atria Scandinavia

Sköllersta (6), Malmö/Fosie (7), Stockholm, 3 units (8), Tranås (9), Halmstad (10), Kinna (11), Moheda (12), Norrboda/Nässjö (13), Borås (14), Norrköping (15), Göteborg (16), Falköping (17), Horsens (18)

Atria Russia

St. Petersburg (Sinyavino, Gorelovo) (19), Moscow (20)

Atria Baltic

Valga (21), Ahja (22), Vastse-Kuuste (23)

Sea region and in European parts of Russia, there are approximately 50 million consumers.

Atria's brands 2008

  • • Net sales increase by some seven percent, but profitability is very unsatisfactory. Atria Scandinavia, Atria Russia and Atria Baltic post negative results. Atria Finland succeeds well in its sales, and operative EBIT is up on the previous year. Atria Finland's EBIT percentage is 5.7.
  • • Atria Russia's new logistics centre in Gorelovo, St. Petersburg region is opened and the three warehouses located in downtown St. Petersburg are closed. » See page 23.
  • • Atria Estonia concentrates its slaughtering and meat cutting operations at the Valga plant.
  • » See page 27.
  • • Net sales grow by nearly 15 percent
  • • Operative EBIT is 8.5 percent lower than in the previous year.
  • • Profitability is improved considerably in the Atria Finland and Atria Russia business areas compared to the first half of the year.
  • • Atria acquires the Russian meat processing company OOO Campomos, whose main market is Moscow. In 2007, the company reported net sales of around EUR 75 million.

3Q

» See page 23.

eS t p me ber

• Net sales increase by about 10 percent

Q1 January–March

  • • Operative EBIT is 41 percent lower than in the comparative period.
  • • The upward trend in raw material prices weakens profitability dramatically in the Atria Finland and Atria Russia business areas.
  • • Atria Finland launches an extensive efficiency improvement programme, which is expected to generate annual cost savings of approximately EUR 4 million.
  • » See page 14.

  • • Net sales decrease by 3 percent from the comparative period, which included EUR 38 million of net sales from the Swedish company Svensk Snabbmat för Storkök AB.

  • • Operative EBIT is 32 percent lower than the year before.
  • • The rise in raw material prices continues.
  • • Atria acquires the Swedish AB Ridderheims Delikatesser, a producer of delicatessen products. The company posted net sales of approximately EUR 50 million. » See page 19.
  • • Atria acquires the Estonian meat processing companies AS Wõro Kommerts and AS Vastse-Kuuste Lihatööstus. Their combined net sales are nearly EUR 20 million.
  • » See page 26.
  • • Atria Russia reports that the completion of the new meat processing plant in Gorelovo, St. Petersburg will be postponed to 2009. » See page 23.

Q4

October–

December

Atria Goup's net sales development

Q1 Net sales by business areas

Q2 Net sales by business areas

Q3 Net sales by business areas

Q4 Net sales by business areas

The development of Atria Group's operative EBIT quarterly

Q1 Operative EBIT

Q2 Operative EBIT

Q3 Operative EBIT

Q4 Operative EBIT

Atria Finland Atria Scandinavia Atria Russia Atria Baltic

Q 2

Ap

ril–Ju

ne

Q1 Q2 Q3 Q4

Operative EBIT = operating profit excluding significant non-recurring items

A year of strategic growth and changing business environment

The year 2008 was a success for Atria in terms of growth. We grew in line with our strategy both organically and through acquisitions.

Profitability, however, fell short of our expectations. Our ability to make profit was reduced by the strong changes in our business environment. The most significant of these were the steep rise in the price of meat raw material and the dramatic weakening of key currencies. The escalated price of meat raw material in the first half of the year, mainly due to an increase in corn and feed prices, eroded our profitability in all of our business areas. The weakening of the Russian rouble and Swedish krona in the last quarter increased costs considerably in the Atria Russia and Atria Scandinavia business areas, where our production is mainly based on imported raw material. In addition to cost pressures in the business environment, Atria Russia's performance was weighed down by the loss-making operations of one of our acquired companies, Campomos.

The global economic recession had a less dramatic impact on Atria – and the entire food industry – than on most other industry sectors. Nevertheless, the impact was significant both in terms of net sales and profitability. The recession reduced general consumer demand for fast-moving consumer goods and shifted purchasing towards more inexpensive products in the food products represented by us.

Strategic acquisitions support international growth

In 2008 Atria made four acquisitions that complement its strategy. They all support the growth of our international operations and our goal of becoming the market leader or the second largest market player in all four of our business areas. We used some EUR 110 million on acquisitions. Furthermore, industrial investments totalled EUR 63 million, less than last year's level.

"Atria has supported its growth through strategic acquisitions, making heavy investments over the past two years. In 2009, we will focus on improving our profitability by successfully merging the acquired companies with Atria and by fully capitalising on synergies. Particular attention will be paid to enhancing the performance of Atria Russia. We see the changes in consumer demand resulting from the recession as a challenge, but also as an opportunity for increasing profitable growth."

Matti Tikkakoski President and CEO, Atria Plc

Strategically speaking, the most significant acquisition was made in Russia. Through the Campomos acquisition, we established a firm foothold in Moscow, the single largest market in Russia, and also strengthened our position in St. Petersburg. Due to our new subsidiary, our production capacity increased substantially, our brand portfolio was expanded by strong brands and we also obtained our own primary production. Having our own raw material supply enhances our competitiveness in Russia. The Campomos acquisition lifted Atria's net sales in Russia considerably and made it the country's leading international meat processor.

In Sweden, we acquired Ridderheims Delikatesser, which supports Atria Scandinavia's growth strategy in product groups with a high degree of processing. Ridderheims's operations were merged with the Falbygdens Ost company, after which a new business area, Atria Deli, was established. We believe that this business area, which specialises in fresh delicatessen products, has excellent opportunities for growth in export markets as well. Delicatessen products form a narrow speciality segment in consumer goods retail trade which according to our studies will experience significant growth over the long run.

In Estonia, we have been a too small player. As a result of acquiring Wõro Kommerts and Vastse-Kuuste Lihatööstus, we are now the country's second largest meat industry company. Our new position gives us an opportunity to influence the development of the industry in Estonia and provides a solid foundation for growth in Estonia and elsewhere in the Baltic region.

Profitable growth driven by Atria Finland

Atria Group's operative EBIT decreased by EUR 20 million to EUR 40 million, which accounts for some three percent of our net sales. This was an unsatisfactory result considering our five percent target for operative EBIT margin.

Significant share of our revenues were generated in the Atria Finland business area. In the early part of the year, Atria Finland streamlined and adjusted its operations to meet the cost pressures, and due to increased sales and strengthened margins, its performance in the second half of the year was even better than the year before. The strong Atria brand boosted the growth of our sales in Finland substantially.

In the Atria Scandinavia business area, the trend was just the reverse. The good performance in the first half of the year declined dramatically towards the end of the year. We were not able to pass on the increased raw material costs to end product prices swiftly enough. The weak profitability of the salad and sandwich operations, the non-recurring items of the efficiency improvement programme as well as the rapid weakening of the Swedish krona eroded our performance. However, market shares developed positively particularly in Sweden.

The sales and market shares of Pit-Product grew in the intense competitive situation in the St. Petersburg region. However, the considerable losses of the meat processing company Campomos, which we acquired in the summer, undermined substantially not only Atria Russia's but the entire Atria Group's performance towards the end of the year.

In the Atria Baltic business area, our profitability targets were not achieved. In addition to a challenging business environment, earnings improvement was slowed by the lossmaking Valga Lihatööstus. Towards the end of the year, earnings development took a more positive turn thanks to new acquisitions.

2009 a year of stabilisation

Over the past two years, Atria has invested over EUR 300 million in acquisitions supporting its growth. Last year, our equity ratio fell to 38 percent, which is slightly below our minimum target level of 40 percent. In 2009, we intend to reduce investments compared to 2008. This year we will concentrate on improving our operational profitability.

Enhancing the performance of Atria Russia will play a pivotal role in improving our profitability. Our aim is to take the Campomos company from red to black during 2010 by increasing the cost-efficiency of Campomos, improving its sales and maximising the synergies between Campomos and Pit-Product. The earnings of Pit-Product continue to develop favourably.

The successful integration of the acquired companies into Atria will also be the key to enhancing our profitability in the Baltic and Scandinavia business areas. The new subsidiaries in Estonia make it possible to develop operations and raise profitability to an entirely new level. In Sweden, we will concentrate on the integration but also on streamlining our cost structure considerably. In Finland, profitability improvement measures will be applied to the entire Atria food chain. This is the only way to strike a balance between costs and sales prices.

The decline in consumer demand and changes in purchasing habits resulting from the recession are a challenge for Atria, but also an opportunity. Our cost-efficiency is among the best in the industry. We also have a broad product selection for various consumer segments, and we are wellplaced to respond to changes in demand. I can confidently say that even in these economic conditions, Atria has extremely successful products.

I would like to thank all Atria employees and our partners for the past year and excellent cooperation, which benefits our customers, our shareholders and our company.

Nurmo, February 2009

Matti Tikkakoski President and CEO, Atria Plc

Striving for leadership in fresh foods

Atria's strategic goal is to be the first choice for consumers and customers in fresh foods in the Baltic Sea region and European parts of Russia.

Atria implements its vision through its strategy of profitable growth. In line with this strategy, Atria seeks growth in the traditional meat processing market and also more extensively in the entire food sector, particularly in the fresh products segment.

Atria aims to grow mainly organically, but complementary acquisitions are also possible.

Core strengths supporting growth

Atria's growth in international food markets is supported, in particular, by the following core strengths, which it utilises and develops actively:

Strong market position

Atria is the market leader in Finland with a supplier share of approximately 30 percent. In Sweden, the company is the second largest market player whose position was strengthened considerably through the acquisitions of Sardus in 2007 and Ridderheims in 2008. These acquisitions also reinforced Atria's position in Denmark. In Russia, Atria is the market leader in the quickly growing, modern daily consumer goods retail trade in the St. Petersburg area. In the Moscow region, Atria established itself through the Campomos acquisition completed in 2008.

Strong brands

Atria has strong and well-known brands, and it invests consistently in their development. Thanks to its strong brands, Atria is well-placed to continue launching products with a higher degree of processing and better profitability.

Good consumer experience and management of customer relations

Knowing consumers' purchasing and eating habits is the main challenge in the food industry. Atria manages this task well.

Atria cooperates with the leading players in consumer goods retail trade in all of its business areas. The Group strengthens its strategic customer partnerships by developing new and profitable cooperation models separately with each consumer goods retail chain.

Efficient production structure and good management of change processes and the delivery chain

Atria has met the challenges for change presented by the consumer goods retail trade and the entire business environment through extensive investments that make its production structures more efficient. Experience with increasing production efficiency and good control over change processes and the delivery chain are Atria's core strengths in all of its business areas.

Financial targets

Atria has defined the following five financial targets for its operations:

Share of international operations

Atria's goal is to grow into a company in which international operations account for at least 50 percent of net sales.

Profitability

Atria aims at even earnings development; the target for operative EBIT margin is at least 5 percent of net sales.

Return on equity

Atria's ROE target is 12 percent.

Equity ratio

Atria aims at an equity ratio of at least 40 percent.

Distribution of dividends

Atria's aim is to pay out some 50 percent of the profit for the period as dividends.

Vision 2012

Atria is the first choice for consumers and customers in fresh food in the Baltic Sea region and in European parts of Russia.

  • We are the market leader or number two in all of our business areas. This way we are the best creator of sustainable shareholder value.
  • Our brands are among the two best-known brands in the existing food category, developing markets of meat products and in emerging markets in the meat categories.
  • We are our customers' most preferred partner in the existing food category, developing markets of meat products and in emerging markets in the meat categories.
  • We are the most efficient and streamlined company in the industry.
  • We are the best employer; our tools are good management and systematic development of skills based on our strategy. Values

Profitability and forerunner in our business

Mission

Good food - better mood.

Changing Business Environment

Atria's growth strategy is adapted to strong changes in the business environment.

The international business environment is controlled by the following dynamics in particular

  • Global increasing demand of food
  • Internationalization of the food industry and industrial processes
  • Internationalization of retailing and the food service industry
  • Raw materials migration across borders
  • Increasing pressure on environmental and ethical issues
  • More complex consumer behaviours
  • Operating models based in networking and partnership

Significant international growth through acquisitions

Atria's primary goal, in line with its strategy, is organic growth, which is supported by complementary acquisitions.

In 2008, Atria made four acquisitions, which increased its international operations substantially. As a result of the acquisitions, the share of international operations in the Group's net sales is 42 percent. The strategic goal is for international operations to account for at least 50 percent of net sales.

Atria invested some EUR 110 million in the acquisitions. Their value halved compared to the previous year.

Campomos acquisition: expansion into Moscow

Atria doubled its operations in Russia by acquiring the meat processing company OOO Campomos. In 2007, the company posted net sales of approximately EUR 75 million and employed about 1,000 people. The main products of Campomos are meat products and pizzas.

The main market of Campomos is Moscow, where more than 50 percent of the company's products are sold. Roughly 20 percent are sold in the St. Petersburg area and just under 30 percent in other major cities. The company's production plant and logistics centre are located in Moscow and distribution centre in St. Petersburg. Deliveries to principal customers are mainly made using the company's own fleet. Campomos is also involved in primary production. It owns agricultural land and a new pork breeding facility of 2,500 sows whose output is on a par with Western facilities.

Through the acquisition, Atria established a firm foothold in the modern consumer goods retail trade in Moscow and strengthened its market leadership in St. Petersburg. Campomos has invested in marketing with a long-term view, and its main brand, CampoMos, is well-known in Russia. The company's product selection complements Atria Russia's offering and makes it more diverse.

The profitability of Campomos has been poor in recent years. To make the business profitable, a programme was launched within the company in which the key element is synergies to be achieved with Pit-Product in areas such as purchasing, logistics and marketing.

Established in 1989, OOO Campomos was the first international meatindustry company in Russia. Atria acquired Campomos from the Spanish Campofrio Alimentacion S.A., a publicly quoted company that owned 100 percent of its stock. The enterprise value of the deal was EUR 72 million.

Campomos was consolidated into Atria as of 15 October 2008.

Ridderheims acquisition: more products with higher added value

In the summer, Atria acquired the Swedish AB Ridderheims Delikatesser, which specialises in premium delicatessen products. In its last financial year, the company recorded net sales of slightly over EUR 50 million and employed 110 staff.

The Ridderheims acquisition will increase the share of products with higher added value in Atria's portfolio. The company's operations were merged with Falbygdens Ost, a business unit of Atria Scandinavia, after which a new business unit, Atria Deli, was established. The selection of fresh delicatessen products offered by the unit is the broadest in the Nordic countries, and the unit's opportunities for growth are excellent in the export markets as well. Fresh delicatessen products form one of the fastest growing segments in the consumer goods retail trade.

Ridderheims was founded in 1987, and the brand is known for its innovation. Its products include beer sausages, premium cheese and hams, and marinated products, such as sun-dried tomatoes, olives and garlic. Instead of individual products, Ridderheims always offers a complete product concept for its customers. Roughly onethird of the selection is produced by the company, while the rest comes from contract manufacturers or foreign suppliers. Ridderheims is headquartered in Gothenburg. In 2008, almost 40 percent of its products were exported to other Nordic countries as well as the Benelux countries, among others.

The company was consolidated into Atria as of 1 July 2008.

Growth in Baltic countries boosted by two acquisitions in Estonia

To boost its growth in Estonia and the other Baltic countries, Atria acquired two Estonian meat processing companies, AS Wõro Kommerts and AS Vastse-Kuuste Lihatööstus. In 2007, Wõro Kommerts and Vastse-Kuuste Lihatööstus posted net sales of EUR 10 and 9 million and employed 170

ATRI A S GROWTH A ND INTERN ATION A LI Z ATION

Atria's strategic measures and development of net sales 2005–2008

and 140 people, respectively. The main products of both companies – various meat products and consumerpacked meat – complement and expand Atria's range of retail products. As a result of the acquisitions, Atria became the second largest industry player in Estonia.

The product portfolio of Wõro Kommerts, established in 1993, includes smoked sausages, meat products, raw sausages and frankfurters. In recent years, the company has invested actively in product quality and brand development. Its 13 percent share of the market, measured in value, made it the second largest meat processor in Estonia 1). The company has a modern production plant in Ahja, close to Tartu, and a distribution terminal in Tartu.

The main products of Vastse-Kuuste Lihatööstus include a range of cold cuts, sausages and consumerpacked meat. In terms of value, its market share was 6 percent. Over the past few years, Vastse-Kuuste has invested particularly in the modernisation and capacity improvement of its production plant. The production plant of the company, founded in 1993, is located in southern Estonia, in Vastse-Kuuste.

The companies were consolidated into Atria as of 1 August 2008.

1) Source: AC Nielsen, 2008, unless otherwise indicated

MEGATRENDS

Flavour & savour

Feasting at home – especially at weekends – has retained its value. The weak economy may have increased the price-consciousness of consumers and made them cut back on restaurant meals, but it has not reduced the social value of weekend lunches and dinners. These get-togethers are not only about food; they also mean time spent together in good company. Flavour and savour remain one of the megatrends in the food market.

good food 11

Major differences in growth and concentration between business areas

In Atria's business areas of Finland and in Scandinavia the quantitative growth in meat consumption is low and consumer goods retail trade is concentrated. In Russia and the Baltic countries, overall demand for meat products and Atria's other food product groups is expected to grow considerably over the long term, and the consolidation of consumer goods retail trade is only just beginning.

Atria finland
Overview
Atria Scandinavia
• Quantitative growth of the market1) approx. 2%
• Growth in terms of value2) approx. 8%
• Size of the market3) approx. EUR 2 bn
• Share of food in citizens' consumption expenditure 12%
• Finland is a net exporter of meat; the main export is pork
• The production of beef is not sufficient to cover consumption;
88% of the beef consumed is Finnish
• Chicken production and consumption are in balance
Sweden
• Quantitative growth of the market1) 1%
• Growth in terms of value2) approx. 5%
• Size of the market3) approx. EUR 2.7 bn
• Share of food in citizens' consumption expenditure 11.5%
• Sweden is a net importer of meat; nearly 50% of beef,
approx. 25% of pork and over 40% of poultry are imported
Denmark
• Denmark is a major net exporter of meat globally; the main
export is pork
Business environment
• Consumer goods retail trade is highly concentrated; the
sector is dominated by the S-Group and K-Group.
• The combined market share of the S-Group and K-Group
in Finnish consumer goods retail trade is approx. 75%. The
share of Tradeka (Suomen Lähikauppa Oy) is substantially
smaller4).
• The share of private labels in total retail sales grew slightly
in 2008. Their shares in products groups represented by
Atria ranged from 5% to 15%.
• Consumer goods retail trade is highly concentrated in
Sweden; by far the most significant player is ICA, the
leading retail company in the Nordic countries with a
market share of approx. 46%.
• Coop and Axfood both have market shares of approx. 20% in
Sweden.
• In Denmark, consumer goods retail trade is dominated by
Danske Supermarked, Coop and SuperGros; together they
has a market share 86%.
• The share of private labels in Sweden and Denmark was
18% and 21% of total sales, respectively.
Competitive environment
• There are some 300 meat processing plants and
slaughterhouses in Finland, of which the 20 largest produce
over 90% of the gross value of production4).
• By far the largest market players are Atria Finland Ltd as
well as HK Ruokatalo Oy.
• Atria Finland is the largest slaughterhouse industry player
in Finland with its market share of over 40% in pork
processing.
• Other significant, mid-sized players are the privately owned
Saarioinen Oy, Oy Snellman Ab and Pouttu Oy.
• More than half of the Swedish meat processing market is
dominated by small companies with annual net sales of
less than EUR 50 million.
• The largest market player is Scan AB, Atria Scandinavia is
the second largest player.
• The industry is going through consolidation; the Swedish
Meats acquisition made by HKScan in 2006 and the Sardus
acquisition made by Atria in 2007 are the biggest M&A
arrangements in the industry in Sweden.
Denmark
• In Denmark, the clear leader in the meat processing
market is Danish Crown, Europe's largest company in this
1) Overall demand for meat products
2) Total growth of the product groups represented by Atria in consumer goods retail trade
3) Total market of food products represented by Atria
4) Source: Finnish Food and Drink Industries' Federation, ETL, 2008
sector and the world's largest meat export company.
1) Consumer goods retail trade market
2) Total growth of the product groups represented by Atria in consumer goods retail trade
3) Total market of food products represented by Atria
  • • The food industry is the largest industry in the EU and meat processing is its largest sub-sector.
  • • The food industry and its most important customer segment, consumer goods retail trade, are in the process of becoming more international and concentrated.
  • • Despite the increasingly international nature of the industry, eating habits are still largely national and culture-specific.
  • • The average margins of meat industry products are lower than in many other industries, and the price levels of products will be harmonised globally in the long run.
  • • The food industry is less sensitive to business cycles than most other industries.
Estonia
• Growth in terms of value1) approx. 7%
Size of the market2) approx. EUR 0.9 bn
• Size of the market2) approx. EUR 200 m (the entire Baltic
region)
• Share of food in citizens' consumption expenditure in
Estonia 25%
• Estonia's own meat production is mostly sufficient to cover
the increased demand; some pork is imported
• Share of food in citizens' consumption expenditure in Russia 32%
meat; the country's own meat production cannot satisfy the
growing demand either in terms of quantity or quality
• The Estonian consumer goods retail trade has been rapidly
modernised after the country joined the EU in 2004
is growing rapidly in Russia, although traditional
marketplaces and market halls continue to dominate with a
• The emergence of chain stores in the consumer goods
share of over 45%.
retail trade has been rapid throughout Estonia.
• Nordic chains have a prominent position in the country, the
growth of chains is rapid.
most important ones being Rimi Baltic, owned by ICA, and
• The combined market share of the five largest retail chains
Prisma, owned by the S-Group. Selver and VP Market are
is approx. 12% of the Russian food market. The largest
the main local players.
chains are X5, Metro, Tander and Auchan.
• Estonia's largest meat industry company is Rakvere
just beginning in Russia and there are few international
Lihakombinaat, Atria's acquisitions have made it the second
players; the Campomos acquisition made Atria the largest
largest industry player in Estonia with a market share of
international player in Russia.
more than 20%.
• The biggest meat processing companies in Russia are small
• The number of meat processing companies has decreased
compared to European businesses. The biggest players
slightly in Estonia, and small companies which often
are Prodo, Cherkizovo, Mikoyain, Ostankino, Tsaritsyno and
operate locally are more focused on improving their
Atria.
operational efficiency than expansion.
St. Petersburg
Growth in terms of value1) approx. 7%
Moscow
• Growth of food products in terms of value approx. 7%
• Size of the market2) approx. EUR 2 bn
• Russia is the world's most significant net importer of
Business environment
• The share of modern consumer goods retail trade
• Consumer goods retail trade is highly fragmented, but the
Competitive environment
• The consolidation of the meat processing industry is

1) Overall demand for meat products in modern consumer goods retail trade

2) Total market of food products represented by Atria

1) Overall demand for meat products in modern consumer goods retail trade 2) Total market of food products represented by Atria

atri a f inl a n d

14

Atria's growth clearly above market growth

Atria Finland's sales volumes increased steadily, and the company was able to strengthen its market leadership. However, operational profitability was down due to a sharp rise in the prices of raw materials, supplies and energy, and the targeted EBIT was not achieved.

In the Finnish consumer goods retail trade, the sales of product groups represented by Atria, measured in value, grew slightly more than the year before. Total growth was in the region 8 percent. The growth of Atria's own brands far exceeded the total growth, standing at about 14 percent1).

Atria's share of the supply market decreased slightly over the previous year as Atria did not engage in aggressive price competition between private labels. Nevertheless, Atria remained the clear market leader in food product groups.

Increased sales especially in the first half of the year and the improvement of prices since the spring boosted Atria Finland's net sales by 6.4 percent to EUR 798 million. The growth of net sales was nearly at the previous year's level.

Due to weak first half year operational profitability fell short of the target. Operative EBIT decreased to EUR 34.4 million, or 4.3 percent of net sales. Profitability was reduced by the dramatic rise in meat raw material prices in particular, but the costs of other key factors of production also increased more steeply and quickly than expected. The sales price increases were not enough to compensate the rise in the costs.

Sales directed at Food Service enterprises remained at the previous year's level. Late in the year, economic uncertainty reduced demand particularly in the hotel and restaurant sector.

Atria's export volumes and profitability developed in pace with the global meat market trends. In early 2008, operational profitability was poor due to a large oversupply of pork. In the summer, the markets recovered somewhat and boosted export prices, which improved profitability considerably in the latter half of the year. Atria's top export countries were Sweden and Russia. At the end of the year, export prices began to fall.

Efficiency improved

To enhance its cost-efficiency, Atria Finland launched an efficiency improvement programme at the beginning of the year. The aim is for the programme to generate annual cost savings of EUR 4 million.

Atria discontinued its operations at the rented Kannus production plant, whose bovine and pig slaughtering were transferred to Atria in conjunction with the acquisition of Liha-Pouttu Oy the previous year. The company's bovine slaughtering and cutting were transferred to the Kauhajoki and Kuopio production plants and pig slaughtering and cutting to the Nurmo production plant. Liha-Pouttu's meat procurement operations were merged with A-Farmers Ltd's operations.

The logistics and meat product manufacturing operations of Atria's Forssa production plants were moved to Nurmo. Atria will continue convenience food and meal production in Forssa.

The efficiency improvement programme will result in a reduction of 170 persons.

Growth fuelled by Atria brand

Atria Finland's sales were driven by products bearing the Atria brand, whose sales grew by 14 percent. The growth of private labels manufactured by Atria and of the Forssa brand did not quite meet expectations. Competition between private labels was fierce due to intense price competition.

Sales of cold cuts, which is a core product group at the Group level, grew by nearly 12 percent, outstripping by far the average market growth

1) Contrary to the previous practice, the market data presented is based on information and reports provided by Atria and its partners. This is because data collection practices in the consumer goods retail trade have changed. Atria is responsible for the accuracy of the information.

YEAR 2008

  • Net sales grew by 6.4 per cent to EUR 798 million
  • Comparable operative EBIT decreased by 20.4 percent to EUR 34.4 million
  • An extensive operational efficiency improvement programme was implemented

Atria Finlan d operations

  • Meat operations
  • Meat product operations
  • Convenience food operations
  • Poultry operations

Atria Finlan d key companies

Atria Finland L t d

  • Develops, manufactures and markets Finnish fresh food products and related services
  • Production plants in Nurmo, Forssa, Kuopio, Kauhajoki and Karkkila

A-Farmers L t d

• Company focused on meat procurement

A -Rehu Oy

  • Company focused on the feed business
  • Production plants in Koskenkorva and Varkaus

of just under 7 percent. The 8 percent growth of sausages was also markedly better than the market growth of just under 5 percent.

In the market for consumer-packed meat, the sales of products sold under the Atria brand grew vigorously, but the sales of private labels manufactured by Atria fell short of expectations.

In the convenience food market, Atria's growth of slightly over 10 percent was nearly on a par with average market growth. Meanwhile, sales growth in consumer-packed poultry products was far below the market growth of approximately 10 percent.

Poultry more popular than beef

The consumption of poultry products exceeded that of beef for the first time in Finland. Poultry consumption per capita was 18.5 kilos and beef consumption 18.2 kilos. Beef demand was restrained by the dramatic rise in retail prices. The price level increased particularly as a result of reduced supply due to EU import restrictions and the higher costs of primary production.

Pork consumption per capita grew by 1.8 percent to 35.6 kilos. The growth of Atria's pork processing volume far exceeded total growth, coming in at approximately 15 percent. The processing volume amounted to 95 million kilos. The volume was boosted by the acquisition of Liha-Pouttu Oy's operations in particular. Atria Finland strengthened its position as the country's leading pork producer with a market share of about 44 percent.

Successful seasonal sales

Sales and profitability developed positively during the barbecue season, which is important for Atria's growth.

During the barbecue season, Atria strengthened its market leadership, and the market share of all of its product groups was around 27 percent between May and July.

Especially during the high season, Atria's growth was driven by successful, consumer-oriented productisation as well as enhanced marketing. Excellent management of Atria's orderdelivery process created a major competitive advantage during the busy season as well.

Exceeding market growth

In line with its strategy, Atria Finland's goal for 2009 is to exceed average market growth. The main challenge in terms of profitability is reaching a balance between production costs and the sales prices.

Atria Finland is well-placed operationally for profitable growth. Its production and delivery capacity have increased considerably through investments, and operational costefficiency was enhanced further as a result of the efficiency improvement programme implemented in 2008.

"Atria Finland is well-placed to continue to grow more rapidly than the market as a whole. The lowering of VAT on food in the autumn of 2009 will increase demand for food products represented by Atria, and our entire operating chain is ready to meet this demand. Cost pressures represent a major challenge, though, and we will improve our cost-efficiency further to increase profitability and to prepare for a possible recession in the food industry, too."

