Annual Report • Apr 6, 2011
Annual Report
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Towards Product Leadership
Atria Plc is a powerfully growing and internationalizing 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. Atria's1) net sales in 2010 was EUR 1,301 million and it employed an average of 5,812 per-Finland, Atria Scandinavia, Atria Russia and Atria Baltic.
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.
| CEO's review2 | |
|---|---|
| Atria´s brands4 | |
| Atria's strategy 6 |
| Atria Finland12 | |
|---|---|
| Atria Scandinavia 18 | |
| Atria Russia 22 | |
| Atria Baltic26 |
| Principles30 | |
|---|---|
| Financial responsibility32 | |
| Environmental responsibility 33 | |
| Atria's quality-, environment | |
| and product safety systems 35 | |
| Social responsibility38 |
| and annual report42 | ||
|---|---|---|
| Corporate Governance Code106 | |
|---|---|
| Atria Plc's administration108 | |
| Atria Group's organisation | |
| and management team113 | |
| Investor relations and analysts121 | |
| Contact details 122 |
| 2010 | 2009 | |
|---|---|---|
| Net sales, EUR million | 1,300.9 | 1,316.0 |
| EBIT, EUR million | 9.8 | 27.5 |
| EBIT, % | 0.8 | 2.1 |
| Profit before tax, EUR million | 0.3 | 16.5 |
| Earnings per share, EUR | -0.18 | 0.25 |
| Equity ratio, % | 40.2 | 39.7 |
| Gross investments, EUR million | 46.2 | 33.0 |
| Gross investments of net sales, % | 3.5 | 2.5 |
| Average personnel | 5,812 | 6,214 |
Net sales
Ebit
Earnings per share
Gross investments
Equity ratio
Average personnel
| 2010 | 2009 | |
|---|---|---|
| Net sales, EUR million | 767.8 | 781.9 |
| EBIT, EUR million | 30.7 | 42.9 |
| EBIT, % | 4.0 | 5.5 |
| Average personnel | 2,089 | 2,222 |
| 2010 | 2009 | |
|---|---|---|
| Net sales, EUR million | 391.6 | 405.2 |
| EBIT, EUR million | 13.9 | 10.0 |
| EBIT, % | 3.5 | 2.5 |
| Average personnel | 1,205 | 1,394 |
Share in Group net sales
In Atria´s market area, in the Baltic Sea region and in European parts of Russia, there are approximately 60 million consumers.
1) Includes customers of hotel, restaurant and catering (Food Service) enterprises as well as public administration customers. 2) Production discontinued in 2010
In Atria´s market area, in the Baltic Sea region and in European parts of Russia, there are approximately 60 million consumers.
| 2010 | 2009 | |
|---|---|---|
| Net sales, EUR million | 129.2 | 113.0 |
| EBIT, EUR million | -27.9 | -9.8 |
| EBIT, % | -21.6 | -8.7 |
| Average personnel | 2,048 | 2,003 |
| 2010 | 2009 | |
|---|---|---|
| Net sales, EUR million | 35.0 | 37.5 |
| EBIT, EUR million | -3.7 | -12.6 |
| EBIT, % | -10.5 | -33.6 |
| Average personnel | 470 | 595 |
2010 was disappointing from the point of view of financial performance. A positive aspect is that Atria strengthened its competitiveness.
The set growth and profitability targets were achieved only partially in markets characterised by weak purchasing power. Net sales reached the previous year's level. However, EBIT fell clearly short.
The slight decline (approx. 1%) in net sales was caused by a decrease in sales in the Scandinavian and Finnish business areas. In Sweden, Atria discontinued part of its business, and in Finland, sales volumes decreased due to the effects of the industrial dispute in the spring. In addition, the direct and indirect effects of the dispute weakened Atria Finland's earnings markedly. However, the weaker profitability of Atria Group was mainly due to the loss-making operations of Atria Russia. It was caused by weak demand, increased raw material costs and tougher price competition. The losses were worsened by exceptionally high non-recurring costs.
The targets related to securing and improving Atria's sustainable competitiveness were achieved for the most part. In all of its business areas, the company continued to implement efficiency improvement programmes to improve its operational cost efficiency and slim down its cost structure. The results of the programmes were particularly visible in the improved earnings made by Atria Scandinavia and Atria Baltic. The systematic aim of Atria's new strategy, which maps out goals up to 2013, is to focus on improving the company's competitiveness and profitability.
Atria was well positioned to achieve profitable growth after the difficult recession year of 2009. The operational environment proved, however, surprisingly challenging for us, as well as for most companies in the food industry.
Although consumers' purchasing power began to strengthen in all of our business areas at the end of 2010, recovery was slower than expected throughout the year. The demand for daily consumer goods remained low, which weighed down the increase in the demand for fresh food products and caused significant price competition, both between the chains in the consumer goods retail trade and within our industry. As a consequence of price competition, the consumer sales value of the product groups we represent decreased in practically all of our countries of operation.
By far Atria's most challenging operational environment was Russia, where total sales of meat products in the consumer goods retail trade decreased by approximately 10 per cent and prices remained low. At the same time, the price of the meat raw material used by Atria Russia increased by over 25 per cent. Raw material costs could not be passed on to consumer prices swiftly due to intense price competition. The contraction of the value of demand and sales was similar within Atria Baltic in Estonia.
The Swedish consumer goods market was expected to grow by 4 per cent, but it only grew by slightly over 2 per cent. The meat product markets represented by Atria Scandinavia grew even less than this, and their growth stood at approximately 1 per cent.
In Finland, the overall demand for
food recovered, especially towards the end of the year. However, the average price of food in the food trade decreased by nearly 5 per cent during the year. The challenges of low demand and low prices were, however, small compared to the difficulties caused by the industrial dispute in the spring. These caused – directly or indirectly – most of the decrease in Atria Finland's net sales and EBIT, which fell by EUR 14 million and EUR 12 million, respectively.
Although Atria's earnings were affected by the loss-making operations in Russia, in other business areas operational profitability developed favourably considering the circumstances.
Atria Scandinavia's EBIT grew by approximately 40 per cent, and in the last quarter, the company nearly reached an EBIT margin of 6 per cent. The improvement in profitability was fuelled by the clear strengthening of the Swedish krona. Atria Baltic's operations continued to be in the red. However, its operating loss decreased by over 30 per cent compared to the previous year. Atria Finland's EBIT, which was in excess of EUR 30 million, was a good performance in unusual conditions.
Atria's favourable profitability development was supported by many major restructuring operations and efficiency improvement programmes. In Sweden, we discontinued the production of consumer packed meat due to its low profitability. In Russia, we transfer a large part of our meat product production to the centralised Gorelovo plant in St Petersburg, which was opened in the spring. We expect the measures to generate annual cost
savings of approximately EUR 6 million by mid-2012. In Estonia, we transferred the operations of the Ahja production plant to a centralised plant. In Finland, we launched a well-planned efficiency improvement programme to transfer bovine slaughtering to the Kauhajoki unit, which will be a very competitive plant, even by the highest European standards. We expect this arrangement to generate cost structure savings amounting to EUR 6 million per year. This efficiency improvement programme was approved at the beginning of 2011. The new Kauhajoki bovine slaughterhouse will be completed by the end of 2012.
All these arrangements improved – and will continue to improve – our cost efficiency and structure even if they did not reach their full potential in terms of earnings, due to the weak market conditions.
Atria's financial development focuses on significantly improving the profitability of our international companies in the coming years. This is the core message
of our renewed strategy, which maps out goals up to 2013. The strategy is presented in this Annual Report, starting on page 6.
Under the new strategy the focus is on strengthening Atria's financial position and balance sheet structure. Efforts will focus on raising the company's equity ratio and return on equity quite significantly. At the same time net gearing should be brought down correspondingly. The financial position will be enhanced, first and foremost, by improving profitability and cash flow. The company will also release assets from the balance sheet through a reduction of working capital.
I would like to thank Atria employees and our partners for their excellent work for the benefit of our customers, our shareholders and our company.
Seinäjoki, 18 March 2011
Juha Gröhn President and CEO, Atria Plc
"There are two opposite directions of development in Atria's operational environment, and the balance of these directions will determine the extent of Atria's growth and profitability in 2011.
A positive development is the slight increase in consumer demand in Finland, Sweden, Denmark and Estonia. Demand will recover in Russia as well, although more slowly than in the aforementioned countries. With higher demand, Atria is wellplaced for organic growth. The growth in our net sales is, however, weighed down by the smaller sales volumes in Sweden due to the discontinuation of the production of consumer packed meat, as well as by the challenging situation in Russia with respect to demand and prices.
The alarmingly sharp increase in the prices of crops, feed and other raw materials is an unfavourable development. If raw material costs are not passed on to consumer prices swiftly enough and to an adequate extent, and if there is a large oversupply of meat, the profit-making capacity of Atria and the entire meat processing industry will deteriorate dramatically. If this threatening scenario is averted, Atria is well-placed for significantly better earnings."
Strong regional and international brands are an essential element of Atria's growth strategy. Their importance is further emphasised in the new strategy, which maps out Atria's goals up to 2013 (see page 6). By concentrating product development and marketing investments on strengthening its own brands, Atria has good
preconditions to develop products with a higher degree of processing and more profitable price levels. Strong brands make it significantly easier to develop and launch new product groups and concepts, as well as new business models. Atria's goal is to place its brands among the two best-known brands in all of its business areas.
Atria Finland's leading brand is Atria, one of the best-known and most valued food brands in Finland. In Finland, Atria is the market leader in many of its product groups. Its total market share in the consumer goods retail trade is approximately 25 per cent.
By roots and nature, Atria Baltic's brands in Estonia are local brands that, with the centralisation of the consumer goods retail trade, have grown into national brands. The most important brands are Maks & Moorits and Wõro, whose grill sausages are market leaders in their segment.
Atria Scandinavia has an extensive selection of brands. The best-known brand in Sweden is Sibylla, which is also Atria's most international brand. With a market share of approximately 30 per cent, the Ridderheims and Falbygdens delicatessen products, which are marketed by the Atria Deli business, are the market leaders in their respective product groups in Sweden.
Atria Russia's brands are Pit-Product and CampoMos. With a market share of approximately 20 per cent, the Pit-Product brand is the market leader in its product groups in St Petersburg's consumer goods retail trade. CampoMos' market share in Moscow's centralised consumer goods retail trade is four per cent.
The Board of Directors of Atria Plc approved in spring 2010 a Group strategy that strives to enhance the company's value systematically and with longterm effects. The implementation of this strategy, designed to cover the years until 2013, has already begun.
The most important financial goal under the new strategy is to significantly improve the profitability of Atria's international operations. The strategy also aims to secure and strengthen Atria Finland's profitability, which is already good.
Besides improving profitability, the new strategy promotes company growth. This means predominantly organic growth, and only complementary acquisitions will be considered. In the previous strategy period Atria's growth outside Finland was mostly based on acquisitions and capital investments.
Under the new strategy the focus is on strengthening Atria's financial position and balance sheet structure. Efforts will focus on raising the
company's equity ratio and return on equity quite significantly. At the same time net gearing should be brought down correspondingly. The financial position will be enhanced, first and foremost, by improving profitability and cash flow. The company will also release assets from the balance sheet through a reduction of working capital.
Atria's production and operative structures are seen to support the profitability improvement goals primarily from a cost-efficiency perspective.
To improve its profitability and secure its growth, Atria aims for an increasingly
strong market position in all its business areas.
The strengthening of the market position relies on the scale of Atria's operations, operational efficiency and comprehensive product portfolio. These attributes allow the company to develop its product groups across all price categories.
Product leadership will be the guiding principle in the ongoing development of product groups and operations. This is the profitable growth strategy which Atria will use to gain long-term competitive advantage and stand out from its competitors.
Atria's product leadership model is a genuinely consumer-driven business model in which the development
of operations and product groups is primarily guided by consumer needs, not the needs of retail operators or Atria's other customers. Consumer needs and wishes guide the management and development of product groups as well as their pricing. When supply is genuinely customerdriven, it also improves retail business opportunities in a whole new way.
To be able to make its operations and supply customer-driven, Atria is significantly upgrading its consumer research efforts in all business areas.
In line with the product leadership model, Atria is concentrating its R&D and marketing efforts on strengthening its own brands. Strong brands put Atria in an excellent position to develop
products with a higher degree of processing and more profitable price levels. The goal is to develop entirely new, innovative product groups, concepts and business models.
Atria's product leadership model will initially be applied in two product groups. One of these is cold cuts, which offers opportunities for developing product ranges even across geographical boundaries. The other is the Sibylla fast food range, a product group whose market position Atria aims to considerably strengthen. Sibylla is Atria's most international brand and has excellent expansion potential.
Product leadership is an essential element of Atria's profitable growth strategy. Atria uses it to gain long-term competitive advantage and stand out from its competitors.
Atria's goal is to be the number one choice for consumers and customers in fresh foods in the Baltic Sea region and European parts of Russia.
To put the vision into practice Atria will apply its profitable growth strategy, with which the new 2010– 2013 strategy has been aligned. The strategy dictates that Atria looks for growth in the traditional meat and meat processing market and also more extensively in the entire food sector, particularly in the fresh food segments.
Atria's primary aim is to grow organically, but complementary acquisitions are also possible.
Atria's profitable growth strategy has been adapted to continuing intense changes in the business environment. The international environment is governed by the following dynamics in particular:
In Atria's Finnish and Scandinavian markets the quantitative growth
in meat consumption is negligible, the consumer goods retail trade is concentrated and the share and growth of private label products is considerable.
In Russia, particularly in large cities like Moscow and St Petersburg, overall demand for meat products is expected to grow considerably over the medium and long term. In the Baltic Sea area long-term growth expectations are also promising, although the total volume of the market is modest compared with Atria's other markets. The concentration of retail trade is only just beginning in Russia and the Baltic states.
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, the consumer goods retail trade, are in the process of becoming more international
Product leadership is Atria's new competitive strategy applied to gain long-term competitive advantage and stand out from competitors.
To achieve optimal success, product leadership requires consumer-driven operations and clear segmentation of product lines. A second prerequisite for sustained success is a comprehensive and balanced offering, which Atria is well positioned to achieve as one of the leading operators in the sector.
and concentrated.
Despite the increasingly international nature of the industry, culinary preferences are still largely determined by national culture.
The average margins of meat industry products are lower than in many other industries, and, in the long run, price levels of products will be harmonised both on the EU level and globally.
The food industry is historically less sensitive to business cycles than most other industries.
• 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.
region and in European parts of Russia.
MISSION
| Role of segment | Category | Key success factors |
|---|---|---|
| • Create value | • Most of cold cuts | • Continuous innovation |
| • Platform for innovation | • Higher-end sausages | • Very clear and compelling |
| • Spearhead for international expansion | • Higher-end of convenience | brand promise |
| • Strong value brand in Finland | • Large volume products with | • Continuous innovation |
| • Providing scale & visibility towards customer |
strong brand promise | • Large scale |
| • Needed for SC optimization: | • Largest volume products with little | • Efficient supply chain |
| Maximize utilization | innovation potential | • High-volumes |
| • Lower quality PL | • "Right-sized" supply |
In Finland, Atria is the market leader in many of the product groups it represents and it is the largest player in the meat processing market. In Sweden, the company is the second largest player in the market, and it has a sound bridgehead position in Denmark. In Russia, Atria is the market leader in its segment in the consumer goods retail trade in the St Petersburg area and its position in Moscow has strengthened. In Estonia Atria is the second largest player in the market.
Atria has strong and well-known brands, the significance of which is further highlighted in the product leadership model of the new strategy. Due to its strong brands Atria is well positioned to continue launching new products and product groups and to aim for growth, particularly in product groups with a higher degree of processing and better profitability.
Knowing consumers' purchasing and culinary habits is essential for success in the food industry. Good customer knowledge is already a significant strength of Atria's, and the new strategy means even more investments to promote it. Atria strengthens its customer partnerships by developing
new, innovative and profitable co-operation models with each consumer goods retail chain.
In order to meet the challenges presented by the changing nature of the consumer goods retail trade and business environment, Atria has implemented extensive programmes to increase the efficiency of its production and operations. Experience with increasing production efficiency and good control over change processes and the supply chain are Atria's core strengths in all business areas.
| Target | Achieved | |
|---|---|---|
| • EBIT | 5% | 0.8% |
| • Equity ratio | 40% | 40.2% |
| • Share of international operations | 50% | 42.1% |
| • Return on equity | 12% | -1.0% |
| • Distribution of dividends | ||
| (of the profit for the period) | 50% | -132.9% |
In 2010 Atria did not acquire new companies but aimed for organic growth and stabilising the operations of previous acquisitions and achieving improved profitability in accordance with the company strategy.
In Russia, Atria confirmed its partnership agreements with the Danish company Dan Invest A/S concerning pork production. The agreement gave Atria a 26 per cent holding in the Russian company OOO Dan Invest, owner of two pork farms. The estimated annual production volume is 188,000 pigs by 2013. The total value of the project is about EUR 40 million. Atria is investing EUR 3 million in the project now and a further EUR 2 million when an agreed production volume has been achieved. Atria also signed a supply agreement with the production company.
| Events | Impact | |
|---|---|---|
| Atria Finland | 2009: efficiency improvement programme covering all operations | • annual savings EUR 5 million • personnel reduction 125 man-years |
| 2010–2012: decision to concentrate bovine slaughtering in Kauhajoki |
• annual savings EUR 6 million • personnel reduction 120 man-years |
|
| Atria Scandinavia | 2009: sale of the salad and sandwich business and EUR 5 million investment in increasing the efficiency of the Atria Deli business |
• total personnel reductions 201 man-years |
| 2010: discontinuation of consumer packed meat production and investments in production automation |
• total personnel reductions 79 man-years | |
| Atria Russia | 2009: efficiency improvement programme covering all operations | • annual savings EUR 4 million • total personnel reductions 150 man-years |
| 2010: transfer of most of the meat product production of the Moscow and Sinyavino plants to the new, centralised Gorelovo plant in St Petersburg |
• annual savings EUR 6 million (starting from Q2/2012) • total personnel reductions 300 man-years |
|
| 2009: concentration of slaughtering, cutting and meat product production at the Valga plant |
• annual savings EUR 1.4 million • total personnel reductions 100 man-years |
|
| Atria Baltic | 2010: shutdown of the Ahja plant and concentration of production at the Valga and Vastse-Kuuste plants |
• annual savings EUR 1 million • personnel reduction 40 man-years |
• Atria merges the operations of its Lithuanian subsidiary UAB Vilniaus Mesa and the Estonian company Valga Lihatööstus.
• Atria made no new acquisitions or sales. Instead, it focused on developing operations and improving profitability.
The direct and indirect consequences of the production break caused by the industrial dispute in spring 2010 significantly weakened Atria Finland's growth and performance prospects. The company's net sales fell by nearly 2 per cent and operating profit fell by 28 per cent. Profitability was also weakened by the rise in feed prices, which increased the costs of meat production. Additionally, an increase in imports put pressure on consumer prices.
The food industry strike and related lock-out in April and May directly and indirectly weakened Atria Finland's volume and earnings development. The labour dispute that affected the majority of Finland's food industry operators stopped Atria Finland's production operations for 10 days in Kauhajoki, Kuopio and Nurmo, with the exception of the chicken slaughterhouse.
Atria Finland's net sales fell by EUR 14.1 million or 1.8 per cent to EUR 767.8 million. In the first half of 2010, net sales decreased by EUR 25.6 million, which was 6.7 per cent less compared to the corresponding period the year before. Sales volumes recovered in the last quarter, when net sales grew by approximately three per cent yearon-year.
Falling volumes and the other indirect consequences of the production break significantly weakened Atria Finland's profitability. The company's EBIT decreased by EUR 12.2 million to EUR 30.7 million. This was 28.4 per cent down on the previous year. Profitability weakened, especially in early summer when Atria's sales structure was unfavourable due to problems in production. The decreased average price of the product range also reduced profitability.
Despite the volume and net sales reduction caused by the production break, Atria Finland's cost efficiency remained high and the company slimmed down its cost structure according to plan.
• Subsidiary focusing on meat purchasing.
Net sales
2006 2007 2008 2009 2010*
*) The 99,8% delivery reliability figure does not include the impacts of the production break in spring 2010
The first product group used by Atria Finland to pursue product leadership as per the new strategy is the cold cuts product group. Atria is the market leader in the product group in Finland with a share of over 25 per cent, and the Atria brand has been the quality leader in the product group since the beginning of the 2000s. The size of the cold cut market increased steadily throughout the 2000s until 2010, when growth subsided slightly, along with demand generally. In terms of value, the market size is about EUR 400 million1).
Atria Finland's major investment in the higher price category of the cold cuts product group is the new Kulinaari product family. During its launch phase, the family included four completely new
1) Sources: Nielsen Market Trends, FFDIF statistics
The production break overloaded Atria Finland's pig and bovine slaughtering, which caused a significant increase in stock levels. The clearing of frozen stocks was slowed down primarily by a significant increase in the amount of cheap imported meat.
Even though the growth in import to Finland slowed towards the end of the year, the increase on the previous year was significant. Pork imports increased by 21% to 28.4 million kilos and beef imports by 14% to more than 17 million kilos. The share of imported pork as a proportion of total pork consumption increased by two percentage points, to 15 per cent. The share of imported beef as a proportion of total beef consumption also increased by two percentage points, to a total of 18 per cent. 1)
In addition to cheap imported meat, the rise in feed prices increased
Source: Suomen Gallup Elintarviketieto, 2011.
cost and price pressure on Atria Finland and its meat producers. This was due to the significant increase in the price of cereal and protein raw materials internationally. For example, the price of feed barley almost doubled in 2010. (See page 17.)
Even though the total demand in the retail and Food Service sectors recovered towards the end of the year and the overall demand for food was up from a year earlier, the total value of the food market fell.
The average price of food in the retail trade was 4 per cent lower than in the previous year. The average price of beef was down 7 per cent and the price of beef fillet dropped by 10 per cent. The average price of pork and pork products was 4 per cent down from the previous year. 1)
Prices varied greatly throughout the year. In summer and early autumn, for example, imports of German pork,
which had increased by a third, put pressure on the average market price of pork and on the average consumer price of Finnish pork products.
The consumer prices of product groups represented by Atria Finland also declined, although not as drastically as the average prices of meat products. In Atria's own estimate the market for cold cuts and poultry products declined in value by some 2.5 per cent while sausage sales remained unchanged. The convenience foods market saw a mild growth of less than 2 per cent in terms of value.
The lower-than-anticipated overall demand for fresh food products, the availability issues caused by the production break and the pressure on the price level from cheap imported meat weakened the profit-making capacity of the entire sector and gave rise to occasional bouts of fierce price competition.
products and two that had already been on the market before. The best hams and roasts are used as raw materials for the products. The products have a meat content of at least 95 per cent, and they are manufactured using traditional recipes and methods. The products do not contain monosodium glutamate or substances listed as allergens by the EU. All Kulinaari products come in next-generation recyclable paperboard containers. On top of each container there is a sliding lid that can be easily opened and closed. Thanks to this, the product remains well preserved in the fridge after being opened.
14
To secure its profitability Atria Finland restrained from getting involved in the fiercest price battles, which affected its market share in some product sub-segments. The company's overall market share in the retail trade remained strong, at approximately 25 per cent by its own estimate.
The poultry group progressed especially well with a sales growth of almost 15 per cent. Successful product launches and well-timed product and marketing investments increased Atria's market share, as the new EU fresh poultry marketing standard came into force on 1 May 2010.
Overall, meat consumption in Finland increased by some 3 per cent, with beef and poultry leading the way. Pork consumption also saw a slight increase. Total production volume, on the other hand, remained at the previous year's level, but pork production fell 1.3 per cent. The increase in consumption only applied to imported pork.
Atria's pork processing volume fell relatively more than national production, at about 2 per cent. The most important single reason for this fall was the poor profitability of pork farms, which further deteriorated as feed and cereal prices rose steeply near the end of the year. Unprofitability has led to pork farm closures.
The processing volumes of beef remained at the previous year's level although freight slaughtering fell slightly. Chicken processing volumes grew markedly, by almost 15 per cent.
Despite the challenging procurement situation, Atria maintained its procurement shares. Atria is Finland's leading pork and beef processor with a 43 per cent share of the market.
Export volumes and value remained at 2009 levels despite the import restrictions in Russia. Atria was able to find replacing markets, which meant a bigger role for Group subsidiaries. The profitability of exports was good, as anticipated.
At the end of the year, Atria Finland published a programme of substantial improvements to be made to the effectiveness and competitiveness of its beef production and the entire beef chain. The price competitiveness of domestic production and processing of beef has been affected by increased imports.
In line with the efficiency improvement programme approved in early 2011, Atria's bovine slaughtering and cutting operations will be centralised at a large new facility to be built in Kauhajoki, which is large even on European standards. This EUR 26 million investment is due to be completed by the end of 2012. Atria will subsequently close down the operations of its Kuopio unit. The efficiency improvement programme is expected to generate annual cost savings of EUR 6 million.
"The faster-than-anticipated recovery of the Finnish economy is positively reflected in demand for consumer goods, which also means that the overall demand for fresh food products is expected to grow by more than in 2010. The flip side is the unusually severe pressure to raise the consumer prices of fresh food products, since the costs of primary production are likely to continue rising for at least the first half of the year. Retail price levels are naturally of crucial importance for Atria Finland's profitability, but we will also continue systematically improving the cost-efficiency of operations. Our organic growth will be supported by new products aligned with our new strategy, which will be accompanied by substantial marketing inputs."
Executive Vice President, Atria Finland business area
1) Overall demand for meat products
2) Average consumer price of meat and meat products
3) Total market for food products represented by Atria
4) Figures for 2009, Source: Finnish Grocery Trade Association (FGTA)
Overall production and
Price index: mixed feed for pigs as well as feed barley and fattening pig producer price in Finland 2006–2010 (Index: 2005=100)
240 220 200 180 160 140 120 100 80 60 2006 2007 2008 2009 2010 2011 Mixed feed for cattle (excl. calves)
Feed barley producer price
Beef producer price
Oilseed rape and turnip producer price
• Poultry consumption will increase by nearly 4%
Finland's meat processing markets, source: Suomen Gallup Elintarviketieto Oy, 2011
17
Atria Scandinavia's profitability improved significantly. The company's EBIT grew by nearly 40 per cent on the previous year. The positive development is mainly due to the massive reorganisation of production, which enabled the company to slim down its cost structure and improve the cost efficiency of operations. The strengthening of the Swedish krona also improved the company's profit-making capacity. Net sales, on the other hand, decreased by just over 3 per cent. This primarily stemmed from discontinued operations. The company's organic growth was hampered by reduced sales in some product groups in the Swedish fresh foods market, where recovery has been slower than expected.
Atria Scandinavia's net sales fell for the second year in a row following the closure of unprofitable operations.
In 2010, net sales fell by 3.4 per cent year-on-year to EUR 391.6 million. Net sales in krona fell by 12.3 per cent. The decrease was mainly due to the discontinuation of the production of consumer-packed meat in summer 2010 as well as the divestment of the Lätta Måltider salad and sandwich business in summer 2009. The annual volumes of these two businesses were significant. Net sales of consumer-packed meat amounted to about EUR 45 million and net sales of Lätta Måltider stood at approximately EUR 25 million.
Atria Scandinavia's profitability developed very positively. The company's EBIT grew by 39 per cent to EUR 13.9 million. Despite the decrease in net sales, operative EBIT remained at the previous year's level in the first half of the year. In the second half performance improved significantly. In the fourth quarter, the company reached 5.7 per cent EBIT with the same net sales as during the corresponding period of the previous year.
The trend was supported by the strengthening of the Swedish krona by over 10 per cent against the euro. Thanks to this, the prices of imported raw materials sank, which in turn improved sales margins. However, the improved performance was primarily due to the reorganisation that the company used to slim down its cost structure and improve its cost efficiency.
Atria Scandinavia's business environment in Sweden remained very challenging despite a slight recuperation in the economy. The consumer goods
• Supplier of meat products and convenience food for the grocery industry.
• Supplier of meat products and convenience food for foodservice-sector.
• Supplier of fresh delicatessen products to the grocery industry and foodservice-sector.
• Developer and supplier for the Sibylla fast food concept.
• Supplier of cold cuts for the grocery industry, primarily in Denmark.
| core product groups 2010 | Market share | Market position |
|---|---|---|
| Sausages, Sweden | 13% | 2 |
| Traditional home meals, Sweden | 23% | 1 |
| Cold cuts, Sweden | 17% | 2 |
| Cold cuts, Denmark | 14% | 2 |
| Convenience food, Sweden | 17% | 2 |
| Fast food/Sibylla, Sweden | 14% | 2 |
Sibylla is Atria's most international brand. Atria utilises it to implement its product leadership strategy at a concept level across geographical boundaries. There are good growth opportunities for the Sibylla concept in all of Atria's business areas. However, the most significant growth opportunities are in Russia's major cities as well as in Eastern European EU countries, such as Poland, Hungary, Slovakia and the Czech Republic.
The Fast Food segment grew steadily in the late 2000s, when the demand for many other fresh food segments decreased due to financial uncertainty. For example, in Finland and Sweden, the estimated annual growth of the fast food market was approximately five per cent. In Russia and the Baltic countries, the annual growth
market grew by just 2.5 per cent instead of the predicted 4 per cent. The increase in meat product sales in terms of value was even lower than this at 1.1 per cent.1) The weak demand for meat products resulted in tightened market share competition in the consumer goods retail trade, where hard discount stores increased their share.
Market position remained strong
Despite the weak overall demand for fresh food products and increased domestic and international competition, Atria Scandinavia's total market position in Sweden remained almost unchanged and in Denmark it strengthened.
Atria Scandinavia's decision to give up its consumer-packed meat production notably reduced Atria Retail's sales to the retail branch, but at the same time it clarified the sales structure and improved the function's profitability. Private label products sold steadily and Atria Scandinavia maintained its position as the leading supplier of traditional home meals ("Husmanskost").
Atria Foodservice's sales to the restaurant and catering branch started to pick up in the second half of the
year. At the same time, it was able to strengthen its position with new supply contracts, the effects of which will be evident in the sales for 2011.