Juha Gröhn Deputy CEO Executive Vice President, Atria Finland and Baltic Director, Primary Production

ATRI A F INL A ND

Net sales

Share in Group net sales

Pork

Key figures 2008

2008 2007
Net sales, EUR million 797.9 749.6
EBIT, EUR million 33.9 43.2
Operative EBIT, EUR million 34.4 43.2
Operative EBIT, % 4.3 5,8
Personnel, average 2,378 2,394

2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 750 600 450 300 150 0 2004 2005 2006 2007 2008 Production Consumption

Overall production and consumption of meat in Finland Meat consumption in Finland per capita, 2004-2008

Source: Ministry of agriculture and forestry, Source: TNS Gallup, 2008 2008

Beef Pork Poultry

Source: TNS Gallup, 2008

atri a sc a ndin a v i a

Strengthened market share, profitability weakened

Atria Scandinavia's profitability fluctuated widely over the course of 2008. In the first half of the year, earnings developed better than the previous year, but towards the end of the year, profitability declined rapidly and the results fell far short of the year before. The growth of sales also weakened in late 2008.

Due to the falling value of the Swedish krona, Atria Scandinavia's net sales in euros decreased by 0.6 percent to EUR 455 million. Net sales in krona increased by 3.9 percent over the previous year. Net sales were up due to the organic growth of Atria brands and the acquisition of the Swedish Ridderheims Delikatesser. The company was merged into Atria in early July1).

Atria Scandinavia's operative EBIT decreased by EUR 5.1 million to EUR 15.4 million. The results were weighed down particularly by the sharp rise in raw material costs, the weakening of the Swedish krona and the loss-making salad and sandwich operations.

Total market growth slowed

The steady growth of Swedish consumer goods retail trade, which had continued for years, declined to zero. The growth of demand in the Foodservicesector also slowed to an annual growth rate of approximately two percent.

Atria Scandinavia uses a considerable amount of imported raw materials in production. In Sweden, the rise in international raw material prices was boosted by the weakening of the krona particularly towards the end of the year. Together, these resulted in an increase of over EUR 20 million in Atria Scandinavia's costs. A substantial proportion of this rise could be compensated by increasing sales prices and implementing an operational efficiency improvement

of value-added products. 1) A presentation of the company can be found on page 8.

programme, but this was not enough to achieve the targeted results.

The sales of Atria Scandinavia's product groups were up, although the economic downturn began to have some effect on sales volumes in the latter half of the year. The effect was most pronounced in the category of delicatessen products, whose sales declined. The rise in raw material costs could be best compensated at Atria Denmark, whose sales were growing strongly at the end of the second half of the year.

Market position strengthened

Atria Scandinavia's market position has strengthened considerably in recent years. As a result of the acquisitions of Sardus in 2007 and Ridderheims Delikatesser in 2008, Atria is the market leader or the second largest player in its strategic product groups.

In cold cuts, Atria ranks second in both Sweden and Denmark. In convenience foods, Atria is the market leader in several sub-categories, such as ready-made sandwiches and salads. The position of the convenience foods product category is reinforced by the Sibylla brand particularly in Sweden. In delicatessen products, Atria's position was strengthened due to the Ridderheims acquisition, and it is the largest player in this product group in Sweden. Atria is Sweden's second largest player in sausages, and it has a solid position as a supplier of private label products.

Atria Scandinavia stepped up its brand investments. The packaging overhauls of pastries and cold cuts, among others, were a success. Among individual brands, the strongest were Falbygdens Ost, Arboga, Lönneberga and Sibylla. Innovation, which plays a key role in the company's growth strategy, was also stimulated in a range

YEAR 2008

  • Net sales decreased by 0.6 percent to EUR 455 million
  • Operative EBIT fell by 24.9 percent to EUR 15.4 million
  • Atria acquired Ridderheims Delikatesser AB
  • The integration of Sardus AB was completed
  • Salad and sandwich operations were rationalised
  • Investments into strategic product groups and brands were increased

Atri a S ca ndin av i a' s operat i o n s b y custo m er group

  • Retail customers (cold cuts, meat products, pastries and convenience food for consumer goods retail trade)
  • Foodservice customers (meat products and convenience foods for the HoReCa sector)
  • Concept customers (Sibylla fast food concept for franchise entrepreneurs)
  • Deli customers (delicatessen products, e.g., beer sausages, special cuts, canned foods and premium cheese for consumer goods retail trade and the foodservice market
  • Denmark customers (cold cuts for consumer goods retail trade particularly in Denmark)

Atri a S ca ndin av i a key co m pa nies

Atria Retail AB

  • consumer packed meat, meat products and convenience food
  • Atria Foodservice AB
  • meat products and convenience food for foodservice sector
  • Atria Concept AB
  • Sibylla fast food concept
  • Falbygdens Ostnederlag AB
  • premium cheese
  • Ridderheims Delikatesser AB
  • fresh delicatessen products
  • 3 - S tjernet A/S , Denmark • cold cuts

Significant reorganisations

The acquisition of Ridderheims Delikatesser supports Atria Scandinavia's strategic growth target in product groups with a high degree of processing. Following this acquisition, Atria reorganised its fresh delicatessen product groups with the aim of creating the most extensive and versatile selection in the Nordic countries. Delicatessen products form one of the fastest growing segments in consumer goods retail trade.

Atria Scandinavia also restructured its other operations, an example of which is the integration of two distinct food service operations into one entity. Atria Scandinavia's operations are now organised into five businesses supported by shared administration and purchasing units.

The reorganisations were partly connected to the Sardus acquisition completed in 2007, as the ensuing integration process was now brought to an end.

Atria Scandinavia targeted the most significant efficiency improvement measures to the salad and sandwich operations. The Halmstad plant that manufactured these products was closed, and all production was concentrated in the Norrköping plant.

Investments in efficiency and brands

In 2009, Atria Scandinavia will continue its efficiency improvement programmes aimed at restoring profitability to the targeted level. The measures will be applied to all of the company's operations. As a result of these measures, the number of the company's production sites will decrease further. The company also carried out major rationalisation measures in several of its production units in 2008.

To secure growth, Atria Scandinavia will concentrate investments in its brands and new product concepts. The company will, for example, continue to launch new cold cuts and bring to the market a new product concept bearing the Ridderheims brand.

"A strong market position will enable the growth and development of Atria Scandinavia even in a challenging economic climate. With our broad selection of brands and product groups, we can target consumer demand in our sector, where economic trends play a much smaller role than in many other industries. In 2009, Atria Scandinavia will focus on increasing cost-efficiency. We seek profitable growth through the success of significant launches. If we also manage to constantly deepen our customer and consumer relationships, our vision of being the most interesting food industry company in Scandinavia will become a reality."

Christer Åberg Executive Vice President, Atria Scandinavia Director, Concept & Deli

ATRI A SCA NDIN AVI A

Share in Group net sales

Atria Scandinavia .... 33 % Rest of Group .......... 67 %

Overall production and consumption of meat in Sweden

Source: TNS Gallup, 2008

Key figures 2008

2008 2007
Net sales, EUR million 455.2 457.8
EBIT, EUR million 14.4 54.9
Operative EBIT, EUR million 15.4 20.5
Operative EBIT, % 3.4 4.5
Personnel, average 1,691 1,768

Atria Scandinavia's core product groups 2008

Volume Annual market
growth
Markets share
(incl. private labels)
Market position
Cold cuts, Sweden -2 % +4 % 15 % 2
Liver pâtés, Sweden -2 % +3 % 65 % 1
Cold cuts, Denmark +/- 0 % +2 % 13 % 2
Convenience food +4 % +10 % 10 % 2
Delicacies (premium cheese) -2 % +1 % 30 % 1
Fast food/Sibylla +7 % 11 % 3
Consumer packed meat +17 % +17 % 10 % 2
Sausages +/-0 % +5 % 20 % 2

Sources: Nielsen 2008, GFK 2008, HUI 2008, Delfi 2008

atri a RUSSI A

Growth picked up, profitability weak YEAR 2008

Atria Russia experienced significant growth in 2008, boosted primarily by the acquisition of the Russian meat processing company OOO Campomos. The profitability of the operations was unsatisfactory, however, and since the acquired company was lossmaking, Atria Russia's overall result also showed a loss.

Atria Russia's sales developed favourably, with net sales increasing by 43 percent to EUR 94 million. Of this, approximately one-fifth was generated by Campomos, which was merged into Atria in late 2008. The sales of Atria's Russian subsidiary Pit-Product even exceeded expectations. Its sales grew vigorously particularly in the latter half of the year. This, along with improved prices, increased net sales.

Pit-Product strengthened the market leadership of its product groups in St. Petersburg's modern consumer goods retail trade. In terms of value, the market share of the Pit-Product brand climbed as much as 31 percent. At the end of the previous year, the share had declined to 21 percent due to unhealthy price competition. The greatest improvement took place in the market share of cold cuts as a result of heavy investments made by the company in the product development and marketing of this strategic product group. The Campomos brand achieved a market share of 7 percent in St. Petersburg1).

The earnings of Pit-Product were in the black, but profitability remained lower than expected due to a significant increase in meat raw material prices. Raw material prices rose more quickly and sharply than the sales prices of end products. The company acquired nearly all of its meat raw material from the global markets. The sudden weakening of the rouble and higher import duties undermined further the company's profit-making ability.

The profitability of Campomos, which was consolidated into Atria in the last quarter was poor, and the company was loss-making. In the company's main market Moscow, the market share of the Campomos brand, measured in value, remained at the previous year's level.

Enhanced logistics in St. Petersburg

Atria Russia continued its investment programme of approximately EUR 70 million to build a new meat product plant and logistics centre in Gorelovo, St. Petersburg region. The logistics centre was opened in October, and all deliveries from warehouses located in downtown St. Petersburg were transferred to the new centre. Significant improvements were achieved in the efficiency of delivery and other logistics operations in the St. Petersburg area.

The opening of the meat product plant next to the logistics centre was postponed to 2009 due to delayed completion of the water and drain connection. This delay weakened Atria Russia's growth prospects in the St. Petersburg area.

The capacity and cost-efficiency of the plant located in Sinyavino, Leningrad oblast rose as planned as a result of an investment programme launched in the previous year. Additional investments were made at the plant towards the end of the year to increase dried sausage capacity.

Integration set in motion

Immediately after the Campomos acquisition, Atria Russia initiated a programme aimed at maximising synergies between Campomos and Pit-

  • Net sales grew significantly to EUR 93.8 million
  • The company posted a loss as a result of the Campomos acquisition
  • Due to the acquisition, Atria Russia gained a firm foothold in the Moscow area as well and in other major cities in European parts of Russia
  • The integration of Pit-Product and Campomos was initiated
  • A new logistics centre was opened in St. Petersburg

Atria Russia companies

OOO Pit-Product

  • Headquartered in St. Petersburg
  • The company develops, manufactures and markets mainly meat products, particularly sausages and cold cuts
  • The company's meat processing plant is located in Sinyavino, Leningrad oblast. The new production plant (as of 2009) and the adjacent logistics centre are located in Gorelovo, Leningrad oblast

OOO Campomos

  • Headquartered in Moscow
  • The company develops, manufactures and markets mainly meat products, cold cuts and pizzas
  • The company's production plant and logistics centre are located in Moscow, the distribution terminal in St. Petersburg. The company's primary production (pork breeding facility) is situated in the Moscow region.

More detailed presentation of OOO Campomos can be found on page 8. Product as well as improving the profitability of Campomos. The integration of the organisations began by merging their purchasing and financial administration operations.

The aim of Atria Russia is to improve the profitability of Campomos and take the company from the red to the black during 2010. This means that the company's position in the consumer goods retail trade must be strengthened in Moscow and St. Petersburg and other major cities in the European part of Russia. Other means to enhance profitability include increasing cost-efficiency, reducing costs and rationalising primary production.

Slower growth in demand

The growth of consumer spending slowed in Russia, which also affected the overall demand for products represented by Atria. Annual growth measured in value dropped from over 10 percent to around 7 percent.

The slowing of growth tightened competition between meat processing companies and increased the negotiating power of consumer goods retailers. In meat product retailing, a slight change occurred towards more affordable meat products. Overall in the food market, the western trend was further strengthened in purchasing and consuming habits, emphasising the ease and convenience of eating.

No major integration took place in the industry apart from the acquisition made by Atria. The consolidation of Russian meat processing companies is still in its early stages. However, the interest of international players towards the Russian market increased.

More capacity, major synergies

In 2009, Atria Russia's growth will be driven by the newly acquired Campomos as well as Pit-Product's rapidly increasing production capacity. The new Gorelovo plant will more than double Pit-Product's capacity to produce meat products. The investments made in the Sinyavino plant will also lift production volumes.

The improvement of Atria Russia's profit level is based on enhancing the profitability of Campomos and succeeding in the integration of Campomos and Pit-Product. The synergies created by the integration are substantial. Initially, the greatest benefits will come from logistics operations, purchasing, administrative and raw material acquisition related operations, as well as marketing operations. Long-term benefits have to do with the distribution channel and individual accounts in particular. Campofarm's primary production will be in full swing as of the beginning of 2009, which will improve competitiveness and risk management in raw material procurement as well as create opportunities for marketing fresh meat.

"Our operations in Russia have expanded considerably as a result of the Campomos acquisition. In 2009, our net sales will increase clearly. To enhance our profitability, we will focus on improving the cost-efficiency of Campomos and exploiting rapidly the synergies between Campomos and Pit-Product. Our strengthened position in the Moscow and St. Petersburg areas will create good conditions for profitable growth."

Juha Ruohola Executive Vice President, Atria Russia Director, Procurement and Investments

ATRI A RUSSI A

Atria Russia........... 7 %

Rest of Group ...... 93 %

Key figures 2008

2008 2007
Net sales, EUR million 93.8 65.6
EBIT, EUR million -3.4 4.3
Operative EBIT, EUR million -3.4 4.3
Operative EBIT, % -3.6 6.5
Personnel, average 1,525 1,278

Source: RosCom Stat, 2008

Development of consumption of meat products (sausages)

Atria becomes the second largest player in the market

Atria made two acquisitions in the Baltic business area, which strengthened its position in the Estonian market considerably. The acquisitions of the meat processing companies AS Wõro Kommerts and AS Vastse-Kuuste Lihatööstus, completed in the summer, increased Atria's share of the meat products market in particular. As a result of these deals, Atria Baltic became the second largest player in the Estonian meat processing market.

Following the acquisitions, Atria Baltic's net sales rose by 21.0 percent to EUR 32.3 million. The growth in the sales of both the new companies and AS Valga Lihatööstus was close to expectations, and all of the three companies reinforced their market shares. The aggregate market share of the product groups represented by these companies, measured in value, was 22 percent in Estonia. In individual product groups, the share was even higher. In cold cuts, the market share was 23 percent and in sausages as high as 31 percent 1).

Unlike the sales, Atria Baltic's profitability did not develop as expected. The companys operative result posted a loss of EUR -3.8 million. Particularly in the first part of the year, performance was weakened by the poor profitability of Valga Lihatööstus. The company is engaged in significant primary production, whose costs rose sharply due to increased feed prices. The profitability of the acquired companies was better than that of Valga, though not satisfactory.

The retail prices of the product groups represented by Atria Baltic rose by 5 to 10 percent in the Estonian consumer goods retail trade. The price increases were, however, not enough to compensate the rise in the costs of primary production and meat processing operations. The weakening outlook for the Estonian economy reduced consumer demand slightly towards the end of the year.

1) Source: AC Nielsen, 2007/2008, unless otherwise indicated

Increased efficiency

The integration of the acquired companies into Atria Baltic progressed as planned. The Estonian management was reorganised and the streamlining of operations began with the transfer of the slaughtering and meat cutting operations of Vastse-Kuuste to Atria's Valga plant. The slaughterhouse in Valga was modernised completely in 2002.

Atria Baltic continued its approximately EUR 8 million investment programme launched during the previous year. The majority of the investments were directed at ensuring raw material procurement and quality in primary production. Another aim was to increase the capacity and cost-efficiency of the Valga plant.

Improved conditions for growth

The completed acquisitions create good conditions for Atria Baltic's profitable growth in Estonia and more widely in the Baltic region in 2009. The company's own meat production and slaughtering operations also secure competitiveness when the meat market is unstable. Atria's production capacity has increased markedly. The cost-efficiency of production and all operations can be improved by, for example, specifying the distribution of work between plants and harmonising logistic systems. The integration of operations will lead to cost savings of approximately EUR 2 million in 2009.

The acquisitions also enhanced the opportunities of Atria Baltic's product development and marketing considerably. Atria is now able to offer a wide range of well-known brands for retailers. In product group and brand development, Atria Baltic makes use of Atria's Group-level brand expertise.

Key figures 2008

2008 2007
Net sales, EUR million 32.3 26.7
EBIT, EUR million -3.8 -4.4
Operative EBIT, EUR million -3.8 -3.1
Operative EBIT, % -11.8 -11.6
Average personnel 541 507

YEAR 2008

  • As a result the completed acquisitions, net sales grew substantially to EUR 32.2 million
  • The company posted a loss of EUR -3.8 million
  • The integration of the new companies into Atria was initiated
  • Investments in primary production continued

Atria Balt i c companies

AS Valga L ihatööstus

  • The company's main products are meat, sausages and cold cuts
  • A meat processing plant in Valga in South-West Estonia and six farms mainly in Central Estonia

AS Wõro Kommerts

  • The company's main products are sausages and meat products
  • A production plant in Ahja, close to Tartu, and a distribution centre in Tartu

A s Va s t s e - K u u s t e L ihatööstus

  • The company's main products are cold cuts, sausages and consumerpacked meat
  • A production plant in Vastse-Kuuste in southern Estonia

More detailed presentations of Wõro Kommerts and Vastse-Kuuste Lihatööstus can be found on page 8.

MEGATRENDS

E ase & convenience

Consumers value ease and convenience, especially on weekdays. Individuality is increasingly common in family dining, with meals consisting of many different dishes depending on the likes of eaters. This poses a challenge to the food industry: the demand for small raw material packages will increase and the purchasing threshold for economic package sizes will become lower.

good food 29

Atria's corporate responsibility

Corporate responsibility is an integral part of Atria's corporate culture, and the company recognises its responsibility towards all of its stakeholders. Atria integrates corporate responsibility into all levels of its operations: targets, values, business strategies, management and everyday work.

Atria secures its current and future operating conditions through responsible operations. In accordance with the principles of sustainable development, Atria takes into account economic, social and environmental aspects in all of its business areas. Atria sees the satisfaction and trust of consumers and customers as the key preconditions for its business and success. Also the profitability and competitiveness of its business operations, responsible management, the competence, commitment and availability of personnel as well as the continuous improvement of operations in all level are the key preconditions for its sustainable business.

Atria's corporate responsibility is encapsulated in its mission "Good food – better mood". For Atria, the concept of good food covers the entire food chain from primary production to the table of consumers. Atria's good food is produced in a responsible and ethical manner; it is of high quality and safe. Good food leads to a better mood, safety and added value to all of Atria's stakeholders.

Scope of principles

General principles for Atria's corporate responsibility cover all of the Group companies in the various business areas. The Atria Group Management Team has approved and confirmed these principles in its meeting on 22.1.2009.

In applying the general principles for corporate responsibility in its various business areas, Atria complies with good practice while respecting the different views of its stakeholders on responsibility and ethical operations. These cannot, however, be in conflict with local or international legislation, Group management principles or Atria's values or ethical principles.

Management of corporate responsibility

Atria's corporate responsibility team which has members from every business area (Atria's CR-team) is responsible for monitoring and developing Atria's corporate responsibility. The Group is led by the Vice President of the Group's environmental and quality affairs, who reports to the Group Management Team on the objectives and results of Atria's corporate responsibility.

Responsible communication

Transparency and openness of operations are an integral part of Atria's corporate responsibility. Accordingly, Atria communicates on its corporate responsibility to its internal and external stakeholders in an open, comprehensive and systematic manner. Corporate Communications coordinates and is responsible for the communication.

In order to ensure the provision of essential and comprehensive information to its stakeholders, Atria develops and diversifies its reporting on the principles, objectives and results of its corporate responsibility. As the basis for the reporting, Atria uses the international Global Reporting Initiative (GRI) guidelines, in which corporate responsibility is viewed from the angles of economic, social and environmental responsibility according to a three-pillar model. The report is published annually in a condensed form as part of the Annual Report and as a separate electronic publication.

Atria and stakeholders

Atria's corporate responsibility is embodied in its day-to-day work with stakeholders. Atria defines its key stakeholder groups on the basis of its business strategy.

Atria's main stakeholders are

  • • consumers
  • • customers
  • • personnel
  • • subcontractractors and partners
  • • shareholders and investors
  • • authorities
  • • local communities and educational institutes
  • • media

Atria's corporate responsibility perspectives

Atria's financial responsibility

By financial responsibility, Atria refers to meeting its financial targets in such a way that it can generate long-term financial added value to its owners and other stakeholders and increase the wellbeing of the surrounding communities and society. In order to reach its financial targets, Atria's operations are required to be sufficiently profitable, competitive and efficient. They must also have a business risk management system in place.

At Atria, financial responsibility also means complying with healthy and responsible business practices. Corporate responsibility is subject to national legislation, the International Financial Reporting Standards as well as the Corporate Governance recommendations for listed companies.

Sufficient profitability and efficiency create the preconditions for bearing social and environmental responsibility. Atria's view is that social and environmental responsibility also works in the other direction, i.e., as factors strengthening financial responsibility.

Atria's social responsibility

The competence and wellbeing of personnel form the most central dimension of Atria's social responsibility. On them rest the quality of all of the company's operations and products. The wellbeing of personnel is also a key factor with regard to Atria's sustainable growth. Only satisfied personnel create a working atmosphere and employer image that make it possible to recruit competent and motivated personnel.

At Atria, social responsibility also covers complying with and, where possible, exceeding, national and international regulations concerning product safety and responsibility as well as consumer protection, such as product markings and marketing communications.

Atria uses its position in the food chain in a responsible manner. It only deals with such primary producers and subcontractors, customers and other business partners that are known to be trustworthy and honest. Atria favours partners that, in addition to price and quality arguments, are able to demonstrate that they operate in accordance with ethically acceptable practices.

Atria's environmental responsibility

Atria's environmental responsibility consists of three main elements: taking the ecologic environment into account at all operational levels, recognising indirect environmental impacts in the different stages of the operating chain and reducing direct environmental impacts in everyday work. By focussing on the balanced control and management of these elements, Atria generates substantial added value to its business operations as well as to its stakeholders and the environment.

At its most extensive, Atria views its environmental responsibility as covering the entire food chain. It reaches throughout the operating chain, from primary production and acquisition of raw materials to the manufacture, consumption, recycling and disposal of products. In addition to environmental protection, emphasis is also on preventing environmental and health hazards and paying attention to consumer and personnel safety. To a certain extent, environmental responsibility also includes the operating practices of the suppliers of raw materials and other subcontractors as well as the wellbeing of animals at farms and during transport.

In reducing direct environmental impacts, Atria's key considerations are the pollution load on water systems, raw material and product wastage, the environmental properties of packaging, the environmental impact of transport as well as energy and water consumption.

Comprehensive quality, environment and product safety management

The well-being of the environment is essential to Atria's and the entire food industry's operations. One of the key elements of Atria's environmental responsibility is taking into consideration the natural environment at all levels of operations. What this means in practice is identifying all of the indirect environmental impacts of the operating chain and controlling and reducing the direct environmental impacts of operations.

The role of Atria's environmental responsibility, as well as its administration and management practices related to environmental matters, vary depending on the business area. Owing to the numerous acquisitions carried out in recent years, practices also differ between units and companies belonging to the same business area. The most uniform administration and management practices are those of Atria Finland, which has made environmental responsibility a part of its comprehensive quality, environment and product safety management. Atria Finland's environmental management is based on an environmental system that complies with ISO 14001. In other business areas the company strives to achieve a corresponding level, taking into consideration national regulations and procedures.

Atria audits its material and service suppliers also in terms of environmental issues. Among other things, suppliers are expected to have identified and recorded any significant environmental aspects, and the measurement results required by environmental permit regulations must be available for verification during auditing. Suppliers are also expected to do waste sorting and recycling and to properly handle hazardous waste.

Environmental management through networking

According to its environmental vision, Atria is an efficient expert in environmental matters, with environmental management supporting business and sustainable development. Atria's environmental management strategy is based on networking, in line with the company's values. By networking with other players Atria can develop the best environmental management practices to support continuous improvement. Management is based on an environmental system certified in compliance with the ISO 14001 standard.

Atria's environmental management is handled by a steering group, which works under the management team and is in charge of planning and monitoring environmental management. The steering group has representatives from procurement, production, product development, packaging design and energy production. The composition of the group ensures that management encompasses all of the areas in which Atria can control environmental impacts. The group distributes its annual work in the following way: at the first meeting it analyses the results achieved in the previous year, at the following meeting it plans the required investments and at the end of the year it sets the targets for the following period.

Harmonisation of product safety procedures

The safety and microbiological quality of Atria's products are based on selfmonitoring plans that are approved by the authorities and cover raw materials, production processes and delivery chains. The plans are based on risk management according to the HACCP (Hazard Analysis and Critical Control Point) system. Through authority approval and regular audits, Atria ensures that the plans correspond to the latest legislation and product safety standards in the industry, as well as to the requirements of international trade.

The Group has an extensive Safe Atria Quality programme, which covers product safety, health, ease of use and environmental impact throughout the life cycle of products. With the programme Atria aims to harmonise its product safety procedures in all business areas. A concrete goal is to develop product safety guidelines that apply to all of Atria's business areas and with which each unit can further develop its own safety procedures that follow national regulations and standards.

Atria's goal is to become one of the leading companies in its sector as regards product safety competence and quality development.

Atria's quality and environment systems

Business area Quality Environment Production plant
Atria FINLand
ISO/IEC 17025:2005
(Laboratory accreditation)
Nurmo, Kuopio, Kauhajoki
SFS-EN ISO 9001:2000 Nurmo, Forssa, Kuopio,
Kauhajoki, Karkkila
SFS-EN ISO 14001:2004 Nurmo, Kuopio, Kauhajoki, Karkkila
USDA - approval for pork meat export
to USA
Nurmo
Air quality control, Finland's
environmental administration:
Seinäjoki and Kuopio area quality
control, bio-indicator research
Seinäjoki, Kuopio
Atria Baltic
ISO 22000:2005 Wõro Kommerts
ISO 9001:2000 Valga
ISO/IEC 17025:2005 (Laboratory
accreditation)
Valga
Atria russia
ISO 9001:2000 Campomos
GOST R 51705.1-2001 and Regulation
(EC) Nr. 852/2004 of the European
parliament and the council of 29 April
2004 on the hygiene of foodstuffs.1)
Pit-Product
Atria scand
inavia
ISO 14001:2004 Sköllersta
BRC Global Standard -
Food (Issue4:January 2005) Grade A
Stockholm, Tranås, Kinna, Moheda,
Borås, Sköllersta, Malmö, Göteborg
Organic Production according to
Council
Regulation (EEC) 2092/91
Tranås, Moheda, Borås, Kinna,
Falköping, Göteborg
The IKEA Way on
Purchasing Food (IWAY)
Borås, Falköping
BRC Global Standard -
Food (Issue4:January 2005) Grade B
Halmstad
BRC Global Standard for Food Safety
(Issue5:January 2008) Grade A
Falköping, Horsens, Norrköping
DS/EN ISO 9001:2000 Horsens, Denmark

1) Written GOST R-sertificate is a guarantee for that the product fulfills Russian security standards.

Good results in the programme period

Atria has identified the environmental impact and aspects caused by its operations, products and services. These vary depending on the business area. The key issues in all areas are energy consumption, water consumption, oxygen consumption caused by wastewater, as well as municipal waste. Key environmental indicators include energy and water consumption, as well as the amount of landfill waste and packaging material per product tonne produced.

Atria Finland's three-year programme period concluded in 2008. It had six environmental targets:

  • • to reduce the consumption of energy and natural resources
  • • to reduce the amount of waste and the load caused by wastewater, to improve waste sorting and to explore new waste utilisation methods
  • • to ensure the safety of environmentally harmful substances during use
  • • to increase the environmental awareness of employees and partners
  • • to understand the environmental impacts of primary production
  • • to recognise the environmental impacts of deliveries.

Numerical environmental targets for the three-year period included reducing water and energy consumption, as well as landfill waste, by two percent. The use of thermal energy was to be enhanced by two percent and heat recovery by ten percent. One of the target indicators was the BOD7 figure, which indicates the organic load of wastewater. Its value was to comply with the environmental permit.

Atria Finland met its key environmental targets very well, as shown by the graphs on the facing page.

Pollution load on water system

Biological oxygen demand indicates the rate at which wastewater uses up oxygen in a body of water. The quality of wastewater was kept under good control and the levels of oxygen consumption remained clearly under target limits.

Amount of municipal waste

Municipal waste is unsorted landfill waste. The amount of municipal waste exceeded target limits due to stricter quality requirements for waste used in waste-to-energy processes. The volumes of plastic waste taken to the landfill increased because the material was not sufficiently pure for energy production.

Electricity consumption

The relative consumption of electrical energy has been reduced by some five percent over the past three years. This positive development has been achieved by efficient production control and higher utilisation of capacity.

Water consumption

Water is used abundantly, for example, in the cooling and washing of cooking sausages. The processes remained under the target limits, and the efficiency of water use has been improved by some 15 percent in three years.