The sales of Ridderheims and Falbygdens products in Sweden declined slightly due to low overall demand. However, Atria Deli's position as the market leader in fresh delicatessen products remained strong. In exports, demand for Atria Deli products was particularly good in Finland, where sales grew by more than 50 per cent.
In Denmark, the position of the 3-Stjernet brand as the second largest player in the cold cuts market strengthened due to increased sales.
International growth of the Sibylla fast food concept continued to be particularly strong in Eastern European countries. In Poland, for example, Atria Concept delivered approximately 240 new Sibylla outlets to service stations, which raised the number of Sibylla outlets in the country to a total of 560. In Russia, 200 new Sibylla outlets were opened, resulting in a total number of 390 outlets in Russia.
Significant reorganisations Atria Scandinavia carried out several restructuring and efficiency improvement measures which resulted in improved cost efficiency and competitiveness.
At the very beginning of the year, Atria Scandinavia announced the discontinuation of the production of consumer-packed meat, and it shut down the Årsta production plant in Stockholm during the summer. Also the Tyresö plant located in the Stockholm region was shut down and production was transferred to the Skene plant. The production of delicatessen products was also transferred there from Gothenburg. The Gothenburg plant was turned into a delivery centre for delicatessen products. As part of the rationalisation of operations, co-operation in meat cutting was launched between the Malmö production plant and KLS Ugglarps, a subsidiary of Danish Crown.
Atria Scandinavia's operations were also streamlined and integrated through significant logistics and IT investments. The target was to get all Swedish operations under a single ERP system in 2011.
1) Grocery Manufacturers of Sweden, 2011
was as much as 15 per cent, depending on the area.
The international growth of the Sibylla fast food concept is based on both developing the offering of the existing sales outlets and establishing new ones. The majority of them are sales outlets based on a franchise agreement and operating at service stations or in other shopping spaces.
1) Consumer goods retail trade market 2) Total growth of the product groups represented by Atria in the consumer goods retail trade 3) Total market for food products represented by Atria
"Atria Scandinavia's key target in 2011 is to further improve profitability. The massive reorganisations create a good basis for this in terms of operations and cost structure. Although the Swedish fresh food segment is not expected to grow much as a whole, we see significant growth potential in sub-segments with a higher degree of processing, especially in premium products. The market position of private label products in Sweden appears to be declining, which also creates a potential demand for our strong brands. Our international growth will be boosted by Atria Deli's strong Ridderheims and Falbygdens brands and the Sibylla fast food concept, which will be given more attention in line with our product leadership strategy."
Executive Vice President, Atria Scandinavia business area until 18 March 2011
Increased marketing and sales efforts improved the net sales of Atria Russia and strengthened its position in the consumer goods retail trade in both Moscow and St Petersburg. At the same time the profitability of operations declined significantly. A decrease in overall demand, increased price competition and higher raw material costs caused the operations to make a loss. Non-recurring goodwill impairments brought the result down by more than EUR 10 million.
Atria Russia's net sales increased by 14.3 per cent to EUR 129.2 million. Growth was boosted by increased sales, strengthening of the Russian rouble and price increases implemented at the end of the year. Calculated in roubles, the growth was 3.9 per cent.
Atria Russia's profitability was weak and the result was very much in the red. The economic recession continued from the previous year and weakened the earnings potential decisively. Because of the recession, overall demand for meat products declined by approximately 10 per cent 1) and demand shifted towards lower cost product groups and products. The contracting market also toughened price competition. The price level rose towards the end of the year, but not sufficiently to compensate for the rise in raw material prices and the general inflation rate of 9 per cent 2).
A steep rise in the price of meat raw material on global markets started
during the second half of the year. This eroded Atria Russia's profitability as well as its competitiveness. The price rose from the starting level at the beginning of the year by approximately 26 per cent. Almost 90 per cent of the meat raw material used by Atria Russia is imported meat. Atria was able to pass on only part of the increased raw material costs to sales prices.
Atria Russia's result was also significantly strained by increased marketing costs and fixed costs and the non-recurring goodwill impairment. Atria invested heavily in marketing, especially in Moscow, which increased marketing costs by approximately EUR 3 million. The start-up of the new production plant in Gorelovo increased fixed costs and depreciation by approximately EUR 3 million.
As a result of goodwill impairment testing in Atria Russia, the company decided to record impairments totalling EUR 10.8 million allocated to goodwill. These non-recurring entries did not affect the cash flow.
Atria Russia continued investments launched in 2009 to enhance the recognition rate and market position of the CampoMos brand, particularly in the Moscow region. Thanks to these investments the market share of the brand rose to 4 per cent in Moscow's retail-chain based consumer goods trade 3). The sales of CampoMos cold cuts sold in re-closable packages increased
1) Source of market information: Business Analytica 2010, unless otherwise indicated. 2) Source: Bank of Finland, BOFIT, 2011 3) Atria's own estimate
In 2009–2010, Atria Russia made record investments in renewing and marketing its CampoMos brand, particularly in the Moscow region, which is the largest market area of the food industry in Russia by far. Furthermore, citizens' purchasing power there is nearly twice as high as in the rest of Russia. The value of the meat and meat product markets is about EUR 2.7 billion. The corresponding figure for the St Petersburg region is about EUR 0.9 billion. Moscow's enormous market also has a significantly high number of players in the meat processing industry. In some product groups, Atria has 50–60 local competitors. Atria has practically no international competitors in the Moscow market.
In line with its product leadership strategy, Atria Russia looks for growth through differentiation. It strives to differentiate itself from its competitors through the quality of its products and its innovation. Re-closable cold cut packages are an example of a very successful innovation. Atria was the first company to launch them in Russia.
significantly. Thanks to promotion campaigns, the recognition of the brand increased in the Moscow region to as high as 95 per cent 4).
Atria's market position in the St Petersburg region remained strong. In terms of value, the market share in St Petersburg's entire consumer goods retail trade rose to over 20 per cent, making Atria the clear market leader in its segment. The biggest increase was seen in the frankfurter sub-segment, where sales in terms of volume and value increased by nearly 10 per cent in an otherwise declining market.
To increase sales and strengthen its pioneering position as a producer of fresh convenience foods, Atria launched entirely new products in the Russian market. These are cooked minced beef products such as meat balls, hamburger patties and kebabs. The products are sold in similar modified atmosphere boxes as in the Finnish market.
Atria Russia's competitive environment became significantly tighter both in the St Petersburg and Moscow regions. Because of falling overall demand, overcapacity in the segment only grew worse. This resulted in tough price competition which caused severe profitability and liquidity problems for some companies operating in the sector.
Some of Atria Russia's investments in primary production, crucial for its competitiveness, were ready to start production. In accordance with the shareholder agreement signed in 2009, Atria owns 26 per cent of the Russian company OOO Dan Invest, which invests approximately EUR 40 million in two pork farms (see page 10). The
investment is progressing according to plan, and the estimated production volume of the pork farms is to grow in stages to 188,000 slaughter pigs in 2013. The Campofarm pork farm, fully owned by Atria, was already completed and in full use in 2010. The annual volume of the farm is 55,000 slaughter pigs. Slaughtering has been contracted out and the meat is cut at the Campomos plant in Moscow.
The significance of the new massscale pork farms for Atria Russia's competitiveness was further heightened when the Russian government announced new food import quotas and self-sufficiency targets. With its investments in primary production, Atria Russia will reach 90 per cent selfsufficiency in pork.
Atria Russia's EUR 70 million logistics centre and production facility investment was finalised when the new Gorelovo, St Petersburg meat product plant started production in early summer. The logistics centre has been operating since 2008. The production capacity of the Sinyavino plant located in St Petersburg was also increased in the important cured sausages product segment.
To improve its cost efficiency, Atria Russia decided at the end of the year to move the production of some of its meat products from the Moscow and Sinyavino plants to the new Gorelovo plant in St Petersburg. The arrangement enables Atria to increase the productivity of its entire production structure and make maximum use of the efficient western process technology at the new Gorelovo facility.
The measures to improve efficiency will reduce the number of Atria's personnel by about 300. The annual cost savings are estimated at EUR 6 million, which will be fully realised by spring 2012.
After these measures, logistics operations, meat cutting and pizza production will still remain in Moscow. The Sinyavino plant will concentrate mainly on the production of cured sausages. If the food market recovers and leads to increased demand, the production of meat products at the Moscow plant can be re-commissioned to increase production capacity.
"The overall demand for the food products represented by Atria Russia is expected to pick up alongside the general economic recovery in Russia, and the value of the market is likely to grow at least on a par with the rate of inflation. The massive development and efficiency improvement measures we have taken will improve our cost efficiency and thereby our profit-making capacity. We are implementing profitable growth in line with the product leadership strategy."
Executive Vice President, Atria Russia business area
1) Overall demand for meat products in consumer goods retail trade 2) Total market of food segments in which Atria operates
The Russian president approved a plan in February 2010, according to which Russia will strive to reinforce the position of domestic food production and reduce dependency on foreign imports.
With its new food strategy, which is part of the national security strategy in force until 2020, Russia will strive to raise its level of self-sufficiency in all major foodstuffs. The self-sufficiency target for cereal is 95%, for sugar 80%, for vegetable oil 80%, for dairy products 90% and for meat and meat products 85%.
The continued decline in demand for and prices of daily consumer goods in Estonia had an adverse effect on Atria Baltic's growth and performance prospects. Net sales did not reach the level seen in 2009 and EBIT was negative. Profitability improved, however, thanks to intensive efficiency improvement measures.
The continued decline in consumer purchasing power in Estonia decreased overall demand in the product groups represented by Atria Baltic. For example, sales of cooking sausages in the consumer goods retail trade fell by almost 10 per cent and cold cuts by approximately 5 per cent 1).
Due to weakened overall demand and decreased market shares in meat products Atria Baltic's net sales fell by 6.7 per cent to EUR 35.0 million.
The decreased price level was the main element that hampered Atria Baltic's profitability. The price level was weighed down by reduced overall demand and the resulting stiff price competition between companies in the meat industry and retail chains. The decline in the price level was also fuelled by increased imports of inexpensive meat and meat products. For example, average prices of cooking sausages in the consumer goods retail trade fell by 6 per cent and cold cuts by 4 per cent. Atria's preconditions for profit-making were also weakened by the rise in the price of cereals and feed, which raised producer prices for beef and pork and costs at Atria's own pork farms.
Despite the fallen prices Atria Baltic was able to improve its profitability. The operating loss (excluding goodwill impairment losses) decreased by 31.5 per cent to EUR 3.7 million.
In order to improve its competitiveness and profitability, Atria Baltic carried out an efficiency improvement programme, which slimmed down the company's cost structure and measurably improved operational cost efficiency.
The most significant actions were the shutdown of the Ahja plant and the concentration of production to the Valga and Vastse-Kuuste plants. Additionally, the company launched a programme to considerably reduce costs and increase cost efficiency in all areas of its business process.
The market shares of Atria Baltic's key product groups narrowed slightly in the declining market. Atria retained its market position as the second largest player in the important cold cuts market with a share of just under 20 per cent. In the first half of the year, Atria lost some ground in sausages, although rising sales in the second half of the year compensated for the loss. Atria is the market leader in the grill sausages subsegment with a share of over 30 per cent. Sales of consumer-packed meat grew from the previous year.
1) Source of market information: AC Nielsen 2010, unless otherwise indicated
"Once Estonia's economy takes a turn for the better, the contraction of the meat market is also expected to end. At this point the demand for more expensive product segments is also expected to pick up, which is key to our profitability. On the other hand, the cost level rise in primary production poses a challenge to our price competitiveness. The cost efficiency improvement measures we have launched and our investments in sales and product development will create the preconditions for profitable growth in the expanding market."
Executive Vice President, Atria Baltic business area
In line with its product leadership strategy, Atria Baltic strives to boost its growth by investing in strengthening its own brands. The best-known brands are Maks & Moorits and Wõro, which are among Estonia's 10 strongest food brands, including all international brands1). The Wõro brand has the widest product range of all the Atria Baltic's brands. The marketing of fresh meat – both packaged and unpackaged – focuses on the Maks & Moorits brand. The VK brand is used to market ham and other meat products for consumers who appreciate high quality.
1) Source: TNS Emor, 2010
1) Overall demand for meat products in the modern consumer goods retail trade 2) Total market for food products represented by Atria
Atria's new strategy states that product leadership is the guiding principle in the development of product groups and operations. Atria uses product leadership to gain long-term competitive advantage and stand out from its competitors.
Atria's product leadership model is a genuinely consumer-driven business model in which the development of operations and product groups is primarily guided by consumer needs, rather than the needs of retail operators or Atria's other customers. In order to make its operations and supply more consumer-driven, Atria stepped up its research and product development investments in 2010. The Group's research and product development operations focus on researching consumer behaviour and market data. In addition, Atria participates in applied research in the areas of product and packaging technology and food science.
Atria's research and product development operations form an integrated function along with marketing. At the Group level, Atria is developing a joint R&D process and joint operating models between the business areas. Each business area has, however, its own operative research and marketing unit, because the business is mainly regional and culinary preferences are rather culture-specific.
In 2010, Atria launched over 400 new products. This figure, which is considerably higher than that of the previous year, also includes new
packages and new products related to product support. The significance of new products is further emphasised in the new strategy, and efforts are made to considerably increase their share in both net sales and EBIT.
In addition to research and development operations, Atria's product leadership model emphasises marketing. As product leadership is Atria's differentiation tool, innovation and uniqueness are significant factors in marketing communication. Marketing communication resourcing is also a critical success factor.
In 2010, Atria Russia had the highest relative increase in marketing communications. The main investment target was the CampoMos brand. However, also the sales of the Pit-Product brand were boosted through major additional investments. The effects of Atria Finland's new marketing communications guidelines and the considerably higher investments will become visible in 2011.
Atria complies with the updated guidelines for responsible food marketing communications, which are based on the principles of responsible marketing communications of the Confederation of the Food and Drink Industries of the EU (CIAA). These illustrate the approach at the EU level and serve as a guideline for the voluntary self-regulation of companies.
Additional information on Atria's responsible marketing is at: www.atriagroup.com/en/ corporateresponsibility/ socialresponsibility/ ResponsibleMarketingCommunications
| Main campaign: | Key target: | Key means: | Key achievements: | |
|---|---|---|---|---|
| Finland | a perfect Finnish summer day, Wilhelm |
strengthening the image as the leading supplier of the grilling season |
afternoon newspapers, periodicals, television, radio, online banners and image service on Facebook and |
the image targets were met, but the same cannot be said for all sales targets as the production break weakened the delivery reliability of certain product groups. |
| Scandinavia | Lithells ASADO | increasing sales and product awareness |
the grilling party at Kungsträdgården Park in Stockholm, sales material, TV spots, announcements in the specialised press, competitions online and in social media, as well as our own iPhone application |
the campaign aroused the interest of the media and received an honourable mention in the Chark-SM competition. |
| Russia | Pit-Product frankfurters | 25% sales growth | extensive use of mass media and various advertising channels, such as special advertising hoardings, lotter ies and competitions |
sales grew by 35 per cent, exceeding the original targets by 10 per cent. |
| Estonia | Wõro frankfurters | increasing sales | TV, POS, radio, PR | sales grew by approximately 200 per cent. |
Campaigns:
Atria Finland, Atria Wilhelm campaign
Atria Baltic, Wõro campaign
Atria's corporate responsibility policy 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 dining table. Atria's good food is produced in a responsible and ethical manner; it is of high quality and it is safe. Good food leads to a better mood and added value for all of Atria's stakeholders.
Atria aims to secure its current and future operating conditions through responsible operations. In accordance with the principles of sustainable development, Atria takes into account the economic, social and environmental aspects of all its business areas.
Atria's corporate responsibility policy is embodied in its day-to-day work with stakeholders. Atria uses various surveys, inquiries and analyses, as well as meetings and personal interaction, to gain extensive knowledge of its stakeholders' expectations.
In addition to the information provided in this Annual Report, corporate responsibility at Atria is discussed in the Corporate Responsibility Report and on the company website at www.atriagroup.com/en/ corporateresponsibility www.atria.fi/atria yrityksena/ yritysvastuu (in Finnish)
The key stakeholders have been defined on the basis of Atria's business strategy. The most important stakeholder groups are
Other stakeholders include subcontractors, local communities, educational institutes and the media.
Atria's corporate responsibility policy is managed on two levels. A Grouplevel workgroup determines the main principles of corporate responsibility and ensures that the business areas' development programmes support the common goals. Steering groups in the business areas analyse the expectations that the most significant and active stakeholders of the business area have concerning Atria's corporate responsibility, and initiate development programmes.
The CR programme sums up the principles of responsible operations In autumn 2010 Atria launched an extensive and long-term corporate responsibility programme, Atria's Handprint, which is visible in and impacts the entire Atria food processing chain. This programme will assist Atria as it continues to build upon its long history of corporate responsibility, which began nearly 110 years ago.
The Atria's Handprint programme gathers the principles, practices, projects and results of Atria's responsible operations and transparently provides extensive information on them. The programme has been integrated into the Group's management practices and a member of the management team has been put in charge of the programme.
Under the Atria's Handprint
programme, responsible operations will initially be developed and measured in the following seven sectors:
By developing all of these sectors in a balanced manner, Atria aims to become a leading company in responsible food production in its areas of operation. Responsible practices will be developed and expanded with various development projects, which vary from one business area to the next. The development projects bring together established practices and also create entirely new operating methods.
The symbol of Atria's Handprint programme is the Handprint logo. The logo speaks of the personal contribution – handprint – of each person participating in the Atria food processing chain, and communicates responsibility with its colours.
Atria published its set of ethical guidelines, the Atria Code of Conduct, in autumn 2010. The guidelines reflect Atria's values and practices, and guide the Group's operations towards sustainable development and continuous improvement. Atria's Code of Conduct lays out the company's expectations for the behaviour of its employees, as well as the employees' ethical and legal basic responsibilities when they act as Atria's representatives.
The Atria Code of Conduct comprises five sectors:
The Code of Conduct applies to all Atria employees, partners and clerical employees, as well as members of the management team, Board of Directors and Supervisory Board. The Code covers all business areas and also the partnerships and joint ventures in which Atria has a majority holding and/ or positions of responsibility.
The Atria Code of Conduct has been distributed to every Atria employee as an insert of Atria's Group magazine, Our Atrium. The issue takes a comprehensive look at the code and the significance of responsibility in each individual's work.
At the end of 2010 Atria published its first stand-alone Corporate Responsibility Report. The report describes the impact Atria has on its operating environment and on society as a whole, as well as how Atria takes corporate responsibility into account in its current and future operations. The report describes Atria's key events, results and impacts in 2009 from the point of view of corporate responsibility. As the basis for its reporting, Atria uses the international Global Reporting Initiative (GRI) guidelines, in which corporate responsibility is viewed from the economic, social and environmental perspective according to a threepillar model. The 2010 Corporate Responsibility Report will be published in the summer of 2011.
Atria Code of Conduct
Clockwise from top left Therese Sundman, Anna Schreil, Ulrik Jismyr ja Tiina Kinnunen
By financial responsibility, Atria refers to meeting its financial targets in such a way that it can generate economic added value to the shareholders and other stakeholders on a long-term basis and increase well-being in the surrounding communities and society.
In order to reach the financial targets, Atria's business must first and foremost be profitable. This is supported by good competitiveness and efficiency, together with business risk management. The company's financial goals and their achievement in 2010 are presented on page 10.
For Atria, economic responsibility also means complying with healthy and responsible business practices. Corporate responsibility, decisionmaking and administration are subject to national legislation and regulations, as well as the Corporate Governance Code for Finnish listed companies, which Atria has followed from the beginning of 2009.
Profitability and efficiency create the preconditions for bearing social and environmental responsibility. Atria believes that socially and environmentally responsible conduct also works in the other direction by strengthening economic responsibility.
Net sales and other operating income EUR 1,309 mill.
Primary production in particular Purchasing and other expenses EUR 998 mill.
Personnel Wages and salaries EUR 181 mill.
Taxes and social security expenses EUR 52 mill.
Shareholders Dividends 1) EUR 7 mill.
EUR 57 mill.
Lenders Financial expenses EUR 11 mill.
Growth investments Gross investments, Research and development
1) Proposal of the Board of Directors
A prospering environment is essential to Atria and its entire food production chain. One of the key elements of Atria's environmental responsibility is taking into consideration the natural environment at each stage of operations.
Atria is committed to monitoring the environmental impact of its operations, products and services and to identifying the significance of the environmental impact of each stage of the operating chain.
What this means in practice is reducing the direct environmental impact of practical operations and identifying the indirect environmental impact of the entire operating chain.
Atria's environmental management vision is to be an efficient expert in environmental matters such that environmental management supports the business and promotes sustainable development. A key objective of Atria's environmental management is the controlled and sparing use of natural resources. Continuous improvement means continuous monitoring of energy and water consumption, packaging material and waste volumes, and using all of these inputs more efficiently.
The starting point for environmental management is ensuring that the company operates in compliance with local environmental legislation. Atria's environmental management strategy is based on networking, in line with the company's values. By networking with research and development operators and the operative level, Atria can develop the best environmental management practices to support continuous improvement.
Atria is committed to reducing the direct environmental impact of its operations, and it continuously monitors and optimises its environmental performance. Atria's environmental measures permeate the whole food processing chain: primary production, industrial production, transportation, and products and services for customers and consumers.
Atria's meat raw material procurement models and structures differ from one country to another. Atria Scandinavia acquires its meat raw material from Swedish slaughterhouses and international meat raw material markets. In Estonia, Atria has its own slaughterhouse that processes animals from Atria's own pork farms and from local farmers. Some meat is also imported into Estonia from Atria's Finnish plants and from elsewhere in the EU. Russia has the most versatile raw material base in terms of origin: South and North America, EU countries, Russia's regions and Atria's own farm.
In Finland, nearly all of the raw material needed by the industry is acquired from Finnish farms, and the slaughter animals produced on the farms are slaughtered, cut and processed at Atria's production plants. All of the meat used in Atria-branded products comes from Finnish producers. In primary production Atria supports sustainable development by offering expert services to develop production farms. In Finland these operations are handled by A-Farmers Ltd.
In industrial production, essential factors include compliance with
environmental management principles, management of the environmental impact of production, efficient use of energy, fuel and water, the reduction of waste and sorting.
In the food industry, energy consumption is highest in various manufacturing-related heating and cooling processes, as well as in the maintenance of material flows. Atria has increased the efficiency of its energy consumption relative to production output, since the pressure to increase energy consumption has been substantial following the increase of refrigerated production space and increasingly strict refrigeration requirements.
In transportation the aim is to reduce CO2 emissions by using new trucks, more efficient logistics planning, driver training and networking. Atria Finland's CO2 emissions fell by a third, from 0.006 to 0.004 CO2/kg from 2007 to 2010.
The aim is to reduce waste volumes through better identification and utilisation of waste: clean packaging materials are recycled: clean plastic packages are recycled, energy waste is separated from mixed waste and food waste is utilised as fuel for biogas plants or as feed for fur animals.
The structures of Atria's operations and the measurement of environmental variables vary greatly between the business areas, so unified environmental targets and objectives had still not been fully defined at the end of 2010. Atria continued drafting Group-level measurement principles, targets and common environmental guidelines for all business areas. A concrete goal is to create Group-level measurement principles and targets for environmental objectives and modernise the
The food industry uses large amounts of water, partly because of production hygiene requirements. The total water consumption increased by 2 per cent in the monitoring period due to the production start of the Pit Product plant in Russia. In other business areas water consumption fell on average by 2.5 per cent. Water consumption efficiency has improved by 2 per cent. Atria strives to minimise the environmental impacts of water consumption in cooperation with local waterworks, among other things by increasing the use of surface water and levelling off consumption peaks.
In the food industry, energy consumption is highest in various manufacturing-related heating and cooling processes, as well as in the maintenance of material flows and the refrigeration chain. Total energy consumption increased by 4 per cent, and energy efficiency per kilogram of end product increased by 4.6 per cent.
Direct energy consumption of the main sources
Indirect energy consumption of the main sources
environmental guidelines that apply to all of Atria's business areas.
At Group level, 2010 environmental performance indicators included energy and water consumption as well as direct and indirect consumption of the main sources. Performance was also measured
in terms of CO2 emissions, both as absolute values and in proportion to production volume. Because of the differences detected in the measurement of CO2 emissions these figures are not shown in the statistical summary.
| 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, Seinäjoki |
||
| ISO 22000:2005 | Nurmo | ||
| SFS-EN ISO 14001:2004 | Nurmo, Kuopio, Forssa Kauhajoki, Karkkila, Seinäjoki |
||
| 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, Campomos | ||
| Atria Scandinavia | BRC Global Standard - Food (Issue5:January 2005) Grade A |
Sköllersta, Tranås, Falköping, Skene, Moheda, Borås, Horsens, Halmstad |
|
| The IKEA Way on Purchasing Food (IWAY) |
Borås, Falköping | ||
| BRC Global Standard for Food Safety (Issue5:January 2008) Grade B |
Sköllersta, Malmö | ||
| DS/EN ISO 9001:2000 | Horsens | ||
| ISO 14001:2004 | Sköllersta | ||
| Organic Production according to Council Regulation (EEC) 2092/9 |
Tranås, Moheda, Borås | ||
| Organic production according to KRAV Regulation |
Falköping |
1) Written GOST R-certificate is a guarentee for that the product fulfils Russian security standards.
The greenhouse gas emissions arising from the production of operating energy calculated as carbon dioxide equivalents has increased in the monitoring period. At Atria Finland the replacement of crude oil by peat has increased the volume of greenhouse gas emissions, but on the other hand this assessment does not take into account the overall environmental impacts, which in our view are positive when using peat. The use of peat is also justified from an economic and social responsibility perspective and it has been a conscious choice.
Atria Finland´s waste profile
Atria Finland's environmental impact has been analysed on five measures: management of energy consumption, water consumption, wastewater values, municipal waste and packaging material. A target and a programme have been defined for each measure.
Atria Finland will develop Group-level measurement principles and indicators for environmental objectives and modernise the environmental guidelines that apply to all of Atria's business areas.
Atria Finland's environmental management is handled by a steering group, which works under the Management Team. It includes representatives from purchasing, production, product and package
development and energy production. The composition of the group ensures that management encompasses all of the areas in which Atria can control its environmental impact. The group analyses the results achieved in the previous year, plans the required investments and sets the targets for the following period.
| Environmental objective | Environmental target | Environmental programme |
|---|---|---|
| Control of energy consumption |
The consumption of energy relative to the volume of production will be reduced by 9% by 2016, comparison year 2005 |
• Energy review and analysis at Nurmo • Improving the efficiency of the controls of cold stores and systems • Increase of heat recovery profitably |
| Control of water consumption |
The consumption of water relative to the volume of production will be maintained at the 2008 level |
• More effective recycling of water and identification of new recycling possibilities • Identification of water loss through new consumption monitoring methods and alarms • Optimisation of water consumption in process washes |
| Control of wastewater values |
Ensuring operations are within valid environmental permit limits |
• Emptying production equipment of solid waste before washing • Maintaining the cleaning capacity of pre-treatment plants |
| Control of municipal waste volumes |
5% increase in the volume of waste used for energy by 2011 |
• Improving the efficiency of sorting through personnel training • Planning the locations of the energy waste collection points • Colour coding of waste bins |
| Control of packaging materials |
Consideration of environmental values an integral part of package design |
• Recognising the environmental impacts of packaging methods and materials • Development of packaging units that are suitable for the transport module |
Atria Finland's environmental indicators in 2010 in the Corporate Responsibility Report to be published in summer 2011
Atria production plant in Nurmo
The competence and well-being of personnel form the most central dimension of Atria's social responsibility. The quality and competitiveness of all the company's operations and products rest on them.
You can read more about social responsibility in the Corporate Responsibility Report to be published in summer 2011
At Atria, social responsibility also refers to obligations and voluntary responsibilities relating to product safety and product responsibility as well as consumer protection, including product labelling and marketing communications.
The well-being of personnel is a key factor for Atria's sustainable growth. Atria engages in continuous co-operation with employees to promote physical and psychological well-being at work. Atria's success is critically dependent on employees' investment in their personal and professional development.
Atria's human resources work in 2010 focused on integrating operations and supporting more efficient practices especially in Atria Scandinavia and Atria Baltic. In Atria Russia, the inauguration of the Gorelovo facility took centre stage in human resources operations and in Atria Finland, spring 2010 was shadowed by labour market disputes in the food industry.
Development of skills was a focus area in business areas as well as in international Group-level training programmes, the first among which, Atria Future Leader, came to completion. An international meat technology training programme, Atria Meat Technology Seminar, was launched at the end of 2010, with individuals attending from all business areas. The training maintains and promotes Atria's pioneering work in the field of meat technology.
In Group-level HR work, systematic development of skills will continue in 2011 and a Group employee survey will be conducted in all Group units at the same time in the first quarter. The survey will gather information on the various operational areas of the organisation and on factors affecting satisfaction at work. Based on the findings of the survey, measures will be prepared in spring to further improve workplace operations and the wellbeing of employees.
Atria Finland continued the implementation of the Early Caring project for better employee wellbeing in 2010. A well-being survey was conducted among all Atria Finland employees along with physical capability tests. All participants received individual feedback on their physical capacity. Spring 2010 was shadowed by labour market disputes in the food industry. Measures to maintain individuals' ability to work were strengthened and set up in the occupational health care. Managerial activities and leadership structures were also improved. Strategy-based training and development programmes were established, for example, by launching the new Atria Trainee coaching for young academic talents.
The Early Caring employee wellbeing project will continue in 2011 with focus on occupational safety and safety management. Atria has safety management targets for accident rate and close calls reporting. A well-being at work discussion will be held with all production employees during 2011, while clerical and managerial employees have their annual personal performance evaluations which also address the issue. The 2011 priority areas are productivity improvement, further development of leadership and managerial work and the creation and reinforcement of talent.