Heat recovery

Heat recovery takes place in conjunction with the cooling process and during heat-generating production processes. The target limit was not achieved, because new recovery elements could not be introduced.

Heat energy consumption

The use of heat energy has been enhanced by more than 12 percent in the programme period. The main factor contributing to this is the enhanced energy efficiency in pig slaughtering achieved through a higher capacity utilisation rate.

Atria Finland's environmental orientation 2009–2011

  • • Control of energy consumption
  • • Control of water consumption
  • • Control of wastewater values
  • • Control of municipal waste
  • • Control of the amount of packaging materials

Atria Finland's environmental targets 2009–2011

  • • Control of energy consumption: reduction in accordance with the energy efficiency agreement (-9% by 2016)
  • • Control of water consumption: reduction of consumption (-1% by 2011)
  • • Control of wastewater values in compliance with environmental permit regulations
  • • Control of municipal waste; systematic increase in the share of energy waste through enchanced sorting at the point of origin
  • • Control of the amount of packaging materials means making the assessment of environmental impacts an inherent part of innovations and next-generation product development projects

E nviron m ent

Atria Finland

Electricity consumption

Water consumption

Realised The objective varies according to the environmental permit regulations for the locations

Packaging materials

Municipal solid waste

Wastewater load BHK, kg

Ecoefficiency

Environmental indicators in relation to turnover 2008 2007 2006 2005 2004
Electricity consumption, MWh/EUR 1,000 0.18 0.18 0.23 0.24 0.24
Water consumption, m3
/ EUR 1,000
2.04 2.03 2.90 3.09 2.90
Landfill waste, kg/EUR 1,000 3.73 3.65 3.98 4.10 3.97
Packaging materials, tonne/EUR 1,000 0.017 0.016 0.014 0.012 0.011
Wastewater load BHK7
kg/EUR 1,000
1.54 1.81 2.14 2.45 3.23

The graphic descriptors and chart data on this page only apply to Atria Finland Ltd's production plants. Atria Group's environmental aspects are presented in the financial statements on page 50.

Group HR strategy implemented locally

The execution of Atria's growth strategy is supported by efficient personnel planning, well-designed and timely recruitment, systematic talent development and a successful performance management system. Atria's Grouplevel HR strategy ensures a common objective for HR management and uniform methods to reach this objective in the various business areas. Atria's aim is to be the industry's employer of choice.

During the autumn 2008, local HR strategies were drawn up for all busi-

Performance evaluation*

* Only office employees are included in regular performance evaluaations. ** Only Pit-Product office employees

ness areas based on their own business strategies and the Group HR strategy. They define concrete operating models for putting business objectives into practice. In addition, clear operational indicators were specified for each country to regularly monitor the success of HR activities. At the Group level, the success of the HR strategy is monitored through business achievements as well as an extensive personnel survey and individual performance reviews.

In 2008, there were two clear focuses in HR activities: supporting the integration of operations and talent development. Significant mergers of ope-rations occurred in nearly all business areas, accompanied by major changes in organisational and personnel structures.

Personnel structure and turnover

The majority of Atria employees are based in Finland, and Scandinavia and Russia have nearly the same number of employees. Atria Baltic employs roughly eight percent of all the employees within the Group. In 2008, the Group recruited over 4,100 persons, and nearly 4,500 employees left Atria. Turnover is high particularly in Finland and Scandinavia due to the seasonal nature of the operations. Among permanent and clerical employees, turnover is at the target level. In the recruitment of clerical employees, the focus was on key competencies required by the company. Internal turnover increased substantially.

Talent management

The time frame for talent development was extended and new country-specific projects were launched. Through development programmes, talent recruitment and annual succession planning, Atria strives to ensure superior industry expertise in the future as well. The members of the Group's Management Team participated in several development programmes aimed at strengthening their strategic management skills. The Group's top management, Board of Directors and a group of managers attended a course on Russian business practices tailored for Atria. Systematic exit interviews were adopted in 2008. The confidential feedback received can be used to improve the operations further and increase employee engagement.

PERSONNEL

Men & Women

Not FTE, based on Dec 31, 2008

Age structure in Atria Group*

1200 1000 800 600 400 200 0 Atria Finland Atria Scandinavia Atria Russia / Year 2008 figures includes both Pit-Product and Campomos. persons under 1 year 1–5 year 6–10 year 11–15 year 16–20 year 21–25 year 26–30 year 31–35 year 36–40 year over 40 year

Atria Baltic / Year 2008 figures includes Walga, Wõro and Vastse-Kuuste.

*situation on Dec 31, 2008

Service structure

Recruitment

* Sickness rate 2008 includes Pit-Product & Campomos. 2007 only Pit-Product. ** Sickness rate 2008 inlcudes Valga, Wõro and VK, 2007 figures include also Lithuania.

Atria Finland

Atria Finland's shared competencies, management competencies and strategic professional competencies were identified for directors, supervisors and experts. All of Atria Finland's clerical employees filled in a form aimed at assessing their competencies and had a performance review with their supervisor. A talent development system forms the foundation for longterm, business-driven development of the entire company and its personnel. The training offering was improved systematically. Supervisory training designed for foremen and line managers was launched in the autumn.

Atria Scandinavia

Personnel training focused on systematic management training related to the working environment and quality. The topics covered in the training, which was mainly organised internally, included hygiene, fire safety, handling of chemicals and environmental issues.

Atria Russia

The most important personnel training projects were the organisation of supervisor training, quality training, cultural training and orientation training for all new employees. The performance review process was expanded further, and now most of the clerical employees have an annual performance and development review with their supervisor.

Atria Baltic

Personnel training focused on performance review training for supervisors, hygiene training for all employees and the improvement of health and safety at work. The amount of personnel training quadrupled from the previous year.

Personnel survey and actions

Atria conducted a personnel survey for all Group employees in the spring. The purpose of the survey was to study employees' views on the organisation's strengths and areas for improvement, how communication works and job satisfaction. More than 4,500 Atria employees responded, and

Average training days

Training days, based on Dec 31, 2008 personnel amount information

Management Office Factory Total
2008 2007 2008 2007 2008 2007 2008 2007
Finland) 2,800 3,110 9,680 15,590 12,771
Scandinavia2) 16 40 221 16 800 1,209 1,021 1,265
Russia3) 126 161 576 347 308 99 1,010 607
Baltic4) 112 16 234 48 527 29 873 93

1)Year 2007 information not available

2)Scandinavia training days for Management include only Top Management team training.

Training for other managers is in "Office"

3)Russia training information 2007 includes only Pit-Product information.

4)Baltic training information 2007 includes Lithuania, 2008 information is combined with VK, Wõro and Valga.

the response rate was 73 percent. The responses reveal that Atria employees regard the company's goals as important and worth pursuing. They are motivated and engaged. The areas most in need of improvement were working conditions, internal communication and leadership.

Atria Finland

The results of the personnel survey were discussed with employees, and more than 80 percent of the agreed improvement actions were implemented in 2008. Key areas for improvement in Atria Finland's organisation are the development of leadership, long-term strengthening of basic industry skills and rewarding. Leadership is developed by organising annual supervisory training for supervisors as well as a supervisor briefing event four times a year. The training needs of employees have been specified and meeting practices improved.

Atria Scandinavia

The results of the personnel survey were discussed with all employees. The most important areas for improvement in Atria Scandinavia were internal communications, leadership and inter-departmental cooperation. To improve these, Atria Scandinavia will increase internal communications by implementing a special communication plan for employees and launching systematic manager training.

Atria Russia

The results of the personnel survey were presented to the entire organisation at events targeted at employee groups as well as in Atria Russia's personnel magazine. Based on the results, the heads of departments have created an action plan. The following were identified as areas for improvement: Atria Russia's employer image, inter-departmental cooperation and internal communications.

Atria Baltic

The most important areas for improvement were the working environment, training, inter-departmental cooperation, communication as well as recognition and rewarding. Particular attention was paid to internal communications, and monthly department meetings were launched in production plants.

Well-being and safety at work

Safety at work was given a more prominent role, and a full-time occupational safety manager started at Atria Finland at the beginning of the year. Atria Russia and Estonia already had full-time occupational safety managers. In Atria Scandinavia, sickness absences of employees decreased considerably. In Finland the absences somewhat increased while in other business areas they remained at the previous year's level.

Systematic orientation training for new employees was initiated in all business areas. The amount of training on well-being and safety at work was increased, and it was also included in orientation. Atria Finland and Baltic invested in the assessment of risks and the gathering of information on close calls defined in occupational safety action plans. A development project for occupational instruction and guidance was set in motion in Atria Finland.

Participation and commitments

In Atria Finland and Scandinavia, all employees – with the exception of top management – are covered by collective labour agreements. In Atria Russia, a collective agreement applies to some 4.5 percent of the employees. Atria Baltic has no collective agreement system in place. The minimum notification periods in the event of reorganisations, i.e. redundancies or layoffs, vary from two weeks to two months in the countries where Atria Group operates.

Goals for 2009

Atria Plc and Atria Finland

  • • personnel planning with the aim of supporting optimal personnel structure
  • • the development of leadership skills; launch of Atria's international manager training programme and increasing the knowledge of Russian business practises
  • • the strategy-driven training and development activities based on competency assessments
  • • the development of management and information systems supporting supervisory work
  • • health and safety activities and employee well-being

Atria Scandinavia

  • • HR activities aimed at supporting the organisation's operational efficiency
  • • activities supporting the merger of Atria Deli and Atria Foodservice operations
  • • streamlining measures at the Sköllersta plant
  • • development of joint logistics as well as financial and HR administration operations
  • • improvement of performance review culture and performance reviews

• communications and the development of rewards

Atria Russia

  • • HR activities aimed at supporting the integration of Pit-Product and Campomos
  • • improving the engagement of production and logistics centre employees
  • • employee orientation and quality training
  • • planning the opening of the Gorelovo production plant
  • • promoting actions identified in the personnel survey

Atria Baltic

  • • HR activities strengthening new companies and operations integration
  • • implementing HR strategy in all production plants
  • • improving working conditions
  • • knowledge transfer and the adoption of best practices will be developed through job rotation and increasing international assignments
  • • development of rewards, health and safety at work and communications
  • • implementation of performance reviews and internal personnel training

These profiles were taken from Our Atrium, the Group's personnel magazine published three times a year in Finnish, Swedish, Danish, Russian and Estonian.

Insight into consumer needs guides product development and marketing

Atria's product development and marketing are guided by insights into consumer needs gained from research on consumer behaviour. Product development and marketing are not separate functions at Atria. Instead, they form an integrated function on both a strategic and operational level.

In 2008, Atria put more emphasis on research into consumer behaviour. The Group's research and development costs amounted to EUR 9.9 million.

Atria launched 280 new products. The figure, which also includes new packages and new products related to product support, rose considerably from the previous year's 153 novelties.

Knowing consumers' purchasing and eating habits is one of the main challenges in the food industry. It is also one of Atria's core strengths. In addition to consumer research, Atria participated in applied research in fields such as nutritional science and product packaging technology in 2008. Atria carries out basic research through its co-operation network, which includes research institutes, schools and universities.

Atria's research and product development operations aim at consumeroriented and successful commercialisation of products and concepts. At the Group level, Atria is developing a joint R&D process and joint operating models between the business areas. Each business area has its own operative product development unit because operations are mainly local.

Atria has developed a three-layer research hierarchy. The first level consists of identifying and interpreting eating trends at the macro level, that is, how the food markets are developing internationally and within individual business areas. On the second level, research focuses on market development, consumers' purchasing and consumption habits, as well as their expectations and wishes concerning product groups and product segments within different groups. The third level consists of product-level research, that is, how the product features correspond to consumers' wishes and needs.

Megatrends direct product development

The international food markets are influenced by three megatrends: wellbeing & health, ease & convenience, and taste & deliciousness. Atria's product development and marketing aim to respond to the challenges set by these trends equally in all business areas.

The recession that began in 2008 has had a slight effect on consumers' purchasing behaviour and eating habits. Consumers became more priceconscious and some began to favour products in lower price categories. There was also a small drop in eating out. This, in turn, made eating meals at home more common.

Good resources also in economic downturn

In 2009, Atria will continue its systematic inputs in product development and marketing. At the same time it will also enhance the cost-effectiveness of its operations through co-operation at the Group level. Atria is well positioned to deal with recession-driven changes in demand at the level of both product groups and product segments. The Group will launch many important new products in all business areas.

MEGATRENDS

Health & well-being

43 good food

Products that boost health and well-being interest consumers, as long as they do not compromise flavour and taste. For example, individually packed snacks, such as salads, are an essential part of the notion of a healthy diet. The 'health and well-being' megatrend is closely linked to confidence and awareness of the origin of food. The expressions 'natural food' and 'purity' describe one of the key ideals related to food.

good food 42

Financial statements and annual report

Invitation to the Annual General Meeting 44
Report by the Board of Directors 45
Atria Plc's shareholders and shares 54
Group indicators 56
Atria Group´s IFRS Financial Statements 2008 58
Notes to the Consolidated Financial Statements 62
Parent company balance sheet, income
statement and cash flow statement (FAS) 96
Notes to the parent company financial statement 98
Signatures and audit report 103

Annual General Meeting, 29 April 2009

Atria Plc invites its shareholders to the Annual General Meeting, which will be held on Wednesday, 29 April 2009 in Helsinki at the Finlandia Hall.

The AGM will address the following matters, among others:

  1. Matters to be addressed at the AGM as set out in Article 16 of the Articles of Association.

The invitation to the AGM will be published in national newspapers on 3 April 2009. The AGM documents are available on Atria's website at www.atria.fi/ konserni.

Report by the Board of Directors for 1 January - 31 December 2008

Stable growth in a challenging business environment

2008 will go down in history as a challenging year marked by international food and financial crises. For Atria, it was a year of strong growth and international expansion, during which it executed its growth-oriented business strategy systematically. In line with this strategy, Atria aims to grow mainly organically, i.e. expand its current operations. In 2008, growth was sought particularly through acquisitions supporting the strategy. Atria's goal is to be the first choice for consumers and customers in the food sector – especially in fresh food – in the Baltic Sea region and European parts of Russia. To accomplish this, Atria must be the market leader or second largest player in Atria's business areas, and its brands must be among the two best-known brands. Due to the acquisitions made during the accounting period, Atria is one step closer to achieving its goal.

Despite the changes in the market conditions and business environment, Atria retained the following financial targets:

• Operating profit (EBIT) at least 5%
• Equity ratio 40%
• Share of international operations 50%
• Return on equity (ROE) 12%
• Dividend distribution of profit for the period 50%

The year started on a rough note on the meat market. An unbalance between supply and demand weighed down producer and consumer prices of meat, whereas the prices of feedstuffs used as raw material in meat production rose sharply. The increasing cost of raw materials across the food chain worldwide hampered the Group's performance in the first half of the year.

In the summer, the meat market took a turn for the better, and expectations for 2009 were more positive. When the financial crisis which originated in the US housing market spread to Europe in the autumn, the conditions in global meat markets became unclear and more difficult to predict. At the end of the year, the crisis had begun to affect everyday life and there were reports in the media on the uncertainty of the economy in nearly all industries and service sectors. In such a climate, consumers consider more carefully what to buy and often settle on less expensive products. The change in consumer habits had a slight impact on the demand for Atria's products, although sales volumes remained good until the end of the year. Atria Group's profitability was mainly affected by the steep rise in raw material prices and the fact that consumer price increases lagged behind this rise. The weakening of the Swedish krona and Russian rouble also reduced profitability.

Atria strengthened its position and experienced substantial growth in Russia, Sweden and Estonia. In the summer, Atria acquired four companies, whose impact on its net sales amounts to approximately EUR 150 million annually.In early July, Atria acquired the Swedish AB Ridderheims Delikatesser, a producer of delicatessen products. Ridderheims is a strong, well-known and innovative brand in the industry. Atria's aim is to build the product selections of Ridderheims and Falbygdens Ost into the largest range of delicatessen products in the Nordic countries.

In Finland, the investments made in the Atria brand were reflected in the growth of sales and market shares, but the increase in raw material prices and other industrial costs diminished the profits. Goals were achieved in the operation of industrial processes and respect for the brand; these are at the top of the industry in Finland. The situation was the hardest in meat-producing farms, which saw a rapid rise in production costs and subsidy changes that eroded earnings.

The largest acquisition was made in Russia, where Atria purchased the meat processing company OOO Campomos, operating in the Moscow and St. Petersburg regions, at the end of July. This made Atria the country's leading international meat industry company and one of the biggest meat processing companies in Russia. Campomos has a production plant and logistics centre in Moscow and a distribution terminal in St. Petersburg. It also runs its own significant pork production operations.

In the Atria Baltic business area, two Estonian meat processing companies, AS Wõro Kommerts and AS Vastse-Kuuste Lihatööstus, were merged into the Group. These new companies, together with AS Valga Lihatööstus, make Atria the second largest industry player in Estonia. This position will create new development and growth prospects for Atria not only in Estonia but also in the entire Baltic region.

Atria's sales and market shares at a good level in a challenging business environment

Atria's net sales in Finland were EUR 797.9 million (EUR 749.6 million),up 6.4 percent from the previous year.Operative EBIT amounted to EUR 34.4 million (EUR 43.2 million). The investments made in the Atria brand were reflected in the growth of sales and market shares, but the increase in raw material prices and other industrial costs reduced profitability. The company's strengths include production and delivery reliability, which play a major role in the successful delivery of fresh meat and poultry products and performance during the seasons. To enhance cost-efficiency, Atria Finland launched an operational efficiency improvement programme in the spring, aimed at annual cost savings of EUR 4 million. Atria discontinued its operations in Kannus, and the logistics and meat product manufacturing operations of the Forssa production plants were moved to Nurmo. In addition, Liha-Pouttu's meat procurement operations were merged with A-Farmers Ltd's operations.

Atria Scandinavia posted net sales of EUR 455.2 million (EUR 457.8 million). Due to the weakened exchange rate of the Swedish krona, net sales in euros decreased by 0.6 percent, while net sales in kronor rose by 3.9 percent.Operative EBIT came to EUR 15.4 million (EUR 20.5 million).The year 2008 was one of stable growth for Atria Scandinavia. However, profitability did not develop as expected. The company's profits were reduced by raw material costs that remained high particularly in the latter half of the year and the weak performance of the Lätta Måltider unit. The weakened krona increased the prices of imported raw materials further towards the end of the year.

In summer 2008, Atria acquired the Swedish AB Ridderheims Delikatesser, a producer of delicatessen products. This acquisition strengthened further Atria's market position in Sweden. Ridderheims was consolidated into Atria as of 1 July 2008.

In the autumn, Atria concentrated the production of the Lätta Måltider unit from Halmstad into Norrköping. As a result of this arrangement, 50 of the Halmstad plant's employees were made redundant.

Atria Russia posted net sales of EUR 93.8 million (EUR 65.6 million) and an operative EBIT of EUR -3.4 million (EUR +4.3 million).The growth of net sales and market shares in 2008 met the company's expectations. The results of the St. Petersburg-based OOO Pit-Product fell short of expectations, although the targets for growth and market shares were exceeded. Pit-Product is the market leader in the St. Petersburg region modern trade with a market share of approximately 30 percent (Source:AC Nielsen).The company's profitability was slightly below the target, which was mainly due to the sharp rise in raw material prices. Sales prices were increased, but raw material prices rose more quickly than the sales prices of end products.

As a result of an acquisition, Atria Russia became an even stronger player in European Russia. Atria acquired the meat processing company OOO Campomos, which operates in the Moscow and St. Petersburg regions. The takeover of Campomos was initiated immediately after the confirmation of the deal on 15 October 2008.The acquisition is expected to double Atria Russia's net sales. Campomos is loss making, and Atria aims to have the company's EBIT in the black during 2010. This requires the further strengthening of the company's market position in Moscow, new product group launches, cost reductions and the rationalisation of primary production, which was started up in 2008.

In the Baltic countries, Atria's operations are centred in Estonia. Two major acquisitions were completed in summer 2008: AS Wõro Kommerts and AS Vastse-Kuuste Lihatööstus. The new companies were consolidated into Atria as of 1 August 2008. Atria Baltic's net sales were EUR 32.3 million (EUR 26.7 million) and operative EBIT stood at EUR -3.8 million (EUR -3.1 million).

Key indicators (EUR million): 2008 2007 2006
Net sales 1,356.9 1,272.2 1,103.3
EBIT 38.4 94.5 41.5
EBIT, % 2.8 7.4 3.8
Operative EBIT 39.9 61.4 33.5
Operative EBIT, % 2.9 4.8 3.0
Balance sheet, total 1,134.5 1,000.7 731,6
Return on equity, % 2.5 17.2 8.8
Return on investments, % 5.3 15.2 8.7
Equity ratio, % 38.4 47.6 42.8
Gearing, % 94.6 60.1 66.8

Earnings

Consolidated EBIT amounted to EUR 38.4 million (EUR 94.5 million) and operative EBIT to EUR 39.9 million (EUR 61.4 million). EBIT for 2008 includes the following non-recurring costs: EUR 1.0 million for the closing of the Halmstad plant in Sweden and EUR 0.5 million for the discontinuing of operations in Kannus, Finland and the closing of a logistics centre in Forssa, Finland.

Research and development

Atria Group's research and development operations focus on researching consumer behaviour in all of the Group's business areas. In addition, Atria participates in applied research in the areas of product and packaging technology, and the science of nutrition.

Besides flavour and savour, consumers value ease and convenience, especially on weekdays when meals must be prepared quickly for the whole family. This is an interesting challenge for the food industry. Package size, in particular, will become an increasingly important selection criterion for consumers.

Health and well-being will continue to be important. Consumers expect there to be healthier foods available as well, i.e. products that have a lower fat content, only include a little salt or contain health-promoting ingredients. Health and well-being are closely linked to confidence and awareness of the origin of food. Consumer awareness of environmental sustainability is also increasing.

In 2008, the focus in Atria Group's product development was on sliced cold cuts. New products were launched in all countries in this segment. In the Baltic countries, particularly the smaller package sizes were a great success. A new envelope package for cold cuts was launched in the Swedish and Danish markets.

Many new products were also launched in convenience foods. Productisation focused on ready-to-eat portions, which were launched in Finland in the spring. In Sweden, Atria launched new types of private label microwave meals. In January 2008, Atria Finland revised its package labelling for microwave meals. The upper corner of the package now contains clear information on nutritional content for quick and easy viewing.Consumers usually check the date,but they are also interested in how healthy the product is (the amount of energy, fat and salt). In terms of value, the net sales of Atria Finland's microwave meals grew by 23 percent in 2008. The new package labels were introduced in all product groups during 2008.

The launches of a few new products were postponed to 2009 due to the good sales of Atria Russia's current product selection. Atria brought a total of 280 new products to the market in 2008.These accounted for around 4 to 5 percent of Atria's total net sales. New products played a pivotal role in the earnings for certain product groups, as they contributed to a significant change in the selection.

The key factor affecting consumption in 2008 and in the near future is the economic recession. It could already be seen in 2008, when consumers became more price-conscious and shifted their purchasing towards less expensive food.

Freshness, flavour and speed will be the guiding principles for 2009 launches. Atria will bring to the market new, reasonably priced concepts and solutions which will make everyday life easier for consumers whether they require speed or enjoy family meals that take slightly more time.

Funds used for Atria Group's research and development activities in relation to net sales for the period 2006–2008:

2008 2007 2006
Research and development (EUR million) 9.9 8.4 7.4
% of net sales 0.7 0.7 0.7

Financing and liquidity

The financial market crisis progressed during 2008 and reduced the number of financing options generally available for companies. The liquidity of the bond and commercial paper market was very poor, particularly towards the end of the year. Where necessary, Atria financed its maturing commercial papers by using its existing credit limits. The availability of traditional bank financing was more uncertain than previously, and loan margins were on the rise. On the other hand, the steep decline in market interest rates that began in the autumn has reduced financing costs.

Despite the very challenging business environment, Atria was able to keep its financing position strong. Between October and December,Atria acquired new long-term, 5–7 year financing in the amount of EUR 69 million, of which the proportion of TyEL (Employees Pensions Act) premium lending was EUR 39 million. In addition, Atria signed an agreement for two binding credit limits in December, totalling EUR 32 million. There was a total of EUR 126 million in undrawn binding credit limits at the end of the year.

Atria made four significant acquisitions in 2008. During the third quarter, the acquisition of AB Ridderheims Delikatesser was completed in Sweden and the acquisitions of AS Wõro Kommerts and AS Vastse-Kuuste in Estonia. The acquisition of OOO Campomos was completed in Russia in the fourth quarter. The liabilities of the acquired companies were transferred in the transactions, and the remainder of the purchase prices were paid using cash funds and existing credit limits.

OOO Campomos had approximately EUR 66 million in foreign-currency-denominated liabilities, the reorganisation of which was commenced after the acquisition. In November,Campomos amortised its euro-denominated loans by approximately EUR 35 million.Of Campomos's euro-dominated loans at the balance sheet date, EUR 13 million has been paid off in January 2009 and further repayments will be made during the early part of the year. Campomos's foreign-currencydenominated loans created exchange rate losses of approximately EUR 5 million due to the weakening of the rouble.

Risk management in Atria

In its operations, Atria is faced with a variety of external and internal risks, whose effects on the results may be negative or positive. The purpose of Atria's proactive risk management activities, implemented consistently across the Group, is to support the execution of Atria's strategy and the achievement of targets, as well as to secure business continuity if the risks are realised. In reporting, Atria's risks are divided into four categories: business risks, operational risks, financial risks and accident risks.

In 2008, Atria Group's Board of Directors approved a new Risk Management Policy and operation models for common risk assessment and risk reporting. A risk assessment in accordance with the policy was implemented in all business areas and Group operations. The most significant risks observed were prioritised throughout the Group and reported to the Board of Directors. The Management Teams of the business areas and the Group Management Team are responsible for implementing the required risk management actions in their own responsibility areas. Financial risk management is centralised in the Group's Treasury unit. The following key risks and their controls have been taken into account in the control of Atria Group's business operations:

Business risks

The profitability of Atria's operations is greatly affected by the risk associated with changes in the international market price of meat raw material. Atria aims to protect itself against unfavourable price movements by adjusting production, where necessary, and by trying to anticipate changes through the pricing of end products. Products sold under the Atria brand are manufactured using only Finnish meat. Consequently, changes in the production volumes and availability of Finnish meat raw material may affect Atria Finland's profitability. In Atria Russia's operations, a special characteristic of the market is changing restrictions and import duties related to the import of meat.The Moscow-based OOO Campomos, which was merged into Atria Group in 2008, has invested heavily in the development of primary production.

Retail trade in the food industry is highly consolidated in all of Atria's key markets, which creates opportunities for building many forms of cooperation over the long term. On the other hand, this may increase dependence on individual customers. Atria's market position and strong brands improve the company's negotiating position.

Operational risks

During the past year, Atria made significant acquisitions in Sweden, Russia and Estonia. Each acquisition was preceded by due diligence. The integration of the operations of each new company is the responsibility of a specially appointed integration team, the role of which is to ensure that the process goes according to plan.

Being a food manufacturing company, it is of primary importance for Atria to see to the high quality and safety of raw materials and products throughout the production chain. Atria has modern methods in place for ensuring the safety of production processes and for eliminating various microbiological, chemical and physical hazards. An animal disease discovered at a critical point in Atria´s primary production chain can interrupt production in the unit concerned and disturb the entire chain´s operations. Through internal monitoring involving multiple stages, Atria aims to detect potential hazards as early as possible.

Financial risks

The food industry's dependence on economic cycles is below the average, and Atria's annual sales volumes are fairly stable. The main areas that may be affected by the financial crisis are financing and risk for credit losses.

The economic downturn increases the risk of weakening liquidity among Atria's customers and the occurrence of credit losses particularly in industries that are sensitive to business cycles, such as the hotel and restaurant sector and the shoe and leather industry.

A significant proportion of Atria's trade receivables in Finland are related to feed and animal trading in primary production. The profitability of agricultural production has been reduced particularly by the sharp changes in the prices of feedstuffs, fertilizers and other factors of production. At the same time, obtaining financing has become more difficult due to the general economic conditions, which may result in financial difficulties for some farms.

Significant changes in energy costs, e.g. electricity and gas prices, may affect Atria's profitability. Atria aims to hedge against unfavourable changes using derivatives. The company also has initiated projects aimed at cutting energy costs.

Atria Group's interest rate and currency risks as well as liquidity and refinancing risk are described in the Notes to the Financial Statements on page 88.

Accident risks

Low temperatures and repetitive movements are characteristic of work performed within the food industry. The work is often physical and requires the use of cutting machines and tools, for instance. Atria aims to prevent occupational accident and disease risks and related costs by investing in safety at work and the continuous improvement of work methods and tools.

Atria has more than 20 production plants in Finland, Sweden, Denmark, the Baltic Countries and Russia. All of these are insured against material damage and business interruptions.

Changes in administration and operative organisation

In its organisation meeting following the Annual General Meeting, Atria Plc's Supervisory Board re-elected retiring members Matti Tikkakoski and Martti Selin. Ari Pirkola was appointed Chairman of the Supervisory Board,and Chairman of the Board, Martti Selin, was reappointed.

Atria Plc's Board of Directors now has the following membership: Chairman Martti Selin; Vice-Chairman Timo Komulainen; members Tuomo Heikkilä, Runar Lillandt, Matti Tikkakoski and Ilkka Yliluoma.