Human resources work within Atria Scandinavia involved continued reorganisation of the Sköllersta and Fosie sites. Particular attention was paid to reassigning existing personnel. An internal and external recruitment tool was developed to ensure efficient organisation and the payroll and travel expenses accounting system was also improved.
The Apollo project, launched in 2009 to increase the efficiency of Atria Deli operations and to develop its product portfolio, actively continued
Atria Group's average number of
% 100 80 60 40 20 0 Men & women Women Atria Finland Atria Scandinavia Atria Russia Atria Baltic
Men
Atria Finland ...........36% Atria Scandinavia....21% Atria Russia ............35% Atria Baltic................8%
in 2010. The project, which has affected the entire organisation, is expected to yield positive results in 2011. The drafting of shared human resources practices started alongside the reorganisation work to support business expansion and employee well-being.
Atria Scandinavia participated in the Group-level development projects to secure the development of skills, and a regional sales development programme was launched.
Human resources targets for 2011 highlight the reinforcement of leadership and sales skills, harmonising personnel practices and supporting employees through the organisation's structural change process.
The main personnel changes within Atria Russia in 2010 were linked to the recruitment, workplace induction and training of production personnel for the newly opened Gorelovo production facility. Gorelovo's production managers also took part in leadership training. The Moscow and St Petersburg sales units were strengthened and expanded.
The programme focusing on well-being at work launched in 2010 involves a work station survey and regular health checks for production personnel. Well-being at work was promoted by means of various personnel events, excursions and contests. Hard work was promoted by revising the remuneration scheme of the logistics, production, technology and marketing units.
Atria Russia engages in development of skills through participation in Atria's joint training programmes. The unit also launched its own quality management training programme with an eye on the implementation of the ISO 22 000 food safety standard.
At the end of 2010 Atria Russia announced a shift of meat product
production from the Moscow and Sinyavino plants to the new Gorelovo plant in St Petersburg. This concentration of operations means a net reduction of 300 employees.
Atria Russia's main targets in 2011 is to focus on strengthening skills through leadership and conference training and Group training programmes. Internal communications will be intensified by means of regular meetings and events.
Within Atria Baltic, key organisational changes included restructuring of the Ahja production plant and a new sales unit with 70 per cent new workforce.
The meat products and sales units' pay systems were revised, and a review of salaries was conducted among clerical employees. The employment contracts were redrafted according to new Estonia Employment Act. Job descriptions were updated for office and factory employees.
All production and logistics centre employees participated in annual physical health check and work environment risk assessment was carried out in Vastse-Kuuste production plant. Skills were developed through participation in Group training programmes; in language and team training.
Internal communication was improved by arranging communication training for the sales and marketing team as well as by arranging regular meetings and common events.
The goals for 2011 highlight the development of skills through participation in training programmes, variable pay-system to production employees, implementation of health and safety strategy and investment to internal communication.
The management of product quality and the safety of Atria's meat products starts at primary production and continues throughout the processing chain all the way to the consumer. Each link in the chain ensures that predetermined quality criteria are met. The foundation for safety is laid by competent personnel, a hygienic production environment, hygienic work methods and an uninterrupted cold chain.
Product safety work starts at the beginning of the chain. A crucial part of the product safety of meat consists of the disease prevention work conducted at farms and a strictly limited use of veterinary medicines, such as antibiotics, so that the meat contains only minor traces. The wellbeing of production animals consists of animal health, rearing conditions and the consideration of species-typical needs in animal husbandry.
The wellbeing of animals is measured by several indicators. Information is gathered in national health classification systems and national and European registers, such as the pork farm health classification
register (SIKAVA), the salmonella control programme and the European Food Safety Authority (EFSA). In addition to EU requirements, meat producers are subject to structural, operational and documentation requirements on a national level, the compliance with which is controlled by authorities.
The safety and microbiological quality of Atria's products are based on self-monitoring plans that are approved by the authorities and cover raw materials, production processes and distribution routes. Safe Atria Quality workgroups which meet up regularly review the internal monitoring process and methods in use. In-house validations and audits ensure the functionality of systems. Through authority approval and regular audits, Atria ensures that the plans comply with the latest legislation and product safety standards in the industry, as well as with the requirements of international trade.
| Invitation to the Annual General Meeting42 | |
|---|---|
| Report by the Board of Directors43 | |
| Atria Plc´s shareholders and shares52 | |
| Group key indicators54 | |
| Atria Group´s IFRS Financial Statements 201056 | |
| Notes to the consolidated financial statements60 | |
| Parent Company Financial Statements (FAS) 96 | |
| Notes to the parent company financial statements (FAS) 98 | |
| Signatures104 | |
| Auditor´s report105 |
Corporate Governance Code (See separate table of contents on page 106)
Atria Plc invites its shareholders to the Annual General Meeting, which will be held on Thursday, 29 April 2011 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 is published in national newspapers on 21 of March 2011. The AGM documents are available on Atria's website at www.atriagroup.com.
Atria Plc will publish financial results in 2011 as follows:
| 2010 Financial statement17 February 2011 | |
|---|---|
| 2010 Annual report during week 14 | |
| Interim report Q1 (3 months)29 April 2011 | |
| Interim report Q2 (6 months) 28 July 2011 | |
| Interim report Q3 (9 months) 27 October 2011 |
Atria's financial information will be published in real time on the company website at www.atriagroup.com
The recovery of the food products market in 2010, following the previous year's recession, was slower than anticipated. The Russian economy developed particularly weakly. In April and May, industrial disputes in Finland culminated and a strike by food processing employees and an employer lock-out kept the Nurmo, Kauhajoki and Kuopio production plants closed for a period of 10 days. These were the main reasons for the year's unexpectedly weak performance. The recovery from the impact of the strike takes some time. Sales in the important summer season were lower than predicted, as the impact of the strike on the range of products for sale, and thus on customer orders, was still evident in the second half of the year.
The market for food products in Russia continued to contract. More intense competition made it more difficult to implement price increases and, therefore, it has not been possible to transfer the increased raw material prices to sales prices. Atria Russia's performance was additionally weighed down by the costs of the new production plant in the St Petersburg region and increased investments in marketing. At the end of the year, as a result of goodwill impairment testing in Atria Russia, the Board of Directors decided that Atria Russia will record impairments totalling EUR 10.8 million allocated to goodwill. The impairments were recorded in the performance of Q3/2010 as a non-recurring item.
The strengthening of the Russian rouble and Swedish krona against the euro increased the Group's net sales in euro terms. The Group's cash flow was strongly positive during the fourth quarter of the year and, owing to this, free cash flow for the entire year (operating cash flow – cash flow from investments) amounted to EUR 4.4 million (EUR 27.6 million). Consolidated net liabilities increased to EUR 411 million (EUR 391 million). This was mainly due to the strengthening of the Swedish krona.
Work towards revamping the strategy was initiated in 2010. In April, the Board of Directors approved the new strategy, which extends to 2013. The most important financial goal of the new strategy is to significantly improve the profitability of Atria's international operations. The strategy also aims to secure and strengthen Atria Finland's profitability, which is already good.
Besides improving profitability, the new strategy promotes company growth. This means predominantly organic growth, and only complementary acquisitions will be considered. The strengthening of the financial position and balance sheet structure are also highlighted in the new strategy.
Product leadership is the strategic cornerstone. In practice this means that Atria will, in the coming years, increasingly invest in product development and marketing as well as in the development of new types of operating models. Becoming more innovative is one of the key objectives of the product leadership strategy.
Besides new products, further development of existing products and product families is crucial in achieving product leadership and putting the strategy into practice. Individual product group strategies will be devised for all product groups. Product leadership will be sought in two primary product groups: cold cuts and the Sibylla fast food business.
The business area specific strategy plans were built into strategic projects with specified financial indicators. The strategic projects in each country are monitored by the Group on a monthly basis, and more extensive reviews are carried out quarterly.
Atria wants to be the first choice of consumers and customers in the food sector – especially in fresh products – in the Baltic Sea region and European part of Russia. To accomplish this, Atria must be the market leader or at least the second largest player in the market in all business areas, and its brands must be among the two best-known brands.
Atria Group's financial goals are as follows:
| • EBIT 5% |
|---|
| • Equity ratio 40% |
| • Share of international operations 50% |
| • Return on equity (ROE) 12% |
| • Dividend distribution of profit for the period 50% |
In the period under review Atria focused on further developing its responsible operations and published the principles and goals of the Handprint programme. With the Handprint programme, Atria's responsible operations, which already have more than 100 years of history, will be developed in a coordinated manner. It is a comprehensive corporate responsibility programme that concerns the entire Atria food processing chain. The Atria's Handprint programme gathers the principles, practices and results of Atria's responsible operations and provides extensive, transparent information on them. The corporate responsibility programme is particularly concerned with seven sectors:
As part of the Handprint programme, Atria published a set of ethical principles, the Atria Code of Conduct, and the Group's first stand-alone Corporate Responsibility Report.
Responsible operating methods and transparency are key development priorities for the entire food industry. By investing more systematically in developing responsible operating methods, Atria aims to secure its current and future operating conditions.
Atria Finland's net sales were EUR 767.8 million (EUR 781.9 million), down 1.8 per cent year-on-year. The decline of net sales was mainly due to the industrial disputes in spring 2010. The Nurmo, Kauhajoki and Kuopio production plants shut down, with the exception of the poultry unit, for 10 days.
In the summer season, Atria was particularly successful within the poultry product group. Good preparation for the amendment of the EU poultry directive and good new products boosted Atria's market share to record heights. In other product groups, recovery from the strike to normal levels will take longer. The market for Food Service products is recovering from the recession, and sales took a turn for the better during the accounting period. Christmas season sales, especially sales of ham, were brisk.
The export ban imposed by the Russian authorities interrupted Atria Finland's exporting of pork to Russia during the period between February and December. The share of Russian exports in Atria Finland's net sales is quite small, and the export ban did not have a significant impact on net sales.
Atria Finland's EBIT fell 28.4 per cent from the previous year. The industrial disputes and lower prices across the entire product range weighed on the result. However, cost-efficiency has been good, resulting in moderate profitability.
The 10-day production break caused by the strike overloaded pig and bovine slaughtering in the summer, and clearing this backlog increased the amount of frozen stocks. The frozen stocks could not be cleared because of the recordhigh amount of imported meat in the market. The steep rise in feed price at the end of the year put heavy cost pressure on meat producers.
In October, Atria Finland published its plan to improve the efficiency of its bovine slaughtering operations. According to the plan, bovine slaughtering and cutting will be concentrated at the Kauhajoki facility. Modern abattoir and cutting facilities will be constructed in Kauhajoki, to be completed by the end of 2012. Employer-employee negotiations relating to the plan were initiated with the
personnel. The annual cost savings from the efficiency improvement programme are estimated at EUR 6 million. The Board of Directors decided to go ahead with the plan in January 2011. The decision did not affect the result for the accounting period.
Atria Scandinavia's net sales were EUR 391.6 million (EUR 405.2 million), a decline of 3.4 per cent. Net sales in krona fell by 12.3 per cent. The decrease in net sales was mainly due to the discontinuation of the production of consumer packaged meat in summer 2010 and the sale of the salad and sandwich business in summer 2009. The annual net sales from these totalled approximately EUR 70 million.
Atria Scandinavia's EBIT grew by 39.4 per cent to EUR 13.9 million. The EBIT margin in the fourth quarter of 2010 rose to 5.7 per cent. The performance improvement was supported by the strengthening of the Swedish krona by more than 10 per cent against the euro. This caused the price of imported raw materials to fall, which in turn improved sales margins. The improved performance was primarily due to the reorganisation that the company used to slim down its cost structure and improve its cost efficiency.
An efficiency improvement programme was launched in Sweden in Q1/2010 and the company decided to discontinue production of consumer-packed meat. Production at the Årsta plant came to an end in October and the plant was closed. Atria Scandinavia's result includes EUR 2.3 million of non-recurring costs relating to the shutdown of the Årsta plant. Also, the Tyresö plant located in the Stockholm region was shut down and production was transferred to the Skene plant. A decision was made in the spring concerning large investments in the automation of the cold cuts production line at the Halmstad plant and the automation of the meat products line at Sköllersta. These investments totalled EUR 1.6 million.
Despite the weak overall demand for fresh food products and increased domestic and international competition, Atria Scandinavia's total market position remained unchanged and in Denmark it strengthened. International growth of the Sibylla fast food concept continued to be particularly strong in Eastern European countries. In Poland, for example, Atria Concept delivered approximately 240 new Sibylla outlets to service stations, which raised the number of Sibylla outlets in the country to a total of 560.
Atria Scandinavia's Managing Director Michael Forsmark moved on and Juha Gröhn, M.Sc. (Food Science) was appointed as new Managing Director as of 1 September 2010.
Atria Russia's net sales increased by 14.3 per cent to EUR 129.2 million (EUR 113.0 million). Growth was boosted by increased sales, strengthening of the Russian rouble and price increases implemented at the end of the year. In the local currency, net sales grew by 3.9 per cent year-on-year.
Atria Russia's EBIT was heavily in the red at EUR -27.9 million (EUR -9.8 million). During the review period, Atria Russia recorded impairments totalling EUR 10.8 million allocated to goodwill as a non-recurring item. The weak performance was also impacted by sluggish market demand, weakened margins, increased marketing costs and, in particular, the strong rise in the prices of meat raw materials. In 2010 the Russian market for meat products declined by about 10 per cent (Source: Business Analytica).
Atria Russia's EBIT also includes non-recurring items relating to the Campomos acquisition and real estate in Moscow. The company reached an agreement with the seller concerning the conditional purchase price for the Campomos acquisition. The positive net effect of these items was EUR 1.3 million.
Atria's market position in the St Petersburg region remained strong. Its market share in St Petersburg's consumer retail trade increased to over 20 per cent. Atria is the clear market leader in St Petersburg (Source: Business Analytica). In Atria's own estimate its market share in the Moscow retail trade was approximately 4 per cent. The sales and marketing efforts related to Campomos products, initiated in 2009, have continued as planned.
At the end of 2009 Atria signed a shareholder agreement with the Danish company Dan Invest A/S, concerning pork production, and this agreement was confirmed at the beginning of 2010. Once the production of the pork farms reaches full capacity, the estimated annual production volume will be 188,000 slaughter pigs by 2013. With this agreement, Atria has secured better availability and quality of locally produced pork for Russian consumers and Atria's Russian customers. This investment provides Atria with better means for creating a balance between imported and locally produced pork. This enables more efficient management of currencyrelated risks and other risks associated with the procurement of raw material.
The new meat processing plant in Gorelovo, St Petersburg went on stream in April. The Gorelovo logistics centre has been operational since 2008. At the end of the year Atria Russia decided to concentrate its meat processing in Gorelovo, and production will be transferred there from the Sinyavino and Moscow plants. The aim is to improve cost efficiency by utilising the efficient western process technology at the Gorelovo facility. The measures will reduce the number
of Atria's personnel by about 300. The annual cost savings are estimated at EUR 6 million, which will materialise fully by spring 2012.
Atria Baltic's net sales fell by 6.7 per cent to EUR 35 million. The fall was mainly due to weakened overall demand and a decrease in the market share of meat products.
The operating loss (excluding goodwill impairment losses) decreased by 31.5 per cent to EUR 3.7 million. Atria's profitmaking ability has been weakened by a lower price level, increased imports of meat products and the rapid increases in the prices of cereals and feed at the end of the year.
Atria's market shares have narrowed slightly in the declining Estonian market. In the important cold cuts market Atria retained its position as the second largest player with a share of just under 20 per cent. In grill sausages, Atria is number one in the Estonian market with a market share exceeding 30 per cent (Source: AC Nielsen).
The closing down of the Ahja plant in the early part of the year, as well as other efficiency improvement measures implemented, have improved the company's cost structure.
Rauno Väisänen was appointed Managing Director of Atria Eesti AS effective of 1 February 2010. Tomas Back, M.Sc. (Econ.), was appointed Executive Vice President of Atria Baltic business area as of 1 September 2010.
Consolidated EBIT was EUR 9.8 million (EUR 27.5 million). EBIT for 2010 includes a total of EUR 11.8 million (EUR 13.1 million) of non-recurring costs. A EUR 10.8 million goodwill value impairment was recorded in Russia along with other non-recurring items with a positive effect of EUR 1.3 million. Atria Scandinavia ceased producing consumer packaged meat and closed down the Årsta plant. This plant closure caused a non-recurring cost item of approximately EUR 2.3 million in 2010.
Consolidated loss for the period was EUR 4.2 million (profit of EUR 7.4 million).
| Group key indicators, EUR million: | 2010 | 2009 | 2008 |
|---|---|---|---|
| Net sales | 1,300.9 | 1,316.0 | 1,356.9 |
| EBIT | 9.8 | 27.5 | 38.4 |
| EBIT% | 0.8 | 2.1 | 2.8 |
| Balance sheet total | 1,111.6 | 1,101.3 | 1,134.5 |
| Return on equity,% | -1.0 | 1.7 | 2.5 |
| Return on investments,% | 1.9 | 4.7 | 5.3 |
| Equity ratio,% | 40.2 | 39.7 | 38.4 |
| Net gearing,% | 92.2 | 89.4 | 94.6 |
In January 2011, Atria announced its decision to invest approximately 26 million euros in building and renovating the Kauhajoki bovine slaughterhouse and cutting plant. New production facilities will be built in Kauhajoki, and the existing production facilities will be renovated and automated using the latest production technology. Atria will also buy the shares of Kauhajoen Teurastamokiinteistöt Oy from Itikka Co-operative. The purchase price is approximately EUR 7 million.
At the same time, the company launched an efficiency improvement programme to increase the efficiency of bovine slaughtering and cutting operations and bring down the excess capacity in slaughtering. Bovine slaughtering and cutting at the Kuopio facility will be transferred to the Kauhajoki slaughterhouse by the end of 2012. Carrying out the efficiency improvement programme means the reduction of approximately 120 man-years of work in Kuopio by the end of 2012. The annual cost savings from the efficiency improvement programme are estimated at EUR 6 million. The decision did not affect the result for the accounting period.
In this context Atria also announced the conclusion of a co-operation agreement with Saarioinen Oy on the slaughtering of cattle reared in Eastern Finland at Saarioinen's Jyväskylä slaughterhouse.
Mika Ala-Fossi was appointed Managing Director of Atria Finland and member of the management team on 1 February 2011.
In February 2011, Atria Scandinavia announced a plan for an investment and efficiency improvement programme aimed at streamlining and automating the black pudding production process. According to plan Atria will invest approximately EUR 2.2 million in new production equipment for the Tranås plant. The production of black pudding will be transferred from the Saltsjö-Boo plant in Stockholm to Tranås. Significant synergy benefits will be achieved from moving the production to Tranås. The efficiency improvement programme is expected to generate annual cost savings of approximately EUR 1 million.
Matti Tikkakoski resigned as President and CEO of Atria Plc on 4 March 2011. He also resigned from the Board of Directors. The Board of Directors started the recruitment process to appoint a new CEO. In the meantime the CEO's duties are performed by Juha Gröhn, Managing Director of Atria Scandinavia and Deputy CEO of Atria Plc.
Atria Group's research and development operations focus on researching consumer behaviour and market data in all of the Group's business areas. In addition, Atria participates in applied research in the areas of product and packaging technology and food science.
In line with Atria's new strategy, product leadership is our strategic differentiation tool. Product research and development resources were adjusted to meet the new strategy in the second half of 2010.
Atria Finland launched 93 new products in the retail and Food Service markets in 2010. Among the year's biggest successes were Atria Organic Minced Beef, Meatloaf, Grill Plate, CheeseGotler and Surface Seasoned Chicken Tenderloin. The share of the new products in Finland is 3.5 per cent of total sales.
Atria Russia launched a total of 104 new products. Of these 23 were launched under the Pit-Product brand and 83 under the Campomos brand. Re-closable frankfurter and cold cut packages were a significant new product in Russia. This innovation increased Pit-Product frankfurter sales by 10 per cent. In Russia the new products account for 1.5 per cent of total sales.
Atria Scandinavia launched some 200 new products across all product groups. Several new high-end innovations were launched in the delicatessen and cold cuts product groups. In the Atria Scandinavia business area, consumers favour local products. Additive-free and healthy options are also sought after. In Sweden the new products accounted for some 3.7 per cent of total sales.
Funds used for Atria Group's research and development activities in relation to net sales for the period 2008–2010:
| 2010 | 2009 | 2008 | |
|---|---|---|---|
| Research and development, EUR million |
10.3 | 9.4 | 9.9 |
| % of net sales | 0.8 | 0.7 | 0.7 |
After two challenging years, the functioning of financial markets normalised to some extent during the accounting period. Bank credits shifted toward long-term maturities and the availability of credit improved. The decline in the market interest rate reversed in spring 2010, but market rates remained low by historical standards and loan margins decreased somewhat below last year's level. Therefore, the Group's financial expenses fell slightly year-on-year. Atria Plc refinanced a considerable portion of its committed credit limits and made active use of commercial papers to acquire short-term financing.
In order to concentrate external financing in the parent company, Atria Scandinavia AB paid off a loan of approximately EUR 18 million in June and Atria Plc raised a seven-year loan of EUR 15 million. In September, Atria Plc refinanced four old credit limits totalling EUR 190 million with three new credit limits totalling EUR 150 million. The maturities of the new committed credit limits are five years (EUR 100 million) and seven years (EUR 50 million). In addition to these, an eight-year TyEL loan in the amount of EUR 14 million was drawn. In November, an additional fiveyear committed credit facility of EUR 50 million was agreed upon. These arrangements lengthened the average maturity of the Group's loan portfolio and decreased the refinancing risk of the loan portfolio. In September, Atria also concluded a new interest rate swap to the amount of SEK 370 million. At the end of the accounting period on 31 December 2010, fixed interest debts accounted for 39.7% (33.0%) of the Group's liabilities.
Atria's business is exposed to 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.
Risk management operations in Atria are guided by the Risk Management Policy approved by the Board of Directors and its harmonised operating models for risk assessment and reporting. A risk assessment in accordance with the policy was implemented in all business areas and Group operations. The most significant risks observed are 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 measures in their respective areas of responsibility.
The profitability of Atria's business is greatly affected by the global-level risk associated with changes in the market price of meat raw material. Price risk in cereals is also connected to Atria's own primary production. Atria aims to protect itself against unfavourable fluctuations in production costs by adjusting production where necessary. Atria also tries to anticipate changes through the pricing of end products. The Group applies a uniform transaction risk management policy to hedge against currency risks relating to raw material procurement. The Group makes active use of currency derivatives, particularly in order to hedge foreign-currency-denominated material purchases in Sweden against currency risks.
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 the long run. Changes in meat consumption may have a similar impact on production volumes and the Group's business as a whole.
In Atria Russia's operations, changing restrictions and import duties on meat, as well as other authority regulations, constitute a special characteristic of the market. Atria aims to secure availability and quality of locally produced pork by investing in local pig production in Russia. Atria and its Danish partners have launched an extensive project in Russia concerning two pig farms. Atria Russia's new production plant in Gorelovo in the St Petersburg region was inaugurated in May 2010, enabling increased efficiency and the launch of new product groups in the Russian market. The most important new product group is convenience food, not much of which has been on offer in the Russian market up until now. Atria Russia will continue implementing its projects to concentrate functions and manage capacity in 2011.
Retail trade in the food industry is highly concentrated in all of Atria's key markets, which creates opportunities for building diverse forms of cooperation over the long term. On the other hand, this may increase dependence on individual customers. The strength of Atria's market position and its brands improve its negotiating position.
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 production chain could 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.
The economic downturn increased the risk of weakening liquidity among Atria's customers and the occurrence of credit losses particularly in the hotel and restaurant sector and in the Baltic states and in Russia. As a result of more efficient credit control, no significant credit losses were incurred. 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 and producers' liquidity may be reduced by sharp changes in the price of inputs.
Significant changes in energy costs, such as electricity and gas prices, may affect Atria's profitability. Atria uses derivatives to hedge against unfavourable changes in
accordance with its hedging policy. The company also has projects underway aiming to cut energy costs.
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, which increases the risk of accidents at work. Atria aims to prevent occupational accidents, 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 through the Group's insurance programmes.
Atria manages its financial risks in accordance with the financing policy approved by the Board of Directors. The Board of Directors has delegated the application and implementation of financing policy and management of financing risks to the Group's Treasury Committee that consists of the President and CEO, the Executive Vice President, the CFO, the Group Controller and the Treasurer. The practical management of financial risks is centralised in the Group's Treasury unit. The aim of the Group's financing risk management is to reduce the effect on earnings, the balance sheet and cash flow due to price fluctuations on the financial markets and other uncertainty factors, and to ensure sufficient liquidity. The main risks related to financing are interest rate risk, currency risk, liquidity and refinancing risk and credit risk. Atria's financial risk management is discussed in more detail in Note 29 to the financial statements.
In its constitutive meeting following the Annual General Meeting, Atria Plc's Supervisory Board elected Maisa Romanainen, M.Sc. (Econ.), as a new member of the Board of Directors in place of retiring member Runar Lillandt. The Supervisory Board re-elected retiring member Timo Komulainen.
Ari Pirkola was appointed Chairman and Seppo Paavola Deputy Chairman of the Supervisory Board. Martti Selin, Chairman of the Board of Directors, was reappointed.
Atria Plc's Board of Directors had the following membership: Chairman of the Board Martti Selin; Deputy Chairman Timo Komulainen; members Tuomo Heikkilä, Esa Kaarto, Maisa Romanainen, Harri Sivula and Matti Tikkakoski.
Michael Forsmark, Managing Director of Atria Scandinavia, left Atria. Juha Gröhn, M.Sc. (Food Science), was appointed Managing Director of Atria Scandinavia
effective as of 1 September 2010. Juha Gröhn previously served as Managing Director of Atria Finland and director of the Atria Baltic business area. Matti Tikkakoski, M.Sc. (Econ.), was appointed Managing Director of Atria Finland and Tomas Back, M.Sc. (Econ.) Executive Vice President of Atria Baltic business area as of 1 September 2010.
Seija Pietilä, M.Sc. (Econ.), Group Vice President, Human Resources, transferred to another employer. Kirsi Matero, M.Sc. (Econ.), was appointed new Group Vice President, Human Resources and member of the management team from 15 November 2010.
Atria Plc's corporate governance system in 2010 is described in a separate report and published simultaneously with the report by the Board of Directors on the company website.
Atria Plc's governance is described in more detail under the chapter on corporate governance principles on page 107.
| Average at 31 Dec | 2010 | 2009 | 2008 |
|---|---|---|---|
| Atria Finland | 2,089 | 2,222 | 2,378 |
| Atria Scandinavia | 1,205 | 1,394 | 1,691 |
| Atria Russia | 2,048 | 2,003 | 1,525 |
| Atria Baltic | 470 | 595 | 541 |
| Atria Group total | 5,812 | 6,214 | 6,135 |
| Salaries and benefits for the period, Group total (EUR million) |
180.9 | 184.8 | 181.0 |
Atria Plc's Board of Directors has decided to continue the share-based incentive programme for Atria Group's key individuals. The programme comprises three one-year accrual periods in the calendar years 2010, 2011 and 2012. Payments will be made in 2010, 2011 and 2012, 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 2010 will be based on consolidated EBIT and capital employed. The share incentives to be paid for 2010 would have amounted to no more than 100,100 of Atria Plc's Series A shares. However, no share incentives are granted based on the 2010 result.
In the earlier accrual periods of the incentive plan in 2007–2009 incentives were paid partly in Series A shares and
GJ / product tonne 3 2 1 consumption in proportion to production 2009 2010 Atria Finland Atria Scandinavia Atria Russia Atria Baltic GJ 2,000,000 1,500,000 1,000,000 500,000 0 Energy consumption 2009 2010
Total energy
partly as cash payments. The cash payments covered the taxes and 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. In the 2007–2009 accrual period, a total of 38,540 Series A shares held by the company were transferred free of charge to key persons under the incentive programme (35,260 shares for 2007 and 3,280 shares for 2009). In 2009, a total of 3,870 of these shares were returned to the company.
Atria Plc's Board of Directors has set out the management and key persons' bonus scheme for 2011. The maximum amount of merit pay for Atria Plc's President and CEO and Management Team is 30% to 50% of the annual salary, depending on the effect on the performance and the requirement level of the role. The criteria of Atria Plc's merit pay system comprise result criteria at Group level and in the person's responsibility area, the amount of working capital and, for some individuals, personal performance. In addition to the President and CEO, Deputy CEO, and Management Team, Atria Plc's merit pay system covers approximately 60 people at the executive and supervisory levels.
The well-being of the environment is essential to the operations of Atria and the food industry as a whole.
Atria Group's environmental responsibility is built around three main elements:
Atria's main environmental concerns are energy use, water use, wastewater load and the generation of municipal waste. Indirect concerns are transport and primary production. The company is aware of their impact and monitors key variables such as the fuel consumption of vehicles. In primary production, Atria keeps track of the share of farms committed to the conditions for environmental subsidies.
Environmental management is developed in accordance with the Group's values by networking, which enables Atria to develop the best environmental management practices to support continuous improvement together with other players. Environmental management at Atria Finland and, partially, Atria Scandinavia is based on an environmental management system certified in compliance with the ISO 14001 standard. In other business areas, the company strives to achieve a corresponding level of environmental management.
Atria Finland'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 purchasing, production, product development, packaging design and energy production. The composition of the group ensures that Atria's environmental management encompasses all of the areas in which the company can control its environmental impact. The group analyses the results achieved in the previous year, discusses the required investments and sets the targets for the following period.
Atria's Environmental Responsibility Programme is laid out on page 33 of this Annual Report.
Market conditions are expected to remain challenging in 2011. Consumption of food is expected to grow slightly in Finland, Sweden, Denmark and Estonia. In Russia, overall
demand for meat products decreased in 2010 and, according to Atria's estimate, the increase in demand will be slow during 2011. Atria Group's net sales are expected to grow somewhat in 2011. The growth of net sales was weighed down, particularly by the difficult market situation in Russia and the discontinuation of the production of consumer packaged meat in Sweden.
The Group's EBIT excluding non-recurring costs stood at EUR 21.6 million in 2010. In 2011, the Group's EBIT is expected to be higher than this. The key sources for uncertainty in terms of earnings development are the rising prices of cereal, feed and other raw materials, as well as the difficult market situation in Russia. Rising cereal and feed prices cause pressure to increase meat prices.
The breakdown of the parent company's share capital is as follows:
| Series A shares (1 vote/share)19,063,747 | |
|---|---|
| Series KII shares (10 votes/share) 9,203,981 |
Series A shares have preference for a dividend of €0.17, after which Series KII shares are paid a dividend of up to €0.17. If dividend remains to be paid after this, Series A and Series KII shares entitle their holders to an equal right to a dividend.
Atria's Articles of Association include a pre-emptive purchase clause concerning the KII shares. 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. In addition, 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" on page 52.
The Annual General Meeting authorised the Board of Directors to decide, on one or several occasions, on an issue of a maximum of 12,800,000 new A shares or on the disposal of any A shares held by the company through a share issue and/or by granting option rights or other special rights entitling people to shares as referred to in Chapter 10, Section 1 of the Companies Act. The authorisation will be exercised for the financing or execution of any acquisitions or other arrangements or investments related to the company's
business, for the implementation of the company's incentive programme or for other purposes subject to the Board's decision.
The Board is also authorised to decide on all terms and conditions of the share issue and of the granting of special rights as referred to in Chapter 10, Section 1 of the Companies Act. The authorisation thus also includes the right to issue shares in a proportion other than that of the shareholders' current shareholdings in the company under the conditions provided by law, the right to issue shares against payment or without charge and the right to decide on a share issue without payment to the Company itself, subject to the provisions of the Companies Act on the maximum number of treasury shares.
The authorisation shall supersede the share issue authorisation granted by the Annual General Meeting on 29 April 2009 to the Board of Directors, and be valid until the closing of the next Annual General Meeting or until 30 June 2011, whichever is first.
The Annual General Meeting held on 29 April 2010 authorised the Board of Directors to decide, on one or several occasions, on the acquisition of a maximum of 2,800,000 of the company's own Series A shares with funds belonging to the Company's unrestricted equity, subject to the provisions of the Companies Act regarding the maximum number of treasury shares to be held by a company. The Company's own Series A shares may be acquired for use as consideration in any acquisitions or other arrangements relating to the Company's business, to finance investments, as part of the Company's incentive scheme, to develop the Company's capital structure, to be otherwise further transferred, to be retained by the Company or to be cancelled.
The shares shall be acquired in a proportion other than that of the shareholders' current shareholdings in the Company in public trading arranged by NASDAQ OMX Helsinki Ltd at the trading market price at the moment of acquisition. The shares shall be acquired and paid for in accordance with the rules of NASDAQ OMX Helsinki Ltd and Euroclear Finland Oy. The Board of Directors is authorised to decide on the acquisition of treasury shares in all other respects.
The authorisation by the Annual General Meeting shall supersede the authorisation granted by the Annual General Meeting on 29 April 2009 to the Board of Directors to decide on the acquisition of the company's own shares and be valid until the closing of the next Annual General Meeting or until 30 June 2011, whichever is first.
A total of 3,280 treasury Series A shares held by the company were transferred as share incentives in 2010. As of 31 December 2010, the company held a total of 110,432 treasury shares.
The AGM approved the Board of Directors' proposal on the donation of a maximum amount of EUR 150,000 to be made to the operation of universities or other educational institutions. The Board of Directors decided to donate a total of EUR 150,000 to three academic recipients: EUR 50,000 was donated to each of the University of Vaasa, the University of Eastern Finland and the South Ostrobothnian University Fund.
The parent company's shareholders' equity on 31 December 2010 comprises the invested unrestricted equity fund of EUR 110,227,500, treasury share fund of EUR -1,271,455 and profits of EUR 85,382,754, of which profit for the period totals EUR 10,984,562.
The Board of Directors will propose to the Annual General Meeting that the distributable profits be used as follows:
| • a dividend of EUR 0.25/share | |
|---|---|
| be paid totalling | EUR 7,039,324 |
| • added to shareholders' equity | EUR 77,071,975 |
| EUR 84,111,299 |
No significant changes have occurred in the company's financial position since the end of the financial year. The company's liquidity is good and, in the Board of Directors' opinion, the proposed dividend does not compromise the company's solvency.
| Number of shares | No. of shareholders | % | Shares (1,000) | % |
|---|---|---|---|---|
| 1-100 | 4,882 | 42.98 | 248 | 0.88 |
| 101-1,000 | 5,440 | 47.89 | 2,042 | 7.22 |
| 1,001-10,000 | 944 | 8.31 | 2,390 | 8.45 |
| 10,001-100,000 | 71 | 0.63 | 1,660 | 5.87 |
| 100,001-1,000,000 | 20 | 0.18 | 5,865 | 20.75 |
| 1,000,001-999,999,999,999 | 3 | 0.03 | 16,063 | 56.83 |
| Total | 11,360 | 100.00 | 28,268 | 100.00 |
| Business sector | No. of shareholders | % | Shares (1,000) | % |
|---|---|---|---|---|
| Companies | 484 | 4.26 | 17,059 | 60.35 |
| Financial and insurance institutions | 44 | 0.39 | 2,041 | 7.22 |
| Public corporations | 17 | 0.15 | 1,610 | 5.70 |
| Non-profit associations | 117 | 1.03 | 742 | 2.62 |
| Households | 10,671 | 93.94 | 4,686 | 16.58 |
| Foreign owners | 27 | 0.24 | 1,497 | 5.30 |
| Total | 11,360 | 100.00 | 27,635 | 97.76 |
| Nominee-registered, total | 8 | 633 | 2.24 |
| Major shareholders, 31 Dec 2010 |
KII | A | Total | % |
|---|---|---|---|---|
| Itikka Co-operative | 4,914,281 | 2,642,801 | 7,557,082 | 26.73 |
| Lihakunta | 4,020,200 | 3,438,797 | 7,458,997 | 26.39 |
| Odin Norden | 1,047,216 | 1,047,216 | 3.70 | |
| Varma Mutual Pension Insurance Company | 767,411 | 767,411 | 2.71 | |
| Pohjanmaan Liha Co-operative | 269,500 | 480,038 | 749,538 | 2.65 |
| Mandatum Life Insurance Company Limited | 502,000 | 502,000 | 1.78 | |
| Public pension insurance company Veritas | 366,000 | 366,000 | 1.29 | |
| Odin Finland | 316,392 | 316,392 | 1.12 | |
| Nordea Bank Finland Plc | 312,329 | 312,329 | 1.10 | |
| Reima Kuisla | 297,470 | 297,470 | 1.05 | |
| Major shareholders in terms | ||||
|---|---|---|---|---|
| of voting rights, 31 Dec 2010 | KII | A | Total | % |
| Itikka Co-operative | 49,142,810 | 2,642,801 | 51,785,611 | 46.61 |
| Lihakunta | 40,202,000 | 3,438,797 | 43,640,797 | 39.28 |
| Pohjanmaan Liha Co-operative | 2,695,000 | 480,038 | 3,175,038 | 2.86 |
| Odin Norden | 1,047,216 | 1,047,216 | 0.94 | |
| Varma Mutual Pension Insurance Company | 767,411 | 767,411 | 0.69 | |
| Mandatum Life Insurance Company Limited | 502,000 | 502,000 | 0.45 | |
| Public pension insurance company Veritas | 366,000 | 366,000 | 0.33 | |
| Odin Finland | 316,392 | 316,392 | 0.28 | |
| Nordea Bank Finland Plc | 312,329 | 312,329 | 0.28 | |
| Reima Kuisla | 297,470 | 297,470 | 0.27 | |
The members of the Board of Directors and Supervisory Board, and the President and CEO and deputy CEO owned a total of 46,464 A series shares on 31 December 2010, which corresponds to 0.16% of shares and 0.04% of the voting rights conferred by them.
| Month | Turnover, EUR | Turnover, shares | Monthly lowest | Monthly highest |
|---|---|---|---|---|
| January | 10,763,493 | 962,665 | 10.70 | 11.60 |
| February | 8,215,255 | 740,446 | 10.80 | 11.51 |
| March | 12,588,165 | 1,070,790 | 10.92 | 12.42 |
| April | 13,810,068 | 1,067,338 | 12.01 | 13.48 |
| May | 8,180,041 | 730,865 | 10.51 | 12.27 |
| June | 3,519,231 | 314,971 | 10.80 | 11.52 |
| July | 2,493,127 | 222,109 | 10.60 | 11.80 |
| August | 13,798,622 | 1,270,300 | 10.35 | 11.25 |
| September | 10,578,127 | 984,092 | 10.60 | 11.16 |
| October | 6,150,134 | 580,631 | 9.86 | 10.80 |
| November | 3,376,543 | 339,971 | 9.79 | 10.10 |
| December | 12,879,863 | 1,417,951 | 8.74 | 9.87 |
| Total | 106,352,671 | 9,702,129 | ||
| 31 Dec 2010 | 31 Dec 2009 | 31 Dec 2008 | 31 Dec 2007 | 31 Dec 2006 | |
|---|---|---|---|---|---|
| Net sales, EUR million | 1,300.9 | 1,316.0 | 1,356.9 | 1,272.2 | 1,103.3 |
| EBIT, EUR million | 9.8 | 27.5 | 38.4 | 94.5 | 41.5 |
| % of net sales | 0.8 | 2.1 | 2.8 | 7.4 | 3.8 |
| Financial income and expenses, EUR million | -11.1 | -12.4 | -22.3 | -14.3 | -7.3 |
| % of net sales | 0.9 | 0.9 | 1.6 | 1.1 | 0.6 |
| Profit before tax, EUR million | 0.3 | 16.5 | 16.7 | 80.6 | 34.6 |
| % of net sales | 0.0 | 1.3 | 1.2 | 6.3 | 3.1 |
| Return on equity (ROE), % | -1.0 | 1.7 | 2.5 | 17.2 | 8.8 |
| Return on investment (ROI), % | 1.9 | 4.7 | 5.3 | 15.2 | 8.7 |
| Equity ratio, % | 40.2 | 39.7 | 38.4 | 47.6 | 42.8 |
| Interest-bearing liabilities, EUR million | 429.9 | 425.8 | 448.4 | 321.9 | 244.2 |
| Gearing, % | 96.4 | 97.5 | 103.1 | 67.6 | 78.1 |
| Net gearing, % | 92.2 | 89.4 | 94.6 | 60.1 | 66.8 |
| Gross investments in fixed assets, EUR million | 46.2 | 33.0 | 152.6 | 284.1 | 89.0 |
| % of net sales | 3.5 | 2.5 | 11.2 | 22.3 | 8.1 |
| Average number of employees | 5,812 | 6,214 | 6,135 | 5,947 | 5,740 |
| Research and development costs, EUR million | 10.3 | 9.4 | 9.9 | 8.4 | 7.4 |
| % of net sales * | 0.8 | 0.7 | 0.7 | 0.7 | 0.7 |
| 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
| 31 Dec 2010 | 31 Dec 2009 | 31 Dec 2008 | 31 Dec 2007 | 31 Dec 2006 | ||
|---|---|---|---|---|---|---|
| Earnings per share (EPS), EUR | -0.18 | 0.25 | 0.42 | 2.56 | 1.15 | |
| Shareholders' equity per share, EUR | 15.68 | 15.39 | 15.34 | 16.77 | 13.28 | |
| Dividend/share, EUR* | 0.25 | 0.25 | 0.20 | 0.70 | 0.595 | |
| Dividend/profit, %* | -138.9 | 99.5 | 48.1 | 27.4 | 51.7 | |
| Effective dividend yield* | 2.8 | 2.3 | 1.7 | 4.0 | 3.3 | |
| Price/earnings (P/E) | -50.0 | 44.0 | 27.9 | 6.8 | 15.9 | |
| Market capitalisation, EUR million | 254.4 | 312.6 | 327.9 | 490.4 | 422.4 | |
| Share turnover/1,000 shares | A | 9.702 | 7.389 | 4.077 | 7.933 | 3.899 |
| Share turnover, % | A | 50.9 | 38.8 | 21.4 | 41.6 | 28.1 |
| Number of shares, million, total | 28.3 | 28.3 | 28.3 | 28.3 | 23.1 | |
| Number of shares | A | 19.1 | 19.1 | 19.1 | 19.1 | 13.9 |
| KII | 9.2 | 9.2 | 9.2 | 9.2 | 9.2 | |
| Share issue-adjusted average number of shares | 28.3 | 28.3 | 28.3 | 26.1 | 21.8 | |
| Share issue-adjusted number of shares on 31 December | 28.3 | 28.3 | 28.3 | 28.3 | 23.1 | |
| SHARE PRICE DEVELOPMENT | ||||||
| Lowest of the period | A | 8.74 | 6.50 | 10.51 | 16.90 | 15.00 |
| Highest of the period | A | 13.48 | 13.00 | 18.29 | 28.77 | 21.50 |
| At end of period | A | 9.00 | 11.06 | 11.60 | 17.35 | 18.29 |
| Average price during the period | A | 10.93 | 10.76 | 14.04 | 22.18 | 18.31 |
* The Board of Directors' proposal
| Profit/loss for the period | ||
|---|---|---|
| Return on equity (%) | = Shareholders' equity (average for the period) |
* 100 |
| Profit before tax + interest and other financial expenses | ||
| Return on investments, % | = Shareholders' equity + interest-bearing financial liabilities (average) |
* 100 |
| Shareholders' equity = |
||
| Equity ratio (%) | Balance sheet total - advance payments received | * 100 |
| Interest-bearing financial liabilities | ||
| Gearing (%) | = Shareholders' equity |
* 100 |
| Interest-bearing financial liabilities - cash and cash equivalents | ||
| Net Gearing (%) | = Shareholders' equity |
* 100 |
| Profit for the period attributable to the owners of the parent company | ||
| Earnings per share (basic) | = Average share issue-adjusted number of shares for the period |
|
| Equity attributable to the owners of the parent company | ||
| Equity per share | = Undiluted number of shares on 31 Dec |
|
| Dividend distribution during the period | ||
| Dividend per share | = Undiluted number of shares on 31 Dec |
|
| Dividend / share | ||
| Dividend/profit (%) | = Earnings/share (EPS) |
* 100 |
| Dividend / share | ||
| Effective dividend yield (%) | = Closing price at the end of the period |
* 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 during the period |
|
| Market | ||
| capitalisation | = Number of shares at the end of the period * closing price on 31 Dec |
|
| Number of shares traded during the period | ||
| Share turnover (%) | = Undiluted average number of shares |
* 100 |
| Notes | 1 January – 31 December 2010 |
1 January – 31 December 2009 |
|
|---|---|---|---|
| Net sales | 1, 2 | 1,300,906 | 1,315,998 |
| Costs of goods sold | 7, 8 | -1,149,118 | -1,151,133 |
| Gross margin | 151,788 | 164,865 | |
| Sales and marketing expenses | 3, 7, 8 | -84,497 | -77,737 |
| Administrative expenses | 4, 7, 8 | -47,329 | -47,658 |
| Other operating income | 5 | 7,714 | 4,646 |
| Other operating expenses | 6 | -17,920 | -16,602 |
| EBIT | 1 | 9,756 | 27,514 |
| Financial income | 9 | 31,500 | 24,657 |
| Financial expenses | 9 | -42,623 | -37,066 |
| Net financial items | -11,123 | -12,409 | |
| Income from associates | 15 | 1,672 | 1,439 |
| Profit before tax | 305 | 16,544 | |
| Income taxes | 10, 18 | -4,532 | -9,097 |
| Income for the financial period | -4,227 | 7,447 | |
| Income distribution for the financial period: | |||
| To parent company owners | -5,069 | 7,073 | |
| To non-controlling owners | 842 | 374 | |
| Total | -4,227 | 7,447 | |
| Earnings per share (basic), EUR | 11 | -0,18 | 0,25 |
| Diluted earnings per share, EUR | 11 | -0,18 | 0,25 |
| CONSOLI DATE D STATE MENT OF COMPREHE NSIVE INCOME, EUR 1,000 |
|||
| Income for the financial period | -4,227 | 7,447 | |
| Other items of the total comprehensive income after tax: | |||
| Financial assets available for sale | 9, 10 | 13 | 15 |
| Cash flow hedge | 9, 10 | 3,156 | -1,443 |
| Net investment hedge | 10 | 322 | -322 |
| Translation differences | 9 | 16,888 | 2,510 |
| Total comprehensive income for the financial period | 16,152 | 8,207 | |
| Comprehensive income distribution for the financial period: | |||
| To parent company owners | 15,097 | 7,758 | |
| To non-controlling owners | 1,055 | 449 | |
| Total | 16,152 | 8,207 |
| Assets | Notes | 31 Dec 2010 | 31 Dec 2009 |
|---|---|---|---|
| Non-current assets | |||
| Property, plant and equipment | 1, 12 | 470,099 | 467,284 |
| Biological assets | 13 | 1,891 | 1,811 |
| Goodwill | 14 | 162,923 | 157,801 |
| Other intangible assets | 14 | 75,527 | 70,008 |
| Investments in joint ventures and associates | 1, 15, 32 | 11,862 | 7,444 |
| Other financial assets | 16, 29 | 1,586 | 2,307 |
| Trade receivables, loans and other receivables | 17, 29 | 20,166 | 20,394 |
| Deferred tax assets | 10, 18 | 11,453 | 7,025 |
| Total | 755,507 | 734,074 | |
| Current assets | |||
| Inventories | 19 | 105,334 | 110,131 |
| Biological assets | 13 | 5,765 | 5,440 |
| Trade and other receivables | 20, 29 | 199,852 | 198,191 |
| Tax assets | 17,453 | 8,206 | |
| Cash and cash equivalents | 21, 29 | 18,530 | 35,300 |
| Total | 346,934 | 357,268 | |
| Non-current assets held for sale | 22 | 9,174 | 9,995 |
| Total assets | 1 | 1,111,615 | 1,101,337 |
| Equity and liabilities | Notes | 31 Dec 2010 | 31 Dec 2009 |
| Equity attributable to the shareholders of the parent company | |||
| Share capital | 48,055 | 48,055 | |
| Share premium | 138,502 | 138,502 | |
| Treasury shares | -1,271 | -1,308 | |
| Other funds | 1,822 | -1,669 | |
| Invested unrestricted equity fund | 110,571 | 110,596 | |
| Translation differences | -14,314 | -30,989 | |
| Retained earnings | 159,811 | 171,919 | |
| Total | 10, 11, 18, 23, 24, 29 |
443,176 | 435,106 |
| Non-controlling owners' share | 2,867 | 1,812 | |
| Total equity | 446,043 | 436,918 | |
| Non-current liabilities | |||
| Interest-bearing financial liabilities | 26, 29 | 302,778 | 318,883 |
| Deferred tax liabilities | 10, 18 | 46,797 | 41,186 |
| Other liabilities | 25, 29 | 800 | 1,380 |
| Provisions | 27 | 812 | |
| Total | 351,187 | 361,449 | |
| Current liabilities | |||
| Interest-bearing financial liabilities | 26, 29 | 127,159 | 106,914 |
| Trade and other payables | 28, 29 | 186,525 | 186,842 |
| Current tax liabilities | 701 | 9,214 | |
| Total | 314,385 | 302,970 | |
| Total liabilities | 1 | 665,572 | 664,419 |
| Equity and liabilities, total | 1,111,615 | 1,101,337 |
| Equity attributable to the owners of the parent company | Non-con trolling owners' share |
Total equity |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Share | Share | Treasury | Other | Invested unre stricted equity |
Transla tion dif ferences |
Retained | |||||
| Note | capital | premium | shares | funds | fund | premium | earnings | Total | |||
| Equity 1 January 2009 | 48,055 | 138,502 | -542 | 81 | 110,336 | -33,424 | 170,499 | 433,507 | 1,363 | 434,870 | |
| Total comprehensive income for the financial period | |||||||||||
| Income for the financial period | 7,073 | 7,073 | 374 | 7,447 | |||||||
| Other items of the total comprehensive income | |||||||||||
| Financial assets available for sale | 15 | 15 | 15 | ||||||||
| Cash flow hedge | -1,443 | -1,443 | -1,443 | ||||||||
| Net investment hedge | -322 | -322 | -322 | ||||||||
| Translation differences | 2,435 | 2,435 | 75 | 2,510 | |||||||
| Transactions with owners | |||||||||||
| Treasury shares | 23 | -766 | -766 | -766 | |||||||
| Share incentives | 24 | 260 | 260 | 260 | |||||||
| Distribution of dividends | 23 | -5,653 | -5,653 | -5,653 | |||||||
| Equity 31 December 2009 | 48,055 | 138,502 | -1,308 | -1,669 | 110,596 | -30,989 | 171,919 | 435,106 | 1,812 | 436,918 | |
| Total comprehensive income for the financial period | |||||||||||
| Income for the financial period | -5,069 | -5,069 | 842 | -4,227 | |||||||
| Other items of the total comprehensive income | |||||||||||
| Financial assets available for sale | 13 | 13 | 13 | ||||||||
| Cash flow hedge | 3,156 | 3,156 | 3,156 | ||||||||
| Net investment hedge | 322 | 322 | 322 | ||||||||
| Translation differences | 16,675 | 16,675 | 213 | 16,888 | |||||||
| Transactions with owners | |||||||||||
| Treasury shares | 23 | 37 | 37 | 37 | |||||||
| Share incentives | 24 | -25 | -25 | -25 | |||||||
| Distribution of dividends | 23 | -7,039 | -7,039 | -7,039 | |||||||
| Equity 31 December 2010 | 48,055 | 138,502 | -1,271 | 1,822 | 110,571 | -14,314 | 159,811 | 443,176 | 2,867 | 446,043 |
| Notes | 1 January – 31 December 2010 |
1 January – 31 December 2009 |
|
|---|---|---|---|
| Cash flow from operating activities | |||
| Sales income | 1,302,497 | 1,332,314 | |
| Payments received from other operating revenue | 7,627 | 4,646 | |
| Payments on operating expenses | -1,224,582 | -1,244,217 | |
| Interest paid and payments on other operating expenses | -42,723 | -38,815 | |
| Dividends received | 12 | 5 | |
| Interest payments received and other financial income | 26,756 | 17,388 | |
| Direct taxes paid | -24,894 | -9,584 | |
| Cash flow from operating activities | 44,693 | 61,737 | |
| Cash flow from investments | |||
| Investments in tangible and intangible assets | -39,615 | -32,340 | |
| Investments | -596 | -1,850 | |
| Cash flow from investments | -40,211 | -34,190 | |
| Cash flow from financing | |||
| Draw down of long-term loans | 40,814 | 41,807 | |
| Repayment of long-term loans | -56,245 | -64,768 | |
| Dividends paid | 23 | -7,039 | -5,653 |
| Treasury shares | 23 | -766 | |
| Cash flow from financing | -22,470 | -29,380 | |
| Change in cash and cash equivalents | -17,988 | -1,833 | |
| Cash and cash equivalents at the start of the financial period | 21 | 35,300 | 37,138 |
| Effect of exchange rate changes | 1,218 | -5 | |
| Cash and cash equivalents at end of financial period | 18,530 | 35,300 | |
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 Ltd since 1991. Copies of the consolidated financial statements are available online at www.atriagroup.com 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 16 February 2011. According to the Finnish Companies Act, the shareholders are entitled to approve or reject the financial statements in the Annual General Meeting to be held after their publication. The AGM can also make a decision to revise the financial statements.
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 2010 have been followed, as well as SIC and IFRIC interpretations. The IFRS refer to standards and interpretations thereof approved for application in the EU in compliance with the proceedings stipulated in EU decree (EC) 1606/2002, as referred to in the Finnish Accounting Act and subsequent regulations. The notes to the consolidated financial statements also comply with Finnish accounting and corporate legislation.
The consolidated financial statement has been prepared on acquisition cost basis with the exception of available-forsale financial assets, financial assets and liabilities measured at fair value through profit or loss and derivative instruments. From the moment of classification, the assets held for sale are measured at the lower of their book value and fair value less cost to sell.
The financial statement data is presented in units of 1,000 euros, with sums rounded off to the nearest thousand.
a) New and amended standards which must be applied by the financial period beginning on 1 January 2010
• IFRIC 9 "Reassessment of Embedded Derivatives" and amended IAS 39 "Financial Instruments: Recognition and Measurement"
• IAS 39 amendment: "Financial Instruments: Recognition and Measurement". The amendments concern hedge accounting.
c) IASB published in April 2009 improvements to 12 standards as part of the annual standard improvement process (Improvements to IFRSs). The impacts of the amendments vary depending on the standard, but the changes have not had a material impact on the consolidated financial statements.
d) New standards and interpretations which have been published but which do not have to be applied in the financial period beginning on 1 January 2010 and have not been adopted early
• IFRIC 19 "Extinguishing Financial Liabilities with Equity Instruments" is applicable in financial periods beginning on or after 1 July 2010. The interpretation clarifies the accounting approach in a situation where the terms of a financial liability are renegotiated and, as a consequence, the company issues equity instruments to a creditor to extinguish all or part of the financial liability (settling liability by equity). The Group will adopt this interpretation as of 1 January 2011. It is not expected to affect the consolidated or parent company financial statements.
• "Prepayments of a Minimum Funding Requirement" (amendments to IFRIC 14). The amendments correct an unintended consequence of IFRIC 14 "IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction". Without these amendment, companies would not be allowed to recognise as an asset in their balance sheet some voluntary prepayments for minimum funding contributions. The amendments apply in financial periods beginning on or after 1 January 2011. The amendments are not expected to affect the consolidated financial statements.
• IFRS 9 Financial Instruments, covering classification and measurement of financial assets was issued in November 2009. It was the first part in a process to replace IAS 39 "Financial Instruments: Recognition and Measurement" with a new standard. IFRS 9 contains new kinds of requirements regarding the classification and measurement of financial assets, and it is not believed to affect the accounting of financial assets in the Group. The standard will not be effective until January 2013, but early adoption is permitted. However, the standard has not yet been approved for adoption in the EU. IFRS 9 "Classification and measurement of financial liabilities" was issued in October 2010. It complements the first part of the process to replace IAS 39, which targeted on the classification and measurement of financial assets, issued in November 2009. Under the new standard the recognition and measurement of financial liabilities should remain unchanged, except for those financial liabilities to which the fair value option is applied. The amendment is not expected to affect the accounting treatment of financial liabilities in the Group. The standard is not effective until January 2013, but early adoption is allowed if the previously issued standard on the recognition and measurement of financial assets has also been adopted early. However, the standard has not yet been approved for adoption in the EU. The overall effect of IFRS 9 is only now being looked into.
When preparing the financial statements, the management must make assessments and assumptions concerning the future and affecting assets and debts in relation to responsibilities, profits and costs. The realised values may deviate from the original assessments and assumptions. In addition, deliberation must be used in applying the accounting policies. This concerns cases where the IFRS practice in force contains alternative recognition, measurement or presentation procedures. The management has exercised judgment in the classification of assets and financial assets and in the recognition of deferred tax assets and reserves.
The assessments are based on the management's view at the end date of the reporting period. Any changes in the assessments and assumptions are recognised in the accounting period in which the assessment or assumption is adjusted and in all subsequent accounting periods.
The assets and liabilities acquired in business combinations are valued using the fair value at the time of acquisition. 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.
The Group reviews any indication of impairment of tangible and intangible assets at least at the end date of each reporting period.
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 accounting policies. At the end of the accounting period, the value of the intangible assets to be tested annually was EUR 231.2 million. The recoverable amounts of cash-generating units are defined on the basis of value-in-use calculations. The cash flows resulting from these calculations are based on the five-year financial plans approved by the management (Note 14).
As a result of goodwill impairment testing, Atria Russia decided to record an impairment totalling EUR 10.8 million allocated to goodwill. Additional information on the recoverable amount susceptibility to changes in the assumptions used can be found in Note 14.
The consolidated financial statements include the parent company Atria Plc and all of its subsidiaries. Subsidiaries are companies over which the Group has control. The Group is in control when it owns over half of the voting rights or otherwise has the say in 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.
Business combinations are accounted for using the acquisition method. The consideration paid for an acquisition of a subsidiary is measured using the fair value of assigned assets and accepted liabilities. Paid consideration includes the fair value of an asset or liability arising from a contingent consideration arrangement. Acquisition costs are entered as expenses as they arise. The net assets and accepted and contingent liabilities acquired in business combinations are valued at fair value at the time of the acquisition. The interest of non-controlling owners in the acquisition target is recognised on acquisition basis either at fair value or based on their relative share of the net assets of the acquisition target.
The amount by which the sum total of paid consideration, non-controlling owners' share in the acquisition target and the fair value of the previously held interest exceeds the Group's share of the fair value of the acquired net assets is recognised as goodwill in the balance sheet. If the sum total of the consideration, non-controlling owners' share and previously held interest is less than the fair value of the acquired net assets of the subsidiary, the difference is entered directly in the profit and loss account.
All intra-Group transactions, receivables and liabilities, as well as unrealised profits are eliminated. Unrealised losses are also eliminated.
Transactions conducted with non-controlling shareholders are treated as those conducted with Group shareholders. When shares are purchased from noncontrolling shareholders, the difference between the consideration paid and the book value of the share acquired of the net assets of the subsidiary is recognised in equity. Profit or loss from the sale of shares to non-controlling shareholders is also recognised in equity.
When the control or large influence ceases to exist, any remaining interest is measured at fair value and the change in book value is recognised through profit or loss. This fair value serves as the original book value when the remaining interest is later recognised as an associate, joint venture or financial assets. In addition, the amounts of the said entity previously recognised in other comprehensive income are treated as if the Group had directly assigned the associated assets and liabilities. This may mean that amounts previously entered as other comprehensive income become accounted for through profit or loss.
If the interest in an associate diminishes but a large influence remains, only a relative share of the amounts previously recognised in other comprehensive income is accounted for through profit or loss where appropriate.
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 financial year from associates, corresponding to the Group's holding in them, has been entered as a separate item after operating profit.
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.
The consolidated financial statements are presented in euro, which is the functional and presentation currency of the parent company.