Atria Plc's administration is described in more detail under the heading Corporate Governance Principles.

Auditors

In 2008, Atria Plc´s Annual General Meeting elected Authorized Public Accountants Pekka Loikkanen and Eero Suomela as the company´s regular auditors.

Personnel, average 2008 2007 2006
Atria Finland 2,378 2,394 2,325
Atria Scandinavia 1,691 1,768 1,206
Atria Russia 1,525 1,278 1,528
Atria Baltic 541 507 681
Atria Group total 6,135 5,947 5,740
Salaries and benefits for the
period, Group total (EUR million)
181.0 169.9 144.8

Key persons' share-based incentive programme

Atria Plc's Board of Directors has decided to adopt a sharebased incentive programme for Atria Group's key personnel. The programme will comprise three one-year accrual periods, i.e. calendar years 2007, 2008 and 2009. Payments will be made in 2008, 2009 and 2010, partly in the form of the company's Series A shares and partly as cash payments. The cash payments will cover any taxes or similar costs caused by the incentives. The shares may not be transferred for a period of two years from the end of the accrual period. Any profit from the programme for the accrual period 2008 will be based on the Group's EBIT percentage and return on capital employed (ROCE).The share incentives to be paid for 2008 would have amounted to no more than 100,100 of Atria Plc's Series A shares. Share incentives will not be paid for 2008. For 2007 share incentives were paid for some 40 company's key persons.

A total of 35,260 Series A treasury shares held by the Company were transferred free of charge to key persons belonging to the incentive programme for the accrual period 2007. The date of the share transfer was 19 December 2008.

Environmental responsibility

Atria Group's environmental responsibility is built around three main elements:

  • • Taking account of the environment at all operational levels
  • • Identifying indirect environmental impacts at various stages of the operating chain
  • • Reducing the direct environmental impacts of practical operations

By focusing on the balanced control and management of these elements, Atria generates substantial added value for its business operations, as well as for its stakeholders and the environment.

At its widest, Atria views its environmental responsibility as covering the entire food chain. It applies to the entire operating chain from primary production and acquisition of raw materials to the manufacture, consumption, recycling and disposal of products. In addition to environmental protection, this perspective emphasises the prevention of environmental and health hazards and the consideration of consumer and personnel safety. To a certain extent, this perspective also covers the operating practices of the suppliers of raw materials and other subcontractors, as well as the wellbeing of animals at farms and during transport.

Environmental impacts have been identified and organised based on their significance. Atria's main environmental concerns are energy use, water use, wastewater load and the generation of municipal waste.

Atria Group Biological oxygen demand

2006 2007 2008

Indirect concerns are transport and primary production. Atria is aware of their effects; in transport, it monitors fuel consumption and in primary production, the share of farms committed to the conditions of environmental subsidies.

The operations of the Group's production plants are in compliance with environmental legislation, licenses and obligations monitored by the authorities. The environmental systems are certified in accordance with the ISO 14001 standard at Atria Finland Ltd's Nurmo, Kauhajoki and Kuopio production plants. The same level of attention is given to environmental matters at other units.

Outlook for 2009

Market conditions will remain challenging in 2009. It will be difficult to anticipate the global price movements of meat raw material. In Russia and Sweden, Atria also uses imported meat, whose price is strongly affected by exchange rate fluctuations. Potential changes in Russia's import duties and regulations will also be reflected in the prices of imported meat. The economic recession will have some effect on sales volumes and the demand for certain product groups. The demand for more expensive products is expected to decline, while inexpensive products will be in stronger demand.

We expect Atria Finland to further reinforce its market position. Particularly the retail sales of the Atria brand will increase. At the beginning of 2009, Atria Scandinavia launched an extensive programme to improve its profitability. In addition to the streamlining of operations, it will involve price increases in order to compensate the rise in costs caused by the weakening of the krona. Unprofitable operations will be rationalised and discontinued. Atria Scandinavia will invest in the development of new, innovative products and the growth of the concept business.

Atria Russia's key objective for 2009 is the completion and commissioning of the meat product plant in Gorelovo, St Petersburg. Particularly in the first half of the year, resources will be concentrated on the takeover of the new subsidiary, Campomos,the improvement of its profitability and the utilisation of synergies. Investments will also be made in increasing the efficiency and capacity of primary production, as well as in streamlining production and logistics operations.

The integration of the operations of Atria Baltic's new subsidiaries will be continued in 2009. The aim is to enhance profitability through the streamlining of production and logistics.

Atria Plc's share capital

The breakdown of the parent company share capital is as follows:

Series A shares (1 vote/share) 19,063,747
Series KII shares (10 votes/share) 9,203,981

The Series A shares have preferential claim to a dividend of 10 percent on the nominal value of the share, after which a dividend of 10 percent of the nominal value shall be paid on Series KII shares. After this, if dividends remain to be paid, Series A and Series KII shares entitle their holders to an equal right to a dividend.

If a Series KII share is transferred to a party outside the company or a Series KII share is transferred to a shareholder within the company who has not previously owned Series KII shares, the transferee must inform the Board of Directors without delay and a Series KII shareholder has the right to pre-emptively purchase the share under certain conditions. The acquisition of Series KII shares by means of transfer requires approval by the company. Series A shares have no such limitations.

Information on shareholding distribution, shareholders and management holdings can be found under the heading Shares and shareholders.

Board of Directors' share issue authorisation

The General Meeting held on 29 April 2008 resolved to authorise the Board of Directors to decide, on one or several occasions, on a share issue involving a maximum of 10,000,000 new Series A shares at the nominal value of EUR 1.70 per share. The authorisation is valid until the closing of the next Annual General Meeting, or until 30 June 2009, whichever occurs first. The General Meeting has previously authorised the Board of Directors to decide on one or several reserve increases, which may increase the company's share capital by a maximum of EUR 850,000.The authorisation is valid for a maximum of five years from the date of the General Meeting's decision.

Purchase and transfer of treasury shares

The General Meeting held on 29 April 2008 authorised the Board of Directors to decide on the purchase of up to 2,800,000 A shares of the company with the company's unrestricted equity. The maximum amount of the Series A shares to be acquired is less than 10 percent of all of the company's shares. The authorisation is valid until the closing of the next Annual General Meeting, or until 30 June 2009, whichever occurs first.

The General Meeting held on 29 April 2008 authorised the Board of Directors to decide on the transfer of treasury shares held by the company in one or more batches, so that a maximum total of 2,800,000 Series A shares are subject to the authorisation. The authorisation is valid until the closing of the next Annual General Meeting, or until 30 June 2009, whichever occurs first.

Based on the authorisation of the General Meeting, Atria Plc's Board of Directors decided to purchase up to 300,000 A shares of the company. In accordance with the authorisation, the shares to be purchased are intended to be used as consideration in any company acquisitions or other arrangements relating to the company's business, for the financing of investments, for the implementation of the company's incentive programme, for improvement of the company's capital structure, or to be kept by the company, otherwise assigned or cancelled. The acquisition of treasury shares began on 29 September 2008 and will end no later than 30 June 2009.

A total of 35,260 treasury Series A shares held by the company were transferred free of charge to key persons belonging to the incentive programme for the accrual period 2007. The date of the share transfer was 19 December 2008. As of 31 December 2008,the company held a total of 47,157

treasury shares which represents 0.17 percent of the shares and 0.04 percent of the voting rights conferred by the shares. The aqcuisition of the company´s own shares did not have significant influence on distribution of ownership and voting rights.

Board of Directors' proposal for use of profit

The parent company's distributable profit amounts to EUR 74,531,673, of which profit for the period totals EUR 23,292,962.

The Board of Directors will propose to the AGM that the distributable profits be used as follows:

• a dividend of EUR 0.20/
share is paid totalling EUR 5,653,546
• added to shareholders' equity EUR 68,878,127
EUR 74,531,673

No significant changes have occurred in the company's financial position since the end of the accounting period. The company's liquidity is good and, according to the Board of Directors, the proposed dividend does not compromise the company's solvency.

BREAKDOWN OF SHARE OWNERSHIP

Shareholders according to the number of shares owned, 31 Dec 2008 Shareholders Shares
Number of shares no. % 1,000 %
1-100 4,432 44.91 216 0.76
101-1,000 4,581 46.42 1,663 5.88
1,001-10,000 769 7.79 1,971 6.97
10,001-100,000 66 0.67 1,864 6.60
100,001-1,000,000 16 0.16 4,673 16.53
1,000,001-999,999,999,999 4 0.04 17,881 63.26
Total 9,868 100.00 28,268 100.00
Shareholder by business sector, 31 Dec 2008 Shareholders Shares
Business sector no. % 1,000 %
Companies 465 4.71 16,421 58.09
Financial and insurance institutions 56 0.57 1,761 6.23
Public corporations 21 0.21 912 3.23
Non-profit associations 143 1.45 836 2.96
Households 9,152 92.74 3,439 12.17
Foreign owners
Total
31
9,868
0.31
100.00
2,535
25,904
8.97
91.64

INFORMATION ON SHAREHOLDERS

Major shareholders 31 Dec 2008 K II A Total %
Itikka Co-operative 4,914,281 2,457,801 7,372,082 26.08
Lihakunta 4,020,200 3,351,797 7,371,997 26.08
Odin Norden 1,687,300 1,687,300 5.97
Skandinaviska Enskilda Banken 1,449,436 1,449,436 5.13
Nordea Bank Finland Plc 754,733 754,733 2.67
Pohjanmaan Liha Co-operative 269,500 480,038 749,538 2.65
Odin Finland 695,214 695,214 2.46
OP-Suomi Arvo 404,922 404,922 1.43
Public pension insurance company Veritas 309,000 309,000 1.09
Nordea Life Assurance Finland Ltd 225,000 225,000 0.80
Largest shareholders in terms of voting rights, 31 Dec 2008 K,II A Total %
Itikka Co-operative 49,142,810 2,457,801 51,600,611 46.44
Lihakunta 40,202,000 3,351,797 43,553,797 39.20
Pohjanmaan Liha Co-operative 2,695,000 480,038 3,175,038 2.86
Odin Norden 1,687,300 1,687,300 1.52
Skandinaviska Enskilda Banken 1,449,436 1,449,436 1.30
Nordea Bank Finland Plc 754,733 754,733 0.68
Odin Finland 695,214 695,214 0.63
OP-Suomi Arvo 404,922 404,922 0.36
Public pension insurance company Veritas 309,000 309,000 0.28

MANAGEMENT'S SHAREHOLDING

The members and deputy members of the Board of Directors and Supervisory Board, and the CEO and deputy CEO owned a total of 41,661 A series shares on 31 Dec 2008, which corresponds to 0.15 % of shares and 0.04% of voting rights.

MONTHLY TRADING VOLUME OF A SERIES SHARES IN 2008

Net sales, Net sales, Monthly Monthly
Month euro shares lowest highest
January 7,178,687 443,343 14.00 18.29
February 3,115,659 198,719 15.08 16.89
March 1,918,243 124,978 14.93 16.00
April 12,785,774 835,101 13.90 18.09
May 4,891,815 347,306 13.30 14.85
June 2,274,875 156,317 13.45 15.05
July 2,678,557 203,183 12.38 14.19
August 8,903,810 652,547 11.52 14.50
September 2,426,919 182,493 11.65 14.60
October 2,923,154 247,036 10.73 13.32
November 2,901,305 236,989 11.15 13.25
December 4,942,232 448,913 10.51 11.70
Total 56,941,030 4,076,925

TREND IN THE PRICE OF THE A SERIES SHARE, 2004-2008 (average price)

FINANCIAL INDICATORS

IFRS IFRS IFRS IFRS IFRS
31 Dec 2008 31 Dec 2007 31 Dec 2006 31 Dec 2005 31 Dec 2004
Net sales, mill. EUR 1,356.9 1,272.2 1,103.3 976.9 833.7
EBIT, mill. EUR 38.4 94.5 41.5 40.2 49.3
% of net sales 2.8 7.4 3.8 4.1 5.9
Financial income and expenses, mill. EUR -22.3 -14.3 -7.3 -3.2 -5.2
% of net sales 1.6 1.1 0.6 0.3 0.6
Profit before tax 16.7 80.6 34.6 37.8 44.6
% of net sales 1.2 6.3 3.1 3.9 5.3
Return on equity (ROE), % 2.5 17.2 8.8 10.0 13.9
Return on investment (ROI), % 5.3 15.2 8.7 10.3 13.9
Equity ratio, % 38.4 47.6 42.8 43.0 50.9
Interest-bearing liabilities 448.4 321.9 244.2 206.9 116.1
Gearing 103.1 67.6 78.1 75.2 44.6
Net gearing, % 94.6 60.1 66.8 68.9 39.7
Gross investments to fixed assets, mill. EUR 152.6 284.1 89.0 107.3 37.3
% of net sales 11.2 22.3 8.1 11.0 4.5
Average FTE 6,135 5,947 5,740 4,433 3,638
Research and development costs, mill. EUR 9.9 8.4 7.4 6.7 7.0
% of net sales* 0.7 0.7 0.7 0.7 0.8
Volume of orders** - - - - -

*Booked in total as expenditure for the financial year

**Not a significant indicator as orders are generally delivered on the day following the order being placed.

Calculation of indicators:

Profit/loss for the period
Return on equity (%) = Shareholders' equity (average for the period) x 100
= Profit before tax + interest and other financial expences
Return on invetments (%) Shareholders' equity + interest-bearing financial liabilities (average) x 100
= Shareholders' equity
Equity ratio (%) Balance sheet total - advance payments received x 100
Interest-bearing financial liabilities
Gearing (%) = Equity x 100
Interest-bearing financial liabilities - cash and cash equivalents
Net gearing (%) = Equity x 100
Profit for the period
Basic earnings / share = Average share issue-adjusted number of shares for the period
Equity belonging to the owners of the parent company
Equity / share = Undiluted number of shares on 31 Dec

SHARE-ISSUE ADJUSTED PER-SHARE INDICATORS

IFRS
31 Dec 2008
IFRS
31 Dec 2007
IFRS
31 Dec 2006
IFRS
31 Dec 2005
IFRS
31 Dec 2004
Earnings per share (EPS), EUR 0.42 2.56 1.15 1.24 1.58
Shareholders' equity per share, EUR 15.34 16.77 13.28 12.08 11.58
Dividend/share, EUR* 0.20 0.70 0.595 0.595 0.595
Dividend/profit, %* 48.1 27.4 51.7 48.0 37.7
Effective dividend yield* 1.7 4.0 3.3 3.3 5.3
Price/earnings (P/E) 27.9 6.8 15.9 14.5 7.2
Market capitalisation, mill. EUR 327.9 490.4 422.4 379.5 238.3
Share turnover/1,000 shares A 4,077 7,933 3,899 5,704 3,800
Share turnover, % A 21.4 41.6 28.1 48.0 32.0
Number of shares, million, total 28.3 28.3 23.1 21.1 21.1
Number of shares A 19.1 19.1 13.9 11.9 11.9
K II 9.2 9.2 9.2 9.2 9.2
Share issue-adjusted average
number of shares 28.3 26.1 21.8 21.1 21.1
Share issue-adjusted number
of shares on 31 December 28.3 28.3 23.1 21.1 21.1
SHARE PRICE DEVELOPMENT
Lowest of period A 10.51 16.90 15.00 11.50 8.55
Highest of period A 18.29 28.77 21.50 18.18 11.75
At end of period A 11.60 17.35 18.29 17.99 11.30
Average price during period A 14.04 22.18 18.31 15.33 9.42

*Proposal from the Board of Directors

Dividend distribution in period
Dividend per share = Undiluted number of shares on 31 Dec
Dividend / share
Dividend / profit (%) = Earnings / share (EPS) x 100
Dividend / share
Effective dividend yield (%) = Closing price at the end of the period x 100
Closing price at the end of the period
Price / earnings (P/E) = Earnings / share
Overall share turnover in euro
Average price = Undiluted average number of shares traded in the period
Market capitalisation = Number of shares at the end of the period * closing price on 31 Dec
Share turnover (%) = Number of shares traded in the period x 100
Undiluted average number of shares

CONSOLIDATED BALANCE SHEET, EUR 1,000

Assets Notes 31 Dec 2008 31 Dec 2007
Non-current assets
Property, plant and equipment
Goodwill
1, 32
2
493,562
151,054
455,624
151,810
Other intangible assets 2 70,499 64,247
Investments in joint ventures and associates 3 6,137 5,728
Other financial assets 4, 28 2,111 2,959
Loan assets and other receivables 5, 28 15,461 12,090
Deferred tax assets 6 2,194 625
Total 741,018 693,083
Current assets
Inventories 7, 32 113,265 87,313
Trade and other receivables 8, 28 231,821 184,750
Cash and cash equivalents 9, 28 37,138 35,592
Total 382,224 307,655
Non-current assets held for sale 1 11,257
Total assets 14, 15, 16 1,134,499 1,000,738
Equity and liabilities Notes 31 Dec 2008 31 Dec 2007
Equity belonging to the shareholders of the parent company
Share capital 48,055 48,055
Share premium 138,502 138,502
Own shares -542
Fair value fund 81 1,890
Invested untied equity fund 110,336 110,489
Translation differences -33,424 -3,304
Retained earnings 170,499 178,521
Total 10, 11 433,507 474,153
Minority interest 1,363 1,872
Equity, total 434,870 476,025
Non-current liabilities
Deferred tax liabilities 6 42,400 42,766
Other liabilities 13 154 252
Interest-bearing financial liabilities 12,28 320,812 194,081
Total 363,366 237,099
Current liabilities
Trade and other payables 11,13,28 207,878 157,252
Current tax liabilities 796 2,573
Interest-bearing financial liabilities 12,28 127,588 127,789
Total 336,263 287,614
Total liabilities 699,629 524,713
Equity and liabilities, total 14,15,16 1,134,499 1,000,738

CONSOLIDATED INCOME STATEMENT, EUR 1,000

Notes 1 Jan-31 Dec
2008
1 Jan-31 Dec
2007
Net sales 14, 15, 16, 17 1,356,936 1,272,187
Other operating income
Change in the inventory of finished and unfinished goods
16,18 3,685
10,109
38,068
7,511
Use of materials and supplies
Employee benefits
19
13, 20
-861,875
-240,583
-768,637
-227,480
Depreciation and amortisation expense and impairments
Other operating expenses
14, 21
22, 23, 24
-47,535
-182,320
-44,529
-182,574
EBIT 14 38,417 94,546
Financial income
Financial expenses
Share of the results of joint ventures and associates
25
25
3
44,361
-66,678
573
8,312
-22,637
384
Profit before tax 16,673 80,605
Income taxes
Deferred tax
26
6, 26
-7,971
2,711
-14,243
1,283
Profit for the period 11,413 67,645
Profit distribution for the accounting period:
To parent company's shareholders
To the minority
11,765
-352
66,695
950
Total 11,413 67,645
Earnings per share calculated from the profit for the period belonging to the parent company's owners:
Basic earnings/share and earnings/share adjusted for dilutive effect, euros 27 0.42 2.56

STATEMENT OF CHANGES IN CONSOLIDATED EQUITY, EUR 1,000

Minority
interest
Equity,
total
Equity belonging to the owners of the parent company
Invested
Share Share Own Fair value untied equity Translation Retained
capital premium shares fund fund differences earnings Total
Shareholders' equity
1 Jan, 2007 39 258 138 502 808 128 080 306 648 5 828 312 476
Translation differences -4 112 -4 112 -198 -4 310
Other changes 1 890 262 2 152 -4 708 -2 556
Profit for the period 66 695 66 695 950 67 645
Distribution of dividends -13 740 -13 740 -13 740
Equity issue 8 797 110 227 -2 514 116 510 116 510
Shareholders' equity
31 Dec, 2007 48 055 138 502 0 1 890 110 489 -3 304 178 521 474 153 1 872 476 025
Translation differences -30 120 -30 120 -157 -30 277
Other changes -542 -1 809 -153 -2 504 -2 504
Profit for the period 11 765 11 765 -352 11 413
Distribution of dividends -19 787 -19 787 -19 787
Shareholders' equity
31 Dec, 2008 48 055 138 502 -542 81 110 336 -33 424 170 499 433 507 1 363 434 870

CONSOLIDATED CASH FLOW STATEMENT, EUR 1,000

Notes 1 Jan-31 Dec
2008
1 Jan-31 Dec
2007
Cash flow from operating activities
Sales income 1,347,986 1,260,453
Payments received from other operating revenue 3,685 3,392
Payments on operating expenses -1,281,823 -1,172,415
Interest paid and payments on other operating financial expenses -65,009 -21,634
Dividends received 26 68
Interest payments received and other financial yields 42,525 7,851
Direct taxes paid -9,828 -14,684
Cash flow from operating activities 37,562 63,031
Cash flow from investments
Acquisition of subsidiaries, less cash acquired 15 -41,261 -124,631
Disposal of subsidiaries, less cash at date of disposal 16 39,117
Investments in tangible and intangible assets -65,433 -92,202
Investments 3,623 -459
Cash flow from investments -103,071 -178,175
Cash flow from financing
Payments received from equity issues 116,511
Draw down of long-term loans 171,691 304,125
Repayment of long-term loans -86,067 -292,074
Dividends paid -19,787 -13,740
Own shares -967
Cash flow from financing 64,870 114,822
Change in cash and cash equivalents -639 -322
Cash and cash equivalents at the start of the accounting period 35,592 35,427
Effect of changes in exchange rates 2,185 487
Cash and cash equivalents at end of the accounting period 37,138 35,592

Basic corporate information

The parent company of the Atria Group, Atria Plc, is a Finnish public company formed in accordance with Finnish law and domiciled in Kuopio, Finland. The company has been listed on Nasdaq OMX Helsinki Oy since 1991. Copies of the consolidated financial statements are available online at www. atria.fi or from the parent company's head office at Atriantie 1, Nurmo;postal address: P.O. Box 900, FI-60060 ATRIA.

Atria Plc and its subsidiaries manufacture and market food products, especially meat products, poultry products, meals and food concepts. Atria has defined Finland, Sweden, Denmark, European parts of Russia and the Baltic countries as its market area. Atria's subsidiaries are also located in this area. The Group's operations are divided into four business areas: Atria Finland, Atria Scandinavia, Atria Russia and Atria Baltic.

The financial statements were approved by the Board of Directors for publication on 25 February 2009. According to the Finnish Companies Act, the shareholders are entitled to approve or reject the financial statements in the AGM to be held after the publication of the financial statements. The AGM can also make a decision to revise the financial statements.

Accounting policies

Basis of preparation

The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) approved for use in the EU. IAS and IFRS standards valid on 31 December 2008 have been followed, as well as SIC and IFRIC interpretations.The International Financial Reporting Standards refer to standards approved to be applied in the EU, in accordance with the proceedings stipulated in Finnish accounting legislation and regulations based on it in EU decree (EC) 1606/2002 and interpretations issued thereof. The notes to the consolidated financial statements are in accordance with Finnish accounting and corporate legislation.

The financial statement data are presented as 1,000 euro and are based on original cost, unless indicated otherwise in the accounting policies.

Interpretations adopted in 2008:

• IAS 39 (amendment) and IFRS 7 (amendment),Reclassifi-

cation of Financial assets. The amendment enables certain financial assets to be reclassified out of the held-for-trading or available-for-sale categories under limited circumstances. In such cases, additional information must be disclosed in the financial statements. The amendment has been effective since 1 July 2008.

Owing to the nature of the Group's business and transactions, these interpretations have not affected the consolidated financial statements:

The preparation of IFRS-compliant financial statements requires the Group management to make certain estimations and judgments when applying the Group's accounting policies. Information on judgments that the management has made when applying the policies and that have the most significant effect on the figures presented in the financial statements are presented under "Accounting policies calling for judgments by the management and key sources of estimation uncertainty".

Accounting policies for the consolidated financial statements

Subsidiaries

The consolidated financial statements include the parent company Atria Plc and all of its subsidiaries. Subsidiaries are companies over which the Group has control.Control is generated when the Group owns over half of the voting rights, or it otherwise has control over the company. Control refers to the right to decide on the company's financial and operating principles in order to reap benefit from its operations. The acquired subsidiaries are consolidated from the moment the Group has gained control of the company until said control ends.

Inter-group shareholding has been eliminated using the purchase method. All internal Group business transactions, receivables, liabilities and profits, as well as internal profit distribution, are eliminated when preparing the consolidated financial statements. Unrealised losses are not eliminated if the loss results from impairment. Profit distribution for the accounting period to parent company owners and minority interest is presented in the income statement, and the minority's share of equity is presented as a separate item in the balance sheet under equity. The minority share of accumulated losses is recognised in the consolidated financial statements up to an amount not greater than the value of the investment.

Business combinations between companies under common control

Business combinations between companies under common control have been accounted for based on historical cost, as these acquisitions do not come under the scope of IFRS 3 Business combinations. For minority share acquisitions, the difference between acquisition cost and acquired equity is recognised as goodwill.

Associates

Associates are companies in which the Group has considerable influence.Considerable influence materialises when the Group owns more than 20 per cent of the company's voting rights, or when the Group otherwise has considerable influence but not control over the company. The associates have been consolidated using the equity method. If the Group's share in the associates' losses exceeds the investment's book value, the investment will be entered at zero value in the balance sheet and the losses exceeding the book value will not be recognised unless the Group is committed to fulfilling the associates' obligations. Investments in associates include investments at the time of acquisition and changes in the associates' equity after the time of acquisition. Income for the accounting period from associates, corresponding to the Group's holding in them, has been entered as a separate item after EBIT.

Joint ventures

Joint ventures are companies in which the Group and other parties exercise joint control based on an agreement. Within the Group, joint ventures are consolidated using the equity method.

Foreign currency translation

The profit and financial position of Group units are measured using the currency of the main operating region of the unit in question ("functional currency").The consolidated financial statements are presented in euro, which is the functional and presentation currency of the parent company.

Foreign currency business transactions:

Foreign currency business transactions have been translated at the exchange rate on the date of transaction. In practice, this often means using an exchange rate that is close to the rate on the transaction date. Foreign currency monetary items have been translated into the functional currency at the exchange rates on the closing date. Foreign currency non-monetary items, which have been measured at fair value, have been translated at the exchange rates on the measurement date. In other respects, non-monetary items have been measured using the exchange rate on the transaction date.

Profits and losses arising from foreign currency transactions and the translation of monetary items are recognised in the income statement, except when dealing with items that meet the criteria for net investment in a foreign operation, in which case they are recognised in equity. Exchange gains and losses from operations are included in the appropriate item before EBIT. Exchange gains and losses from foreign currency-denominated loans are included in financial income and expenses. Translation differences from qualifying net investments in foreign operations are recognised as translation differences in equity.

Translating the financial statements of foreign Group companies:

The income statements of the Group's foreign companies have been translated into euros at the average exchange rate for the accounting period, and the balance sheets at the rate on the closing date. Translating the profit for the accounting period with different exchange rates in the income statement and balance sheet causes an exchange rate difference, which is recognised in equity. Exchange differences arising from the elimination of foreign subsidiary acquisition costs and the translation of equity items and net investments accumulated after the acquisition are recognised as translation differences in equity.On disposal of a subsidiary or part of it, the accumulated translation differences are recognised in the income statement as a sales gain or loss.

Goodwill generated from the acquisition of foreign units, and the fair value adjustments made to the book values of the assets and liabilities of the said units in conjunction with the acquisition, are treated as assets and liabilities of the said foreign units and converted to euro using the exchange rates on the closing date.

Property, plant and equipment

Property, plant and equipment are recognised at original cost, less accumulated depreciation and any impairment.

If the tangible fixed asset consists of several parts with different useful lives, each part is treated as a separate asset. In this case, the costs connected to renewing the part are activated.Otherwise, later costs are included in the book value

of the property, plant and equipment only if it is probable that the future benefit connected to the asset will benefit the Group, and the acquisition cost of the asset can be reliably determined. Other repair and maintenance costs are booked so that they affect earnings after they have materialised.

Depreciation is calculated as straight-line depreciation according to the estimated useful life as follows:

Buildings 25–40 years
Machinery and equipment 5–10 years

No depreciation is made on land and water.

The residual value and the useful life of assets are checked in every financial statement and, if necessary, adjusted so that the book value equals, at most, the recoverable amount.

The depreciation of property, plant and equipment stops when the tangible fixed asset is classified as available for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Sales gains and losses accumulated from the disposal or transfer of tangible fixed assets are included in other operating income or expenses.

Borrowing costs:

Borrowing costs are booked as costs for the accounting period in which they occur. An amendment to IAS 23 requires that, as of the beginning of 2009, the borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset be capitalised as part of the acquisition cost of the asset.

Government grants:

Government grants, such as grants received for the acquisition of property, plant and equipment, are recognised as a deduction in the book value of property, plant and equipment when it is reasonably certain that the grant will be received and that the Group company fulfils the prerequisites for receiving the grant. Grants are recognised as income in the form of lower depreciation during the useful life of the asset. Grants received as compensation for expenses are recognised in the income statement, while expenses connected with the grant are entered as costs. Such grants are entered under other operating income.