Foreign currency business transactions have been translated into euros at the exchange rate on the date of transaction. Foreign currency receivables and liabilities have been translated into euros at the exchange rate on the closing date. Exchange gains and losses arising from foreign currency transactions as well as receivables and liabilities have been recognised in the income statement, excluding loans that are part of a net investment in a foreign operation and those exchange rate changes of derivative instruments that are qualifying cash flow hedges or are used to effectively protect foreign net investments. These exchange differences have been recognised in other items of the total comprehensive income. Exchange gains and losses from operations are included in the appropriate item before operating profit. Exchange gains and losses from foreign currency-denominated loans and forward exchange agreements protecting financial transactions are included in financial income and expenses.
The profit and financial position of Group companies outside the eurozone have been accounted for in the currency that is the currency of the operating region of the company in question. The income statements of Group companies
outside the eurozone have been translated into euros at the average exchange rate for the reporting period, and the balance sheets at the rate on the closing date. The exchange difference arising from the use of different translation rates is recognised in other comprehensive income. The translation differences arising from the elimination of the acquisition costs of subsidiaries outside the eurozone and the hedge profit deriving from the corresponding net investments are recognised in other comprehensive income. When a foreign operation is partially disposed of or sold, exchange rate differences recognised in equity are recognised through profit or loss as a sales gain or loss.
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 |
| Other intangible assets | 5–10 years |
No depreciation is made on land and water. Assets which are not suited for recognition in other property, plant or equipment accounts due to their nature or depreciation periods are recognised as other tangible assets (Buildings, Machinery and equipment).
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.
Gains and losses accumulated from the disposal or transfer of tangible fixed assets are included in other operating income or expenses.
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 financial year. Lease obligations are included in interest-bearing debts.
Leases where the risks and rewards incident to ownership remain with the lessor are handled as operating 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.
Goodwill:
Goodwill is the amount by which the acquisition cost exceeds the Group's share of the fair value of the acquired subsidiary's net assets at the time of acquisition. Goodwill arising from the acquisition of subsidiaries is recognised in intangible assets. Goodwill is tested annually for impairment and entered in the balance sheet at acquisition cost less accrued impairment losses. An impairment loss recognised for goodwill is not reversed.
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 2010, they are Atria Finland, Atria Scandinavia, Atria Russia and Atria Estonia. Goodwill is measured at original cost less impairment.
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 |
*) Includes e.g. computer software and subscription fees
On each closing 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 of cash from goodwill and intangible assets with indefinite useful lives is assessed annually and whenever indications of impairment are detected. The recoverable amount is the fair value of the asset less costs to sell or, if higher, the asset's value in use. If the recoverable amount cannot be assessed per item, the impairment need is observed on the level of cash-flow generating units, i.e. at the lowest unit level which is mainly independent of other units and at which cash flows can be distinguished from other cash flows.
Impairment loss is recognised if the book value of the asset is higher than the recoverable amount. Impairment loss is recognised immediately in the income statement. If the impairment loss arises with regard to a cash-generating unit, it is first allocated to reduce the goodwill 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 are measured at the lower of original cost or probable net realisable value. The 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 realisable value is the estimated selling price in the ordinary course of business, less the estimated costs related to sales.
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 tangible assets and other biological assets are included in inventories.
Agricultural products harvested of the biological assets at harvest time are valued at fair value, less estimated sales-related costs. Valuation after harvest is conducted in accordance with inventories' valuation principles.
The fair value of productive biological assets is based on acquisition price less a cost corresponding to the reduction of value in use due to the aging of animals. There is no available market price for productive animals. The fair value of consumable biological assets (slaughter animals) equals their market price, which is based on the company's slaughter animal procurement/sales in the local market. The fair value of consumable biological assets (growing crops) is based on production costs.
The Group's financial assets are divided into the following groups:
The classification is made on the basis of the purpose of the acquisition, and the assets are classified in connection with the original acquisition.
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. The derivatives used by the company that do not fulfil the hedge accounting conditions in IAS 39 have been classified as held for trading. The assets belonging to this group have been classified as current assets.
Loans and other receivables are non-derivative financial assets which involve payments that are fixed or determinable and which are not noted on active markets. They are included in current assets, except when they fall due within more than 12 months of the end date of the reporting period. These assets are classified as non-current assets. The trade and other receivables
as well as cash and cash equivalents in financial assets are also included in the Group's loans and other receivables.
Financial assets available for sale are non-derivative assets that have been prescribed to this group or that have not been prescribed to any other group. They are included in noncurrent assets unless they fall due or are intended to be kept for less than 12 months from the closing date, in which case they are included in current assets.
Regular purchases and sales of financial assets are recognised on the basis of the trading date, i.e., the date on which the Group commits to purchase or sell the asset. Financial assets are classified as non-current assets when they fall due more than 12 months from the closing date. If financial assets are intended to be kept for less than 12 months, they are classified as current assets.
Financial assets are derecognised when the rights to receive cash flows from investments have expired or have been transferred to another party and the Group has transferred substantially all risks and rewards of ownership.
Investments in financial assets not recognised at fair value through profit or loss are initially recognised at fair value plus all transaction costs that are directly attributable to the acquisition or issue. Financial assets recognised at fair value through profit or loss are initially recognised at fair value, and all transaction costs are expensed in the income statement.
Financial assets recognised at fair value through profit or loss and available-for-sale financial assets are subsequently measured at fair value. Loans and other receivables are measured at amortised cost using the effective interest method.
Unrealised and realised profits and losses due to changes in the fair value of the "financial assets at fair value through profit or loss" group are recognised in the income statement in the accounting period in which they occur. Exchange differences and changes in the fair value of assets classified as available for sale are recognised in other comprehensive income and are presented in the fair value fund, taking into consideration the tax effect.
When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are transferred to the income statement as financial income and expenses. Dividends on available-for-sale equity instruments are recognised in the income statement when the Group's right to receive payments is established. The fair values of quoted investments are based on current bid
prices. If the market for a financial asset is not active (and for unlisted securities), fair value is established through valuation techniques. These include the use of recent arm's-length transactions between independent parties, fair values of other instruments that are substantially the same and discounted cash flow analysis. The models make maximum use of market inputs and relies as little as possible on entity-specific inputs. Whether there is objective proof of impairment of a financial asset or financial asset group is estimated on each closing date. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its acquisition cost is considered as an indicator that the securities are impaired. If any such evidence exists, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments will not be reversed through the income statement.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The derivatives hedge accounting is applied to are defined as either:
• hedges of interest rate, currency or electricity price risks associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or • hedges of a net investment in a foreign operation (net investment hedge).
The relationship between hedging instruments and hedged items is documented at the inception of the hedging transaction. Risk management objectives and strategies for undertaking various hedging transactions are documented as well. The Group documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other items of the total comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement under the proper item. Gains and losses accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or loss (for example, when the forecast purchase that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventories or fixed assets), the gains and losses previously deferred in equity are transferred from equity and included in the initial acquisition cost of the asset. The deferred amounts are ultimately recognised in costs of goods sold in case of inventories, or in depreciations in case of fixed assets. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at the time remains in equity and is recognised in the income statement only when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement under the proper item.
Hedges of net investments in foreign operations are accounted for in the same way as cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other items of the total comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Gains and losses accumulated in equity are included in the income statement when the foreign operation is partially disposed of or sold.
Certain derivative instruments do not meet the criteria for hedge accounting. All changes in the fair value of this kind of derivatives are immediately recognised in the proper item of the income statement.
Trade receivables are initially recognised at fair value and are subsequently measured at amortised cost using the effective interest rate method and taking impairment into account. Provisions for impairment for trade receivables are recognised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired.
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.
Cash and cash equivalents comprise cash and bank deposits available on demand. 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.
Non-current assets are classified as held for sale if their book value is to be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary. Furthermore, management must be committed to the sale, which should be expected to occur within one year of the date of classification.
Immediately before being classified as held for sale, these assets are measured in accordance with the applicable IFRS standards. Thereafter, the assets are measured at the lower of their book value and fair value less cost to sell. These assets are no longer depreciated after the classification.
Ordinary shares are presented as share capital. Expenses related to the issue or acquisition of equity instruments are presented as a deductible item under equity.
If a Group company acquires shares in the company, the consideration paid for them and the expenses arising directly from the acquisition, taking into consideration the tax effect, are deducted from the shareholders' equity until the shares are either cancelled or reissued. If the shares are reissued, the consideration received for them less transaction costs directly attributable to the shares is included in the shareholders' equity, taking into consideration the tax effect.
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.
A one-off credit fee related to committed credit facilities is spread over the duration of the agreement. The credit limit fees related to such facilities are recognised as a cost based on the passing of time.
A reservation is entered when the Group has, due to a past event, a judicial or factual obligation, and the obligation is likely to materialise and the sum of the obligation can be reliably estimated. Reservations are valued at the current value of the expenses required to cover the obligation. The amounts of reservations are assessed on each closing date and their amounts are adjusted to correspond to the best estimate at that time. Changes in reservations are recognised in the income statement in the same item where the original reservation was entered.
Turnover includes profits from the sale of products and services, as well as raw materials and equipment, adjusted by indirect taxes and discounts.
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.
Rental income is recognised on a straight-line basis over the lease period.
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.
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 reporting period to which they apply. The Group's pension plans are mainly defined contribution plans. Swedish ITP pension arrangements are multi-employer defined benefit plans. Sufficient information on these arrangements has not been acquired to allocate liabilities and assets, and therefore these plans are treated as defined contribution plans in the financial statements.
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 awarded under the programme are measured at fair value at the time of awarding and recognised in the income statement as an expense arising from employee benefits spread over 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. More information on share-based payments in Note 24.
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. The Group has no activated development costs.
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. In the period under review, production subsidies for agricultural operations in Russia and Estonia have been recognised as government grants. The nature of the grants varies from one country to the next and the grants are only paid after all the terms and conditions of the grant have been met, so the company does not have a repayment obligation regarding grants received. No significant change is anticipated regarding the amount of 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.
The tax expense in the income statement consists of current tax, tax adjustments from previous financial years, and deferred tax. Taxes are entered in the income statement except if they are connected to other comprehensive income or to items recognised directly in equity. In this case the tax is also entered in other comprehensive income or directly 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.
The Group's operating segments are based on the Group's internal organisation structure and internal financial reporting, which the Group's Board of Directors uses in strategic and operative decision-making. The Group's Board of Directors assesses the performance of the operating segments based on net sales, EBIT and return on capital employed. 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 Baltic. In addition, Group costs are now 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. The transactions between the segments take place at market price.
The group has two customers, with whom the value of the trade is between 10 and 15 percent of the Group's net sales. The net sales in question is reported in the operating segments Finland, Russia and Baltic.
| Operating segments | Finland | Scandinavia | Russia | Baltic | Unallocated | Eliminations | Group |
|---|---|---|---|---|---|---|---|
| Net sales | |||||||
| External | 753,655 | 383,190 | 129,248 | 34,813 | 1,300,906 | ||
| Internal | 14,114 | 8,440 | 152 | -22,706 | 0 | ||
| Total net sales | 767,769 | 391,630 | 129,248 | 34,965 | 1,300,906 | ||
| EBIT | 30,690 | 13,895 | -27,943 | -3,666 | -3,220 | 9,756 | |
| Financial income and expenses | -11,123 | ||||||
| Income from joint ventures and associates | 1,672 | ||||||
| Income taxes | -4,532 | ||||||
| Profit for the period | -4,227 | ||||||
| Assets | 492,025 | 413,066 | 188,235 | 52,167 | -33,878 | 1,111,615 | |
| Liabilities | 241,924 | 299,224 | 141,688 | 16,614 | -33,878 | 665,572 | |
| Return on capital employed | |||||||
| (ROCE) % | 7.9% | 5.3% | -16.9% | -9.6% | 1.1% | ||
| Investments | 13,254 | 9,524 | 22,624 | 765 | 46,167 | ||
| Depreciation | 28,749 | 11,662 | 8,102 | 2,985 | 51,498 | ||
| Impairment | 210 | 10,825 | 19 | 11,054 | |||
| Operating segments | Finland | Scandinavia | Russia | Baltic | Unallocated | Eliminations | Group |
|---|---|---|---|---|---|---|---|
| Net sales | |||||||
| External | 766,611 | 399,018 | 112,956 | 37,413 | 1,315,998 | ||
| Internal | 15,312 | 6,200 | 134 | -21,646 | 0 | ||
| Total net sales | 781,923 | 405,218 | 112,956 | 37,547 | 1,315,998 | ||
| EBIT | 42,910 | 9,973 | -9,819 | -12,485 | -3,065 | 27,514 | |
| Financial income and expenses | -12,409 | ||||||
| Income from joint ventures and associates | 1,439 | ||||||
| Income taxes | -9,097 | ||||||
| Profit for the period | 7,447 | ||||||
| Assets | |||||||
| Segment assets | 512,265 | 369,411 | 184,402 | 54,261 | -26,446 | 1,093,893 | |
| Investments in joint ventures | |||||||
| and associates | 7,437 | 7 | 7,444 | ||||
| Total assets | 519,702 | 369,411 | 184,402 | 54,268 | -26,446 | 1,101,337 | |
| Liabilities | 266,394 | 262,528 | 147,518 | 14,425 | -26,446 | 664,419 | |
| Return on capital employed | |||||||
| (ROCE) % | 10.2% | 4.0% | -6.9% | -26.5% | 3.1% | ||
| Investments | 14,154 | 5,291 | 11,965 | 1,616 | 33,026 | ||
| Depreciation | 29,584 | 11,245 | 6,254 | 3,283 | 50,366 | ||
| Impairment | 96 | 775 | 187 | 7,217 | 8,275 |
| 2. Net sales, EUR 1,000 | 2010 | 2009 |
|---|---|---|
| Sale of goods | 1,286,489 | 1,302,033 |
| Sale of services | 5,227 | 5,953 |
| Other sales | 9,190 | 8,012 |
| Total | 1,300,906 | 1,315,998 |
| 3. Research and development costs, EUR 1,000 | ||
| The income statement includes R&D costs booked as costs to the amount of | 10,287 | 9,382 |
| 4. Fees paid to auditors, EUR 1,000 | ||
| Fees paid to auditing Reports and statements |
546 33 |
494 11 |
| Tax consulting | 46 | 18 |
| Other fees | 93 | 42 |
| Total | 718 | 565 |
| 5. Other operating income, EUR 1,000 | ||
| Sales income from fixed assets | 87 | 116 |
| Cancellation of contingent consideration | 2,922 | |
| Contributions received | 366 | 407 |
| Others *) Total |
4,339 7,714 |
4,123 4,646 |
| *) including rental income and sales income from by-products | ||
| 6. Other operating expenses, EUR 1,000 | ||
| Sales loss from fixed assets | 1,233 | |
| Impairment of fixed assets | 1,263 | 3,481 |
| Depreciation on intangible assets | 11,774 | 4,956 |
| Others *) | 3,650 | 8,165 |
| Total | 17,920 | 16,602 |
| *) including costs related to the sales of by-products, credit losses and non-recurring restructuring costs | ||
| 7. Personnel expenses, EUR 1,000 | ||
| Expenses from employee benefits: | ||
| Salaries and wages | 180,916 | 184,766 |
| Pension costs - contribution plans | 28,061 | 23,854 |
| Other staff-related expenses | 19,795 | 26,748 |
| Total | 228,772 | 235,368 |
| Information on management employee benefits is presented in Note 32. Information on granted share incentives is presented in Note 24. | ||
| Expenses from employee benefits per operation: | ||
| Costs of goods sold | 177,632 | 183,353 |
| Sales and marketing expenses | 27,945 | 26,308 |
| Administrative expenses | 23,195 | 25,707 |
| Total | 228,772 | 235,368 |
| 2010 | 2009 | |
|---|---|---|
| Group personnel on average by segment: | ||
| Finland | 2,089 | 2,222 |
| Scandinavia | 1,205 | 1,394 |
| Russia | 2,048 | 2,003 |
| Baltic | 470 | 595 |
| Total | 5,812 | 6,214 |
| Depreciation and impairment per operation: | ||
|---|---|---|
| Costs of goods sold | 46,129 | 44,924 |
| Sales and marketing expenses | 1,572 | 990 |
| Administrative expenses | 4,066 | 4,452 |
| Other operating expenses | 10,785 | 8,275 |
| Total | 62,552 | 58,641 |
72
| Financial income: | ||
|---|---|---|
| Interest income from loan assets | 2,986 | 3,472 |
| Exchange rate profits from loan assets | 26,470 | 14,640 |
| Dividends received from financial assets for sale | 12 | 5 |
| Other financial income | 28 | 6,008 |
| Changes in the value of financial assets at fair value through profit or loss | ||
| - Derivative instruments - not in hedge accounting | 2,004 | 532 |
| Total | 31,500 | 24,657 |
| Financial expenses: | ||
| Interest expenses from financial liabilities valued at amortised cost | -10,694 | -14,780 |
| Exchange rate losses from financial liabilities valued at amortised cost | -20,472 | -12,231 |
| Other financial expenses | -2,351 | -1,598 |
| Changes in the value of financial assets at fair value through profit or loss | ||
| - Derivative instruments - not in hedge accounting | -9,106 | -8,457 |
| Total | -42,623 | -37,066 |
| Financial income and expenses, total | -11,123 | -12,409 |
During the year 2009, compensation in the amount of about EUR 6 million for the delayed completion of the meat product plant in Gorelovo, St Petersburg, was recorded under other financial income.
| Items related to financial instruments and recognised in other items of the total comprehensive income before taxes: | ||
|---|---|---|
| Cash flow hedges | 4,207 | -1,950 |
| Financial assets available for sale | 17 | 46 |
| Translation differences | 16,888 | 2,510 |
| Total | 21,112 | 606 |
| 10. Income taxes, EUR 1,000 | ||
| Taxes in the income statement: | ||
| Tax based on the taxable profit for the period | 6,956 | 15,221 |
| Retained taxes | 181 | -154 |
Deferred tax -2,605 -5,970 Total 4,532 9,097
| 2010 | 2009 | ||
|---|---|---|---|
| Balancing of income statement taxes to profit before taxes: | |||
| Profit before taxes | 305 | 16,544 | |
| Taxes calculated with parent company's 26% tax rate | 79 | 4,301 | |
| Effect of foreign subsidiaries' deviating tax rates | 3,175 | 2,148 | |
| Effect from associates' earnings | -432 | -373 | |
| Retained taxes | 579 | -154 | |
| Effect of tax-free income | -1,179 | -97 | |
| Effect of costs that are undeductible in taxation | 2,315 | 325 | |
| Unrecognised deferred tax assets | 61 | 2,995 | |
| Other changes | -66 | -48 | |
| Total | 4,532 | 9,097 | |
| Taxes recognised in other items of the total comprehensive income | Before tax | Tax effects | After tax |
| 2010 | |||
| Cash flow hedges | 4,207 | -1,051 | 3,156 |
|---|---|---|---|
| Net investment hedge | 434 | -112 | 322 |
| Financial assets available for sale | 17 | -4 | 13 |
| Translation differences | 16,888 | 16,888 | |
| Total | 21,546 | -1,167 | 20,379 |
| 2009 | |||
| Cash flow hedges | -1,950 | 507 | -1,443 |
| Net investment hedge | -434 | 112 | -322 |
| Financial assets available for sale | 48 | -33 | 15 |
| Translation differences | 2,510 | 2,510 | |
| Total | 174 | 586 | 760 |
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.
| -5,069 | 7,073 |
|---|---|
| 28,156 | 28,160 |
| -0,18 | 0,25 |
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. Shares transferred through the Group's share incentive plan have a dilution effect. The share incentive plan criteria based on the 2010 result are not met and, therefore, no dilutive shares exist.
| Land and | Buildings and | Machinery and | Other tangible | Acquisitions in | ||
|---|---|---|---|---|---|---|
| water | structures | equipment | assets | progress | Total | |
| Acquisition cost, 1 Jan 2010 | 6,693 | 427,337 | 496,820 | 5,737 | 38,770 | 975,357 |
| Business combinations | ||||||
| Increases | 5,849 | 31,537 | 41,619 | 290 | 34,220 | 113,515 |
| Decreases | -3,865 | -19,687 | -3,200 | -58,213 | -84,965 | |
| Exchange differences | 439 | 9,266 | 19,159 | 22 | 1,332 | 30,218 |
| Acquisition cost, 31 Dec 2010 | 12,981 | 464,275 | 537,911 | 2,849 | 16,109 | 1,034,125 |
| Accumulated depreciation | ||||||
| and impairment, 1 Jan 2010 | -167,707 | -338,263 | -2,076 | -27 | -508,073 | |
| Business combinations | ||||||
| Decreases | 1,556 | 6,748 | 1,349 | 27 | 9,680 | |
| Depreciation | -12,510 | -35,632 | -565 | -48,707 | ||
| Impairment | -421 | -51 | -8 | -480 | ||
| Exchange differences | -3,762 | -12,673 | -11 | -16,446 | ||
| Accumulated depreciation | ||||||
| and impairment, 31 Dec 2010 | -182,844 | -379,871 | -1,311 | 0 | -564,026 | |
| Book value, 1 Jan 2010 | 6,693 | 259,630 | 158,557 | 3,661 | 38,743 | 467,284 |
| Book value, 31 Dec 2010 | 12,981 | 281,431 | 158,040 | 1,538 | 16,109 | 470,099 |
| Land and water |
Buildings and structures |
Machinery and equipment |
Other tangible assets |
Acquisitions in progress |
Total | |
|---|---|---|---|---|---|---|
| Acquisition cost, 1 Jan 2009 | 7,395 | 413,403 | 478,037 | 8,434 | 46,060 | 953,329 |
| Business combinations | ||||||
| Increases | 15,721 | 19,077 | 936 | 11,825 | 47,559 | |
| Decreases | -876 | -1,883 | -5,344 | -3,461 | -17,886 | -29,450 |
| Exchange differences | 174 | 96 | 5,050 | -172 | -1,229 | 3,919 |
| Acquisition cost, 31 Dec 2009 | 6,693 | 427,337 | 496,820 | 5,737 | 38,770 | 975,357 |
| Accumulated depreciation | ||||||
| and impairment, 1 Jan 2009 | -152,580 | -304,106 | -4,824 | -461,510 | ||
| Business combinations | ||||||
| Decreases | 1,196 | 5,259 | 3,212 | 9,667 | ||
| Depreciation | -12,170 | -34,489 | -538 | -47,197 | ||
| Impairment | -3,109 | -1,265 | -60 | -27 | -4,461 | |
| Exchange differences | -1,044 | -3,662 | 134 | -4,572 | ||
| Accumulated depreciation | ||||||
| and impairment, 31 Dec 2009 | -167,707 | -338,263 | -2,076 | -27 | -508,073 | |
| Book value, 1 Jan 2009 | 7,395 | 260,823 | 173,931 | 3,610 | 46,060 | 491,819 |
| Book value, 31 Dec 2009 | 6,693 | 259,630 | 158,557 | 3,661 | 38,743 | 467,284 |
Assets acquired with financial leasing contracts are included in machinery and equipment. The acquisition cost recognised on the basis of the financial leasing contracts was EUR 5.4 million (EUR 6.9 million) and accumulated depreciation was EUR 1.0 million (EUR 3.7 million). Book value of assets was EUR 4.4 million (EUR 3.3 million).
The value of property, plant and equipment does not include borrowing costs. The Group has not received government grants for the acquisition of fixed assets during the 2010 accounting period.
The tangible assets used as loan collateral amount to EUR 9.0 million (EUR 9.7 million).
| 13. Biological assets, EUR 1,000 | 2010 | 2009 |
|---|---|---|
| Biological assets: | ||
| Productive | 1,891 | 1,811 |
| Consumable | 5,765 | 5,440 |
| At end of the period | 7,656 | 7,251 |
| Amounts of biological assets at the end of the period: | ||
| Boars / number | 57 | 69 |
| Sows, gilts/number | 7,298 | 7,531 |
| Dairy cattle / number | 749 | 739 |
| Pigs for fattening / number | 58,361 | 54,615 |
| Yearling, heifer/ number | 723 | 681 |
| Chicken eggs, chicken chicks / number | 1,710,345 | 1,742,488 |
| Growing crops / hectares | 1,238 | 414 |
| Production of agricultural products during the period: | ||
| Pork/1,000 kg | 10,369 | 6,804 |
| Beef/1,000 kg | 67 | 133 |
| Chicken/1,000 kg | 32,886 | 28,872 |
| Milk/1,000 kg | 5,238 | 5,551 |
| Cereal/1000 kg | 15,113 | 15,090 |
Agricultural production is practised in order to control raw material risks in the meat product business. Any increase in the cost of agricultural production is, if possible, passed on in the production chain to the meat product business and to the meat product sale prices.
| Customer | Other intangible |
||||
|---|---|---|---|---|---|
| Intangible assets | Goodwill | Trademarks | relationships | assets | Total |
| Acquisition cost, 1 Jan 2010 | 176,621 | 67,085 | 2,347 | 18,044 | 264,097 |
| Increases | 2,270 | 2,270 | |||
| Decreases | -1,048 | -514 | -1,562 | ||
| Exchange differences | 17,914 | 7,058 | 252 | 25,224 | |
| Acquisition cost, 31 Dec 2010 | 193,487 | 74,143 | 2,347 | 20,052 | 290,029 |
| Accumulated depreciation and | |||||
| impairment 1 Jan 2010 | -18,820 | -3,600 | -903 | -12,965 | -36,288 |
| Depreciation on decreases | 514 | 514 | |||
| Depreciation | -358 | -422 | -2,008 | -2,788 | |
| Impairment | -10,785 | -10,785 | |||
| Exchange differences | -959 | -1,056 | -217 | -2,232 | |
| Accumulated depreciation, 31 Dec 2010 | -30,564 | -5,014 | -1,325 | -14,676 | -51,579 |
| Book value, 1 Jan 2010 | 157,801 | 63,485 | 1,444 | 5,079 | 227,809 |
| Book value, 31 Dec 2010 | 162,923 | 69,129 | 1,022 | 5,376 | 238,450 |
| Other | |||||
| Customer | intangible | ||||
| Intangible assets | Goodwill | Trademarks | relationships | assets | Total |
| Acquisition cost, 1 Jan 2009 | 166,291 | 65,176 | 2,347 | 16,170 | 249,984 |
| Increases | 1,133 | 40 | 1,611 | 2,784 | |
| Decreases | -259 | -259 | |||
| Exchange differences | 9,197 | 1,869 | 522 | 11,588 | |
| Acquisition cost, 31 Dec 2009 | 176,621 | 67,085 | 2,347 | 18,044 | 264,097 |
| Accumulated depreciation | |||||
| and impairment, 1 Jan 2009 | -15,237 | -2,089 | -432 | -10,673 | -28,431 |
| Depreciation on decreases | 258 | 258 |
| Depreciation | -294 | -471 | -2,404 | -3,169 | |
|---|---|---|---|---|---|
| Impairment | -3,000 | -800 | -14 | -3,814 | |
| Exchange differences | -583 | -417 | -132 | -1,132 | |
| Accumulated depreciation, 31 Dec 2009 | -18,820 | -3,600 | -903 | -12,965 | -36,288 |
| Book value, 1 Jan 2009 | 151,054 | 63,087 | 1,915 | 5,497 | 221,553 |
| Book value, 31 Dec 2009 | 157,801 | 63,485 | 1,444 | 5,079 | 227,809 |
During the 2010 accounting period, the company reached an agreement concerning the contingent consideration for the Campomos acquisition. The change in the purchase price reduced the amount of goodwill created by the acquisition by EUR 1.0 million.
Goodwill and intangible assets with indefinite useful lives are allocated to the Group's cash-generating units as follows:
| Goodwill | Trademarks | ||||
|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | ||
| Atria Finland | 3,721 | 3,721 | |||
| Atria Scandinavia | 150,140 | 133,975 | 58,481 | 52,835 | |
| Atria Russia | 0 | 11,043 | 5,247 | 4,963 | |
| Atria Estonia | 9,062 | 9,062 | 4,516 | 4,516 | |
| Total | 162,923 | 157,801 | 68,244 | 62,314 | |
The recoverable amount of a cash-generating unit is defined on the basis of value-in-use calculations. These calculations use cash flow forecasts that are based on budgets approved by the management are defined before taxes and extend over a five-year period. Cash flows after the five-year forecast period are extrapolated using the growth rates presented below. The growth rate used does not exceed the average long-term growth rate of the industry in which the unit that generates the cash flow operates.
| Key assumptions for 2010 | Atria Finland | Atria Scandinavia |
Atria Russia brand |
Atria Estonia | |
|---|---|---|---|---|---|
| Long-term net sales growth rate | 1.0% | 1.0% | 4.5% | 1.0% | |
| Discount rate defined before taxes | 5.4% | 6.1% | 11.1% | 6.1% | |
| Atria | |||||
| Key assumptions for 2009 | Atria Finland | Scandinavia | Atria Russia | Atria Estonia | |
| Long-term net sales growth rate | 1.0% | 1.0% | 5.0% | 1.0% | |
| Discount rate defined before taxes | 5.3% | 5.4% | 10.0% | 7.5% |
The most important assumptions used in Atria's impairment testing for cash flow forecasts are growth in net sales and long-term EBIT margin. The growth and profitability assumptions used are based on the profitability levels and growth rate in net sales that the company has experienced in the near past in Finland and Scandinavia. EBIT margins are expected to be close to the Group's targeted level of 5%. The improving long-term profitability of the Baltic business area is based on the assumptions that the ongoing improvement measures, the more profitable use of meat raw material and the improvement of the general market situation will make the company profitable in the next few years.
Growth percentage assumptions are moderate in all market areas. Russia's higher growth projection is due to its higher market growth expectations and the relatively high growth projection for meat consumption. Due to the relatively stable development of the food industry and moderately optimistic growth forecasts, it is unlikely that the growth rate assumptions will generate impairment losses in the future.
As regards EBIT margins, impairment losses must be recognised if the long-term level in Scandinavia remains about 42% below the assumption and 38% below the assumption in Estonia. In Finland, the EBIT percentage should be approximately 93% below the assumption before the need for impairment arises.