Leases – Group as lessee:

Leases concerning tangible assets where the Group has a

considerable share of the risks and rewards related to ownership are classified as finance leases. Finance leases are entered in the balance sheet at the fair value of the leased asset on the day the lease period begins, or at a lower value that corresponds to the current value of the minimum lease payments. The depreciation of assets acquired with finance leases are made during the useful life of assets or a shorter leasing period. Lease payments are apportioned between a finance charge and debt reduction over the lease period, so that a constant interest rate is formed for the outstanding liability in each accounting period. Lease obligations are included in interest-bearing debts.

Leases where the risks and rewards incident to ownership remain with the lessor are handled as other leases. Rents paid on the basis of other leases are recognised as costs in the profit and loss account, based on the straight-line method during the lease period.

Intangible assets

Goodwill:

Goodwill corresponds to the share of the acquisition cost that exceeds the Group's share of the fair value of the acquired company's net assets, liabilities and conditional liabilities at the time of acquisition. The Group has applied the IFRS 3 standard to all mergers of business activities that have occurred since September 2003. In these, goodwill corresponds to the share of the acquisition cost that exceeds the Group's share of the fair value of the acquired company's net assets at the time of acquisition. Goodwill generated in business combinations prior to this corresponds to the book value in accordance with previous accounting standards.

Goodwill is tested annually for impairment. For this purpose, goodwill is allocated to cash-generating units. The Group's cash-generating units are classified by business segment based on the operations and location of subsidiaries. In 2008 these were Atria Finland, Atria Scandinavia, Atria Russia and Atria Estonia. Goodwill is measured at original cost less impairment.

Research and development costs:

Research costs are recognised as an expense in the balance sheet. Development costs related to individual projects are activated in the balance sheet when there is enough certainty that the asset in question can be technically implemented and will probably generate a future financial benefit. Activated development costs are recognised as project-specific costs during the useful life of the asset. The asset is amortised from the time it is ready for use.

Other intangible assets:

Intangible assets are only entered in the balance sheet if the acquisition cost of the asset can be reliably determined and if it is probable that the expected economic benefit from the asset will flow to the company.

Intangible assets with a limited useful life are recognised as expenses based on straight-line depreciation in the income statement during their known or estimated useful life. Intangible assets with indefinite useful lives are not amortised, but instead tested annually for impairment.

Depreciation periods:

Customer relationships 3–8 years
Trademarks 5–10 years
Other intangible assets 5–10 years

Impairment

On each balance sheet date, the Group tests intangible and tangible assets to see whether they show indications of impairment. If there are such indications, the recoverable amount from the said asset is estimated. The recoverable amount is estimated annually for goodwill and intangible assets with indefinite useful lives. The need for impairment is reviewed at the level of cash-generating units, that is, the lowest unit level that is largely independent of other units, and whose cash flow can be separated from other cash flows. The recoverable amount is the fair value of the asset less costs to sell or, if higher, the asset's value in use. Value in use is the estimated future net cash flow from the asset or cash-generating unit, which cash flow is discounted to its present value. The discount rate used is the pre-tax rate, which describes the market's view of the time value of money and the particular risks associated with the asset.

Impairment losses are recognised when the book value of the asset is higher than the recoverable amount. Impairment losses are recognised immediately in the income statement. If the impairment loss is allocated to a cash-generating unit, it is first allocated to reduce the goodwill of the cash-generating unit and then to reduce the other assets of the unit pro rata. The useful life of the amortised asset is re-evaluated in conjunction with the recognition of an impairment loss. An impairment loss recognised for an asset other than goodwill is reversed if there has been a change in the estimates used to determine the recoverable amount from the said asset. However, the impairment loss may not be reversed in excess of what the asset's book value would be without the recognition of the impairment loss. An impairment loss recognised for goodwill is never reversed.

Inventories

Inventories are valued at the direct acquisition cost, or at probable net realisation value below this. The direct acquisition cost is determined using the FIFO method.The acquisition cost for finished and unfinished products consists of raw materials, direct labour costs, other direct costs, and the appropriate share of manufacturing-related overhead and fixed overhead at a normal level of operations. The net realisation value is the estimated selling price in the ordinary course of business, less the estimated costs for completing the product and costs related to sales. Biological assets included in inventories are valued at fair value, less estimated sales-related costs.

Biological assets

The Group's biological assets are live animals and growing crops. Biological assets are valued at fair value, less estimated sales-related costs. Productive animals are included in other tangible assets and other biological assets are included in inventories.

Financial assets and liabilities

Financial assets:

The Group divides its financial assets into the following groups: financial assets recognised at fair value through profit or loss, loans and other receivables, and as financial assets available for sale. The classification is made on the basis of the purpose of the acquisition, and the assets are classified in connection with the original acquisition.

Financial assets recognised at fair value through profit or loss

A financial asset belongs to this group if it has been acquired for trading purposes or if it has been initially recognised at fair value through profit or loss. Financial assets held for trading are acquired mainly to generate profit from changes in short-term market prices. Since the derivatives used by the company do not fulfil the hedge accounting conditions in IAS 39, they have been classified as held for trading. Unrealised and realised profits and losses due to changes in fair value are recognised in the income statement in the accounting period in which they occur.

Loans and other receivables

Loans and other receivables are non-derivative assets which involve payments that are fixed or determinable, which are not noted on active markets and which the company does not hold for trading. This group contains the Group's financial assets generated by handing over cash, articles or services to debtors. They are measured at amortised cost and included in current and non-current financial assets; in the latter if they mature after more than 12 months.

Financial assets available for sale

Available-for-sale financial assets are non-derivative assets, which have been prescribed to this group or which have not been prescribed to any other group. They are included in noncurrent assets unless they are intended to be kept for less than 12 months from the balance sheet day, in which case they are included in current assets. Financial assets available for sale may consist of equity and interest-bearing investments. They are measured at fair value or, when the fair value cannot be reliably determined, at acquisition cost. Changes in the fair value of available-for-sale financial assets are entered in equity in the value adjustment reserve, taking into consideration the tax effect. Changes in fair value are transferred from equity to the profit and loss account when the investment is sold or its value has decreased so that an impairment loss must be recognised for the investment.

Cash and cash equivalents:

Cash and cash equivalents consist of cash, bank deposits that can be withdrawn on demand and other short-term highly liquid investments. Items classified as cash and cash equivalents have a maximum maturity of three months from acquisition. Available credit limits are included in current interest-bearing liabilities.

Financial assets are derecognised when the Group has lost its agreement-based right to the cash flow or it has transferred a significant share of the risks and income outside the Group.

Financial liabilities:

Financial liabilities are initially recognised at fair value. They are later measured at amortised cost using the effective interest method. Financial liabilities are included in current and non-current liabilities.

Impairment of financial assets:

On each balance sheet date, the Group estimates whether there is objective proof of impairment of an individual financial asset or a financial asset group.

An impairment loss is recognised for accounts receivable when the receivable is estimated to have been lost. If the impairment loss decreases in a later accounting period, and the reduction can be objectively linked to a transaction that has taken place after the recognition of the impairment loss, the recognised loss is reversed through profit or loss.

Derivative financial instruments

Derivative instruments are initially recognised at fair value on the day the Group becomes a contracting party and they continue to be recognised at fair value later on. The accounting treatment of gains and losses resulting from fair value recognition depends on the purpose of use of the derivative instrument.

The Group has not applied hedge accounting in accordance with IAS 39.

Revenue recognition

Net sales include profits from the sale of products and services, as well as raw materials and equipment, adjusted by indirect taxes, discounts and exchange rate differences in foreign currency denominated sales.

Goods and services:

Revenue from the sale of articles is recognised when the risks and rewards of owning the article have been transferred to the buyer. Revenue from services is recognised when the service has been completed.

Interest and dividends:

Interest rates are recognised based on the passing of time, taking into account the effective income from the asset. Dividend income is recognised when the shareholders' right to payment is established.

Employee benefits

Pension obligations:

Pension arrangements are classified as either defined benefit

or defined contribution plans. In defined contribution plans, the Group makes fixed payments into a separate unit. The Group has no legal or constructive obligation to make additional payments, if the recipient of the payments cannot pay the pension benefits in question. All plans that do not fulfil these conditions are defined benefit pension plans. Payments made into defined contribution plans are recognised in the income statement in the accounting period to which they apply. The Group's pension plans are mainly defined contribution plans.

Share-based payments:

The Group has an incentive programme for the management where the payments are made in part as company shares, and in part as money. The benefits granted under the programme are measured at fair value at the time of payment and recognised in the income statement as an expense from employee benefits evenly throughout the earnings and engagement period. The amount of money paid in the arrangement is remeasured using the share price at the balance sheet date and recognised in the income statement as an expense from employee benefits evenly from the day of granting until the money is transferred to the recipient.

EBIT

IAS 1 Presentation of Financial Statements does not define the concept of EBIT. The Group has defined it as follows: EBIT is a net total, which can be calculated by adding other operating income to net sales, subtracting purchase expenses adjusted by the change in the stock of finished and unfinished products as well as expenses caused by production for own use, subtracting expenses from employee benefits, depreciation and potential impairment losses, as well as other operating expenses. All but the above-mentioned income statement items are entered below EBIT.

Income taxes

The tax expense in the income statement consists of current tax, tax adjustments from previous accounting periods, and deferred tax. The tax expense is recognised in the income statement, except for items recognised directly in equity, in which case the tax effect is correspondingly recognised in equity.Current tax is calculated from taxable profit based on the valid tax rate of each country. The tax is adjusted by possible taxes related to previous periods.

Deferred tax is calculated from all temporary differences

between the book value and tax base. The biggest temporary differences arise from the depreciation of tangible fixed assets and fair value measurement in connection with acquisitions. No deferred tax is recognised for non-deductible goodwill impairment, and no deferred tax is recognised for the undistributed profits of subsidiaries if the difference is not likely to dissolve in the foreseeable future.

Deferred tax is calculated using the tax rates provided on the balance sheet date. Deferred tax assets are recognised to the amount for which it is likely that taxable profit will be generated in the future against which the temporary difference can be utilised.

Accounting policies calling for judgments by the management and key sources of estimation uncertainty

When preparing the financial statements, the management must make assessments and assumptions concerning the future, whose outcome may deviate considerably from the original assessments and assumptions. In addition, deliberation must be used in applying the accounting policies. The assessments are based on the management's view at the balance sheet date. Any changes in the assessments and assumptions are entered in the accounting period in which the assessment or assumption is adjusted and in all subsequent accounting periods.

The key assumptions concerning the future and key sources of estimation uncertainty on the balance sheet date that constitute a significant risk of causing changes to the book values of assets and liabilities in the following accounting period include the following:

Measurement of the fair value of assets acquired in business combinations:

In significant business combinations, the Group has used an external advisor when measuring the fair value of tangible and intangible assets. In the case of tangible assets, comparisons have been made with the market price of corresponding assets, and the assets have been tested for impairment caused by their age, wear and other similar factors. The fair value of intangible assets is determined based on assessments of asset cash flows. The management believes that the assessments and assumptions are sufficiently detailed to be used as the basis for fair value measurement.

Impairment testing:

The Group conducts annual impairment tests on goodwill and

intangible assets with indefinite useful lives. It also assesses any indication of impairment in accordance with the abovementioned accounting policies. The recoverable amounts of cash-generating units are defined on the basis of value-in-use calculations. These calculations require the use of estimates.

Emission rights:

Emission rights are intangible assets that are measured at acquisition cost. The book value of gratuitous transfers of emission rights is zero. In order to cover the return obligation of emission rights, a loan is recorded if the free emission rights do not cover the obligations arising from actual emissions.On the balance sheet date, the loan is estimated at probable value at the time the obligation is realised. The difference between obligations from actual emissions and the value of emission rights received, as well as changes in the probable value of the loan, are included in EBIT.

Application of new or revised IFRS standards and IFRIC interpretations

The following new or revised standards and interpretations, published by the IASB, have not yet taken effect and have not been adopted by the Group. The Group will adopt each standard and interpretation as of the effective date or, should the effective date not be the first date of an accounting period, as of the beginning of the following accounting period.

In 2009 the group will adopt the following standards published by the IASB:

  • • IAS 23 Borrowing Costs (amended in 2007 and effective as of 1 January 2009). The amended standard requires that the borrowing costs related to qualifying assets are capitalised as part of the acquisition cost of the assets. These costs can no longer be recognised as expenses. As was previously allowed, the Group has recognised borrowing costs as an expense in the accounting period in which they arise.
  • IAS 1 Presentation of Financial Statements (amended in 2007 and effective as of 1 January 2009). The aim of the revision is to improve the ability of users to analyse and compare the data provided in financial statements by separating changes in equity related to transactions with company owners from other changes in equity. The revision will also lead to comprehensive modifications to the terminology used in other standards and to changes in the titles of some financial statements.
  • IFRS 8, Operating Segments (effective as of 1 January

2009). The standard replaces IAS 14. It requires segment information to be presented using the "management approach", which means that data is presented in the same way as in internal reporting. The new standard will not affect significantly the information provided on segments, since the segment information previously published by the Group was based on internal reporting.

  • • IFRIC 13, Customer Loyalty Programmes (effective in accounting periods beginning on or after 1 July 2008). The interpretation defines business transactions in which products and services are sold in a way that encourages customer loyalty as sales agreements that contain separable parts. Customer payments are allocated to the different components of the sales agreement based on their fair value.The IFRIC 13 interpretation has no effect on the Group's financial statements as the Group companies have no loyal customer programmes.
  • • Amendment to IFRS 2 Share-Based Payment –Vesting Conditions and Cancellations (effective as of 1 January 2009). The revision requires that all non-vesting conditions be taken into consideration when determining the fair value of equity instruments. The amendment also clarifies the guidelines for cancellations. The interpretation does not have a material impact on the consolidated financial statements.
  • • Amendments to IAS 1 Presentation of Financial Statements and IAS 32 Financial Instruments: Presentation – Puttable Financial Instruments and Obligations Arising on Liquidation (effective as of 1 January 2009).The amendments require qualifying puttable instruments to be presented as equity instead of being classified as liabilities, as has been the case to date. The implementation of the revised standards is not expected to have an impact on the Group's future financial statements.
  • Improvements to IFRSs (Annual Improvements 2007) (mostly effective in periods beginning on or after 1 January 2009).In theAnnual Improvements process,minor and less urgent amendments to standards are compiled and implemented once a year. The process includes amendments to a total of 34 standards. The impact of the amendments vary depending on the standard, but the Group does not expect the changes to have a material impact on the consolidated financial statements.
  • • Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

(effective in periods beginning on or after 1 January 2009). Since the amendments apply to first-time adopters, they will not have an impact on future consolidated financial statements.

  • • IFRIC 11, IFRS 2:Group and Treasury Share Transactions. The interpretation clarifies the handling of own shares or operations related to Group companies in the financial statements of parent companies and Group companies by issuing guidelines for their classification into equity-settled or cash-settled share-based transactions. The interpretation does not have a material impact on the consolidated financial statements.
  • • IFRIC 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The interpretation is applied to post-employment defined benefit plans and certain long-term defined benefit plans in compliance with IAS 19 when the plan involves minimum funding requirements. The interpretation also clarifies the recognition requirements of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. The implementation is not expected to have a material impact on future consolidated financial statements.
  • • IFRIC 15 Agreements for the Construction of Real Estate (effective in periods beginning on or after 1 January 2009). The interpretation provides guidance on how to determine what standard to apply when recognising revenue from real estate construction and when revenue from a construction project can be recognised. The interpretation will not affect future consolidated financial statements, since the Group is not active in the construction business.
  • • IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective in periods beginning on or after 1 October 2008).The interpretation clarifies the treatment of hedge accounting of a net investment. According to it, hedge accounting can be applied to currency risks that arise from differences between the functional currencies of a foreign operation and the parent company but not to risks arising from differences between presentation currencies. Moreover, the hedging instrument may be held by any entity in the group. The provisions of IAS 21 The Effects of Changes in Foreign Exchange Rates apply to the hedged item. The Group adopted IFRIC 16 on 1 January 2009.The interpretation is not expected to affect the consolidated financial statements.

In 2010 the group will adopt the following standards published by the IASB:

  • • IFRS 3 Business Combinations (amended in 2008 and effective in periods beginning on or after 1 July 2009). The revised standard still requires the use of the purchase method when accounting for business combinations but with some considerable changes. For example, all payments related to company acquisitions must be recognised at fair value at the time of acquisition and certain contingent considerations are measured at fair value through profit or loss after acquisition. Goodwill can be calculated based on the parent company's share of net assets or it can include goodwill allocated to the minority interest. All transaction costs are entered as expenses. According to the transition requirements, business combinations with an acquisition date prior to the date of obligatory adoption of the standard need not be restated.
  • • IAS 27 Consolidated and Separate Financial Statements (amended in 2008 and effective in periods beginning on or after 1 July 2009). The amended standard requires that all minority transactions are recognised in equity if control is not transferred. Thus, minority transactions no longer lead to recognition of goodwill or a loss or profit affecting earnings. The standard also defines the treatment of transactions when control is lost. The possible remaining share in the acquisition object is measured at fair value and the resulting profit or loss is recognised through profit or loss. This accounting method will also apply to associates (IAS 28) and joint ventures (IAS 31).As a result of the amendment, the losses of a subsidiary can be allocated to a minority even if they exceed the amount of minority interest.
  • • Amendment to IAS 39 Financial Instruments; Recognition and Measurement – Eligible Hedged Items (effective in periods beginning on or after 1 July 2009).The amendments concern hedge accounting. Since the Group does not use hedge accounting, the amendment will not affect its future consolidated financial statements.
  • • IFRIC 12, Service Concession Arrangements. The interpretation applies to arrangements where a private party is involved in the development, funding, implementation or infrastructure maintenance of public services. The interpretation will not affect future consolidated financial statements.

1. Tangible assets, EUR 1,000

Land and Buildings Machinery and Other tangible Unfinished
water and structure equipment assets acquisitions Total
Acquisition cost, 1 Jan 2008 7,766 368,385 440,469 3,490 44,978 865,088
Business combinations 29 38,660 33,809 5,601 3,750 81,849
Increases 44 24,048 45,167 2,683 25,262 97,204
Decreases -10,803 -16,149 -947 -23,088 -50,987
Exchange difference -444 -6,887 -25,259 -59 -4,842 -37,491
Acquisition cost, 31 Dec 2008 7,395 413,403 478,037 10,768 46,060 955,663
Accumulated depreciation and
impairment, 1 Jan 2008 -139,450 -268,811 -1,203 -409,464
Business combinations -7,424 -22,773 -3,655 -33,852
Decreases 2,431 4,435 55 6,921
Depreciation -10,970 -33,624 -671 -45,265
Impairment -400 -400
Exchange difference 3,233 16,667 59 19,959
Accumulated depreciation and
impairment, 31 Dec 2008 -152,580 -304,106 -5,415 -462,101
Book value, 1 Jan 2008 7,766 228,935 171,658 2,287 44,978 455,624
Book value, 31 Dec 2008 7,395 260,823 173,931 5,353 46,060 493,562
Land and Buildings Machinery and Other tangible Unfinished
water and structure equipment assets acquisitions Total
Acquisition cost, 1 Jan 2007 5,778 296,265 325,155 3,148 39,815 670,161
Business combinations 2,028 42,035 78,559 863 123,485
Increases 61 31,288 52,601 844 50,252 135,046
Decreases -7 -573 -13,418 -491 -45,764 -60,253
Exchange difference -94 -630 -2,428 -11 -188 -3,351
Acquisition cost, 31 Dec 2007 7,766 368,385 440,469 3,490 44,978 865,088
Accumulated depreciation and
impairment, 1 Jan 2007 -111,506 -194,742 -1,143 -307,391
Business combinations -18,668 -51,561 -70,229
Decreases 112 6,765 159 7,036
Depreciation -9,615 -30,592 -224 -40,431
Exchange difference 227 1,319 5 1,551
Accumulated depreciation and
impairment, 31 Dec 2007 -139,450 -268,811 -1,203 -409,464
Book value 1 Jan, 2007 5,778 184,759 130,413 2,005 39,815 362,770
Book value 31 Dec, 2007 7,766 228,935 171,658 2,287 44,978 455,624

Assets acquired with finance lease contracts are included in machinery and equipment; book value of assets was EUR 3.4 million (EUR 11.9 million).

Non-current assets held for sale 2008 2007
Buildings 10 687
Machinery and equipment 570
Totalt 11 257

2. Goodwill and other intangible assets, EUR 1,000

Other
Trade intangible
Intangible assets Goodwill marks assets Total
Acquisition cost, 1 Jan 2008 168,829 60,241 17,809 246,879
Business combinations 18,386 12,164 2,320 32,870
Increases 1,778 1,778
Decreases -5,560 -5,560
Exchange difference -20,924 -4,882 -177 -25,983
Acquisition cost, 31 Dec 2008 166,291 67,523 16,170 249,984
Accumulated depreciation and impairment, 1 Jan 2008 -17,019 -2,356 -11,447 -30,822
Business combinations -1,066 -1,066
Depreciation on decreases 3,843 3,843
Depreciation -531 -2,177 -2,708
Exchange difference 1,782 366 174 2,322
Accumulated depreciation, 31 Dec 2008 -15,237 -2,521 -10,673 -28,431
Book value, 1 Jan 2008 151,810 57,885 6,362 216,057
Book value, 31 Dec 2008 151,054 65,002 5,497 221,553
Other
Trade intangible
Intangible assets Goodwill marks assets Total
Acquisition cost, 1 Jan 2007 74,918 31,860 13,210 119,988
Business combinations 95,071 49,142 2,998 147,211
Increases 5 1,696 1,701
Decreases -19,669 -93 -19,762
Exchange difference -1,160 -1,097 -2 -2,259
Acquisition cost, 31 Dec 2007 168,829 60,241 17,809 246,879
Accumulated depreciation and impairment, 1 Jan 2007 -17,265 -5,046 -6,707 -29,018
Business combinations -2,516 -2,516
Depreciation on decreases 3,570 50 3,620
Depreciation -997 -2,274 -3,271
Exchange difference 246 117 363
Accumulated depreciation, 31 Dec 2007 -17,019 -2,356 -11,447 -30,822
Book value 1 Jan, 2007 57,653 26,814 6,503 90,970
Book value 31 Dec, 2007 151,810 57,885 6,362 216,057

Targeting of goodwill

Targeting of goodwill and trademarks, whose Goodwill Trademarks
useful life is estimated to be unlimited 2008 2007 2008 2007
Atria Finland 3,722 3,722
Atria Scandinavia 124,524 130,134 48,666 47,874
Atria Russia 10,746 12,054 5,188 5,952
Atria Estonia 12,062 5,900 3,935 2,857
Total 151,054 151,810 57,789 56,683

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Impairment testing

The recoverable amounts of units that generate cash flow are based on useable value calculations. Future cash flow in these calculations is based on financial plans approved by Group management, which extend over a five-year period. Key variables used in the useable value calculations are earnings from sales, material margin and EBIT, which are defined based on the realised figures from previous years and the five-year plan.

The discount rate used, defined before taxes, is 6.0% (5.6%) in Finland, 6.1% (5.6%) in Scandinavia, 10.8% (9.9%) in Russia and 8.1% (5.6%) in Baltic.

The discount rate before taxes is defined with the help of the weighted average cost of capital (WACC). Cash flow after the forecast period approved by the management was extrapolated using a growth factor of 5% in Russia and 1% elsewhere. The growth factor used does not exceed the long-term realised growth in the industry.

Based on impairment testing, there was no need for any impairment.

On the basis of the sensitivity analyses of impairment testing, significant future impairment losses are not foreseen.

3. Investments in joint ventures and associates, EUR 1,000

Investments in joint ventures
and associates 2008 2007
In joint ventures:
At the beginning of the period 746 524
Share of earnings for the period 143 -105
Increases 354
Dividends received -27
At the end of the period 889 746
In associates:
At the beginning of the period 4,982 4,472
Share of earnings for the period 430 488
Other changes -95 120
Dividends received -69 -98
At the end of the period 5,248 4,982
Total 6,137 5,728
Joint ventures and Profit/ Ownership
associates Domicile Assets Liabilities Net sales Loss interest (%)
2008
Best-In Oy Kuopio 1,693 925 4,778 64 50.0
Findest Protein Oy Kaustinen 3,862 2,343 4,470 63 16.6
Finnpig Oy Group Seinäjoki 2,467 2,001 2,771 142 50.0
Foodwest Oy Seinäjoki 996 278 1,783 15 33.5
Honkajoki Oy Group Honkajoki 12,944 9,233 18,298 428 47.8
OÜ LKT Invest Valga Estonia 11 3 26.0
LTK Co-operative Hämeenlinna 9,648 2,077 23,735 505 40.7
Länsi-Kalkkuna Oy Säkylä 3,647 3,148 27,039 79 50.0
Tuoretie Oy Helsinki 6,454 5,526 48,367 23 33.3
2007
Best-In Oy Kuopio 1,083 378 4,610 143 50.0
Findest Protein Oy Kaustinen 4,201 2,913 3,775 112 40.6
Finnpig Oy -konserni Seinäjoki 2,854 1,909 2,033 -371 50.0
Foodwest Oy Seinäjoki 891 187 1,625 27 33.5
Honkajoki Oy Honkajoki 10,248 7,586 16,204 190 47.8
OÜ LKT Invest Valga Estonia 11 3 26.0
LTK osuuskunta Hämeenlinna 9,225 1,982 22,149 834 40.7
Länsi-Kalkkuna Oy Säkylä 3,406 2,986 22,952 9 50.0
Tuoretie Oy Helsinki 6,646 5,741 45,111 1 33.3

4. Other financial assets, EUR 1,000

2008 2007
Investments available for sale 2,111 2,959

Includes unquoted and quoted shares in euro.

A sales gain of EUR 1.7 million from available-for-sale financial assets was recognised in financial income. Changes in fair value are presented in the consolidated statement of changes in equity.

5. Loan assets and other non-current receivables, EUR 1,000

Balance sheet
values
2008
Balance sheet
values
2007
Loan assets 9,302 11,744
Other receivables 6,157 346
Accrued credits and deferred charges 2
Total 15,461 12,090
Long-term receivables were divided into currencies as follows:
EUR 9,345 11,787
SEK 527 303
RUR 5,589
Total 15,461 12,090

Fair values do not deviate significantly from balance sheet values.

6. Deferred tax assets and liabilities, EUR 1,000

Booked in the
Changes to deferred income Exchange Acquired/Sold
taxes in 2008 1 Jan 2008 statement difference subsidiaries 31 Dec 2008
Deferred tax assets:
Internal margin of inventories 213 -213 0
Confirmed losses 386 386
Benefit-based pension obligations 65 -32 33
Depreciation differences and voluntary provisions 347 939 -45 1,241
Other items 443 18 73 534
Total 1,068 1,098 -45 73 2,194
Deferred tax liabilities:
Valuation of tangible and
intangible assets
at fair value upon acquisition -14,949 1,293 1,536 -4,364 -16,484
Depreciation differences and voluntary provisions -27,817 -73 1,777 -120 -26,233
Other items 393 45 -121 317
Total -42,766 1,613 3,358 -4,605 -42,400
Booked in the
Changes to deferred income Exchange Acquired/Sold
taxes in 2007 1 Jan 2007 statement difference subsidiaries 31 Dec 2007

Deferred tax assets: Internal balance of inventories 31 182 213

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Booked in the
Changes to deferred income Exchange Acquired/Sold
taxes in 2007 1 Jan 2007 statement difference subsidiaries 31 Dec 2007
Benefit-based pension obligations 88 -23 65
Depreciation differences and voluntary provisions 3 346 -2 347
Changes in fair value 377 -380 3 0
Other items -1,018 28 1,433 443
Total 499 -893 29 1,433 1,068
Deferred tax liabilities:
Valuation of tangible and intangible assets
at fair value upon acquisition -6,938 76 68 -8,155 -14,949
Depreciation differences and provisions -19,968 2,100 -10 -9,939 -27,817
Total -26,906 2,176 58 -18,094 -42,766

7. Inventories, EUR 1,000

2008 2007
Materials and supplies 37,203 27,491
Biological assets 6,156 2,872
Unfinished products 17,988 14,560
Finished products 48,871 41,894
Other inventories 3,047 496
Total 113,265 87,313

8. Trade and other current receivables, EUR 1,000

2008 2007
Trade receivables 186,734 166,358
Loan assets 386 4,496
Deferred tax assets 443
Other receivables 21,085 4,722
Accrued credits and deferred charges 16,961 6,487
Total 225,166 182,506
Financial assets at fair value through profit or loss
Derivative instruments - not in hedge accounting 6,655 2,244
Total 231,821 184,750

Trade receivables include EUR 45 million of feed and animal trading receivables from animal payments. Other trade receivables are mainly from retail chains and do not involve considerable credit risk accumulation. Material items in accrued credits and deferred charges consist of prepaid expenses of purchase invoices, lease receivables and tax amortisations.