Discount rates could produce impairment losses (all cash flow forecasts being equal) if they increased by 3.1 percentage points in Scandinavia and 1.7 percentage points in Estonia. In Finland, an increase by over 11 percentage points would lead to impairments. Clearly higher discount rates would mean that the market situation has changed in such a way that the change could affect Atria's cash flows as well. Therefore, the above-mentioned increases in discount rates do not directly mean that there would be a need for impairment.
Goodwill impairment testing performed as a result of a decline in market demand, steep rise of meat raw material prices and weakened margins led to the company recording goodwill impairment losses of EUR 10.8 million in Atria Russia during the third quarter of the period.
In the financial statements, a separate test was conducted on a trademark with an indefinite useful life for Atria Russia. The testing did not indicate a need for recognising an impairment loss. On the basis of a sensitivity analysis, an impairment loss is not likely to be recognised for the trademark in the coming years, either.
| Investments in joint ventures and associates | 2010 | 2009 | ||||
|---|---|---|---|---|---|---|
| In joint ventures: | ||||||
| At the beginning of the period | 1,038 | 889 | ||||
| Share of earnings for the period | 1,576 | 165 | ||||
| Dividends received | -33 | -16 | ||||
| Other changes | 2,171 | |||||
| At the end of the period | 4,752 | 1,038 | ||||
| In associates: | ||||||
| At the beginning of the period | 6,406 | 5,248 | ||||
| Share of earnings for the period | 96 | 1,274 | ||||
| Dividends received | -39 | -116 | ||||
| Other changes | 647 | |||||
| At the end of the period | 7,110 | 6,406 | ||||
| Total | 11,862 | 7,444 | ||||
| Joint ventures | Ownership | |||||
| and associates | Domicile | Assets | Liabilities | Net sales | Profit/loss | share (%) |
| 2010 | ||||||
| Joint ventures: | ||||||
| Best-In Oy | Kuopio | 1,602 | 726 | 5,019 | 73 | 50,0 |
| Honkajoki Oy Group | Honkajoki | 17,356 | 9,519 | 25,939 | 2,733 | 50,0 |
| Länsi-Kalkkuna Oy | Säkylä | 3,696 | 2,974 | 24,313 | 26 | 50,0 |
| Associates: | ||||||
| OOO Dan-Invest | Krasnodar, Russia | 24,096 | 16,994 | 557 | -510 | 26,0 |
| Findest Protein Oy *) | Kaustinen | 3,131 | 1,690 | 3,535 | 141 | 41,7 |
| Finnpig Oy Group | Seinäjoki | 2,838 | 2,029 | 3,411 | 118 | 50,0 |
| Foodwest Oy | Seinäjoki | 1,040 | 254 | 2,002 | -6 | 33,5 |
| KOY Itikanmäen Teol | ||||||
| lisuustalo | Seinäjoki | 3,720 | 68 | 174 | -8 | 13,2 |
| OÜ LKT Invest | Valga, Estonia | 220 | 20 | 26,0 | ||
| LTK Co-operative | Hämeenlinna | 10,673 | 2,009 | 21,510 | 548 | 40,7 |
| Tuoretie Oy | Seinäjoki | 8,148 | 7,231 | 60,564 | -1 | 33,3 |
| 2009 | ||||||
| Joint ventures: | ||||||
| Best-In Oy | Kuopio | 1,628 | 758 | 5,617 | 134 | 50,0 |
| Länsi-Kalkkuna Oy | Säkylä | 3,629 | 2,932 | 25,576 | 197 | 50,0 |
| Associates: | ||||||
| Finnpig Oy Group | Seinäjoki | 2,609 | 1,880 | 2,979 | 216 | 50,0 |
| Findest Protein Oy | Kaustinen | 3,541 | 2,102 | 3,572 | 65 | 40,6 |
| Foodwest Oy | Seinäjoki | 1,149 | 339 | 1,982 | 92 | 33,5 |
| Honkajoki Oy Group | Honkajoki | 14,707 | 9,622 | 21,365 | 1,434 | 47,8 |
| OÜ LKT Invest | Valga, Estonia | 200 | 9 | 26,0 | ||
| LTK Co-operative | Hämeenlinna | 10,238 | 2,000 | 22,888 | 953 | 40,7 |
| Tuoretie Oy | Seinäjoki | 7,832 | 6,913 | 63,717 | -12 | 33,3 |
*) Ownership share: direct 16.6% and indirect 25.1 %
| 2010 | 2009 | |
|---|---|---|
| Other financial assets include financial assets available for sale: | ||
| Financial assets available for sale, 1 Jan | 2,307 | 2,111 |
| Exchange differences | -1 | 8 |
| Increases | 17 | 219 |
| Decreases | -737 | -31 |
| Financial assets available for sale, 31 Dec | 1,586 | 2,307 |
| Financial assets available for sale include the following items: | ||
| Listed securities | 181 | 164 |
| Unlisted securities | 1,405 | 2,143 |
| Total | 1,586 | 2,307 |
| Financial assets available for sale are | ||
| denominated in the following currencies: | ||
| EUR | 1,505 | 2,225 |
| SEK | 81 | 82 |
| Total | 1,586 | 2,307 |
| Balance sheet values 2010 |
Balance sheet values 2009 |
|
|---|---|---|
| Trade receivables from producers |
11,309 | 9,428 |
| Loan receivables | 6,597 | 6,406 |
| Other receivables | 918 | 4,538 |
| Derivative financial instruments - in hedge accounting | 1,321 | |
| Accrued credits and deferred | ||
| charges | 21 | 22 |
| Total | 20,166 | 20,394 |
| Fair values do not deviate significantly from balance sheet values. | ||
Non-current receivables were divided into currencies as follows:
| EUR | 19,720 | 19,864 |
|---|---|---|
| SEK | 425 | 506 |
| RUR | 2 | |
| Others | 21 | 22 |
| Total | 20,166 | 20,394 |
Trade receivables from producers include feed and animal trading receivables from animal payments, which fall due in more than 12 months. The credit risk of these receivables is explained in Note 20.
No impairment has been recognised for loans and other receivables.
The maximum credit risk for loans and other receivables is equivalent to their book value.
| Deferred tax assets and liabilities | 2010 | 2009 | ||||
|---|---|---|---|---|---|---|
| Deferred tax assets: | ||||||
| Tax asset to be realised in more than 12 months | 11,142 | 6,697 | ||||
| Tax asset to be realised within 12 months | 311 | 328 | ||||
| Total | 11,453 | 7,025 | ||||
| Deferred tax liabilities: | ||||||
| Tax liability to be realised in more than 12 months | 46,306 | 41,186 | ||||
| Tax liability to be realised within 12 months | 491 | 0 | ||||
| Total | 46,797 | 41,186 | ||||
| Recog | Recognised in | |||||
| nised in | other items of the | |||||
| Changes to deferred taxes | the income | Exchange | total comprehensive | Recognised | ||
| in 2010 | 1 Jan 2010 | statement | differences | income | in equity | 31 Dec 2010 |
| Deferred tax assets: | ||||||
| Provisions | 101 | -1 | 100 | |||
| Recognised losses | 3,277 | 5,196 | 30 | 193 | 8,696 | |
| Benefit-based pension obligations | 16 | -16 | 0 | |||
| Depreciation differences and voluntary provisions | 1,270 | -736 | 2 | 536 | ||
| Other items | 2,462 | -158 | 222 | -405 | 2,121 | |
| Total | 7,025 | 4,387 | 253 | -405 | 193 | 11,453 |
| Deferred tax liabilities: | ||||||
| Valuation of tangible and intangible assets | ||||||
| at fair value upon acquisition | -16,170 | 836 | -2,608 | 483 | -17,459 | |
| Depreciation differences and voluntary provisions | -24,844 | -1,140 | -1,026 | -27,010 | ||
| Other items | -172 | -1,478 | -156 | -522 | -2,328 | |
| Total | -41,186 | -1,782 | -3,790 | -522 | 483 | -46,797 |
| Recog | Recognised in | |||||
| nised in | other items of the | |||||
| Changes to deferred taxes | the income | Exchange | total comprehensive | Recognised | ||
| in 2009 | 1 Jan 2009 | statement | differences | income | in equity | 31 Dec 2009 |
| Deferred tax assets: | ||||||
| Recognised losses | 386 | 2,899 | -8 | 3,277 | ||
| Benefit-based pension obligations | 33 | -17 | 16 | |||
| Depreciation differences and voluntary provisions | 1,241 | 10 | 19 | 1,270 | ||
| Other items | 534 | 1,265 | 52 | 611 | 2,462 | |
| Total | 2,194 | 4,157 | 63 | 611 | 7,025 | |
| Deferred tax liabilities: |
| Valuation of tangible and intangible assets at fair value upon acquisition |
-16,484 | 408 | -94 | -16,170 | |
|---|---|---|---|---|---|
| Depreciation differences and voluntary provisions | -26,233 | 1,891 | -502 | -24,844 | |
| Other items | 317 | -486 | 22 | -25 | -172 |
| Total | -42,400 | 1,813 | -574 | -25 | -41,186 |
Deferred tax assets for unused tax losses are recognised to the amount for which obtaining tax benefits on the basis of taxable profit is likely. The accounting period's losses, for which deferred tax assets have been left unrecognised, amount to EUR 0.4 million.
| Deferred tax assets recognised | ||||
|---|---|---|---|---|
| from recognised losses expire as follows: | Finland | Sweden | Russia | Total |
| 2016 | 40 | 40 | ||
| 2017 | 557 | 557 | ||
| 2018 | 113 | 0 | 113 | |
| 2019 | 3,075 | 3,075 | ||
| 2020 | 4,465 | 4,465 | ||
| 2021 | 154 | 292 | 446 | |
| Total | 267 | 292 | 8,137 | 8,696 |
| 2010 | 2009 | |
|---|---|---|
| Materials and supplies | 42,979 | 42,343 |
| Unfinished products | 14,616 | 16,700 |
| Finished products | 43,559 | 47,603 |
| Other inventories | 4,180 | 3,485 |
| Total | 105,334 | 110,131 |
During the accounting period, EUR 0.8 million (EUR 1.5 million), i.e., the amount used to lower the book value of the inventories to a value comparable with the net realisable value, was recognised as expenses.
| 2010 | 2009 | |
|---|---|---|
| Trade receivables | 135,467 | 132,393 |
| Trade receivables from producers | 30,621 | 31,362 |
| Loan receivables | 3,143 | 4,109 |
| Other receivables | 19,827 | 21,377 |
| Derivative financial instruments - not in hedge accounting | 299 | |
| Derivative financial instruments - in hedge accounting | 1,871 | |
| Accrued credits and deferred charges | 8,624 | 8,950 |
| Total | 199,852 | 198,191 |
Fair values do not deviate significantly from balance sheet values.
In the Atria Group, credit risk from trade receivables is considered small in proportion to the scope of the operations. The Group's trade receivables are dispersed over several market areas and many customers. The share of retail chains in trade receivables is central in all business areas. Credit risk is managed with securities, such as credit insurances and bank guarantees as well as with advance billing. Each business area has been assigned a separate credit policy that takes the special features of the market area into account. Credit risk is examined and monitored on a case-by-case basis for major customers and customer groups.
Trade receivables from producers include feed and animal trading receivables from animal payments. The receivables situation and security values are monitored regularly in accordance with the credit policy.
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: |
2010 | Credit losses |
Net 2010 |
|
|---|---|---|---|---|
| No due | 153,705 | 153,705 | ||
| Overdue | ||||
| Less than 30 days | 8,890 | -10 | 8,880 | |
| 30–60 days | 1,545 | -82 | 1,463 | |
| 61–90 days | 572 | 572 | ||
| More than 90 days | 2,017 | -549 | 1,468 | |
| Total | 166,729 | -641 | 166,088 | |
| Breakdown of trade receivables and items booked as credit losses: |
2009 | Credit losses |
Net 2009 |
||
|---|---|---|---|---|---|
| No due | 154,380 | 154,380 | |||
| Overdue | |||||
| Less than 30 days | 12,039 | -272 | 11,767 | ||
| 30–60 days | 1,401 | -40 | 1,361 | ||
| 61–90 days | 1,519 | -26 | 1,493 | ||
| More than 90 days | 5,557 | -1,376 | 4,181 | ||
| Total | 174,896 | -1,714 | 173,182 | ||
| Current receivables were divided into currencies as follows: | 2010 | 2009 | |||
| EUR | 119,723 | 116,932 | |||
| SEK | 41,278 | 41,060 | |||
| RUR | 24,349 | 26,917 | |||
| DKK | 6,028 | 5,157 | |||
| EEK | 4,312 | 4,278 | |||
| USD | 1,695 | 1,649 | |||
| NOK | 937 | 1,474 | |||
| Others | 1,530 | 724 | |||
| Total | 199,852 | 198,191 | |||
| 2010 | 2009 | ||
|---|---|---|---|
| Cash in hand and at banks | 18,530 | 35,300 |
| Finland | Russia | Baltic | Total | ||
|---|---|---|---|---|---|
| 2010 | |||||
| Land and water | 146 | 146 | |||
| Buildings and structures | 3,046 | 1,960 | 3,675 | 8,681 | |
| Machinery and equipment | 330 | 330 | |||
| Other intangible assets | 17 | 17 | |||
| Total | 3,209 | 1,960 | 4,005 | 9,174 | |
| 2009 | |||||
| Land and water | 146 | 146 | |||
| Buildings and structures | 3,046 | 2,781 | 3,675 | 9,502 | |
| Machinery and equipment | 330 | 330 | |||
| Other intangible assets | 17 | 17 | |||
| Total | 3,209 | 2,781 | 4,005 | 9,995 |
Non-current assets held for sale include industrial real estate in Moscow (balance sheet value EUR 2.0 million), industrial real estate and related machinery and equipment in Lithuania (balance sheet value EUR 4.0 million) and logistics real estate in Forssa, Finland, (balance sheet value EUR 3.2 million). The company has actively attempted to sell the real estate, but sales periods are longer due to the depressed market situation. The company expects the sales to come through after markets have recovered.
During the 2010 accounting period, an impairment of EUR 1.0 million was recognised for the plant located in Russia. During the 2009 accounting period, an impairment of EUR 1.4 million was recognised for the plant located in Lithuania.
Shares are divided into A and KII series, which differ in terms of voting rights. A series shares have one vote per share and KII series shares have ten votes per share. A series shares have preference for a dividend of EUR 0.17, after which KII series shares are paid a dividend of up to EUR 0.17. If there is still more dividend available for distribution, A and KII series shares have the same entitlement to the dividend. All issued shares have been paid in full. The share has no nominal value or a maximum number.
| Number of shares outstanding (1,000) | A series | KII series | Total |
|---|---|---|---|
| 1 Jan 2009 | 19,017 | 9,204 | 28,221 |
| Purchase of treasury shares | -63 | -63 | |
| Return of treasury shares | -4 | -4 | |
| 31 Dec 2009 | 18,950 | 9,204 | 28,154 |
| Shares granted in share incentives | 3 | 3 | |
| 31 Dec 2010 | 18,953 | 9,204 | 28,157 |
The portion of share subscription payments recognised in share premium in compliance with the conditions of plans prior to the new Companies Act (21 July 2006/624) taking effect.
The treasury shares reserve contains the acquisition cost of own shares held by the Group. In 2008 and 2009, the Group's parent company, Atria Plc, acquired 145,102 shares on the stock exchange for an acquisition cost of EUR 1.3 million. In 2008, 35,260 of the acquired shares and, in 2010, 3,280 shares were transferred to key persons as a part of the Group's share incentive plan. At the end of the year, the parent company held a total of 110,432 treasury shares (113,712 treasury shares).
| Other funds: | 2010 | 2009 |
|---|---|---|
| Fair value reserve | 107 | 97 |
| Hedging fund | 1,715 | -1,766 |
| Total | 1,822 | -1,669 |
The other funds item includes the fair value reserve and hedging fund. Changes in the fair value of available-for-sale financial assets are recognised in the fair value reserve, while the effective portions of changes in the fair value of the derivative instruments used for hedging are recognised in the hedging fund.
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.
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. Profits and losses arisen from hedges of net investments in foreign operations are also included in translation differences when the hedge accounting criteria are met.
| Parent company's distributable shareholders' equity | 2010 | 2009 |
|---|---|---|
| Invested unrestricted equity | ||
| fund | 110,228 | 110,228 |
| Retained earnings | 74,397 | 69,420 |
| Own shares | -1,271 | -1,308 |
| Profit for the period | 10,985 | 12,016 |
| Total | 194,339 | 190,356 |
| Dividend per share paid for the period | 2010 | 2009 |
| Dividend/share, EUR | 0.25 | 0.20 |
| Dividend distributed by the parent company | 7,039 | 5,653 |
The Board of Directors proposes to the Annual General Meeting, which will be held on 29 April 2011, that the Company pay EUR 0.25 per share in dividend, total of EUR 7,039,324.
Atria Plc has a share incentive plan in place as part of the remuneration and commitment 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 persons to the Company by offering them a competitive bonus plan based on the ownership of the Company's shares. The plan has been extended by three 1-year accrual periods that begin on 1 January 2010, 1 January 2011 and 1 January 2012, all ending on 31 December in the respective years. The previous 3-year period comprised the accrual periods 2007, 2008 and 2009. 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. On the basis of the plan, a maximum of 300,300 shares for the accrual periods 2010–2012 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 | 2010 | 2009 | |
|---|---|---|---|
| Grant date | 17 Feb 2010 | 1 April 2009 | |
| Earnings period begins | 1 Jan 2010 | 1 Jan 2009 | |
| Earnings period ends | 31 Dec 2010 | 31 Dec 2009 | |
| Maximum number of shares granted as remuneration | 100,100 | 100,100 | |
| Share release | 31 Dec 2012 | 31 Dec 2011 | |
| Number of people | 41 | 31 | |
| Earnings criteria: | |||
| - Operative EBIT % | 50% | ||
| - Operative EBIT | 80% | ||
| - ROCE % | 50% | ||
| - Capital employed | 20% | ||
| Achievement of earnings criteria, % | 0% | 4% | |
| Number of share incentives granted | 0 | 2,952 | |
| Share price listed on grant date, EUR | 11.17 | 6.60 | |
| Share price listed on balance sheet date, EUR | 9.00 | 11.06 | |
| Impact of share incentive plan on the results for the period | 2010 | 2009 | |
| Impact of the scheme on the profit for the period | 13 | 306 | |
| Liabilities from the cash payments of the share-based scheme | 0 | 41 | |
| 2010 | 2009 | |
|---|---|---|
| Pension obligations | 63 | |
| Other liabilities | 34 | 392 |
| Derivative financial instruments - in hedge accounting | 766 | 925 |
| Total | 800 | 1,380 |
| Non-current liabilities consist ofthe following currencies: | 2010 | 2009 |
| EUR | 766 | 988 |
| RUR | 364 | |
| Others | 34 | 28 |
| Total | 800 | 1,380 |
| 2010 Balance sheet values |
2009 Balance sheet values |
|
|---|---|---|
| Non-current | ||
| Bonds | 80,000 | 80,000 |
| Loans from financial institutions | 158,510 | 182,526 |
| Pension fund loans | 59,929 | 51,490 |
| Other liabilities | 2,037 | 3,000 |
| Finance lease obligations | 2,302 | 1,867 |
| Total | 302,778 | 318,883 |
| Current | ||
| Loans from financial institutions | 21,796 | 26,211 |
| Commercial papers | 92,500 | 73,500 |
| Pension fund loans | 6,157 | 4,407 |
| Other liabilities | 5,108 | 1,854 |
| Finance lease obligations | 1,598 | 942 |
| Total | 127,159 | 106,914 |
| Total interest-bearing liabilities | 429,937 | 425,797 |
| The fair values of interest-bearing loans do not deviate significantly from balance sheet values. | ||
| With fixed interest rates | 39,7% | 33,0% |
| With variable interest rates | 60,3% | 67,0% |
| Average interest rate | 2,71% | 2,44% |
| Non-current liabilities mature as follows: | 2010 | 2009 |
| 2011 | 33,014 | |
| 2012 | 25,304 | 139,907 |
| 2013 | 79,478 | 79,740 |
| 2014 | 90,451 | 46,048 |
| 2015 | 33,407 | 4,619 |
| 2016 | 6,012 | |
| Later | 68,126 | 15,555 |
| Total | 302,778 | 318,883 |
| Interest-bearing liabilities are divided into currencies as follows: | 2010 | 2009 |
| EUR | 228,986 | 217,330 |
| SEK | 157,111 | 155,102 |
| DKK | 15,904 | 19,662 |
| RUR | 25,208 | 25,672 |
| EEK | 211 | 3,109 |
| LTL | 2,517 | 4,922 |
| Total | 429,937 | 425,797 |
| Finance lease obligations - total amount of minimum lease payments | 2010 | 2009 |
| In less than a year | 1,713 | 975 |
| Between one and five years | 2,513 | 2,127 |
| After five years | 54 | 72 |
| Total | 4,280 | 3,174 |
| Finance lease obligations - present value of minimum lease payments | 2010 | 2009 |
|---|---|---|
| In less than a year | 1,611 | 942 |
| Between one and five years | 2,251 | 1,823 |
| After five years | 37 | 44 |
| Total | 3,899 | 2,809 |
| Future interest accumulation | 381 | 365 |
| Total | 4,280 | 3,174 |
| Legal claims | 2010 | |
|---|---|---|
| At the beginning of the period | 0 | |
| New provisions | 812 | |
| Total | 812 | |
Legal claims concern a cancelled sale of real estate in Moscow and a contract dispute in Sweden.
| 2010 | 2009 | |
|---|---|---|
| Trade payables | 111,331 | 96,688 |
| Advances received | 1,096 | 1,135 |
| Other liabilities | 28,447 | 35,974 |
| Derivative financial instruments - not in hedge accounting | 1,741 | 1,913 |
| Derivative financial instruments - in hedge accounting | 217 | 1,748 |
| Accrued liabilities | 43,693 | 49,384 |
| Total | 186,525 | 186,842 |
Material items in accrued liabilities consist of personnel expenses and the amortisation of debt interests.
| Current liabilities consist of the following currencies: | 2010 | 2009 |
|---|---|---|
| EUR | 99,794 | 103,929 |
| SEK | 57,001 | 46,343 |
| RUR | 13,394 | 20,674 |
| DKK | 6,132 | 6,064 |
| USD | 3,830 | 4,245 |
| EEK | 4,930 | 4,043 |
| NOK | 533 | 1,081 |
| Others | 911 | 463 |
| Total | 186,525 | 186,842 |
The financing policy approved by the Board of Directors defines the general principles of financial risk management. The Board has delegated the management of financial risks to 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. Treasury, together with the business areas, aims to identify, assess and hedge against all risks in accordance with the financing policy. The main risks related to financing are interest rate risk, currency risk, liquidity and refinancing risk and credit risk. Commodity risks and capital structure management are also dealt with at the end of this section.
Interest rate risk is managed by dividing financing into instruments with variable and fixed interest rates and by hedging with interest rate derivatives. During the accounting period, the Group used interest rate swaps in interest rate risk management. The Group links interest rate risk management to the interest cover ratio that is forecasted by dividing the 12-month rolling operating margin by the forecasted net interest expense. The lower the operating margin is in relation to net financing costs, the larger is the share of debt that must have a fixed interest rate. The Group's interest-bearing debt at the time of the financial statements was EUR 429.9 million (EUR 425.8 million), of which EUR 170.5 million (EUR 140.6 million) or 39.7% (33.0%) had fixed interest rates. The ratio of debt with fixed and variable interest rates is at the level defined by the Group's financing policy.
The interest rate risk is mainly directed at the Group's interest-bearing liabilities because the amount of money market investments and related interest rate risk is low. The Group's operational cash flow is to a large extent independent of fluctuations in interest rates. At the time of the financial statements, Atria Plc had two open interest rate swaps subject to hedge accounting:
The sensitivity analysis of net interest rate expenses is based on a 1% change in interest rates, which is considered to be reasonably realistic. It is calculated for year-end interest-bearing, variable-rate net liabilities that are expected to remain the same over the accounting period. The interest rate swaps are taken into account in the calculation. In simulations, the same change in interest rate is used for all currencies. On 31 December 2010, variable-rate net liabilities amounted to EUR 240.9 million (EUR 249.9 million). At the end of 2010, a +/-1% change in interest rates corresponded to a change of EUR +/-2.4 million in the Group's annual interest rate expenses (EUR +/-2.5 million).
Atria Group operates in many currency zones and is exposed to currency-related risks. Currency risks arise from forecasted transactions, assets and liabilities booked into the balance sheet and net investments in the operations of foreign subsidiaries. The subsidiaries hedge the currency risk related to commercial, operational items according to their currency risk policy for each business area. Each currency risk policy has been approved by the Treasury Committee. In Finland and Sweden, hedge accounting is applied to the aforementioned currency hedges. Currency risk is monitored according to the 12-month rolling cash flow forecast, and hedges are carried out for periods of 1 to 6 months using forward exchange agreements. During this time the cash flows hedged are expected to occur and affect profit or loss. Among other things, transaction risks come from the euro-denominated meat raw material imports of Atria's Swedish operations and from the USD-denominated imports of its Russian companies. In Atria's Finnish operations, currency flows and risks are relatively low and are mainly related to USD- and SEK-denominated exports.
The Group has net investments in the operations of foreign subsidiaries that are exposed to currency risks. The Treasury Committee decides on net investment hedges on a case-by-case basis. At the time of the financial statements, there were no derivative agreements in force for net investment hedging. The parent company grants financing to the subsidiaries in their home currencies and has hedged the currency-denominated loan receivables from the subsidiaries through currency loans and forward exchange agreements.
If, at the end of the accounting period, the euro had been 10% weaker/stronger than the Swedish krona (all other factors being equal), profit before taxes would have been EUR 0.4 million higher/lower due to the Swedish subsidiaries' euro-denominated accounts payable (EUR 0.3 million). The effect on equity would have been EUR 0.7 million (EUR 0.9 million). Sensitivity analyses also take into account the effects of currency derivatives, which offset the effects of change in exchange rates.
If, at the end of the accounting period, the USD had been 10% weaker/stronger than the Russian rouble (all other factors being equal), profit before taxes would have been EUR 0.4 million higher/lower due to the Russian subsidiaries' USD-denominated accounts payable (EUR 0.3 million). The effect on equity would have been EUR 0.0 million (EUR 0.0 million).
Atria Plc's Treasury raises the majority of the Group's interest-bearing capital. Liquidity and refinancing risks are managed through a balanced loan maturity distribution and by having sufficient committed credit limits with sufficiently long periods of validity at hand, by using many financial institutions and instruments to raise finance and by keeping a sufficient amount of cash funds. Atria also uses commercial papers actively to manage liquidity. There was EUR 125.5 million (EUR 150.8 million) in unutilised committed credit limits at the end of the year, and EUR 107.5 million of the EUR 200 million commercial paper programme had not been used at the end of the accounting period (EUR 126.5 million). The average maturity of the Group's loans and committed credit limits was 3 years 5 months (2 years 11 months).
The main covenant used in loan agreements is a minimum equity ratio covenant of 30%. The Group's equity ratio has been approx. 40% for many years, and the Group will continue to ensure an equity ratio higher than the level required by the covenant. According to the terms of loan agreements, the implementation of covenants is reported to financiers either quarterly or semi-annually.
According to the Group management's view, there was no significant liquidity accumulation in financial assets or financial sources.
The table below shows the maturity analysis for financial liabilities and derivative instruments (undiscounted figures). The capital levies and revenue of derivative liabilities and assets are related to forward exchange agreements, and interest payments to interest rate swaps.
| EUR 1,000 | Maturity, 31 Dec 2010 | |||||
|---|---|---|---|---|---|---|
| < 1 year | 1-5 years | > 5 years | Total | |||
| Loans | Instalments | 127,159 | 234,652 | 68,126 | 429,937 | |
| Interest payments | 8,102 | 22,186 | 6,182 | 36,470 | ||
| Derivative liabilities and assets | Capital payments | 117,866 | 117,866 | |||
| Capital income | -119,776 | -119,776 | ||||
| Interest payments | 1,523 | 7,675 | 9,198 | |||
| Interest income | -2,110 | -6,872 | -8,982 | |||
| Other liabilities | Instalments | 14,106 | 37 | 2,000 | 16,143 | |
| Interest payments | 51 | 100 | 100 | 251 | ||
| Trade payables | Payments | 111,331 | 111,331 | |||
| Accrued liabilities | Payments | 43,693 | 33 | 43,726 | ||
| Total | Total payments | 423,831 | 264,683 | 76,408 | 764,922 | |
| Total income | -121,886 | -6,872 | 0 | -128,758 | ||
| Net payments | 301,945 | 257,811 | 76,408 | 636,164 | ||
| EUR 1,000 | Maturity, 31 Dec 2009 | ||||
|---|---|---|---|---|---|
| < 1 year | 1-5 years | > 5 years | Total | ||
| Loans | Instalments | 106,914 | 298,709 | 20,174 | 425,797 |
| Interest payments | 8,209 | 23,183 | 2,153 | 33,545 | |
| Derivative liabilities and assets | Capital payments | 112,224 | 112,224 | ||
| Capital income | -109,696 | -109,696 | |||
| Interest payments | 1,046 | 3,661 | 4,707 | ||
| Interest income | -414 | -1,449 | -1,863 | ||
| Other liabilities | Instalments | 17,990 | 3,000 | 20,990 | |
| Interest payments | 49 | 150 | 150 | 349 | |
| Trade payables | Payments | 96,688 | 96,688 | ||
| Accrued liabilities | Payments | 49,384 | 20 | 49,404 | |
| Total | Total payments | 392,504 | 325,723 | 25,477 | 743,704 |
| Total income | -110,110 | -1,449 | 0 | -111,559 | |
| Net payments | 282,394 | 324,274 | 25,477 | 632,145 |
Credit risk is managed at Group level in accordance with the Group's risk management policy approved by the Board of Directors. The credit risk related to financing, i.e., the counterparty risk, is managed by selecting only well-established highly rated counterparties with good credit ratings as counterparties. The Group's liquid assets are only invested with counterparties that meet the above-mentioned criteria. This is also the procedure when entering into financing and derivative agreements. The credit risk related to derivatives is also decreased by the fact that all payments made in relation to derivatives are net payments.