Breakdown of trade receivables and
items booked as credit losses: 2008 Credit losses Net 2008
Not due 158,810 158,810
Overdue
Less than 30 days 21,073 -1,097 19,976
30 - 60 days 2,478 -179 2,299
61 - 90 days 1,157 -32 1,125
More than 90 days 6,347 -1,823 4,524
Total 189,865 -3,131 186,734
Breakdown of trade receivables and
items booked as credit losses: 2007 Credit losses Net 2007
Not due 139,722 139,722
Overdue
Less than 30 days 18,881 18,881
30–60 days 1,991 -5 1,986
61–90 days 1,376 -196 1,180
More than 90 days 5,307 -718 4,589
Total 167,277 -919 166,358
Current receivables were divided
into currencies as follows: 2008 2007
EUR 132,743 112,437
SEK 50,023 51,072
RUR 37,035 10,191
DKK 5,860 4,605
PLN 687 2,968
EEK 3,986 2,393
USD 1,389 1,068
Other 98 16
Total 231,821 184,750

9. Cash and cash equivalents, EUR 1,000

2008 2007
Cash in hand and at banks 37,138 35,592

10. Shareholders' equity, EUR 1,000

Shares and share capital

Shares are divided into A and KII series, which differ in terms of voting rights. The A series shares have one vote per share and the KII series shares have ten votes per share. The A series shares have preference to a 10 per cent dividend on the nominal value of the share, after which the KII series shares are paid a dividend of up to 10 per cent of the nominal value. If there is still more dividend available for distribution, A and KII series shares have the same entitlement to the dividend. The nominal value of the shares is EUR 1.70 per share. All issued shares have been paid in full.

The number of shares outstanding is (1,000) A series KII series Total
1.1.2007 13,889 9,204 23,093
Share issue, 18 May 2007 and 30 May 2007 5,175 5,175
31.12.2007 19,064 9,204 28,268
31.12.2008 19,064 9,204 28,268

Reserves included in shareholders' equity:

Share premium:

The portion of share subscription payments recognised in share premium in compliance with the conditions of plans prior to the new Companies Act (21.7.2006/624) taking effect.

Treasury shares:

The treasury shares reserve contains the acquisition cost of own shares held by the Group.

In 2008, the Group's parent company, Atria Plc, acquired 82,417 shares on the stock exchange for an acquisition cost of EUR 0.9 million. Of the acquired shares, 35,260 were transferred to key persons as a part of the Group's share incentive plan.

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Fair value reserve:

Changes in the fair value of available-for-sale financial assets are recognised in the fair value reserve.

Invested unrestricted equity fund:

This reserve contains other equity investments and the share subscription price to the extent that it is not recognised in share capital according to a separate decision, as well as the value of shares earned on the basis of the share incentive plan, calculated at the rate of the grant date.

Translation differences:

This reserve contains the translation differences from the translation of the financial statements of foreign subsidiaries, as well as the translation of fair value adjustments of goodwill, assets and liabilities arising in conjunction with the acquisition of the said companies.

Parent company's distributable shareholders' equity 2008 2007
Retained earnings 51,781 46,488
Own shares -542
Profit for the period 23,293 25,080
Total 74,532 71,568
Dividend per share paid for the period 2008 2007
Dividend/share, EUR 0.70 0.595
Dividend distributed by the parent company 19,787 13,740

The Board of Directors proposes to the Annual General Meeting, which will be held in 29 April 2009, that the Company pay EUR 0.20 per share in dividend, total of EUR 5,653,546.

11. Share-based payments, EUR 1,000

On 27 June 2007, Atria Group Plc's Board of Directors decided to introduce a share-based bonus system as part of the incentive plan for the Company's and its subsidiaries' key persons. The purpose is to combine the shareholders' and key persons' goals to increase the Company's value and to commit the key persons to the Company by offering them a competitive bonus plan based on the ownership of the Company's shares. The plan consists of three 12-month accrual periods that begin on 1 January 2007, 1 January 2008 and 1 January 2009, all ending on 31 December in the respective years. The amount of the bonus for the accrual period is determined on the basis of the goals achieved after the accrual period by the end of April. For the entire plan, a maximum of 300,300 shares and the amount in money needed to cover the taxes and tax-like payments incurred by the shares at the date of the share issue are issued. The Board of Directors will decide on the plan's accrual criteria and on the goals to be set annually and separately for each accrual period. The shares earned on the basis of the plan may not be transferred or otherwise used for a period of two years from the end of the accrual period (period of commitment). Key persons must return to the Company without delay the shares paid out gratuitously as a reward if their employment with a company belonging to the Group ends during the period of commitment.

Earnings periods 2008 2007
Grant date 14 Feb 2008 27 Jun 2007
Earnings period begins 1 Jan 2008 1 Jan 2007
Earnings period ends 31 Dec 2008 31 Dec 2007
Maximum number of shares granted as remuneration 100,100 100,100
Share release 31 Dec 2010 31 Dec 2009
Number of people 42 36
Earnings criteria:
- Operative EBIT % 50% 50%
- ROCE 50% 50%
Achievement of earnings criteria, % 0% 43%
Number of share incentives granted 0 35,260
Share price at grant date, € 15.30 25.22
Share price at balance sheet date, € 11.60 17.35
Impact of share incentive plan on the results for the
period 2008 2007
Impact of the scheme on the profit for the period 272 903
Liabilities from the cash payments of the share-based
scheme 221 642

12. Interest-bearing FINANCIAL liabilities, EUR 1,000

Balance sheet values
Balance sheet values
Non-current financial liabilities valued at amortised cost
Bonds
80,000
90,000
Loans from financial institutions
195,614
82,160
Pension funds loans
40,107
4,582
Other liabilities
3,000
6,954
Finance lease obligations
2,091
10,385
Total
320,812
194,081
Current financial liabilities valued at amortised cost
Bonds
10,000
10,000
Loans from financial institutions
45,434
77,165
Commercial papers
64,800
30,000
Pension fund loans
2,857
21
Other liabilities
3,349
7,859
Finance lease obligations
1,148
2,744
Total
127,588
127,789
Total interest-bearing liabilities
448,400
321,870
With fixed interest rates
24.6 %
17.5 %
With variable interest rates
75.4 %
82.5 %
Average interest rate
4.86%
4.52%
Non-current liabilities mature as follows:
2008
2007
2009
28,351
2010
30,698
20,556
2011
30,800
8,050
2012
124,752
6,247
2013
77,933
75,150
2014
44,498
Later
12,131
55,727
Total
320,812
194,081
Interest-bearing liabilities are divided into currencies as follows:
2008
2007
EUR
229,675
106,073
SEK
156,066
149,957
DKK
25,169
25,649
RUB
2,626
15,198
EEK
30,730
20,902
USD
2,155
4,091
2008 2007
LTL 1,979
Total
448,400
321,870

The 2007 comparative information on EUR, SEK and EEK has been adjusted to comply with the 2008 calculation method, which indicates the amount of interest-bearing liabilities by currency, taking into account currency swap agreements.

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Finance lease obligations - total amount of minimum lease payments 2008 2007
In less than a year 1,080 3,221
Between one and five years 2,346 8,532
After five years 3,249
Total 3,426 15,002
Finance lease obligations - present value of minimum lease payments 2008 2007
In less than a year 1,148 2,744
Between one and five years 2,091 7,321
After five years 3,064
Total 3,239 13,129
Future interest accumulation 187 1,873
Total 3,426 15,002
13. Trade
and
other
payables
, EUR 1,000
2008 2007
Non-current financial liabilities measured at amortised cost
Pension obligations 129 252
Other liabilities 25
Total 154 252
Current financial liabilities valued at amortised cost
Trade payables 117,103 79,315
Advances received 955 510
Other liabilities 39,435 24,878
Accrued liabilities 49,738 52,448
Current financial liabilities at fair value through profit or loss
Derivative instruments - not in hedge accounting 648 101
Total 207,879 157,252
Significant items in accrued liabilities consist of personnel costs and the amortisation of debt interests.
Non-current liabilities consist of the following currencies: 2008 2007
EUR 129 252
EEK 25
Total 154 252
Current liabilities were divided into currencies as follows: 2008 2007
EUR 102,956 86,719
SEK 57,050 51,327
RUR 19,932 7,276
EEK 6,122 3,988
DKK 5,922 3,623
LTL 16 1,596
PLN 259 1,516
USD 15,565 1,205
GBP 7 2
Total 207,829 157,252

14. Segment information, EUR 1,000

The Group's primary segment reporting uses geographical segments defined on the basis of the Group's internal organisation structure and internal financial reporting. The Group has four recognisable geographical segments that differ essentially from one another in terms of the functioning of the markets. They are Atria Finland, Atria Scandinavia, Atria Russia and Atria Baltics. In addition, Group costs are reported separately in unallocated items. Group costs mainly consist of personnel and administration costs as well as costs arising from the share-based payment plan. A segment's assets and liabilities are items that can be directly attributed or reasonably allocated to the segment. Since Atria's withdrawal from wholesale trade in Sweden in 2007 the Group has had only one business segment: the meat industry. Inter-segment transactions are carried out at market price.

Accounting period that ended on

31 Dec 2008
Geographical segments Finland Scandinavia Russia Baltics Unallocated Eliminations Group
Net sales
External 781,873 448,933 93,849 32,281 1,356,936
Internal 16,017 6,269 -22,286 0
Total net sales 797,890 455,202 93,849 32,281 -22,286 1,356,936
EBIT 33,870 14,403 -3,374 -3,815 -2,667 38,417
Financial income and expenses -22,317
Income from joint ventures
and associates 573 573
Income taxes -5,260
Profit for the period 11,413
Assets
Segment assets 527,448 368,478 187,185 68,556 -23,305 1,128,362
Investments in joint ventures and
associates 6,135 2 6,137
Total assets 533,583 368,478 187,185 68,558 -23,305 1,134,499
Liabilities 263,706 268,252 144,091 44,309 -20,729 699,629
Investments 23,856 41,783 68,587 18,411 152,637
Depreciation 29,353 11,706 3,246 2,761 47,066
Impairment 400 55 14 469
Accounting period that ended on
31 Dec 2007
Geographical segments Finland Scandinavia Russia Baltics Unallocated Eliminations Group
Net sales
External 731,644 448,263 65,566 26,714 1,272,187
Internal 17,927 9,561 17 -27,505 0
Total net sales 749,571 457,824 65,566 26,731 -27,505 1,272,187
EBIT 43,128 54,941 4,319 -4,353 -3,489 94,546
Financial income and expenses -14,325

associates 384 384 Income taxes -12,960

Profit for the period 67,645

Income from joint ventures and

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Assets
Segment assets 504,249 373,356 78,750 48,078 -9,424 995,009
Investments in joint
ventures and associates 5,726 2 5,728
Total assets 509,975 373,356 78,750 48,080 -9,424 1,000,737
Liabilities 186,575 259,780 54,427 34,086 -10,155 524,713
Investments 28,579 213,925 32,965 8,623 284,092
Depreciation 27,347 12,171 2,275 2,031 43,824
Impairment 705 705

15. Acquired operations

Ownership
2008 Acquisition date share, % Domicile
AB Ridderheim & Grönvall
Subsidiaries:
1 Jul 2008 100 Sweden
Ridderheims Delikatesser AB
Smakfabriken i Göteborg AB
100
100
Sweden
Sweden
KB Joddlaren
Ridderheims Delikatesser i Norge AS
1 Jul 2008 100
100
Sweden
Norway

Atria Scandinavia's strategy is to focus on products with a higher degree of processing. The acquisition of Ridderheims supports this strategy. The acquisition strengthens Atria's position in the fresh delicatessen products market, which is currently one of the fastest growing segments in the consumer goods retail trade.

Established in 1987, AB Ridderheims Delikatesser's product selection includes beer sausages, hams, cheese, canned foods and tapas ingredients. Ridderheims is a strong, well-known and innovative brand in the industry. The company operates in Gothenburg and employs a staff of 110.

The aim is to merge the product selections of Ridderheims and Falbygdens Ost into Atria Deli. The merger will create the finest and most comprehensive range of fresh delicatessen products in the Nordic countries and improve the position of both companies in export markets. Ridderheims currently exports its products to eleven countries. The merger will allow it to further increase its sales in Sweden and step up its exports, as Atria has a strong position and network of distributors in Finland, Denmark, the Baltic countries and Russia. At the same time, Ridderheims' distribution network will enable Falbygdens Ost to export more of its products.

Furthermore, the acquisition will generate savings, as the manufacture of products which Ridderheims used to buy from subcontractors is transferred to Atria's plants.

Ridderheims' net sales for the previous accounting period were EUR 54.4 million and EBIT EUR 1.9 million.

Fair values on Fair values prior
EUR 1,000 acquisition to acquisition
Property, plant and equipment 5,887 5,887
Goodwill 13,918
Other intangible assets 8,131
Investments 76 76
Inventories 2,979 2,979
Receivables 5,532 5,720
Cash and cash equivalents 2,565 2,565
Total assets 39,088 17,227
Deferred tax liabilities 3,670 1,393
Interest-bearing financial liabilities 2,691 2,691
Other liabilities 7,041 7,041
Total liabilities 13,402 11,125
Net assets 25,686 6,102
Purchase price 25,686
Cash and cash equivalents of acquired companies 2,565
Effect on cash flow 23,121
Ownership
2008 Acquisition date share, % Domicile
AS Vastse-Kuuste Lihatööstus 31 Jul 2008 100 Estonia
AS Wõro Kommerts 31 Jul 2008 100 Estonia

AS Vastse-Kuuste Lihatööstus manufactures a range of cold cuts, sausages, cured sausages and consumer-packed meat. The company has its own slaughterhouse and cutting plant. Founded in 1994, Vastse-Kuuste reported net sales of EUR 8.8 million in 2007. Its total market share in terms of value is 6% (Source: AC Nielsen 2008), and it employs approximately 140 persons. Over the past few years, Vastse-Kuuste has invested in the modernisation and capacity improvement of its production plant. Its market position has also strengthened due to the new investments.The company has a particularly strong position in cold cuts in the Estonian market.The production plant is located in southern Estonia, in Vastse-Kuuste.

Established in 1993, AS Wõro Kommerts is a company specialising in the production of meat products. Wõro's product selection includes smoked sausages and meat products, raw sausages, grill sausages and frankfurters. The company's total market share in terms of value is 13% (Source: AC Nielsen 2008), which makes it Estonia's second largest meat processing company. In recent years, Wõro has invested actively in the improvement of product quality and brand development. In 2007, it posted net sales of EUR 9.9 million and employed some 170 staff. The company has a production plant in Ahja, near Tartu and a distribution centre in Tartu. Built at the turn of the millennium, the production plant boasts modern production machinery.

Through these acquisitions, Atria will complement and expand its current product selection for retail customers in Estonia. Combined with the operations of Wõro and Vastse-Kuuste, AS Valga Lihatööstus is the second largest player in the Estonian meat processing market, with net sales of approximately EUR 42 million.The merger will generate significant synergies and help establish a firmer foothold in the market.

The companies' net sales for the previous accounting period were EUR 18.7 million and EBIT EUR 0.9 million.

Fair values on Fair values prior
EUR 1,000 acquisition to acquisition
Property, plant and equipment 4,814 4,814
Goodwill 6,163
Other intangible assets 3,537
Inventories 1,134 1,134
Receivables 1,965 1,965
Cash and cash equivalents 2,630 2,630
Total assets 20,243 10,543
Deferred tax liabilities 743
Interest-bearing financial liabilities 1,135 1,135
Other liabilities 2,873 2,873
Total liabilities 4,751 4,008
Net assets 15 492 6 535
Purchase price 15 492
Cash and cash equivalents of acquired companies 2 630
Effect on cash flow 12 862

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2008 Acquisition date Ownership share,
%
Domicile
OOO MPZ Campomos 15 Oct 2008 100 Russia
Subsidiaries:
OOO CampoFerma
OOO CampoFoods St. Petersburg
OOO CampoFoods Moscow
100
100
100
Russia
Russia
Russia

Atria expanded its operations in Russia by acquiring the meat processing company OOO MPZ Campomos operating in the Moscow and St Petersburg regions. The main products of Campomos include meat products and pizzas. It is also planning to add consumer-packed meat to its product portfolio. Campomos has a production plant and logistics centre in Moscow and a distribution terminal in St. Petersburg. In addition, it boasts a new pork breeding facility with 2,500 sows. The main market of Campomos is Moscow, but it is also well-established in St. Petersburg and some other major cities. In 2007, Campomos reported net sales of around EUR 75 million. After the positive development of earnings in the early 2000s, the company's performance has ebbed and it has been in the red in recent years. The company's production equipment is modern and well maintained.

Through the acquisition of Campomos, Atria will obtain a significant share of modern retail trade in the Moscow region and strengthen its market leadership in St. Petersburg. Founded in 1989, Campomos employs some 1,000 staff. More than half of its sales are generated in the Moscow region and the rest in St. Petersburg and other major cities. Campomos was the subsidiary of Campofrio Alimentacion S.A., a Spanish publicly quoted company. It was the first meat processing company established in Russia.

The company's main brand is CampoMos, which is widely known in Russia. The CampoMos frankfurters, in particular, are a well-known product. The company also offers a variety of premium-class meat products. In recent years, Campomos has diversified into convenience foods and service desk products.

A customer base of over 17 million people in the Moscow region and the rapid growth of modern retail trade combined with the well-known, high-quality products of Campomos and its excellent position in modern retail trade will help Atria establish a firm foothold in the rapidly growing Moscow market.

Fair values on Fair values prior
EUR 1,000 acquisition to acquisition
Property, plant and equipment 44,074 44,074
Goodwill 276 1,310
Other intangible assets 2,365 576
Inventories 13,589 13,589
Trade receivables 15,404 15,404
Other receivables 15,920 15,920
Cash and cash equivalents 1,000 1,000
Total assets 92,628 91,873
Deferred tax liabilities 1,041 612
Interest-bearing financial liabilities 51,687 51,687
Other liabilities 33,622 33,622
Total liabilities 86,350 85,921
Net assets 6,278 5,952
Purchase price 6,278
Cash and cash equivalents of acquired companies 1,000
Effect on cash flow 5,278
Ownership
2007 Acquisition date share, % Domicile
AB Sardus 1 Apr 2007 100 Sweden
Subsidiaries:
3-Stjernet A/S 100 Denmark
Alf Eliassons Kött & Chark AB 100 Sweden
AB Carl A Carlson Charkuterier 100 Sweden
Charkdelikatesser Produktion AB 100 Sweden
Delikatess Skinkor AB 100 Sweden
Falbygdens Ostnederlag AB 100 Sweden
Filos AB 100 Sweden
G A Carlsson AB, Gea´s 100 Sweden
Gourmet Service i Årsta AB 100 Sweden
Moheda Chark AB 100 Sweden
Norrboda Charkuterifabrik AB 100 Sweden
Pastejköket Produktion AB 100 Sweden
Sardus Chark & Deli AB 100 Sweden
Sardus Foodpartner AB 100 Sweden
Sardus Inköp AB 100 Sweden
Sardus International A/S 100 Denmark
Sardus IT AB 100 Sweden
Sardus Lätta Måltider Halmstad AB 100 Sweden
Sardus Lätta Måltider Holding AB 100 Sweden
Sardus Lätta Måltider Stockholm AB 100 Sweden
Sardus Lätta Måltider Östersund AB 100 Sweden
AB Sven Lindbergs Charkuterifabrik 100 Sweden

Atria Meat & Fast Food AB acquired the Swedish AB Sardus on 1 April 2007. The acquisition forms part of Atria's goal of becoming the leading food industry company in the Baltic Sea region. The food industry is currently undergoing a structural change and integration development, and there are a limited number of major operators. Merging Atria and Sardus strengthens the ability of both companies to respond to the new challenges set by the integrating markets. Together, the companies will complement each other and form a stronger operator with a wide selection of strong brands. The merger is expected to produce synergy benefits for product development, purchases, logistics, production and marketing. The wider product range and the synergy benefits will form the main accelerators of growth, and they strengthen the brands and product groups of both companies. Sardus' net sales in 2006 amounted to EUR 230 million, its EBIT was EUR 9 million and it had approximately 1,000 employees.

Acquiree's
Fair current
EUR 1,000 value book value
Property, plant and equipment 53,037 53,037
Goodwill 93,659 42,036
Other intangible assets 48,329 3,379
Investments 906 906
Inventories 25,300 25,300
Receivables 30,403 30,403
Cash and cash equivalents 3,904 3,904
Total assets 255,538 158,965
Deferred tax liabilities 20,402 9,187
Interest-bearing liabilities 80,219 79,366
Other liabilities 30,401 30,401
Total liabilities 131,022 118,954
Net assets 124,516 40,011
Purchase price 124,515
Cash and cash equivalents of acquired companies 3,904
Effect on cash flow 120,611

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Ownership
Acquisition date share, % Domicile
30 May 2007 100 Poland
1 Oct 2007 100 Finland

In Sweden, Atria Concept AB acquired the Polish agency office Stam with which Atria has been cooperating for a long time in Poland. Atria Concept AB wants to continue strengthening its position in Poland and its neighbouring countries, the Czech Republic and Slovakia. The aim is to double net sales to EUR 6 million by the end of 2009 through better utilisation of local knowledge.

Atria Finland Ltd acquired the entire stock of Liha-Pouttu Oy. The acquisition target was Liha-Pouttu Oy's meat procurement, slaughtering and meat cutting operations. The Finnish Competition Authority approved the acquisition on 21 September 2007 and the deal was confirmed on 1 October 2007.

Packing of retail-packed meat was not included in the purchase. In connection with the deal, Atria and Pouttu signed a cooperation agreement concerning meat deliveries from Atria to Jaloste-Pouttu Oy. Along with the acquisition, Atria adds to its cost-efficiency in meat purchasing and cutting operations as purchasing volumes increase from 140 million kg to approximately 155 million kg. Thanks to the Liha-Pouttu acquisition, the net sales of Atria Finland Ltd is expected to grow by approximately EUR 25 million annually.

Stam and Liha-Pouttu combined:

Acquiree's
EUR 1,000 Fair current
value book value
Tangible assets 219 219
Goodwill 1,413
Other intangible assets 1,295 26
Investments 153 153
Inventories 460 460
Short-term receivables 5,199 5,199
Cash and cash equivalents 201 201
Total assets 8,940 6,258
Deferred tax liabilities 330
Other liabilities 4,389 4,396
Total liabilities 4,719 4,396
Net assets 4,221 1,862
Purchase price 4,221
Cash and cash equivalents of acquired companies 201
Effect on cash flow 4,020

16. Sold operations, EUR 1,000

Ownership
2007 Selling date share, % Domicile
Svensk Snabbmat för Storkök AB 31 May 2007 57.2 Sweden

Subsidiaries:

Hedmans AB Frukt och Matgrossisten i Söderhamn AB Matgrossisten i Skellefteå AB Norrsäljarna AB

Atria sold its share of its Swedish subsidiary Svensk Snabbmat för Storkök AB to Euro Cater A/S. Snabbmat is a local HoReCa wholesale outlet, in which Atria held 57.2 per cent of the shares. Atria recorded a sales gain of nearly EUR 35 million from the deal.

Snabbmat is included in Group figures until 31 May 2007.

Svensk Snabbmat för Storkök AB's earnings 1 Jan - 31 May 2007 1 Jan - 31 Dec 2006
Net sales 85,073 146,879
EBIT 1,658 4,562
Profit before taxes 1,387 4,547
Assets and liabilities on the selling date: 31 May 2007
Assets 54,028
Liabilities 43,465
17. NET SALES, EUR 1, 000
2008 2007
Proceeds from sale of goods 1,341,547 1,257,498
Proceeds from services 7,382 6,380
Other proceeds 8,007 8,309
18. Other
operating
income
, EUR 1,000
2008 2007
Rental income 176 167
Proceeds from sale of fixed assets 35,185
Other 3,509 2,716
Total 3,685 38,068

Total 1,356,936 1,272,187

19. Materials and supplies, EUR 1,000

2008 2007
Materials and supplies 833,786 746,271
Changes in stock 2,087 -2,345
External services 26,002 24,711
Total 861,875 768,637

20. Employee benefits, EUR 1,000

Employee benefits 2008 2007
Salaries and wages 181,035 169,866
Pension costs - contribution plans 26,263 22,627
Pension costs - benefit-based plans -123 -89
Other staff-related expenses 33,408 35,076
Total 240,583 227,480
Group personnel on average by segment 2008 2007
Finland 2,378 2,394
Scandinavia 1,691 1,768
Russia 1,525 1,278
Baltic countries 541 507
Total 6,135 5,947

21. Depreciation and impairment, EUR 1,000 Depreciation and impairment by group of assets 2008 2007 Depreciation Property, plant and equipment Buildings 10,605 9,655 Machinery and equipment 33,137 30,699 Other tangible assets 686 176 Total 44,428 40,530 Intangible assets Trademarks 374 1,019 Other intangible assets 2,264 2,275 Total 2,638 3,294 Total 47,066 43,824 Impairment Buildings 469 Other tangible assets 129 Inventories 576 Total 469 705 Total depreciation and impairment 47,535 44,529

22. Other operating expenses, EUR 1,000

2008 2007
Lease payments 8,045 7,741
Energy costs 26,682 22,743
Transportation costs 17,992 17,951
Other 129,601 134,139
Total 182,320 182,574
23. FEES PAID TO AUDITORS, EUR 1,000
2008 2007
Fees paid for auditing 491 384
Reports and statements 78
Tax consulting 21 12
Other fees 19 239
Total 531 713

24. Research and development costs, EUR 1,000

2008 2007
The income statement includes R&D costs booked as costs to the amount of 9,905 8,428

25. Financial income and expenses, EUR 1,000

2008 2007
Financial income:
Interest income from loan assets 4,931 4,915
Exchange rate profits from loan assets 31,852 845
Dividends received from financial assets for sale 25 68
Other financial income 898 240
Changes in the value of financial assets at fair value through profit or loss
- Derivative instruments - not in hedge accounting 6,655 2,244
Total 44,361 8,312
Financial expenses:
Interest expenses from financial liabilities
valued at amortised cost -20,741 -16,508
Exchange rate losses from financial liabilities valued at amortised cost -41,149 -4,036
Other financial expenses -4,140 -1,992
Changes in the value of financial assets at fair value through profit or loss
- Derivative instruments - not in hedge accounting -648 -101
Total -66,678 -22,637

26. Income taxes, EUR 1,000

Taxes in the income statement 2008 2007
Tax based on the taxable profit for the period 7,890 13,701
Retained taxes 81 542
Deferred tax -2,711 -1,283
Total 5,260 12,960
Balancing of income statement taxes to profit before taxes
Profit before taxes 16,673 80,605
Taxes calculated with the parent company's 26 percent tax rate 4,335 20,957
Effect of foreign subsidiaries' deviating tax rates -1,336 504
Effect from associates' earnings -149 -100
Retained taxes 81 551
Effect of tax-free income -125 -12,076
Effect of costs that are undeductible in taxation 1,494 337
Unrecognised deferred tax assets 960 2,787
Total 5,260 12,960

27. Earnings per share, EUR 1,000

2008 2007
Basic earnings per share are calculated by dividing the parent company's shareholder's profit for the period
by the weighted average number of outstanding shares.
Profit for the period belonging to the owners of the parent company 11,765 66,695
Weighted average of shares for the period (1,000) 28,268 26,082
Basic earnings per share 0.42 2.56

When calculating the earnings per share adjusted by the dilution effect, the dilution effect from all potential dilutive conversions of ordinary shares is taken into account in the weighted average number of shares. The Group does not have any instruments that would have a dilution effect.

28. Financial risk management

The financing policy approved by the Board of Directors on 25 June 2008 confirms the general principles of risk management. The Board has delegated the management of financial risks to the Treasury committee, while the practical management of financial risks is centrally handled by the Group's Treasury unit. The goal of financial risk management is to reduce the effect that price fluctuations on the financial markets and other uncertainty factors have on earnings, the balance sheet and cash flow, as well as to ensure sufficient liquidity. The main risks related to financing are interest rate risk, currency risk, liquidity and refinancing risk and credit risk.

Interest rate risk

Interest rate risk is managed by dividing financing into instruments with variable and fixed interest rates and by hedging with interest rate derivatives. The interest rate risk is mainly directed at the Group's interest-bearing liabilities because the amount of short-term money market investments and the related interest rate risk is low. However, cash at hand is maintained at the level required to maintain good liquidity. The Group's operational cash flow is mainly independent of fluctuations in market rates. At the time of the balance sheet date, the Group had one interest rate swap of EUR 10 million, where the Group pays 4.42% in fixed interest and receives a 6-month Euribor interest rate of 4.93%. The Group's interest-bearing debt was EUR 448.4 million on 31 December 2008 (EUR 321.9 million on 31 December 2007), of which EUR 110.3 million (EUR 56.4 million on 31 December 2007) or 24.6 percent (17.5% on 31 December 2007) had fixed interest rates.

Sensitivity analysis for the interest rate risk of financial instruments in accordance with IFRS 7

The interest rate risk analysis is based on the following assumptions. The sensitivity analysis is calculated using a 1% change in the interest rate level, which is considered to be reasonable and plausible, and the amount of interest bearing net debt with variable interest rates at the end of the year. Net debt with variable interest rates amounted to EUR 301 million on 31 December 2008 (EUR 230 million on 31 December 2007). At the end of 2008, +/-1% change in the interest rate level would amount to a change of EUR +/- 2,9 million in the Group's annual interest expenses (EUR +/-2,2 million on 31 December 2007).

Currency risk

Atria is exposed to both transaction risks and translation difference risks. Transaction risks refer to a potentially negative effect of exchange rate fluctuations on the Group's earnings, whereas translation difference risks affect the Group's balance sheet, with a potentially negative effect on the Group's net assets, i.e. Atria Group's equity. Transaction risks come, among others, from the euro-denominated meat raw material imports of Atria's Swedish operations and from the euro- and USD-denominated imports of its Russian companies. The currency flow and risks in Finnish operations are relatively low. Currency risk is hedged with foreign currency loans and derivatives. As a rule, the equity of foreign subsidiaries is not hedged (translation risk). Most of the subsidiaries' loans are denominated in their home currencies. However, on 31 December 2008 the Russian subsidiaries had a euro-denominated loan of EUR 26.7 million, which has been amortised by EUR 13 million in January and will continue to be amortised in the early part of 2009.

Sensitivity analysis for the currency risks of financial instruments in accordance with IFRS 7

The sensitivity analysis for currencies is based on the financial instruments in currencies other than the operating currency of each Group company in the balance sheet at the time of the financial statement and the resulting risks. Currency-denominated items other than financial instruments, such as forecasted probable purchases or sales, are not included in the sensitivity analysis.

31 Dec 2008 31 Dec 2007
EUR 1,000 EUR SEK USD EUR SEK USD
Net exposure -44,304 470 185 -25,592 576 -320
Effect of a 5 percent increase in
the exchange rate on profit before taxes -2,215 24 9 -1,280 29 -16

The net position of EUR -44.3 million on 31 December 2008 includes EUR 26.7 million in loans and EUR 9.5 million in trade payables and other non-interestbearing liabilities of the Russian companies (EUR/RUB risk), as well as EUR 7.5 million in euro-denominated trade payables of the Swedish subsidiaries (EUR/SEK risk). The net position of EUR -25.6 million on 31 December 2007 includes an intra-Group loan of some EUR 18 million to OOO Atria Group (EUR/ RUB risk). The sensitivity analysis assumes a 5% change in foreign currency exchange rates to be reasonably realistic.

Liquidity and refinancing risk

Atria Plc's Treasury arranges the majority of the Group's interest-bearing liabilities. Liquidity and refinancing risks are managed with balanced loan maturity distribution and by having sufficient committed credit limits and cash funds at hand. Atria also uses commercial paper programmes to manage liquidity. At the end of the year, there was EUR 126.4 million (EUR 151.6 million in 2007) in unutilised committed credit limits. EUR 135.2 million of the EUR 200 million commercial paper programmes had not been used (in 2007, EUR 90 million of the EUR 120 million commercial paper programmes had not been used). At the time of the financial statement, the average maturity of the Group's loans was 3 years 1 month and the average maturity of committed credit limits was approximately 3 years. The main covenant used in loan agreements is a minimum equity ratio covenant of 30%.

The table below shows the maturity analysis for financial liabilities and derivative instruments (undiscounted figures).

Maturity analysis for financial liabilities

< 1 1-5 > 5
EUR 1,000 years years years Total
Loans Instalments 124,241 264,183 53,628 442,052
Interest expenses 15,020 52,549 3,980 71,549
Derivative assets and liabilities Capital payments 121,917 121,917
Capital income -128,482 -128,482
Interest expenses 442 442
Interest income -500 -500
Other liabilities Instalments/Payments 34,510 3,000 37,510
Interest expenses 301 145 446
Trade payables Payments 117,103 117,103
Accrued liabilities Payments 50,386 50,386
Total Total payments 463,920 316,732 60,753 841,405
Total income -128,982 0 0 -128,982
Net payments 334,938 316,732 60,753 712,423

Maturity analysis for financial liabilities

Maturity, 31 Dec 2007
< 1 1-5 > 5
EUR 1,000 years years years Total
Loans Instalments 119,949 106,489 80,619 307,057
Interest expenses 12,953 33,020 4,078 50,051
Derivative assets and liabilities Capital payments 105,270 105,270
Capital income -107,359 -107,359
Interest expenses 442 368 810
Interest income -459 -383 -842
Other liabilities Instalments/Payments 26,765 2,454 4,500 33,719
Interest expenses 354 1,174 218 1,746
Trade payables Payments 79,315 79,315
Accrued liabilities Payments 52,448 52,448
Total Total payments 397,496 143,505 89,415 630,416
Total income -107,818 -383 0 -108,201
Net payments 289,678 143,122 89,415 522,215

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Credit risk

The credit risk related to financing, i.e. the counterparty risk, is mainly controlled by selecting only well-established contracting parties with good credit ratings as counterparties. The Group's liquid assets are only invested in counterparties that meet the above-mentioned criteria. This is also the procedure when entering into financing and derivative agreements. The credit risk of the Group's operative business derives to our customers, of which the main ones are large retail store chain. Receivables from other customers are clearly smaller and more dispersed.

Commodity risk

In the commodity risk area, electricity prices have been hedged by purchasing electricity at a fixed price. Fluctuations in the price of meat raw material affect the Group's profitability in the short term, but the Group aims to pass on the price increases to sales prices as soon as possible.

Capital structure management

In capital structure management, the Group aims to ensure normal operating conditions under all circumstances and to maintain an optimal capital structure in terms of capital costs. The capital structure is influenced, for example, through the distribution of dividends and share issues and by retaining interest-bearing liabilities at such a level that the equity ratio target of 40% can be maintained.

Equity ratio (minimum target 40%)

Realised: 31 Dec 2008 31 Dec 2007
38.4 % 47.6 %

Values for financial assets and liabilities by category

EUR 1,000 Financial assets
and liabilities
at fair value Loans and other Financial assets Financial Balance sheet
2008 balance sheet item through profit or loss receivables for sale liabilities value in total
Non-current assets
Other financial assets 2,111 2,111
Loan assets 7,857 7,857
Other receivables 6,159 6,159
Current assets
Trade receivables 188,179 188,179
Loan assets 386 386
Other receivables *) 7,953 7,953
Accrued credits and 17,882 17,882
deferred charges *)
Derivative instruments 6,655 6,655
Cash and cash equivalents 37,138
Total financial assets 6,655 228,416 2,111 274,320
Non-current liabilities
Interest-bearing financial liabilities 320,812 320,812
Current liabilities
Interest-bearing financial liabilities 127,588 127,588
Trade payables 117,103 117,103
Other liabilities **) 31,169 31,169
Accrued liabilities **) 50,386 50,386
Derivative instruments 648 648
Total financial liabilities 648 647,058 647,706

The fair values of financial assets and liabilities do not deviate significantly from their balance sheet values.

*) Do not include VAT or income tax assets.

**) Do not include VAT or income tax liabilities.

EUR 1,000 Financial assets and
liabilities
at fair value Loans and other Financial assets Financial Balance sheet
2007 balance sheet item through profit or loss receivables for sale liabilities value in total
Non-current assets
Other financial assets 2,959 2,959
Loan assets 11,744 11,744
Other receivables 346 346
Current assets
Trade receivables 166,358 166,358
Loan assets 4,496 4,496
Other receivables *) 1,819 1,819
Accrued credits and deferred charges *) 6,487 6,487
Derivative instruments 2,244 2,244
Cash and cash equivalents 35,592
Total financial assets 2,244 191,250 2,959 232,045
Non-current liabilities
Interest-bearing financial liabilities 194,081 194,081
Current liabilities
Interest-bearing financial liabilities 127,789 127,789
Trade payables 79,315 79,315
Other liabilities **) 18,904 18,904
Accrued liabilities **) 52,448 52,448
Derivative instruments 101 101
Total financial liabilities 101 472,537 472,638

*) Do not include VAT or income tax assets.

**) Do not include VAT or income tax liabilities.

29. Other
leases
, EUR 1,000
Group as lessor 2008 2007
Minimum lease payments based on non-cancellable leases
Within one year 4,949 3,445
Within more than one year and a maximum of five years 11,408 8,379
After more than five years 20,658 17,991
Total 37,015 29,815
30. Contingent
liabilities
, EUR 1,000
Debts with mortgages or other collateral given as security 2008 2007
Loans from financial institutions 9,557 13,521
Pension fund loans 3,867 4,603
18,124
Total 13,424
Mortgages and other securities given as comprehensive security
Real estate mortgages 6,651 21,957
Corporate mortgages 7,884 2,225
Total 14,535 24,182
Guarantee engagements not included in the balance sheet
Guarantees 886 907

31. Related party transactions, EUR 1,000

Group companies by business area Domestic Ownership interest (%) Share of votes (%)
Atria Finland:
Ab Botnia-Food Oy Finland 100.0 100.0
A-Logistics Ltd Finland 100.0 100.0
A-Pekoni Nurmo Oy Finland 100.0 100.0
A-Pihvi Kauhajoki Oy Finland 100.0 100.0
A-Pihvi Kuopio Oy Finland 100.0 100.0
A-Rehu Oy Finland 51.0 51.0
A-Sikateurastamo Oy Finland 100.0 100.0
Atria Concept Oy Finland 100.0 100.0
Atria Meat AB Sweden 100.0 100.0
Atria Finland Ltd Finland 100.0 100.0
Atria Plc Finland
Atria-Chick Oy Finland 100.0 100.0
Atria-Lihavalmiste Oy Finland 100.0 100.0
Atria-Meetvursti Oy Finland 100.0 100.0
Atria-Tekniikka Oy Finland 100.0 100.0
Atria-Tuoreliha Oy Finland 100.0 100.0
Atria-Valmisruoka Oy Finland 100.0 100.0
A-Farmers Ltd Finland 97.9 99.0
F-Logistiikka Oy Finland 100.0 100.0
Itikka-Lihapolar Oy Finland 100.0 100.0
Kiinteistö Oy Tievapolku 3 Finland 100.0 100.0
Liha ja Säilyke Oy Finland 100.0 100.0
Liha-Pouttu Oy Finland 100.0 100.0
Rokes Oy Finland 100.0 100.0
Suomen Kalkkuna Oy Finland 100.0 100.0
Atria Scandinavia:
3-Stjernet A/S Denmark 100.0 100.0
AB Ridderheim & Grönwall Sweden 100.0 100.0
AB Sardus Sweden 100.0 100.0
Atria Chark & Deli AB Sweden 100.0 100.0
Atria Concept AB Sweden 100.0 100.0
Atria Concept SP Z.o.o Poland 100.0 100.0
Atria Foodservice & Concept AB Sweden 100.0 100.0
Atria Foodservice AB Sweden 100.0 100.0
Atria Lätta Måltider AB Sweden 100.0 100.0
Atria Lätta Måltider Halmstad AB Sweden 100.0 100.0
Atria Lätta Måltider Holding AB Sweden 100.0 100.0
Atria Lätta Måltider Östersund AB Sweden 100.0 100.0
Atria Meat & Fast Food AB Sweden 100.0 100.0
Atria Scandinavia AB Sweden 100.0 100.0
Falbygdens Ostnederlag AB Sweden 100.0 100.0
Gourmet Service i Årsta AB Sweden 100.0 100.0
KB Joddlaren Sweden 100.0 100.0
Lithells AB Sweden 100.0 100.0
Nordic Fastfood AB Sweden 51.0 51.0
Nordic Fastfood Etablerings AB Sweden 51.0 51.0
Ridderheims Delikatesser AB Sweden 100.0 100.0
Ridderheims Delikatesser i Norge AS Norway 100.0 100.0
Samfood Fastighet AB Sweden 100.0 100.0
Sardus Chark & Deli AB Sweden 100.0 100.0
Sardus Foodpartner AB Sweden 100.0 100.0
Sardus Inköp AB Sweden 100.0 100.0
Sardus International A/S Denmark 100.0 100.0
Sardus IT AB Sweden 100.0 100.0
Smakfabriken i Göterborg AB Sweden 100.0 100.0
Atria Russia:
Atria-Invest Oy Finland 100.0 100.0
OOO Atria Group Russia 100.0 100.0
OOO CampoFerma Russia 100.0 100.0
OOO CampoFoods Moscow Russia 100.0 100.0
OOO CampoFoods St. Petersburg Russia 100.0 100.0
OOO MPZ Campomos Russia 100.0 100.0
OOO Pit-Product Russia 100.0 100.0
Atria Baltic:
AS Alle Estonia 100.0 100.0
AS Valga Lihatööstus Estonia 100.0 100.0
AS Vastse-Kuuste Lihatööstus Estonia 100.0 100.0
AS Wõro Kommerts Estonia 100.0 100.0
OÜ Atria Estonia 100.0 100.0
OÜ Carmex Invest Estonia 100.0 100.0
OÜ Linnamäe Peekon Estonia 100.0 100.0
OÜ Puidukaubandus Estonia 100.0 100.0
UAB Vilniaus Mesa Lithuania 100.0 100.0
Group joint ventures and associates and other related parties Domestic Ownership interest (%) Share of votes (%)
Group joint ventures:
Best-In Oy Finland 50.0 50.0
Länsi-Kalkkuna Oy Finland 50.0 50.0
Group associates:
Finnpig Oy Finland 49.0 49.0
Findest Protein Oy Finland 40.6 40.6
Foodwest Oy Finland 33.5 33.5
Honkajoki Oy Finland 47.8 47.8
OÜ LKT Invest Estonia 26.0 26.0
Finnish Meat Research Institute, LTK Co-operative Finland 40.7 40.7
Tuoretie Oy Finland 33.3 33.3
Other related parties:
Members of the Board of Directors and the Supervisory Board

Itikka Co-operative Group

Lihakunta

Pohjanmaan Liha Co-operative Group

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The following transactions were completed with related parties: 2008 2007
Sale of goods
Joint ventures/Associates 772 644
Other related parties 4,669 3,904
Total 5,441 4,548
Sale of services
Associates 419 350
Other related parties 26
Total 445 350
Rental income
Joint ventures/Associates 273 264
Purchase of goods
Joint ventures/Associates 20,402 17,643
Other related parties 5,029 4,056
Total 25,431 21,699
Purchase of services
Joint ventures/Associates 32,684 28,497
Rent costs
Joint ventures/Associates 2,259 2,096
Trade receivables
Joint ventures/Associates 60 47
Other related parties 1,441 1,469
Total 1,501 1,516
Trade payables
Joint ventures/Associates 3,045 1,881
Debts to related parties
Other related parties (debts to owners) 893 10,723

The sale of goods and services to related parties is based on the Group's valid price lists. The majority of services purchased were the logistics services of Tuoretie Oy. Debts to related parties are loans that can be called in immediately; their interest rate is tied to the 6-month Euribor rate.

Management employee benefits 2008 2007
Salaries and other short-term employee benefits 3,802 2,934
The retirement age for the CEO and Deputy CEO is 62 years.
Management salaries, benefits and other employee benefits 2008 2007
CEO, Member of the Board
Tikkakoski Matti, CEO since 1 Feb 2006 863 616
Deputy CEO
Gröhn Juha 461 305
Members of the Board of Directors
Selin Martti, Chairman 57 54
Komulainen Timo, Deputy Chairman 72 71
Heikkilä Tuomo 28 28
Lillandt Runar 35 34
Tikkakoski Matti, CEO
Saarinen Leena, member until Oct 2007 23
Yliluoma Ilkka 47 48
Members of the Supervisory Board
Pirkola Ari, Deputy Chairman since July 2008 20
Vornanen Ahti-Pekka, Chairman until June 2008 29 46
Kaarto Esa, Deputy Chairman since July 2007 32 18
Panula Heikki, Deputy Chairman until June 2007 15
Other members of the Supervisory Board, total 25 37

32. Biological assets, EUR 1,000

2008 2007
Biological assets are included in the following items:
Tangible assets (productive animals) 1,742 807
Inventories (other biological assets) 6,156 2,872
Total 7,898 3,679
Biological assets:
At the beginning of the period 3,679 3,075
Business combinations 3,009
Change during the period 1,210 604
At the end of the period 7,898 3,679
Production:
Chicken chicks/1,000 20,008 19,416
Young chickens and turkeys/1,000 156
Pork/1,000 kg 6,252 4,947
Beef/1,000 kg 2,370 1,797
Milk/1,000 kg 4,319 2,837

33. Events occurring after the balance sheet date

The Company management is not aware of any significant events affecting the financial statement.

BALANCE SHEET, EUR 1,000

A s s e t s Note 31 Dec 2008 31 Dec 2007
FIXED ASSETS
Intangible assets 2.1
Intangible rights 140 186
Other long-term expenditure 4,816 5,302
Intangible assets, total 4,956 5,488
Tangible assets 2.1 269,182 262,597
Investments 2.2
Interests in Group companies 181,067 132,662
Interests in associates 2,805 2,805
Other shares and interests 1,983 1,024
Investments, total 185,855 136,491
TOTAL FIXED ASSETS 459,993 404,576
CURRENT ASSETS
Long-term receivables 2.3 231,393 167,071
Short-term receivables 2.3 118,320 88,262
Cash in hand and at bank 983 1,461
TOTAL CURRENT ASSETS 350,696 256,794
T o t a l a s s e t s 810,689 661,370
L i a b i l i t i e s Note 31 Dec 2008 31 Dec 2007
SHAREHOLDERS' EQUITY 2.4
Share capital 48,055 48,055
Share premium 138,502 138,502
Own shares -542 0
Invested untied equity fund 110,228 110,228
Retained earnings 51,781 46,488
Profit for the period 23,293 25,080
TOTAL SHAREHOLDERS' EQUITY 371,316 368,353
ACCRUED APPROPRIATIONS 2.5
Depreciation difference 52,440 52,440
BORROWED CAPITAL
Long-term borrowed capital 2.6 275,492 129,951
Short-term borrowed capital 2.7 111,440 110,626
TOTAL BORROWED CAPITAL 386,932 240,577
T o t a l l i a b i l i t i e s 810,689 661,370

INCOME STATEMENT, EUR 1,000

1 Jan - 31 Dec 1 Jan - 31 Dec
Note 2008 2007
NET SALES 3.1 46,503 40,991
Other operating income 3.2 2,398 2,334
Staff expenses 3.3 -2,712 -1,689
Depreciation and impair
ment 3.4
Planned depreciation -25,950 -23,396
Other operating
expenses 3.5 -5,006 -6,204
EBIT 15,233 12,036
Financial income and
expenses 3.6 8,342 197
PROFIT BEFORE
EXTRAORDINARY ITEMS 23,575 12,233
Extraordinary items 3.7 5,500 19,950
PROFIT BEFORE APPRO
PRIATIONS AND TAXES 29,075 32,183
Income taxes 3.8 -5,782 -7,103
NET PROFIT FOR THE
ACCOUNTING PERIOD 23,293 25,080

CASH FLOW STATEMENT, EUR 1,000

1 Jan - 31 Dec
2008
1 Jan - 31 Dec
2007
Cash
flow
from
operating
activities
Sales income
46,580 40,934
Payments on operating expences -8,567 -6,797
Cash flow from operating activities
before financial items and taxes
38,013 34,137
Financial income and expences, net 10,293 -1,851
Tax paid -7,590 -6,933
Cash flow from operating activities 40,716 25,353
CASH FLOW FROM INVESTMENTS
Investments in tangible and
intangible assets and in investments -85,717 -16,326
Cash flow from investments -85,717 -16,326
CASH FLOW FROM FINANCING
Issue of shares liable to charge 0 119,025
Loan payments 59,312 -134,721
Dividends paid -19,787 -13,740
Own shares -502 0
Group contribution 5,500 19,950
Cash flow from financing 44,523 -9,486
Cash
flow
from
operating
activities 40,716 25,353
Cash
flow
from
investments
-85,717 -16,326
Cash
flow
from
financing
44,523 -9,486
TOTAL -478 -459
Change in cash and equivalents
Cash and equivalents 1.1. -1,461 -1,920
Cash and equivalents 31.12. 983 1,461
Change -478 -459

1. PRINCIPLES APPLIED IN PREPARING THE FINANCIAL STATEMENTS

General principles

Atria Plc's financial statements have been prepared in accordance with Finnish bookkeeping legislation as well as other applicable rules and regulations (FAS).

Group information

The parent company of Atria Plc Group is Atria Plc, domicile Kuopio, Finland.Copies of the consolidated financial statements of Atria Plc are available from the Group parent company's head office at Atriantie 1, Nurmo, postal address: P.O. Box 900, FI-60060 ATRIA. .

Valuation principles

Tangible and intangible assets have been recorded in the balance sheet at their direct acquisition cost, less the depreciations according to plan and impairment bookings. Depreciations are carried out as even depreciations for the time of use. Subsidies received for the acquisition of tangible assets have been booked as depreciations of the acquisition cost. The subsidies received are not relevant in amount. Financial instruments are valued in the balance sheet at the acquisition cost, less the impairment bookings. Derivative instruments are originally booked at fair value and later valued at the fair value. Any gains and losses due to valuation at fair value are treated according to the intended use of the derivative instrument in the bookkeeping.

Depreciation times:
Buildings Nurmo 40 years
other locations 25 years
Machinery and equipment
Nurmo 10 years
other locations 7 years
Computer programs 5 years
Other long-term assets 10 years

Shares of listed companies included in the Group's fixed assets are valuated at acquisition cost. On 31 Dec 2008, the bookkeeping value of such shares was EUR 31,913.66 and the current value EUR 82,907.30.

Foreign currencies

Items in foreign currencies have been noted as Finnish currency according to the exchange rate of the European Central Bank on the closing date. Realised exchange rate differences from foreign currency denominated loans are included in the financial items.

2 . NOTES TO THE BALANCE SHEET, EUR 1,000

2.1. INTANGIBLE AND TANGIBLE
ASSETS 31 Dec 2008 31 Dec 2007
Intangible rights
Acquisition cost 1 Jan 1,443 1,437
Increases 1 6
Decreases 0 0
Acquisition cost 31 Dec 1,444 1,443
Accumulated depreciation 1 Jan -1,256 -1,209
Depreciation on decreases 0 0
Depreciation for the accounting period -48 -47
Accumulated depreciation 31 Dec -1,304 -1,256
Book value 31 Dec 140 187
Other long-term expenditure
Acquisition cost 1 Jan 11,873 10,395
Increases 1,396 1,478
Decreases 0 0
Acquisition cost 31 Dec 13,269 11,873
Accumulated depreciation 1 Jan -6,572 -4,698
Depreciation on decreases 0 0
Depreciation for the accounting period -1,881 -1,874
Accumulated depreciation 31 Dec -8,453 -6,572
Book value 31 Dec 4,816 5,302
Intangible assets total 4,956 5,488
Tangible assets:
Land and water
Acquisition cost 1 Jan 2,182 2,147
Increases 0 35
Acquisition cost 31 Dec 2,182 2,182
Buildings and constructions
Acquisition cost 1 Jan 264,816 243,758
Increases 6,567 21,059
Decreases 0 0
Acquisition cost 31 Dec 271,383 264,816
Accumulated depreciation 1 Jan -102,970 -96,786
Depreciation on decreases 0 0
Depreciation for the accounting period -6,541 -6,184
Accumulated depreciation 31 Dec -109,510 -102,970
Book value 31 Dec 161,872 161,846
Machinery and equipment
Acquisition cost 1 Jan 238,942 205,347
Increases 25,569 33,595
Decreases 0 0
Acquisition cost 31 Dec 264,511 238,942
Accumulated depreciation 1 Jan -145,524 -130,310
Depreciation on decreases 0 0
Depreciation for the accounting period -17,403 -15,214
Accumulated depreciation 31 Dec -162,927 -145,524
Book value 31 Dec 101,584 93,418
Other tangible assets
Acquisition cost 1 Jan 1,182 1,102
Increases 114 80
Decreases 0 0
Acquisition cost 31 Dec 1,295 1,182
Accumulated depreciation 1 Jan -552 -476
Depreciation on decreases 0 0
Depreciation for the accounting period -77 -76
Accumulated depreciation 31 Dec -629 -552
Book value 31 Dec 666 630
Advance payments and acquisitions in progress
Acquisition cost 1 Jan 4,521 33,540
Changes +/- -1,643 -29,019
Acquisition cost 31 Dec 2,878 4,521
Tangible assets total 269,182 262,597
Non-depreciated acquisition cost of
machinery and equipment 101,584 93,418

The share of items other than production machinery and equipment is not significant in amount.

Ownership %
of the parent
Ownership %
of the parent
company company
2.2. INVESTMENTS 2008 2007
Group companies
Ab Botnia-Food Oy, Seinäjoki 100 100
A-Farmers Ltd, Seinäjoki 97.9 97.9
Atria Concept Oy, Seinäjoki 100 100
Atria Meat AB, Tukholma 100 100
Atria Finland Ltd, Kuopio 100 100
Atria-Invest Oy, Seinäjoki 100 100
Itikka-Lihapolar Oy, Seinäjoki 100 100
Kiinteistö Oy Tievapolku 3, Helsinki 100 100
Liha ja Säilyke Oy, Forssa 63.2 63.2
Atria Scandinavia AB, Sköllersta 100 100
Rokes Oy, Forssa 100 100
Suomen Kalkkuna Oy, Seinäjoki 100 100
AS Valga Lihatööstus, Valga 100 100
OU Atria, Tallinn 100 100
UAB Vilniaus Mesa, Vilnius 100 100
Associates
Best-In Oy, Kuopio 50.0 50.0
Foodwest Oy, Seinäjoki 33.5 33.5
Honkajoki Oy, Honkajoki 47.8 47.8
Finnish Meat Research Institute, LTK
co-operative, Hämeenlinna 40.7 40.7
Länsi-Kalkkuna Oy, Säkylä 50.0 50.0
Tuoretie Oy, Helsinki 33.3 33.3
2.3. RECEIVABLES 31 Dec 2008 31 Dec 2007
Long-term receivables
Receivables from group companies
Loan receivables
231,393 167,071
Short-term receivables
Loan receivables
Trade receivables
Other receivables
Accrued credits and deferred charges
441
110
17
9,061
441
312
7
1,826
Receivables from group companies
Trade receivables
Other receivables
Accrued credits and deferred charges
407
106,218
2,067
283
84,088
1,306
Total short-term receivables 118,321 88,262
Material items included in the accrued credits and
deferred charges:
- amortised interests
- exchange rate difference
of forward contracts
- amortised taxes
- other
Total
3,492
6,609
873
154
11,128
1,410
1,557
0
164
3,131
2.4. EQUITY 31 Dec 2008 31 Dec 2007
Share capital 1 Jan 48,055 39,258
Share issue 5 June 2007 0 7,650
Share issue 11 June 2007 0 1,148
Share capital 31 Dec 48,055 48,055
Share premium 1 Jan 138,502 138,502
Share premium 31 Dec 138,502 138,502
Treasury shares 1 Jan 0 0
Acquisition of own shares -542 0
Treasury shares 31 Dec -542 0
Restricted equity total 186,015 186,557
Invested unrestricted equity fund 1 Jan 110,228 0
Share issue 5 June 2007 0 95,850
Share issue 11 June 2007 0 14,378
Invested unrestricted equity fund 31 Dec 110,228 110,228
Retained earnings 1 Jan 71,568 60,229
Dividend distribution -19,787 -13,740
Retained earnings 31 Dec 51,781 46,489
Profit for the period 23,293 25,080
Retained earnings 31 Dec 75,074 71,568
Unrestricted equity total 185,301 181,796
Equity total 371,316 368,353
Calculation of funds appropriate for distribution as dividends
Retained earnings 51,781 46,489
Profit for the period 23,293 25,080
Treasury shares -542 0
Total 74,532 71,568
The breakdown of the share capital is as follows: 2008 2007
amount EUR amount EUR
A series shares (1 vote/share) 19,063,747 32,408 19,063,747 32,408
KII series shares (10 votes/share) 9,203,981 15,647 9,203,981 15,647
Total 28,267,728 48,055 28,267,728 48,055
2.5. ACCRUED APPROPRIATIONS 31 Dec 2008 31 Dec 2007
Depreciation difference 52,440 52,440
2.6. LONG-TERM BORROWED CAPITAL
Bonds
Loans from financial institutions
Pension fund loans
Total
80,000
181,146
14,300
275,446
90,000
39,896
0
129,896
Debts to group companies
Other long-term liabilities
46 55
Total long-term borrowed capital 275,492 129,951
Loans maturing later than in five years
Bonds
Loans from financial institutions
Other long-term liabilities
Total
2.7. CURRENT LIABILITIES
40,000
7,143
55
47,198
80,000
4,286
55
84,340
Bonds
Loans from financial institutions
Advance payments received
Trade payables
Other payables
Accruals and deferred income
Liabilities to group companies
Trade payables
Other payables
Accruals and deferred income
Total current liabilities
10,000
91,355
51
2,506
1,604
5,628
0
293
3
111,440
10,000
90,013
45
3,428
837
4,136
2
2,163
2
110,626
Material items included in accruals and
deferred income:
- amortisation of salaries and
social security payments
- share incentives
- personnel fund
- interest accruals
682
0
5
4,236
527
105
4
2,453
  • tax accruals 0 936 - others 707 113 Total 5,631 4,138

3. NOTES TO THE INCOME STATEMENT, EUR 1,000

1 Jan - 1 Jan -
31 Dec 2008 31 Dec 2007
3.1. NET SALES 46,503 40,991

The company's rental income is presented as net sales because it corresponds with the present nature of the company's operations.