The credit risk of the Group's operative business is related to our customers, of which the main ones are large retail chains. Part of the Group's trade receivables are related to feed and animal trading in primary production. The credit risk related to this is higher, but also more dispersed. The Group's trade receivables are dispersed over several market areas and many customers. However, the share of retail chains in trade receivables is central in all business areas.
Credit loss risk is managed with securities, such as credit insurances and bank guarantees as well as with advance invoicing. Each business area has been assigned a separate credit policy that takes the special features of the market area into account. Credit risk is examined and monitored on a case-by-case basis for major customers and customer groups. The breakdown at trade receivables is illustrated in Note 20, page 80.
The Group is exposed to commodity price risks, the most significant of which are related to meat raw material and electricity. Fluctuations in the price of meat raw material affect profitability in the short term, but efforts are made to pass on the price increases to sales prices as soon as possible. Fluctuations in the price of electricity are hedged with forward electricity agreements according to the Group's electricity procurement policy. The hedging levels in the policy are shown in the table below.
| hedging level | hedging level | |
|---|---|---|
| Period | minimum | maximum |
| 1–10 months | 67% | 100% |
| 11–18 months | 33% | 67% |
| 19–24 months | 0% | 33% |
Hedge accounting in accordance with IFRS is applied to electricity hedges. The effective portion of changes in the value of derivatives has been recognised under equity, and the ineffective portion, which amounts to EUR 0.2 million (EUR -0.2 million) has been recognised in the income statement. If the market price of electricity derivatives changed by +/-10%, the effect on equity would be EUR +/-1.0 million (EUR +/-1.0 million).
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 Group monitors the development of its capital structure primarily through the equity ratio, for which the Group has set a target level of 40%. Based on this equity ratio, the company estimates that the availability and total cost of new capital are optimal. Equity ratio is affected by balance sheet total and equity. The company is able to affect the balance sheet total and, through that, capital structure by managing working capital, adjusting the amount of investments as well as by selling business operations or assets. Correspondingly, the company can affect the amount of its own equity through dividend distribution and share issues. In the assessment of investments and divestments, the Group uses the Group's weighted average cost of capital (WACC) as reference. This way, the Group tries to ensure that its assets generate at least an amount corresponding to the average cost of its capital.
| Realised | 31 Dec 2010 | 31 Dec 2009 |
|---|---|---|
| 40.2% | 39.7% |
| EUR 1,000 | Financial assets and liabilities recognised at fair value through |
Derivative instruments under hedge |
Loans and other |
Financial assets available |
Financial | Balance sheet |
|---|---|---|---|---|---|---|
| 2010 balance sheet item | profit or loss | accounting | receivables | for sale | liabilities | value in total |
| Non-current assets | ||||||
| Trade receivables | 11,309 | 11,309 | ||||
| Other financial assets | 1,586 | 1,586 | ||||
| Loan receivables | 6,597 | 6,597 | ||||
| Other receivables | 918 | 918 | ||||
| Accrued credits and deferred charges *) | 21 | 21 | ||||
| Derivative instruments | 1,321 | 1,321 | ||||
| Current assets | ||||||
| Trade receivables | 166,088 | 166,088 | ||||
| Loan receivables | 3,143 | 3,143 | ||||
| Other receivables *) | 6,595 | 6,595 | ||||
| Accrued credits and deferred charges *) | 8,624 | 8,624 | ||||
| Derivative instruments | 299 | 1,871 | 2,170 | |||
| Cash and cash equivalents | 18,530 | 18,530 | ||||
| Total financial assets | 299 | 3,192 | 221,825 | 1,586 | 0 | 226,902 |
| Non-current liabilities | ||||||
| Interest-bearing financial liabilities | 300,476 | 300,476 | ||||
| Accrued liabilities **) | 34 | 34 | ||||
| Derivative instruments | 766 | 766 | ||||
| Current liabilities | ||||||
| Interest-bearing financial liabilities | 125,561 | 125,561 | ||||
| Trade payables | 111,331 | 111,331 | ||||
| Other liabilities **) | 8,996 | 8,996 | ||||
| Accrued liabilities **) | 43,693 | 43,693 | ||||
| Derivative instruments | 1,939 | 19 | 1,958 | |||
| Total financial liabilities | 1,939 | 785 | 0 | 0 | 590,091 | 592,815 |
| EUR 1,000 | Financial assets and liabilities recognised at fair |
Derivative instruments |
Loans | Financial assets |
||
|---|---|---|---|---|---|---|
| value through | under hedge | and other | available | Financial | Balance sheet | |
| 2009 balance sheet item | profit or loss | accounting | receivables | for sale | liabilities | value in total |
| Non-current assets | ||||||
| Trade receivables | 9,428 | 9,428 | ||||
| Other financial assets | 2,307 | 2,307 | ||||
| Loan receivables | 6,406 | 6,406 | ||||
| Other receivables | 4,538 | 4,538 | ||||
| Current assets | ||||||
| Trade receivables | 163,754 | 163,754 | ||||
| Loan receivables | 4,109 | 4,109 | ||||
| Other receivables *) | 8,765 | 8,765 | ||||
| Accrued credits and deferred charges *) | 8,950 | 8,950 | ||||
| Cash and cash equivalents | 35,300 | 35,300 | ||||
| Total financial assets | 241,250 | 2,307 | 243,557 | |||
| Non-current liabilities | ||||||
| Interest-bearing financial liabilities | 317,016 | 317,016 | ||||
| Derivative instruments | 925 | 925 | ||||
| Current liabilities | ||||||
| Interest-bearing financial liabilities | 105,972 | 105,972 | ||||
| Trade payables | 96,688 | 96,688 | ||||
| Other liabilities **) | 26,150 | 26,150 | ||||
| Accrued liabilities **) | 49,404 | 49,404 | ||||
| Derivative instruments | 1,913 | 1,748 | 3,661 | |||
| Total financial liabilities | 1,913 | 2,673 | 595,230 | 599,816 | ||
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.
Fair value hierarchy:
EUR 1,000
| Balance sheet item | 31 Dec 2010 | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Non-current assets | ||||
| Financial assets available for sale | ||||
| - Listed shares | 181 | 181 | ||
| - Unlisted shares | 1,405 | 1,405 | ||
| Derivative instruments | 1,321 | 1,321 | ||
| Current assets | ||||
| Derivative instruments | 2,170 | 2,170 | ||
| Total | 5,077 | 181 | 3,491 | 1,405 |
| Non-current liabilities | ||||
| Derivative instruments | 766 | 766 | ||
| Current liabilities | ||||
| Derivative instruments | 1,958 | 1,958 | ||
| Total | 2,724 | 0 | 2,724 | 0 |
| Balance sheet item | 31 Dec 2009 | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Non-current assets | ||||
| Financial assets available for sale | ||||
| - Listed shares | 164 | 164 | ||
| - Unlisted shares | 2,143 | 2,143 | ||
| Total | 2,307 | 164 | 0 | 2,143 |
| Non-current liabilities | ||||
| Derivative instruments | 925 | 925 | ||
| Current liabilities | ||||
| Derivative instruments | 3,661 | 3,661 | ||
| Total | 4,586 | 0 | 4,586 | 0 |
The fair value of financial instruments traded in active markets is based on market prices listed on the closing date. Markets are regarded as active if listed prices are readily and regularly available from the stock exchange, broker, industry group, price information service or surveillance authority, and these prices represent actual and regularly occurring market events between independent parties. The current purchase price is used as the listed market price for financial assets.
A fair value is established through valuation techniques for financial instruments that are not traded in active markets (such as OTC derivatives). These valuation techniques make maximum use of observable market information, when available, and rely as little as possible on company-specific assessments. If all significant input required for determining the fair value of the instrument is observable, the instrument is on level 2.
If one or more significant piece of input information is not based on observable market information, the instrument is classified on level 3. Assessments by external parties are used for measurement of financial instruments and, if such assessments are not available, the company's own calculations/assessments are used.
| Unlisted shares 2010 |
2009 |
|---|---|
| Opening balance 1 Jan 2,143 |
1,987 |
| Purchases 24 |
156 |
| Decreases -762 |
|
| Closing balance 31 Dec 1,405 |
2,143 |
| Derivative | Derivative | |||
|---|---|---|---|---|
| EUR 1,000 | asssets 31 Dec 2010 |
liabilities 31 Dec 2010 |
Net fair value 31 Dec 2010 |
Net fair value 31 Dec 2009 |
| Forward exchange agreements | ||||
| Cash flow hedges under IAS 39 hedge accounting | 27 | 223 | -196 | -171 |
| Net investment hedges under IAS 39 hedge accounting | -434 | |||
| Other hedges | 226 | 1,735 | -1,509 | -1,913 |
| Interest rate swaps, due in more than 1 year | ||||
| Cash flow hedges under IAS 39 hedge accounting | 1,030 | 766 | 264 | -15 |
| Electricity derivatives | ||||
| Cash flow hedges under IAS 39 hedge accounting | 2,135 | 2,135 | -2,053 | |
| Other hedges | 73 | 73 | ||
| Total | 3,491 | 2,724 | 767 | -4,586 |
Nominal values of derivative financial instruments:
| EUR 1,000 | 31 Dec 2010 | 31 Dec 2009 | |
|---|---|---|---|
| Forward exchange agreements | |||
| Cash flow hedges under IAS 39 hedge accounting | 13,370 | 17,982 | |
| Net investment hedges under IAS 39 hedge accounting | 15,358 | ||
| Other hedges | 107,692 | 78,163 | |
| Interest rate swaps | |||
| Cash flow hedges under IAS 39 hedge accounting | 81,269 | 40,000 | |
| Electricity derivatives | |||
| Cash flow hedges under IAS 39 | |||
| hedge accounting | 7,982 | 12,375 | |
| Other hedges | 200 | ||
| Total | 210,513 | 163,878 |
| Group as lessee | 2010 | 2009 |
|---|---|---|
| Minimum lease payments based on non-cancellable leases | ||
| Within one year | 7 623 | 5 899 |
| Within more than one year and a maximum of five years | 13 670 | 13 521 |
| After five years | 8 901 | 9 807 |
| Total | 30 194 | 29 227 |
| Rents recognised as cost | 5 121 | 6 153 |
The terms and conditions of the leases vary. The Group companies rent properties, machinery, equipment and cars.
| Debts with mortgages or other collateral given as security | 2010 | 2009 |
|---|---|---|
| Loans from financial institutions | 5 363 | 5 965 |
| Pension fund loans | 4 920 | 4 169 |
| Total | 10 283 | 10 134 |
| Mortgages and other securities given as comprehensive security | ||
| Real estate mortgages | 4 990 | 6 663 |
| Corporate mortgages | 4 022 | 3 086 |
| Total | 9 012 | 9 749 |
| Guarantee engagements not included in the balance sheet | ||
| Guarantees | 756 | 808 |
| Ownership | Share of | ||
|---|---|---|---|
| Group companies by business area | Domestic | interest (%) | votes (%) |
| Atria Finland: | |||
| Ab Botnia-Food Oy | Finland | 100.0 | 100.0 |
| A-Lihatukkurin 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 Plc | Finland | ||
| Atria Finland Ltd | Finland | 100.0 | 100.0 |
| 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 |
| 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 |
| Atria Concept AB | Sweden | 100.0 | 100.0 |
| Atria Concept SP Z.o.o | Poland | 100.0 | 100.0 |
| Atria Denmark A/S | Denmark | 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 Retail 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 |
| Nordic Fastfood AB | Sweden | 51.0 | 51.0 |
| Nordic Fastfood Etablerings AB | Sweden | 51.0 | 51.0 |
| Ridderheims AS | Norway | 100.0 | 100.0 |
| Ridderheims Delikatesser AB | Sweden | 100.0 | 100.0 |
| Atria Russia: | |||
| Atria-Invest Oy OOO Atria Group |
Finland Russia |
100.0 100.0 |
100.0 100.0 |
| OOO CampoFerma | Russia | 100.0 | 100.0 |
| OOO CampoFoods Moscow | Russia | 100.0 | 100.0 |
| OOO MPZ CampoMos | Russia | 100.0 | 100.0 |
| OOO Pit-Product | Russia | 100.0 | 100.0 |
| Atria Baltic: | |||
| Atria Eesti AS | Estonia | 100.0 | 100.0 |
| Atria Farmid OÜ | Estonia | 100.0 | 100.0 |
| OÜ Atria | 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 |
| Honkajoki Oy | Finland | 50.0 | 50.0 |
| Länsi-Kalkkuna Oy | Finland | 50.0 | 50.0 |
| Group and associates: | |||
| OOO Dan-Invest | Russia | 26.0 | 26.0 |
| Findest Protein Oy | Finland | 41.7 | 41.7 |
| Finnpig Oy | Finland | 50.0 | 50.0 |
| Foodwest Oy | Finland | 33.5 | 33.5 |
| KOY Itikanmäen Teollisuustalo | Finland | 13.2 | 13.2 |
| 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 Supervisory Board | |||
| Itikka Co-operative Group | |||
| Lihakunta | |||
| Pohjanmaan Liha Co-operative Group | |||
| The following transactions were completed with related parties: | 2010 | 2009 | |
| Sale of goods | |||
| Joint ventures/Associates | 659 | 727 | |
| Other related parties | 3,913 | 4,074 | |
| Total | 4,572 | 4,801 | |
| Sale of services | |||
| Associates | 421 | 405 | |
| Other related parties | 37 | 14 | |
| Total | 458 | 419 | |
| Rental income | |||
| Joint ventures/Associates | 312 | 311 | |
| Other related parties | 35 | ||
| Total | 347 | 311 | |
| Purchase of goods | |||
| Joint ventures/Associates | 15,467 | 19,565 | |
| Other related parties | 7,040 | 4,642 | |
| Total | 22,507 | 24,207 | |
| Purchase of services | |||
| Joint ventures/Associates | 42,829 | 43,382 | |
| Rental costs | |||
| Other related parties | 3,460 | 2,373 | |
| Trade receivables | |||
| Joint ventures/Associates | 100 | 53 | |
| Other related parties | 487 | 958 | |
| Total | 587 | 1,011 | |
| Trade payables | |||
| Joint ventures/Associates | 4,022 | 4,017 |
| 2010 | 2009 | |
|---|---|---|
| Receivables from related parties | ||
| Other related parties (receivables from owners) | 1,081 | 1,813 |
| Debts to related parties | ||
| Other related parties (debts to owners) | 5,921 | 4,232 |
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 or as agreed; their interest rate is tied to the 3-month or 6-month Euribor rate.
| Management employee benefits | 2010 | 2009 |
|---|---|---|
| Salaries and other short-term employee benefits | 2,590 | 2,292 |
| Share-based payments | 41 | |
| Pensions | 404 | 359 |
| Total | 3,035 | 2,651 |
The retirement age for the President and CEO is 62 years. However, the President and CEO has the right to retire at the age of 60. The amount of pension is based on the President and CEO's annual income during employment at Atria Group.
The pension group benefits for the management have been arranged for the members of Atria Group Management Team who are within the scope of Finnish social security. For the members of the Management Team, the retirement age of the group pension insurance is 63. The pension plan is contributiondefined, and the annual payment is based on the monthly salary (monetary salary and fringe benefits) of the insured. Equivalent pension benefits have been separately arranged for the members of the Management Team who are not within the scope of Finnish social security.
| Management salaries, benefits and other employee benefits | 2010 | 2009 |
|---|---|---|
| CEO, Member of the Board | ||
| Tikkakoski Matti | 688 | 583 |
| Deputy CEO | ||
| Juha Gröhn | 378 | 310 |
| Members of the Board of Directors | ||
| Selin Martti, Chairman | 67 | 61 |
| Komulainen Timo, Deputy Chairman | 77 | 74 |
| Heikkilä Tuomo | 33 | 28 |
| Kaarto Esa, member since July 2009 | 52 | 43 |
| Lillandt Runar, member until June 2010 | 22 | 34 |
| Maisa Romanainen, member since July 2010 | 12 | |
| Sivula Harri, member since July 2009 | 27 | 17 |
| Tikkakoski Matti, CEO | ||
| Yliluoma Ilkka, member until June 2009 | 26 | |
| Members of the Supervisory Board | ||
| Pirkola Ari, Chairman | 51 | 46 |
| Paavola Seppo, Deputy Chairman since July 2009 | 31 | 14 |
| Other members of the Supervisory Board, total | 38 | 33 |
In January 2011, Atria announced its decision to invest approximately EUR 26 million in building and renovating the Kauhajoki bovine slaughterhouse and cutting plant. New production facilities will be built in Kauhajoki, and the existing production facilities will be renovated and automated using the latest production technology. Atria will also buy the shares of Kauhajoen Teurastamokiinteistöt Oy from Itikka Co-operative. The purchase price is approximately EUR 7 million.
At the same time, the company launched an efficiency improvement programme to increase the efficiency of bovine slaughtering and cutting operations and bring down the excess capacity in slaughtering. Bovine slaughtering and cutting at the Kuopio facility will be transferred to the Kauhajoki slaughterhouse by the end of 2012. Carrying out the efficiency improvement programme means the reduction of approximately 120 man-years of work in Kuopio by the end of 2012. The annual cost savings from the efficiency improvement programme are estimated at EUR 6 million. The decision did not affect the earnings for the accounting period.
In this context Atria also announced the conclusion of a co-operation agreement with Saarioinen Oy on the slaughtering of cattle reared in Eastern Finland at Saarioinen's Jyväskylä slaughterhouse.
Mika Ala-Fossi was appointed Managing Director of Atria Finland and member of the management team on 1 February 2011.
In February 2011, Atria Scandinavia announced a plan for an investment and efficiency improvement programme aimed at streamlining and automating the black pudding production process. According to plan Atria would invest approximately EUR 2.2 million in new production equipment for the Tranås plant. The production of black pudding will be transferred from the Saltsjö-Boo plant in Stockholm to Tranås. Significant synergy benefits will be achieved from moving the production to Tranås. The efficiency improvement programme is expected to generate annual cost savings of approximately one million euros.
Matti Tikkakoski resigned as President and CEO of Atria Plc on 4 March 2011. He also resigned from the Board of Directors. The Board of Directors started the recruitment process to appoint a new CEO. In the meantime the CEO's duties are performed by Juha Gröhn, Managing Director of Atria Scandinavia and Deputy CEO of Atria Plc.
| Note | 1 Jan–31 Dec 2010 |
1 Jan–31 Dec 2009 |
|
|---|---|---|---|
| NET SALES | 2.1 | 52,641 | 39,609 |
| Other operating income | 2.2 | 2,961 | 3,002 |
| Personnel expenses | 2.3 | -2,518 | -2,624 |
| Depreciation and impairment Planned depreciation |
2.4 | -26,485 | -27,097 |
| Other operating expenses | 2.5 | -6,528 | -5,149 |
| EBIT | 20,071 | 7,741 | |
| Financial income and expenses | 2.6 | 4,132 | 3,907 |
| PROFIT BEFORE EXTRAORDINARY ITEMS |
24,203 | 11,648 | |
| Extraordinary items | 2.7 | -1,422 | -2,550 |
| PROFIT BEFORE APPROPRIA TIONS AND TAXES |
22,781 | 9,098 | |
| Appropriations | 2.8 | -11,712 | 3,000 |
| Income taxes | 2.9 | -84 | -82 |
| NET PROFIT FOR THE ACCOUNTING PERIOD |
10,985 | 12,016 |
| A s s e t s | Note 31 Dec 2010 | 31 Dec 2009 | |
|---|---|---|---|
| FIXED ASSETS | |||
| Intangible assets | 3.1 | ||
| Intangible rights | 61 | 96 | |
| Other long-term expenditure | 4,392 | 4,164 | |
| Intangible assets, total | 4,453 | 4,260 | |
| Tangible assets | 3.1 | 243,768 | 256,087 |
| Investments | 3.2 | ||
| Holdings in Group companies | 245,529 | 216,900 | |
| Holdings in joint ventures and associates Other shares and interests |
3,624 1,330 |
2,805 2,066 |
|
| Investments, total | 250,483 | 221,771 | |
| TOTAL FIXED ASSETS | 498,704 | 482,118 | |
| CURRENT ASSETS | |||
| Long-term receivables | 3.3 | 5,695 | 94,122 |
| Short-term receivables | 3.3 | 385,289 | 253,167 |
| Cash in hand and at bank | 13,747 | 23,307 | |
| TOTAL CURRENT ASSETS | 404,731 | 370,596 | |
| T o t a l a s s e t s | 903,436 | 852,714 | |
| L i a b i l i t i e s | Note 31 Dec 2010 | 31 Dec 2009 | |
| SHAREHOLDERS' EQUITY | 3.4 | ||
| Share capital Share premium |
48,055 138,502 |
48,055 138,502 |
|
| Treasury shares | -1,271 | -1,308 | |
| Invested unrestricted equity fund | 110,228 | 110,228 | |
| Retained earnings | 74,398 | 69,420 | |
| Profit for the period | 10,985 | 12,016 | |
| TOTAL SHAREHOLDERS' EQUITY | 380,896 | 376,913 | |
| ACCRUED APPROPRIATIONS | 3.5 | ||
| Depreciation difference | 61,152 | 49,440 | |
| LIABILITIES | |||
| Non-current liabilities | 3.6 | 281,847 | 264,953 |
| Current liabilities | 3.7 | 179,541 | 161,408 |
| TOTAL LIABILITIES | 461,388 | 426,361 | |
| T o t a l l i a b i l i t i e s | 903,436 | 852,714 |
| 1 Jan–31 Dec 2010 |
1 Jan–31 Dec 2009 |
|
|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | ||
| Sales income | 53,892 | 38,017 |
| Other business revenue | 2,961 | 2,956 |
| Payments on operating expenses | -8,017 | -9,591 |
| Cash flow from operating activities | ||
| before financial items and taxes | 48,835 | 31,382 |
| Financial income and expenses, net | 4,518 | 11,856 |
| Tax paid | 823 | -5,794 |
| Cash flow from operating activities | 54,176 | 37,444 |
| CASH FLOW FROM INVESTMENTS | ||
| Investments in tangible and intangi - ble assets and in investments |
-43,071 | -49,274 |
| Change in Group receivables | -47,221 | 1,222 |
| Cash flow from investments | -90,292 | -48,052 |
| CASH FLOW FROM FINANCING | ||
| Loan payments | 12,418 | -16,066 |
| Change in Group liabilities | 22,561 | 57,961 |
| Dividends paid | -7,039 | -5,654 |
| Treasury shares | 37 | -806 |
| Other income | 0 | 47 |
| Group contribution | -1,422 | -2,550 |
| Cash flow from financing | 26,555 | 32,932 |
| CASH FLOW FROM OPERATING | ||
| ACTIVITIES | 54,176 | 37,444 |
| CASH FLOW FROM INVESTMENTS | -90,292 | -48,052 |
| CASH FLOW FROM FINANCING | 26,555 | 32,932 |
| TOTAL | -9,560 | 22,324 |
| Change in cash and cash equivalents | ||
| Cash and cash equivalents 1 Jan | -23,307 | -983 |
| Cash and cash equivalents 31 Dec | 13,747 | 23,307 |
| Change | -9,560 | 22,324 |
Atria Plc's financial statements have been drawn up in accordance with Finland's Accounting Act and the other rules and regulations pertaining to the compilation of financial statements (FAS).
Atria Plc is the parent company of Atria Group, and its domicile is in Kuopio, Finland. Copies of Atria Plc's financial statements are available from the company's head office at Atriantie 1, Nurmo; postal address; P.O. Box 900, FI-60060 ATRIA, Finland.
In the balance sheet, tangible and intangible assets are entered at their direct acquisition cost less planned depreciation and value adjustments. Depreciation is implemented on a straight-line basis over the service life of the assets. Contributions received for the acquisition of tangible assets are entered as a decrease in acquisition costs. These contributions are not significant.
| Depreciation periods | ||
|---|---|---|
| Buildings | Nurmo | 40 years |
| other locations | 25 years | |
| Machinery and equipment | Nurmo | 10 years |
| other locations | 7 years | |
| Computer software | 5 years | |
| Other long-term items | 10 years |
The publicly listed companies' shares in the company's fixed assets investments have been measured at acquisition cost. The book value of the shares on 31 December 2010 was EUR 29,326.86 and their fair value was EUR 110,086.09.
In the balance sheet, financial instruments are measured at acquisition cost less value adjustments.
Items expressed in foreign currencies have been converted into euro at the exchange rate quoted by the European Central Bank. The exchange differences of the realised currency-denominated loans are presented under financial items.
The company enters into derivative agreements in order to control exchange differences, interest rate levels and electricity prices. The derivatives used are forward exchange agreements, interest rate swaps and electricity derivatives. The derivatives hedge accounting is not applied to are measured at fair value. All profits and losses resulting from fair value recognition are presented under the financial items of the income statement. The positive fair value of the derivatives used for hedging is presented under receivables and the negative fair value under liabilities. The derivatives hedge accounting is applied to are recognised in the proper item of the income statement on their expiration date.
The fair values of all derivatives are presented in Note 4.3.
| THE INCOME STATE MENT |
2010 | 2009 |
|---|---|---|
| 2.1. NET SALES, EUR 1,000 | ||
| 52,641 | 39,609 | |
| The company's rental income is presented as net sales because it corresponds with the present nature of the company's operations. |
||
| 2.2. OTHER OPERATING INCOME, EUR 1,000 | ||
| Service charges to group companies | 2,961 | 2,904 |
| Others | 0 | 98 |
| Total | 2,961 | 3,002 |
| 2.3. PERSONNEL EXPENSES, EUR 1,000 | ||
| 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 of Directors | 808 | 700 |
| Members of the Supervisory Board | 109 | 85 |
| Other salaries | 1,055 | 1,184 |
| Total | 1,972 | 1,968 |
| Pension costs | 504 | 509 |
| Other staff-related expenses | 42 | 147 |
| Total | 546 | 656 |
| Personnel expenses total | 2,518 | 2,624 |
1 Jan -31 Dec
1 Jan - 31 Dec
Pension commitments of members of the Board of Directors and CEO: The company's statutory pensions are defined contribution plans and have been arranged through an insurance company. The company does not have pension commitments for the CEO and the members of the Board of Directors and the Supervisory Board.
| 2.4. DEPRECIATION AND IMPAIRMENTS, EUR 1,000 | ||
|---|---|---|
| Depreciations of tangible and intangible assets |
26,485 | 27,097 |
Depreciation specification per balance sheet item included in Section 3.1.