3.2. OTHER OPERATING INCOME

Service charges to group companies
Service charges to others
Others
Total
2,311
2
85
2,398
2,252
0
82
2,334
3.3. PERSONNEL EXPENSES
Average number of employees
Clerical staff in Finland 10 7
Personnel expenses
Salaries:
CEO, Executive Vice President and
Deputy CEO and members of the Board 910 627
Members of the Supervisory Board 95 131
Other salaries 891 543
Total 1,896 1,300
Pension costs 659 291
Other staff-related expenses 156 97
Total 815 388
Personnel expenses total 2,712 1,689

Pension commitments of the members of the Board and CEO

The company's statutory pensions are defined contribution plans and have been arranged through an insurance company. The company has no pension commitments towards the CEO and members of the Board or the Supervisory Board.

3.4. DEPRECIATION AND IMPAIRMENTS

Depreciations of tangible and
intangible assets 25,950 23,396

Depreciation specification per balance sheet item is included in Section 2.1.

1 Jan - 1 Jan -
3.5. OTHER OPERATING EXPENSES 31 Dec 2008 31 Dec 2007
Other operating expenses
Including administration, marketing,
energy, cleaning, operational and other
costs as well as fees paid to auditors.
5,006 6,204
Fees paid to auditors
Auditing fees
126 102
Certificates and statements 0 12
Tax consulting 11 12
Other remunerations 2 171
Total 139 297
3.6. FINANCIAL INCOME
AND EXPENSES
Return on long-term investments
Dividend yield
From group companies 13,621 6,569
From other companies 88 185
Total 13,710 6,754
Other interest and financial income
From group companies 16,108 7,327
From other companies 40,683 2,821
Total 56,791 10,148
Interest expenses and other financial expenses
To group companies 25 152
To other companies 55,380 16,552
Total 55,405 16,704
Impairment on fixed assets investments
Impairment on group company shares 6,755 0
Financial income and expenses total 8,341 197
Interest expenses and other financial
expenses include exchange rate losses
(net) 927 1,160
3.7. EXTRAORDINARY ITEMS
Group contributions received 12,500 20,800
Group contributions paid -7,000 -850
Total 5,500 19,950
3.8. INCOME TAXES
Income taxes on operations 5,782 7,103

4. OTHER NOTES, EUR 1,000

31 Dec 2008 31 Dec 2007
4.1. SECURITIES GIVEN, CONTINGENT LIABILITIES AND
OTHER LIABILITIES
Contingent liabilities and other liabili
ties not included in the balance sheet
Guarantees
For group companies
72,533 86,931
Total 72,533 86,931
Leasing liabilities
Maturing within the next 12 months 0 1,675
Maturing later 0 9,697
Total 0 11,373

Signatures to the financial statements and annual report

Seinäjoki, 19 March 2009

Chairman

Auditor's note

A report on the audit performed has been issued today.

Seinäjoki, 19 March 2009

Eero Suomela Pekka Loikkanen Authorised Public Authorised Public Accountant Accountant

To the Annual General Meeting of Atria Oyj

Martti Selin Timo Komulainen

Tuomo Heikkilä Runar Lillandt

Ilkka Yliluoma Matti Tikkakoski President and CEO

We have audited the accounting records, the financial statements, the report of the Board of Directors and the administration of Atria Plc for the period 1.1.-31.12.2008. The financial statements comprise the consolidated balance sheet, income statement, cash flow statement, statement of changes in equity and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.

Responsibility of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the financial statements and the report of the Board of Directors and for the fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the fair presentation of the parent company's financial statements and the report of the Board of Directors in accordance with laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.

Auditor's Responsibility

Our responsibility is to perform an audit in accordance with good auditing practice in Finland, and to express an opinion on the parent company's financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. Good auditing practice requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements and the report of the Board of Directors are free from material misstatement and whether the members of the Supervisory Board and of the Board of Directors of the parent company as well as the Managing Director have complied with the Limited Liability Companies Act.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.

The audit was performed in accordance with good auditing practice in Finland. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion on the Consolidated Financial Statements

In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

Opinion on the Company's Financial Statements and the Report of the Board of Directors

In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.

Seinäjoki, 19 March 2009

Eero Suomela Pekka Loikkanen Authorised Public Authorised Public Accountant Accountant

Corporate Governance Principles

Atria Plc ("Atria" or the "company") is a Finnish public company, and the responsibilities and obligations of its governing bodies are determined by Finnish law. The parent company, Atria Plc, and its subsidiaries constitute the international Atria Group. The company is domiciled in Kuopio.

Responsibility for the administration and operations of Atria Group lies with the governing bodies of the parent, Atria Plc. These are the General Meeting, Supervisory Board, Board of Directors and the President and CEO.

Atria's decision-making and corporate governance are in compliance with the Finnish Companies Act, regulations applied to publicly quoted companies, Atria Plc' Articles of Association and Nasdaq OMX Helsinki Ltd's rules and guidelines. As of 1 January 2009, Atria shall also follow the Finnish Corporate Governance Code issued by the Securities Market Association on 20 October 2008 ("Corporate Governance Code"). The full Corporate Governance Code may be viewed at www.cgfinland.fi. In accordance with the Comply or Explain principle, the company departs from the recommendations of the Code as follows:

  • • The company has a Supervisory Board
  • • The Board of Directors is appointed by the Supervisory Board
  • • The term of members of the Board of Directors is three years
  • • The company has no audit committee The deviations and the reasons for

them are presented in more detail in the relevant sections.

General Meeting

The General Meeting is Atria Plc's supreme decision-making body. At the General Meeting, shareholders decide on the approval of the financial statements and the use of the profit shown on the balance sheet; discharging the members of the Board of Directors, of the Supervisory Board and the CEO from liability; the number of members on the Supervisory Board, their election and remuneration; and on the election of an auditor and the fees of the auditor.

Share classes

The company's shares are divided into KII and A series, which differ in terms of the voting rights carried by them. Each Series KII share entitles the holder to ten (10) votes at a General Meeting and each A share to one (1) vote.

Supervisory Board

As an exception to the recommendations and in accordance with Atria Plc's Articles of Association, the company has a Supervisory Board. Shareholders of the company representing more than 50% of the votes have expressed their contentment with the current model based on the Supervisory Board, because it brings a farreaching aspect to the company's operation and decision-making.

The Supervisory Board is elected by the General Meeting, and it consists of a minimum of 18 and a maximum of 21 members, who are elected for terms of three years. The Supervisory Board meets three times a year on average. The names and ownership data of the members of the Supervisory Board are available on the Atria website at www.atria.fi/Corporate Governance/Supervisory Board.

The duties of the Supervisory Board are specified in the Finnish Companies Act and Atria Plc's Articles of Association. The key duties of the Supervisory Board are to:

  • • Supervise the administration of the company by the Board of Directors and the CEO.
  • • Elect the members of the Board of Directors as well as decide which of the members shall act as the Chairman and Vice Chairman of the Board of Directors and decide on their remuneration.
  • • Issue instructions to the Board of Directors on matters that are of farreaching consequence or important in principle.

• Submit its statement on the financial statements and auditors' report to the Annual General Meeting.

Board of Directors

In accordance with the Articles of Association, Atria's Board of Directors shall have a minimum of 5 and a maximum of 7 members. As an exception to the recommendations and in line with the Articles of Association, the Supervisory Board elects the members of the Board of Directors as well as decides which of the members shall act as the Chairman and Vice Chairman of the Board of Directors and decides on their remuneration. Shareholders of the company representing more than 50% of the votes have expressed their content with the current practice, complying with the Articles of Association, whereby the Board of Directors is appointed by the Supervisory Board.

The term of office of a member of Atria's Board of Directors differs from the term of one year specified in the recommendations. As per the Articles of Association, the term of a member of the Board of Directors is three (3) years. Shareholders representing more than 50% of the votes have stated that the term of three (3) years is appropriate for the long-term development of the company and have not seen the need to shorten the term specified in the Articles of Association. The names and ownership data of the members of the Board of Directors are available on the Atria website at www.atria.fi/Corporate Governance/Board of Directors.

Duties of the Board of Directors

Atria's Board of Directors shall ensure the appropriate organisation of the company's administration, operations, accounting and supervision of asset management.

Atria's Board of Directors has adopted written rules of procedure for the duties of the Board, the matters to be dealt with, meeting practices and the decision-making procedure. According to these rules, the Board of Directors discusses and decides on significant matters related to the company's strategy, investments, organisation and financing. The rules of procedure lay down the following key duties for the Board of Directors:

  • • Approve the strategic goals and guidelines for the Group and business areas
  • • Approve the budgets and business plans for the Group and business areas
  • • Decide on the investment plan for each calendar year and approve major investments (exceeding one million euros)
  • • Approve major M&As and restructurings
  • • Approve the Group's operating principles for important areas of management and supervision
  • • Discuss and adopt interim reports and financial statements
  • • Prepare the matters to be dealt with at General Meetings and ensure that decisions are implemented
  • • Approve the audit plan of internal audit
  • • Appoint the CEO and decide on his or her remuneration and other benefits
  • • At the CEO's proposal, approve the hiring of his or her direct subordinates and the principal terms of their employment contracts
  • • Approve the organisational structure and the key principles of incentive programmes
  • • Monitor and evaluate the CEO's performance
  • • Decide on other matters that are important considering the size of the Group and are not part of the day-to-day operations, such as considerable expansion or contraction of business or other material changes in operations, as well as the sale and pledging of fixed assets
  • • Decide on other matters which, under the Finnish Companies Act, fall within the remit of the Board of Directors

Board committees

The committees of Atria's Board of Directors are the Nomination Committee and the Remuneration Committee. The Nomination Committee consists of the Chairmen of the Board of Directors and the Supervisory Board and one member of the Board of Directors. The purpose of the Nomination Committee is to find new members to the Board of Directors and make proposals to the Supervisory Board. The Nomination Committee also makes the preparations for the election of the CEO and Deputy CEO. All members of the Nomination Committee are independent of the company. The Committee met four (4) times in 2008.

The Remuneration Committee has two members. The Remuneration Committee consists of the Chairman and Vice Chairman of the Board of Directors. All members of the Remuneration Committee are independent of the company. The purpose of the Remuneration Committee is to prepare matters related to the remuneration of management and bonus schemes for employees. The Committee met two (2) times in 2008.

The Board of Directors has no audit committee; the duties of such committee are performed by the Board of Directors.

The committees have no autonomous decision-making power. Decisions are made by the Board of Directors based on the committees' preparations. The committees report on their work to the Board of Directors.

CEO

The company has a CEO in charge of managing the company's operations in accordance with the instructions and orders issued by the Board of Directors, as well as informing the Board of Directors of the development of the company's operations and financial performance. The CEO also sees to the organisation of the company's day-to-day administration and ensures reliable asset management. The CEO is appointed by the Board of Directors, which decides on the terms of the President's employment.

The personal and ownership data of the CEO are available on the Atria website at www.atria.fi/Corporate Governance/Board of Directors. The CEO's ownership data can be found in the section "Insider Register".

Management Team

Atria Group has a Management Team chaired by the CEO. The Management Team assists the CEO in planning the operations and in operational management.

The names of the members of the Management Team are available on the Atria website at www.atria.fi/Corporate Governance/Atria Group Management Team. The ownership data of the members can be found at www.atria.fi/ Corporate Governance/Insider Register/ Members and Share Ownership.

Risk management

The purpose of risk management is to support the execution of Atria's strategy and the achievement of targets, as well as to secure business continuity. Atria Group's risk management goals, principles, responsibilities and powers are specified in its Risk Management Policy, the aim of which is to contribute to the identification and understanding of risks and to ensure that management receive relevant and sufficient information in support of business decisions. In compliance with the policy, the Group has in place an operating model for risk identification and reporting in all business areas. The model forms an integral part of annual strategic planning. In reporting, Atria's risks are divided into four categories: business risks, operational risks, financial risks and accident risks.

Internal audit and control

The operating principles of internal control are confirmed by the company's Board of Directors. The Board of Directors is in charge of the publication of interim reports and financial > statement releases, and the CEO of reporting to the Board of Directors. The Group's operations are divided into four independently accountable business areas, whose accountable executives report to the Group CEO.

The purpose of internal audit is to ensure that all of the company's business areas comply with the Group's rules and guidelines and that the operations are managed effectively. The results of internal auditing are documented, and they are discussed with the management of the audited entity before the report and suggestions for improvement are presented to the Group CEO.

The entities to be audited are defined in cooperation with Group management. The audit plan is also based on annual Group-wide risk assessment. The company's Board of Directors approves the annual plan for internal audit.

Insider policy

Atria complies with Nasdaq OMX Helsinki Ltd (Helsinki Stock Exchange) Guidelines for Insiders confirmed on 2 June 2008. Atria's Board of Directors has approved insider guidelines for the company, which include instructions for permanent and project-specific insiders. The company's guidelines have been distributed to all insiders.

Auditing

In accordance with the Articles of Association, the company shall have at least one (1) and no more than four (4) regular auditors; the number of deputy auditors shall not exceed this. The auditors and deputy auditors shall be public accountants or firms of independent public accountants authorised by the Central Chamber of Commerce. The term of office of the auditors shall end at the conclusion of the next Annual General Meeting following their election.

In 2008, Atria Plc's Annual General Meeting elected Authorised Public Accountants Eero Suomela and Pekka Loikkanen as the company's regular auditors.

Supervisory Board

since
Chairman of the Supervisory Board
Ari Pirkola (born 1956), Farmer 2008
Member of the Supervisory Board
as from 25 June 2008 2008
Ahti-Pekka Vornanen (born 1959),
Farmer, graduate of a commercial institute 1999
Until 25 June 2008
Vice Chairman of the Supervisory Board 2007
Esa Kaarto (born 1959), Farmer, M.Sc. (Agric.)
Member of the Supervisory Board 2002
Members of the Supervisory Board
Juha-Matti Alaranta (born 1965), Farmer 2000
Mika Asunmaa (born 1970), Farmer 2005
Lassi-Antti Haarala (born 1966), Farmer,
Bachelor on Natural Resources 2006
Juhani Herrala (born 1956), Farmer 2002
Henrik Holm (born 1966), Farmer 2002
Pasi Ingalsuo (born 1966), Farmer,
Bachelor on Natural Resources 2004
Veli Koivisto (born 1952), Farmer 2006
Olavi Kuja-Lipasti (born 1957), Farmer, M.Sc. (Agric.) 1997
Teuvo Mutanen (born 1965), Farmer 2007
Seppo Paavola (born 1962), Farmer 2006
Pekka Parikka (born 1951), Farmer 2008
Heikki Panula (born 1955), Farmer, M.Sc. (Agric.) 2005
Pentti Pirhonen (born 1954), Farmer 1999
Jouni Sikanen (born 1962), Farmer 2006
Juho Tervonen (born 1950), Farmer 2001
Timo Tuhkasaari (born 1965), Farmer 2002
Ahti-Pekka Vornanen (born 1959), Farmer 1998
graduate of a commercial institute

The following members of the Supervisory Board of Directros are due to resign Henrik Holm, Juha-Matti Alaranta, Esa Kaarto, Juho Tervonen, Pentti Pirhonen, Seppo Paavola and Jouni Sikanen.

Auditors proper

Eero Suomela, Authorised Public Accountant Pekka Loikkanen, Authorised Public Accountant

Deputy auditors

PricewaterhouseCoopers Oy, firm of Chartered Public Accountants Markku Tynjälä, Authorised Public Accountant

First row CEO Matti Tikkakoski (left), Vice Chairman of the Board Timo Komulainen, Chairman of the Board Martti Selin, Chairman of the Supervisory Board Ari Pirkola and Ilkka Yliluoma. Second row Vice Chairman of the supervisory Board Esa Kaarto (left), Tuomo Heikkilä and Runar Lillandt.

Board of Directors

since since
Chairman of the Board Members of the Board of Directors
Martti Selin (born 1946), Farmer 2005 Tuomo Heikkilä (born 1948), Farmer 1996
Runar Lillandt (born 1944), Agricultural Counsellor 2003
Vice Chairman of the Board 1996 Matti Tikkakoski (born 1953), CEO, B.Sc. (Econ.) 2006
Timo Komulainen (born 1953), Ilkka Yliluoma (born 1946), Agricultural Counsellor 2002
Farmer, Bachelor of Natural Resources
Member of the Board of Directors 1993 Secretary of the Board of Directors
Sirpa Huopalainen (born 1965), Master of Laws 2008

ATRIA G RO U P 'S or g ani s ation an d TOP M ANA G E M ENT 31 d e c e mb er 2008

1. Matti Tikkakoski

President and CEO B.Sc. (Econ.), born 1953 Employed since 2006

2. Juha Gröhn

Deputy CEO Executive Vice President, Atria Finland and Baltic Director, Primary Production M.Sc. (Food Sc.), born 1963 Employed since 1990

3. Juha Ruohola

Executive Vice President, Atria Russia Director, Procurement and Investments M.Sc. (Agr. & For.), eMBA, born 1965 Employed since 1999

4. Chister Åberg

Executive Vice President, Atria Scandinavia Director, Concept & Deli born 1966 Employed since 2006

5. Tomas Back CFO M.Sc. (Econ.) born 1964 Employed since 2007

  1. Merja Leino

Group Vice President, Quality and Product Safety Director, Convenience Food and Poultry Business PhD. (Phil.) born 1960 Employed since 1996

7. Jarmo Lindholm

Group Vice President, Product Development and Product Group Management M.Sc. (Econ.) born 1973 Employed since 2002

8. Pasi Luostarinen

Group Vice President, Brand Management Director, Cold Cuts M.Sc. (Econ.) born 1966 Employed since 2000

9. Jukka Mäntykivi

Group Vice President, Steering, Logistics and IT M.Sc. (Sos. Sc.) born 1961 Employed since 2001

10. Seija Pietilä

Group Vice President, Human Resources M.Sc. (Econ.) born 1973 Employed since 2006

Management Team 2008

Financial reporting

The aim of Atria's investor reporting is to ensure that the market has at all times correct and sufficient information available to determine the value of Atria's share. In addition the aim is to provide the financial markets with versatile information, based on which those active in the capital markets can form a justified image of Atria as an investment object.

Atria has determined a silent period in its investor relation communication that is three weeks prior to the publication of interim and annual reports. During this period Atria gives no statements on its financial status.

Investor information

Atria publishes financial information in real time on its web pages at www.atria.fi/konserni. Here you can find annual reports, interim reports and press and stock exchange releases. The company's largest shareholders and insiders as well as their holdings are updated regularly to the web pages.

Atria Plc's IR contact person: Hanne Kortesoja Communication and IR manager Tel: + 358 6 416 8763 Fax +358 6 416 8440 E-mail: [email protected]

Stock Exchange releases

Atria Plc published a total of 72 stock exchange releases in 2008. The releases can be found on the Atria Group website at www.atria.fi/Latest news/Corporate Releases/Release Archive 2008.

Stock exChange release subjects 2008

  • 27 Feb. Atria Group Plc's financial statement bulletin 1 January - 31 December 2007
  • 03 Mar. Annual summary of stock exchange releases 2007
  • 31 Mar. Atria to restructure operations in Finland
  • 3 Apr. Invitation to the annual general meeting
  • 15 Apr. Atria Group Plc's Annual Report 2007 has been published
  • 15 Apr. global meat market situation slows Atria's profit growth in Finland
  • 29 Apr. Decisions taken by Atria Group Plc's Annual General Meeting
  • 6 May Situation in global meat market hampered Atria's performance
  • 26 May Atria's collective redundancy consultation completed
  • 2 Jun. Atria to acquire Ridderheims specialist in delicatessen

  • 23 Jun. The Swedish Competition Authorities have approved Atria and AB Ridderheims Delikatesser transaction

  • 25 Jun. Atria Plc election of the Board members and the Chairmen
  • 26 Jun. Atria to expand in Estonia through acquisition of two meat processing companies
  • 21 Jul. The Estonian Competition Board has approved Atria's Estonian transactions
  • 25 Jul. Delays in the opening of Atria Russia's new meat product plant
  • 31 Jul. Atria to expand to Moscow and acquire meat processing company OOO Campomos
  • 1 Aug. Atria boosts its growth through acquisitions in Sweden and Estonia, situation in the global meat market hampered performance

  • 18 Sep. Atria Scandinavia to restructure its operations

  • 18 Sep. Atria Plc to purchase company's own shares
  • 7 Oct. The Russian Competition Authorities have approved Atria and OOO Campomos transaction
  • 24 Oct. Improved meat market situation - satisfactory performance by Atria
  • 18 Dec. Atria Plc's Interim Reports in 2009 and preliminary report 2008
  • 18 Dec. Atria Plc conveys own shares as reward payment
  • 1 Oct.–31 Dec. 2008 Pohjola Pankki Oyj: Purchase of treasure shares, 48 Company Announcements

Analysts

Analysts from at least the following firms of brokers have monitored Atria Group as an investment object during 2008:

FIM Corporation

Jaakko Tyrväinen Tel. +358 9 613 46 376 E-mail: [email protected]

Carnegie Investment Bank AB Tel. +358 9 618 711 E-mail: [email protected]

Evli Pankki Oyj Tuomo Kangasaho Tel. +358 9 4766 9635 E-mail: [email protected]

SEB Enskilda Jutta Rahikainen Tel. +358 9 616 287 13 E-mail: [email protected]

Pohjola Bank Plc

Matias Rautionmaa Tel. 010 252 4408 E-mail: [email protected]

Nordea Markets

Rauli Juva Tel. +358 9 165 59944 E-mail: [email protected]

eQ Pankki Oy Jarkko Soikkeli Tel. +358 9 6817 8654 E-mail: [email protected]

Handelsbanken Capital Markets

Maria Wikström Tel. +358 10 444 2425 E-mail: [email protected]

Sofia Pankki Oyj Martin Sundman Tel. +358 10 241 5166 E-mail: [email protected]

Danske Markets Equities

Kalle Karppinen Tel. +358 10 236 4794 E-mail: [email protected]

E. Öhman J:or Fondkommission AB Elina Pennala Tel. +358 9 8866 6043 E-mail: [email protected]

ICECAPITAL Securities Ltd.

Robin Santavirta Tel. +358 9 6220 5092 E-mail: [email protected]

c onta c t d etail s

Atria Plc

Head office: Atriantie 1, Nurmo P.O. Box 900, FI-60060 ATRIA, FINLAND Tel. +358 20 472 8111 Fax +358 6 416 8440

Atria Group administration: Läkkisepäntie 23 FI-006300 Helsinki, FINLAND Fax +358 9 774 1035

Atria Finland

Telephone number for all of Atria Finland's offices: +358 20 472 8111.

Atria Finland Ltd. Head office Atriantie 1, Nurmo P.O. Box 900, FI-60060 ATRIA, FINLAND Fax +358 6 416 8440

Invoicing address: P.O. Box 1000 FI-60061 ATRIA, FINLAND

[email protected] www.atria.fi

Customer Service Center: Varastotie 9, Seinäjoki P.O. Box 900, FI-60060 ATRIA, FINLAND Fax +358 6 416 8202

Financial Administration: Vaasantie 1, Seinäjoki P.O. Box 900, FI-60060 ATRIA, FINLAND Fax +358 6 416 8207

Commercial Functions: Läkkisepäntie 23 FI-006300 Helsinki, FINLAND Fax +358 9 774 1035

Other locations:

Yrittäjäntie 60 FI-03600 Karkkila, FINLAND Fax +358 9 387 2732

Rahikkatie 95 FI-61850 Kauhajoki, FINLAND Fax +358 6 231 3377

Ankkuritie 2 P.O. Box 147, FI-70101 Kuopio, FINLAND Fax +358 17 262 7776

Pusurinkatu 48 FI-30100 Forssa, FINLAND Tel. +358 3 41 541 Fax +358 3 415 4244

A-Logistics Ltd Atriantie 1, Nurmo P.O. Box 900, FI- 60060 ATRIA, FINLAND Fax +358 6 416 8038

Tesomanvaltatie 24 FI-33310 Tampere, FINLAND Fax +358 3 345 1297

Atria-Tekniikka Oy Atriantie 1, Nurmo P.O. Box 900, FI-60060 ATRIA, FINLAND Fax +358 6 416 8038

Atria Scandinavia

ATRIA SCANDINAVIA AB Office: Augustendalsvägen 19 P.O. Box 1229 SE-131 28 NACKA STRAND, SWEDEN Tel. +46 19 300 300 Fax +46 19 230 022

SE-697 80 SKÖLLERSTA, SWEDEN Tel. +46 19 300 300 Fax +46 19 230 022

Drottninggatan 14 SE-252 21 HELSINGBORG, SWEDEN Tel. +46 19 300 300 Fax +46 42 38 14 61

[email protected] www.atria.se

Atria Concept Oy Office: Augustendalsvägen 19 P.O. Box 1229 SE-131 28 NACKA STRAND, SWEDEN Tel. +46 19 300 300 Fax +46 8 556 306 60

Atria Foodservice AB Drottninggatan 14 SE-252 21 HELSINGBORG SWEDEN Tel. +46 19 300 300 Fax +46 42 38 14 61

Augustendalsvägen 19 P.O. Box 1229 SE-131 28 NACKA STRAND SWEDEN Tel. +46 19 300 300 Fax +46 8 556 306 60

Vindkraftsvägen 5 SE-135 70 STOCKHOLM, SWEDEN Tel. +46 19 300 300 Fax +46 8 566 490 99

Atria RETAIL AB Office/production: SE-697 80 SKÖLLERSTA, SWEDEN Tel. +46 19 300 300 Fax +46 19 230 022

Other locations: Skogholmsgatan 12 P.O. Box 446 SE-201 24 MALMÖ, SWEDEN Tel. +46 19 300 300 Fax +46 40 224 273

Grosshandlarvägen 1 P.O. Box 42075 SE-126 13 STOCKHOLM, SWEDEN Tel. +46 19 300 300 Fax +46 8 685 4263

Hjälmarydsvägen 2 P.O. Box 1018 SE-573 28 TRANÅS, SWEDEN Tel. +46 19 300 300 Fax +46 140 573 97

Maskingatan 1 SE-511 62 SKENE, SWEDEN Tel. +46 19 300 300 Fax +46 320 20 58 10

Svetsaregatan 6 SE-302 50 HALMSTAD, SWEDEN Tel. +46 19 300 300 Fax +46 35 17 26 00

Johannelundsgatan 44 P.O. Box 44069 SE-506 03 BORÅS, SWEDEN Tel. +46 19 300 300 Fax +46 33 16 95 59

Östanåkravägen 2 SE-340 36 MOHEDA, SWEDEN Tel. +46 19 300 300 Fax +46 472 726 61

Tryckerigatan 12 SE-571 34 NÄSSJÖ, SWEDEN Tel. +46 19 300 300 Fax +46 380 153 75

Prästkragens väg 9 P.O. Box 188 SE-132 26 SALTSJÖ-BOO, SWEDEN Tel. +46 19 300 300

Falbygdens Ost AB Göteborgsvägen 19 SE-521 30 FALKÖPING, SWEDEN Tel. +46 515 77 66 00 Fax +46 515 77 66 80

Sardus Lätta Måltider AB Hanholmsvägen 25 P.O. Box 6015 SE-600 06 NORRKÖPING, SWEDEN Tel. +46 19 300 300 Fax +46 11 36 67 00

Speditionsvägen 25 SE-142 50 SKOGÅS Tel. +46 19 300 300 Fax +46 8 771 59 89

Hagvägen 5 SE-831 48 ÖSTERSUND, SWEDEN Tel. +46 19 300 300 Fax +46 63 852 31

Ridderheims

Delikatesser Södra Långebergsgatan 12 SE-421 32 Västrä Frölunda, SWEDEN Tel. +46 31 722 5500 Fax +46-31-722 5505

3-Stjernet A/S

Langmarksvej 1 DK-8700 HORSENS, DENMARK Tel. +45 76 28 25 00 Fax +45 76 28 25 01

Atria Russia

OOO PIT-PRODUCT

pr. Obukhovskoy Oborony 70 RUS-192029, Saint-Petersburg, RUSSIA Tel. + 7 812 33-66-888 Fax + 7 812 346 6176 [email protected] www.pitproduct.ru

OOO MPZ Campomos

Ryabinovaya street, 32 RUS-121471 Moscow, RUSSIA Tel. +7 495 448 6704 Fax +7 495 4448 4503

Atria Baltic

AS Valga Lihatööstus

Metsa str.19 EE-68206 Valga, ESTONIA Tel. +372 76 79 900 Fax +372 76 79 901 [email protected] [email protected] www.atria.ee

AS Wõro Kommerts Vilja 14b, 65605 Võru, ESTONIA Tel. +372 782 8830 Fax +372 782 8836 www.woro.ee [email protected]

AS Vastse-Kuuste Lihatööstus

Vastse-kuuste vald Pölva maakond 63601 Vastse-Kuuste, ESTONIA Tel. +372 7970 216 Fax +372 7970 215 www.vklt.ee [email protected] [email protected]

Printed annual reports can be ordered by e-mail at [email protected] or by phone from +358 6 416 8763. Atria Plc's annual report 2008 is published on the Internet at www.atria.fi/konserni.

Concept and production: Selander & Co. Communication Agency Design: Vanto Design Oy

Pictures: Studio Sami Helenius (portraits), Atria Plc, iStockphoto Printing house: Hämeen Kirjapaino Oy, 4/2009

Atria Plc P.O. Box 900, FI-60060 ATRIA, FINLAND Tel. +358 20 472 8111 Fax +358 6 416 8440 www.atria.fi

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