Other operating expenses 6,528 5,149 Including administration, marketing, energy, cleaning, operational and other costs as well as fees paid to auditors.
| Fees paid to auditors / PricewaterhouseCoopers Oy | ||
|---|---|---|
| Auditing fees | 199 | 167 |
| Tax consulting | 8 | 0 |
| Other remunerations | 24 | 14 |
| Total | 231 | 181 |
The presented figures are based on invoicing.
| 2.6. FINANCIAL INCOME AND EXPENSES, EUR 1,000 | ||
|---|---|---|
| Return on long-term investments | ||
| Dividend yield: | ||
| From group companies | 10,707 | 11,806 |
| From other companies Total |
83 10,790 |
135 11,941 |
| Other interest and financial income: | ||
| From group companies | 6,615 | 9,639 |
| From other companies | 26,164 | 12,651 |
| Total | 32,779 | 22,290 |
| Interest expenses and other financial expenses: | ||
| To group companies | 555 | 7 |
| To other companies | 38,882 | 30,317 |
| Total | 39,437 | 30,324 |
| Financial income and expenses total | 4,132 | 3,907 |
| Interest expenses and other financial | ||
| expenses include exchange rate losses (net) |
2,018 | 4,867 |
| 2.7. EXTRAORDINARY ITEMS, EUR 1,000 | ||
| Group contributions paid | 1,422 | 2,550 |
| 2.8. APPROPRIATIONS, EUR 1,000 | ||
| Difference between planned depre - |
||
| ciation and depreciation implemented in taxation |
-11,712 | 3,000 |
| 2.9. INCOME TAXES, EUR 1,000 | ||
| Income taxes on operations | 84 | 82 |
| Intangible rights | ||
|---|---|---|
| Acquisition cost 1 Jan | 1,448 | 1,444 |
| Increases | 7 | 4 |
| Decreases | 0 | 0 |
| Acquisition cost 31 Dec | 1,455 | 1,448 |
| Accumulated depreciation 1 Jan | -1,352 | -1,304 |
| Depreciation on decreases | 0 | 0 |
| Depreciation for the accounting period | -43 | -48 |
| Accumulated depreciation 31 Dec | -1,394 | -1,352 |
| Book value 31 Dec | 61 | 96 |
| Other long-term expenditure | ||
| Acquisition cost 1 Jan | 14,472 | 13,269 |
| Increases | 1,914 | 1,203 |
| Decreases | 0 | 0 |
| Acquisition cost 31 Dec | 16,386 | 14,472 |
| Accumulated depreciation 1 Jan | -10,309 | -8,453 |
| Depreciation on decreases | 0 | 0 |
| Depreciation for the accounting period | -1,685 | -1,856 |
| Accumulated depreciation 31 Dec | -11,993 | -10,309 |
| Book value 31 Dec | 4,392 | 4,164 |
| Intangible assets, total | 4,453 | 4,260 |
| Tangible assets: | ||
| Land and water | ||
| Acquisition cost 1 Jan | 1,469 | 2,182 |
| Increases | 0 | -713 |
| Acquisition cost 31 Dec | 1,469 | 1,469 |
| Buildings and structures | ||
| Acquisition cost 1 Jan | 277,638 | 271,383 |
| Increases | 1,614 | 6,255 |
| Decreases | 0 | 0 |
| Acquisition cost 31 Dec | 279,252 | 277,638 |
| Accumulated depreciation 1 Jan | -116,232 | -109,510 |
| Depreciation on decreases | 0 | 0 |
| Depreciation for the accounting period | -6,834 | -6,722 |
| Accumulated depreciation 31 Dec | -123,066 | -116,232 |
| Book value 31 Dec | 156,186 | 161,406 |
| Machinery and equipment Acquisition cost 1 Jan |
271,068 | 264,511 |
| Increases | 3,748 | 6,557 |
| Decreases | 0 | 0 |
| Acquisition cost 31 Dec | 274,815 | 271,068 |
| Accumulated depreciation 1 Jan | -181,284 | -162,927 |
| Depreciation on decreases | 0 | 0 |
| Depreciation for the accounting period | -17,777 | -18,357 |
| Accumulated depreciation 31 Dec | -199,061 | -181,284 |
| Book value 31 Dec | 75,755 | 89,784 |
| Other tangible assets | ||
| Acquisition cost 1 Jan | 2,099 | 1,295 |
| Increases | 126 | 804 |
| Decreases | -10 | 0 |
| Acquisition cost 31 Dec | 2,215 | 2,099 |
| Accumulated depreciation 1 Jan | -744 | -629 |
| Depreciation on decreases | 0 | 0 |
| 31 Dec 2010 | 31 Dec 2009 | |
|---|---|---|
| Depreciation for the accounting period | -146 | -115 |
| Accumulated depreciation 31 Dec | -890 | -744 |
| Book value 31 Dec | 1,325 | 1,355 |
| Advance payments and | ||
| acquisitions in progress | ||
| Acquisition cost 1 Jan | 2,073 | 2,878 |
| Changes +/- | 6,960 | -804 |
| Acquisition cost 31 Dec | 9,034 | 2,073 |
| Tangible assets total | 243,768 | 256,087 |
| Non-depreciated acquisition cost of | ||
| machinery and equipment | 75,755 | 89,784 |
The share of items other than production machinery and equipment is not significant in amount. The acquisition costs of completely depreciated and scrapped items are presented as decreases.
| Parent holding, % 2010 |
Parent holding, % 2009 |
|
|---|---|---|
| Group companies | ||
| Ab Botnia-Food Oy, Seinäjoki | 100 | 100 |
| A-Farmers Ltd, Seinäjoki | 97.9 | 97.9 |
| Atria Concept Oy, Seinäjoki | 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, | ||
| Sweden | 100 | 100 |
| Rokes Oy, Forssa | 100 | 100 |
| Suomen Kalkkuna Oy, Seinäjoki | 100 | 100 |
| Atria Eesti AS, Valga, Estonia | 100 | 100 |
| OU Atria, Tallinn, Estonia | 100 | 100 |
| UAB Vilniaus Mesa, | ||
| Vilna, Lithuania | 100 | 100 |
| Best-In Oy, Kuopio | 50.0 | 50.0 |
|---|---|---|
| Foodwest Oy, Seinäjoki | 33.5 | 33.5 |
| Honkajoki Oy, Honkajoki | 50.0 | 47.8 |
| Finnish Meat Research Institute, LTK co-operative, Hämeenlinna |
40.7 | 40.7 |
| Länsi-Kalkkuna Oy, Säkylä | 50.0 | 50.0 |
| Tuoretie Oy, Seinäjoki | 33.3 | 33.3 |
| 3.3. RECEIVABLES, EUR 1,000 | 1 Jan –31 Dec 2010 |
1 Jan –31 Dec 2009 |
|---|---|---|
| Long-term receivables | ||
| Receivables from group companies: | ||
| Loan receivables | 5,695 | 94,122 |
| Short-term receivables | ||
| Loan receivables | 221 | 441 |
| Trade receivables | 38 | 79 |
| Other receivables | 505 | 1,895 |
| Accrued credits and | ||
| deferred charges | 5,771 | 6,685 |
| Receivables from group companies: | ||
| Trade receivables | 820 | 2,030 |
| Other receivables | 377,646 | 241,776 |
| Accrued credits and | ||
| deferred charges | 289 | 262 |
| Total short-term receivables | 385,289 | 253,167 |
| Material items included in the accrued credits and deferred charges: | ||
| - amortised interests | 289 | 262 |
| - amortised taxes | 5,677 | 6,585 |
| Share capital 1 Jan | 48,055 | 48,055 |
|---|---|---|
| Share capital 31 Dec | 48,055 | 48,055 |
| Share premium 1 Jan | 138,502 | 138,502 |
| Share premium 31 Dec | 138,502 | 138,502 |
| Restricted equity total | 186,557 | 186,557 |
| Treasury shares 1 Jan | -1,308 | -542 |
| Acquisition of own shares | 37 | -766 |
| Treasury shares 31 Dec | -1,271 | -1,308 |
| Invested unrestricted equity fund | ||
| 1 Jan | 110,228 | 110,228 |
| Invested unrestricted equity fund | ||
| 31 Dec | 110,228 | 110,228 |
| Retained earnings 1 Jan | 81,437 | 75,074 |
| Dividend distribution | -7,039 | -5,654 |
| Retained earnings 31 Dec | 74,398 | 69,420 |
| Profit for the period | 10,985 | 12,016 |
| Retained earnings 31 Dec | 85,383 | 81,437 |
| Unrestricted equity total | 194,339 | 190,356 |
| Equity total | 380,896 | 376,913 |
| Treasury shares | |||
|---|---|---|---|
| transferred during | |||
| the accounting | |||
| period | Date | Amount | Consideration |
| 21 May 2010 | 3,280 | EUR 11.20 / share |
At the beginning of the period, the number of treasury shares was 113,712, of which 3,280 shares were transferred. At the end of the year, the company held a total of 110,432 treasury shares. The ownership share of the shares held is 0.391% of equity and 0.099% of the voting rights.
| 31 Dec 2010 | 31 Dec 2009 | |
|---|---|---|
| Calculation of funds appropriate for distribution as dividends |
||
| Retained earnings | 74,398 | 69,420 |
| Profit for the period | 10,985 | 12,016 |
| Treasury shares | -1,271 | -1,308 |
| Total | 84,111 | 80,129 |
| The breakdown of the share capital is as follows: | |||||||
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | ||||||
| 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 |
| 3.5. ACCRUED APPROPRIATIONS, EUR 1,000 |
31 Dec 2010 | 31 Dec 2009 |
|---|---|---|
| Depreciation difference | 61,152 | 49,440 |
| 3.6. NON-CURRENT LIABILITIES, EUR 1,000 | ||
| Bonds | 80,000 | 80,000 |
| Loans from financial institutions | 151,468 | 156,367 |
| Pension fund loans | 29,316 | 28,586 |
| Total | 260,784 | 264,952 |
| Liabilities to group companies | ||
| Other long-term liabilities | 21,063 | 0 |
| Total non-current liabilities | 281,847 | 264,952 |
| Loans maturing later than in five years | ||
| Loans from financial institutions | 2,500 | 0 |
| Pension fund loans | 1,538 | 2,857 |
| Other long-term liabilities | 9,913 | 0 |
| Total | 13,950 | 2,857 |
Atria Plc's bond loan issued in 2006 amounting to EUR 40 million matures in 2013 (interest rate 1.999%). Atria Plc's bond loan issued in 2007 amounting to EUR 40 million matures in 2014 (interest rate 3.28%).
| 3.7. CURRENT LIABILITIES, EUR 1,000 | 31 Dec 2010 | 31 Dec 2009 |
|---|---|---|
| Loans from financial institutions | 107,646 | 97,038 |
| Pension fund loans | 3,370 | 0 |
| Trade payables | 465 | 1,600 |
| Other payables | 4,133 | 394 |
| Accruals and deferred income | 3,749 | 3,500 |
| Liabilities to group companies | ||
| Other long-term liabilities | 2,788 | 0 |
| Trade payables | 254 | 618 |
| Other payables | 55,543 | 58,254 |
| Accruals and deferred income | 1,594 | 3 |
| Total current liabilities | 179,541 | 161,408 |
| Material items included in accruals and deferred income: | ||
| - accruals of salaries and social | ||
| security payments | 495 | 484 |
| - personnel fund | 4 | 8 |
| - interest accruals | 1,701 | 1,496 |
| - valuation of forward contracts | 1,707 | 1,498 |
| - other | 1,436 | 17 |
| Total | 5,342 | 3,503 |
| 4. OTHE R NOTES |
31 Dec 2010 | 31 Dec 2009 |
|---|---|---|
| 4.1. SECURITIES GIVEN, CONTINGENT LIABILITIES AND OTHER LIABILITIES, EUR 1,000 |
||
| Contingent liabilities and other liabilities not included in the balance sheet |
||
| Guarantees | ||
| For group companies | 77,599 | 67,848 |
| Other leases | ||
| Minimum rents paid based on other leases | ||
| Within one year | 869 | 1,629 |
| Within more than one year and a | ||
| maximum of five years | 853 | 1,150 |
| After more than five years | 3,570 | 3,634 |
| Total | 5,292 | 6,413 |
The company has made the property investments referred to in the Value Added Tax Act. The remaining verification liability of these investments was assessed for each verification period on 31 December 2010. The company is obliged to verify reductions in VAT on property investments if the taxable use of the properties decreases during the verification period.
| Year of completion of the investment |
Remaining amount of verification liability |
||
|---|---|---|---|
| 2006 | 0 | 370 | |
| 2007 | 926 | 1,852 | |
| 2008 | 1,011 | 1,155 | |
| 2009 | 1,101 | 1,239 | |
| 2010 | 322 | 0 | |
| Total | 3,360 | 4,616 |
| Fair values of derivative | Derivative assets |
Derivative assets |
|---|---|---|
| financial instruments | 31 Dec 2010 | 31 Dec 2009 |
| Forward exchange agreements: | ||
| Other hedges | 26 | |
| Interest rate swaps, due in more than 1 year: | ||
| Cash flow hedges under | ||
| hedge accounting | 1,030 | |
| Total | 1,056 | |
| Derivative | Derivative | |
| Fair values of derivative financial | liabilities | liabilities |
| instruments | 31 Dec 2010 | 31 Dec 2009 |
| Forward exchange agreements: | ||
| Net investment hedges under hedge accounting | 434 | |
| Other hedges | 1,733 | 1,498 |
| Interest rate swaps, due in more than 1 year: | ||
| Cash flow hedges under hedge | ||
| accounting | 766 | 15 |
| Electricity derivatives: | ||
| Cash flow hedges under hedge accounting | 2,053 | |
Seinäjoki, 17 March 2011
Martti Selin Timo Komulainen Chairman
Tuomo Heikkilä Maisa Romanainen
Esa Kaarto Harri Sivula
Juha Gröhn President and CEO
A report on the audit performed has been issued today.
Seinäjoki 17 March 2011
PricewaterhouseCoopers Oy Authorised Public Accountants
Juha Wahlroos Authorised Public Accountant
We have audited the accounting records, the financial statements, the report of the Board of Directors and the administration of Atria Corporation for the year ended 31 December, 2010. The financial statements comprise the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows, 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.
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view 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 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.
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about 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 Board of Directors of the parent company as well the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or whether they have violated the Limited Liability Companies Act or the articles of association of the company.
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, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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.
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.
We support that the financial statements and the consolidated financial statements should be adopted. The proposal by the Board of Directors regarding the use of the profit shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the Members of the Supervisory Board and Board of Directors as well the Managing Director of the parent company should be discharged from liability for the financial period audited by us.
Seinäjoki 17 March 2011
PricewaterhouseCoopers Oy Authorised Public Accountants Juha Wahlroos Authorised Public Accountant
| Corporate Governance Principles 107 | |
|---|---|
| General Meeting 107 | |
| Supervisory Board 107 | |
| Board of Directors 108 | |
| Duties of the Board of Directors 108 | |
| Meeting practices and information flow 109 | |
| Composition of the Board of Directors 109 | |
| Board committees 109 | |
| Nomination Committee 109 | |
| Remuneration Committee112 | |
| President and CEO112 | |
| Management Team112 | |
| Rewarding112 | |
| Rewarding of the members of the Supervisory Board114 | |
| Rewarding of the members of the Board of Directors114 | |
| Bonus schemes for the President and CEO and other management114 | |
| Internal control, risk management and internal audit115 | |
| Risk management118 | |
| Internal audit118 | |
| Auditing118 |
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 listed companies, Atria Plc's Articles of Association, and NASDAQ OMX Helsinki Ltd's rules and guidelines. Atria follows the Finnish Corporate Governance Code ("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:
Atria Plc has prepared a review of the corporate governance system in accordance with the recommendation of the Finnish Corporate Governance Code. The review is available on the company's website at www.atriagroup.com.
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 of the members of the Board of Directors and of the Supervisory Board, as well as the President and CEO, from liability; the number of members of the Supervisory Board, and their election and remuneration; and the election of one or more auditors and the fees for auditing.
The Annual General Meeting is held annually by the end of June on a date designated by the Board of Directors, and the agenda includes matters that are to be handled by the Annual General Meeting in accordance with the Articles of Association and any other proposals. The Atria Annual General Meeting has usually been held in April. In addition, the company may
hold an Extraordinary General Meeting, if necessary.
The General Meeting is convened by the Board of Directors. It is held in the company's domicile, Kuopio, or in Helsinki. The notice to convene the General Meeting is communicated by publishing the notice on the Company's website and by a stock exchange release at the earliest three (3) months and at the latest three (3) weeks before the General Meeting, however, no later than nine (9) days prior to the record date for the General Meeting. In addition, the Board of Directors may decide to publish the notice, or delivery notification of the notice, in one or more national newspapers determined by the Board, or in some other manner it may decide.
To have the right to participate in a General Meeting, a shareholder must register with the company no later than on the day mentioned in the notice of meeting, which can be no earlier than ten (10) days before the meeting.
The President and CEO, the Chairman of the Board of Directors and the majority of the Board members shall be present in the General Meeting, and also auditors shall be present in the Annual General Meeting. A first-time candidate nominated to the Supervisory Board shall be present in the General Meeting where a decision on his or her appointment is made, unless there is a weighty reason for his or her absence.
In accordance with Atria Plc's Articles of Association, the company has a Supervisory Board elected by the General Meeting. The Supervisory Board consists of a minimum of 18 and a maximum of 21 members, who are elected for terms of three years. A person aged sixty-five (65) or older cannot be elected to the Supervisory Board. The Supervisory Board elects a Chairman and Vice Chairman from amongst its members for terms of one year. The Supervisory Board meets three times a year on average.
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 President and CEO.
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 far-reaching perspective on the company's operations and decision-making.
In 2010, the members of Atria Plc's Supervisory Board were the following:
| Seppo Paavola | born 1962, Farmer, member since 2006 |
|
|---|---|---|
| Members: |
| Juha-Matti Alaranta | born 1965, Farmer, |
|---|---|
| member since 2000 | |
| Juho Anttikoski | born 1970, Farmer, |
| member since 2009 | |
| Mika Asunmaa | born 1970, Farmer, |
| member since 2005 | |
| Lassi-Antti Haarala | born 1966, Agrologist, |
| Farmer, member since 2002 | |
| Juhani Herrala | born 1959, Farmer, |
| member since 2002 | |
| Henrik Holm | born 1966, Farmer, |
| member since 2002 | |
| Veli Hyttinen | born 1973, Agrologist, |
| Farmer, member since 2010 | |
| Pasi Ingalsuo | born 1966, Agrologist, |
| Farmer, member since 2004 | |
| Juha Kiviniemi | born 1972, MSc (Agric.), |
| Farmer, member since 2010 | |
| Veli Koivisto | born 1952, Farmer, |
| member since 2006 | |
| Teuvo Mutanen | born 1965, Agricultural Officer, |
| Agricultural Entrepreneur, | |
| member since 2007 | |
| Mika Niku | born 1970, Farmer, |
| member since 2009 | |
| Heikki Panula | born 1955, MSc (Agric.), |
| Farmer, member since 2005 | |
| Pekka Parikka | born 1951, Farmer, |
| member since 2008 | |
| Juho Tervonen | born 1950, Farmer, |
| member since 2001 | |
| Tomi Toivanen | born 1954, Farmer, |
| member since 2009 | |
| Timo Tuhkasaari | born 1965, Farmer, |
| member since 2002. | |
All members of Atria Plc's Supervisory Board are members of the administrative bodies of the company's principal owners Lihakunta, Itikka Co-operative and Pohjanmaan Liha Co-operative. All members of the Supervisory Board are independent of the company and dependent on the company's principal owners.
In 2010, Atria Plc's Supervisory Board met three (3) times, and the average attendance percentage of the members was 96.5.
In accordance with the Articles of Association, Atria's Board of Directors shall have a minimum of five (5) and a maximum of seven (7) members. As an exception to recommendation 8 and in line with the Articles of Association, the Supervisory Board elects the members of the Board of Directors and 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 satisfaction with the current practice which is in compliance with the Articles of Association, whereby the members of the Board of Directors are appointed by the Supervisory Board. The Supervisory Board appoints the members of the Board of Directors in its organisation meeting, which is held annually in June.
The term of office of a member of Atria's Board of Directors differs from the term of one year specified in recommendation 10. 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 years is appropriate for the longterm development of the company and have not seen the need to shorten the term from that specified in the Articles of Association.
Atria's Board of Directors shall ensure the appropriate organisation of the company's administration, operations, accounting and supervision of asset management. To this end, the Board of Directors has adopted written rules of procedure concerning 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 its business units
The Board of Directors evaluates its operation and working methods regularly through self-evaluation once a year.
The Board of Directors meets at regular intervals about 10 times during the term in accordance with a separate meeting schedule confirmed in advance by the Board, and when necessary. In 2010, the Board of Directors met fifteen (15) times. The average meeting attendance percentage of the members of the Board of Directors was 98.7.
During the meetings of the Board of Directors, the President and CEO gives a review of the financial situation of the Group. The review also covers forecasts, investments and organisational changes, and all other important issues from the point of view of the Group.
The following reports are reviewed in each regular meeting:
The agenda of the meeting shall be delivered to the members of the Board of Directors no later than one week before the meeting. The meeting material shall be prepared by the President and CEO and the Secretary of the Board of Directors according to the instructions provided by the Chairman. The meeting material shall be delivered to the members no later than three days before the meeting.
The majority of the members of the company's Board of Directors are independent of the company. Harri Sivula and Maisa Romanainen are independent of the company and the principal owners, and Martti Selin, Timo Komulainen, Runar Lillandt, Tuomo Heikkilä and Esa Kaarto are members of the administrative bodies of the company's principal owners – Lihakunta and Itikka Co-operative.
The members of the Board of Directors are obliged to provide the Board with sufficient information to assess their skills and independency and to notify the Board of any changes to the information.
The Board of Directors may set up committees to handle duties designated by the Board. The Board shall approve the rules of procedure for the committees. The committees of the Board of Directors are the Nomination Committee and the Remuneration Committee, whose members are elected by the Board from amongst its members according to the rules of procedure of the committee. The committees have no autonomous decision-making power. Decisions are made by the Board of Directors based on the committees' preparations. The committees shall report on their work to the Board of Directors, which also supervises their operations.
The Nomination Committee consists of the Chairmen of the Supervisory Board and the Board of Directors and one member of the Board of Directors elected by the Board itself. In accordance with recommendation 29 of the Corporate Governance Code, the company's President and CEO or the members of the Board of Directors who belong to the company's other management shall not be elected as members of the Nomination Committee.
According to the rules of procedure, the duties of the Nomination Committee are as follows:
• prepares a proposal to be made to the Supervisory Board
| Name | Selin Martti, Chairman | Komulainen Timo Juhani, Vice Chairman |
Heikkilä Tuomo Juhani | Kaarto Esa | |
|---|---|---|---|---|---|
| Year of birth | 1946 | 1953 | 1948 | 1959 | |
| Education | Farm school | Agrologist | Farm school | MSc (Agr.) | |
| Main occupation | Farmer, meat producer | Farmer | Farmer | Farmer | |
| Relevant work experience |
• Metal industry, Sweden • Farmer |
Positions of trust | Positions of trust | Farmer | |
| Member of the Board since |
2005 | 1993 | 1996 | 25 June 2009 | |
| The most important simultaneous positions of trust |
• Chairman of the Supervisory Board of Itikka Co-operative • Chairman of the Board of Directors of Kauhajoen Teurastamokiinteistöt Oy • Chairman of the Board of Directors of Itikan maa ja metsätilat Oy |
• Chairman of the Board of Directors of Lihakunta • Chairman of the Board of Directors of A-Farmers Ltd • Chairman of the Board of Directors of A-Rehu Oy • Vice Chairman of the Board of Directors of Jukola Co-operative |
• Member of the Board of Directors of Lihakunta |
• Chairman of the Board of Directors of Itikka Co-operative • Member of the Board of Directors of A-Farmers Ltd • Member of the Board of Directors of Feedmix Oy • Member of the Board of Directors of Rehukanava Oy • Member of the Board of Directors of Suurusrehu Oy |
|
| Independency | Independent of the company and dependent on the principal owners |
Independent of the company and dependent on the principal owners |
Independent of the company and dependent on the principal owners |
Independent of the company and dependent on the principal owners |
Atria Plc´s Board of Directors and the Directors of the Supervisory Board, from left:
| Selin Martti, Chairman Komulainen Timo Juhani, Heikkilä Tuomo Juhani Kaarto Esa Vice Chairman |
Lillandt, Karl Runar | Romanainen, Maisa Annukka | Tikkakoski Matti Olavi, President and CEO until 3 March 2011 |
Sivula, Harri Juhani |
|---|---|---|---|---|
| 1953 1948 1959 |
1944 | 1967 | 1953 | 1962 |
| Agrologist Farm school MSc (Agr.) |
Middle school, farm school | MSc (Econ.) | BSc (Econ.), Helsinki School of Economics |
MSc (Admin.) |
| Farmer, meat producer Farmer Farmer Farmer |
Farmer, meat producer | Department Store Group Manager of Stockmann plc, Group Vice President |
President and CEO | President and CEO, Restel Ltd |
| • Metal industry, Sweden Positions of trust Positions of trust Farmer |
Farmer | • Brio Oy, Product Manager and Purchasing Manager, among others • Stockmann Plc: - Purchasing Manager, 1996–1997 - Department Store Manager, Moscow, Russia, 1998–2000 - Department Store Manager, Tallinn, Estonia, 2000–2005 - Manager, Foreign Department Stores, 2005–2007 - Manager, Finnish and Baltic Department Stores, 1 Jan–5 Nov 2008 - Department Store Group Manager, Group Vice President, from 6 Nov 2008 |
• Vice President, Huhtamäki Oy • Vice President, Å&R Carton AB |
• Vice President, Ruokakesko Oy • Vice President, Kesko Oy • CEO, Onninen Oy |
| 1993 1996 25 June 2009 |
2003, member until 18 June 2010 |
18 June 2010 | 2006 | 20 March 2009 |
| • Chairman of the Board • Chairman of the Board • Member of the Board of of Directors of Itikka of Directors of Lihakunta Directors of Lihakunta Co-operative • Chairman of the • Member of the Board of Board of Directors of Directors of A-Farmers Ltd A-Farmers Ltd • Member of the Board of • Chairman of the Board Directors of Feedmix Oy of Directors of A-Rehu • Member of the Board of Directors of Rehukanava • Vice Chairman of the Oy Board of Directors of • Member of the Board of Jukola Co-operative Directors of Suurusrehu Oy |
• Chairman of the Supervisory Board of Metsäliitto Co-operative • Member of the Board of Directors of M-Real Corporation • Chairman of the Board of Directors of Ab Mellanå Plant Oy • Member of the Board of Directors of A-Farmers Ltd • Member of the Board of Directors of A-Rehu Oy • Chairman of the Board of Directors of Osuuskunta Pohjanmaan Liha • Chairman of the Board of Directors of Rannikon Metsäkeskus |
• Member of the Board of Directors of TUKO and FGTA |
• Member of the Board of Directors of Componenta Plc |
• Member of the Board of Directors of Olvi Plc • Member of the Board of Directors of Norpe Oy • Member of the Board of Directors of Top-Sport Oy • Member of the Board of Directors of Leipurin Oy |
| Independent of the Independent of the company and dependent company and dependent on the principal owners on the principal owners |
Independent of the company and dependent on the principal owners |
Independent of the company and the principal owners |
Dependent on the company and independent of the principal owners |
Independent of the company and the principal owners |
regarding new members of the Board of Directors
The Chairman shall convene the Nomination Committee as needed. The meetings discuss the matters that belong to the duties of the Nomination Committee. The agenda shall be prepared by the company's President and CEO after consultation with the Chairman of the Committee. During a meeting of the Committee, the matters to be discussed are presented by the company's President and CEO or a person appointed by him/her, provided that the matters in question do not pertain to them.
The meetings of the Nomination Committee are attended by the President and CEO and the Vice President. An exception to this is when the Committee discusses matters pertaining to them. The Nomination Committee may invite other people to join its meetings if deemed necessary and may use external experts to assist the Committee in fulfilling its duties.
In 2010, the Chairman of the Nomination Committee was Ari Pirkola and the other members were Martti Selin and Maisa Romanainen. All members of the Nomination Committee are independent of the company. Maisa Romanainen is also independent of the principal owners. The Committee met two (2) times in 2010. All members of the Committee attended all meetings.
The Remuneration Committee consists of the Chairman, Vice Chairman and one member of the Board of Directors elected by the Board itself. In accordance with recommendation 32 of the Corporate Governance Code, the President and CEO or people belonging to the company's other management shall not be elected as members of the Remuneration Committee.
The aim of the Remuneration Committee is to ensure the objectivity of decision-making, enhance the achievement of the company's goals through bonus schemes, increase
the company's value and ensure that bonus schemes are transparent and systematic. The aim of the Remuneration Committee is also to ensure that the merit pay systems are connected with the company's strategy and the results obtained.
According to the rules of procedure, the duties of the Remuneration Committee are as follows:
The Chairman of the Remuneration Committee shall convene the Committee as needed, but no less than two times per year. The meetings discuss the matters that belong to the duties of the Remuneration Committee. The agenda shall be prepared by the company's President and CEO after consultation with the Chairman of the Committee. During a meeting of the Committee, the matters to be discussed are presented by the company's President and CEO, provided that the matters in question do not pertain to him/her.
The Remuneration Committee may invite other people to join its meetings if deemed necessary and may use external experts to assist the Committee in fulfilling its duties.
In 2010, the Chairman of the Remuneration Committee was Martti Selin and the other members were Timo Komulainen and Harri Sivula. All members of the Remuneration Committee are independent of the company. Harri Sivula is also independent of the principal owners. The
Product Leadership comprises Group-wide brand management, R&D and product group management functions. The Group Vice President in charge of the Strategy Process is responsible for implementing and monitoring the process throughout the Group.
| Procedures of | Benefits from | ||
|---|---|---|---|
| the Supervisory Board | Group companies | Total | |
| Pirkola Ari, Chairman | 51,000 | 51,000 | |
| Paavola Seppo, Vice Chairman | 30,900 | 30,900 | |
| Alaranta Juha-Matti | 1,500 | 1,500 | |
| Anttikoski Juho | 1,500 | 1,500 | |
| Asunmaa Mika | 1,500 | 1,500 | |
| Haarala Lassi Antti | 1,750 | 1,750 | |
| Herrala Juhani | 1,500 | 1,500 | |
| Holm Henrik | 1,000 | 2,700 | 3,700 |
| Hyttinen Veli, from May 2010 | 1,000 | 1,000 | |
| Ingalsuo Pasi | 1,500 | 4,200 | 5,700 |
| Kiviniemi Juha, from May 2010 | 500 | 500 | |
| Koivisto Veli | 2,000 | 3,900 | 5,900 |
| Kuja-Lipasti Olavi, until April 2010 | 750 | 750 | |
| Mutanen Teuvo | 1,750 | 1,750 | |
| Niku Mika | 1,500 | 1,500 | |
| Panula Heikki | 1,250 | 1,250 | |
| Parikka Pekka | 1,750 | 1,750 | |
| Riekkinen Marita, until April 2010 | 1,000 | 1,000 | |
| Tervonen Juho | 2,000 | 600 | 2,600 |
| Toivanen Tomi | 1,500 | 1,500 | |
| Tuhkasaari Timo | 1,500 | 1,500 | |
| 108,650 | 11,400 | 120,050 |
Remuneration Committee met four (4) times in 2010. All members of the Committee attended all meetings.
The company has a President and 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 President and CEO also sees to the organisation of the company's day-to-day administration and ensures reliable asset management. The President and CEO is appointed by the Board of Directors, which decides on the terms of his or her employment.
The President and CEO of Atria Plc was Matti Tikkakoski, MSc (Econ.) until 3 March 2011. After that, Juha Gröhn, MSc (Food Sc.) was appointed to the position. His task is to attend to the day-to-day administration of the company in accordance with the instructions and orders issued by the Board of Directors. The personal details of the President and CEO can be found in connection with the presentation of the members of the Management Team.
Atria Group has a Management Team chaired by the President and CEO. The Management Team assists the President and CEO in planning the operations and in operational management. The duties of the Management Team include, among others, preparing strategic plans and putting them into practice, handling significant projects and organisational changes as well as reviewing and implementing the Group's risk management measures in their respective areas of responsibility.
In 2010, the Management Team met eleven (11) times.
The Annual General Meeting decides yearly on the remuneration of the members of the Supervisory Board. In 2010, the Supervisory Board met three (3) times and the remunerations were as follows:
• Meeting compensation 250 euros/meeting
The members of the Supervisory Board have no share incentive plans or share-based bonus schemes.
In 2010, monthly fees and meeting fees paid to the members of the Supervisory Board for participating in the procedures of the Supervisory Board (including being a member of the Supervisory Board of another company that is part of the same Group) are presented on the page 113.
The Supervisory Board decides on the remuneration of the members of the Atria Board of Directors yearly. The remuneration to the members of the Board of Directors is paid as monetary compensation. With the exception of the President and CEO, the members of the Board have no share incentive plans or share-based bonus schemes. The principles governing the rewarding of the President and CEO are set out in a different section.
In 2010, monthly fees and meeting fees paid to the members of the Board for participating in the procedures of the Board of Directors (including being a member of the Board of another company that is part of the same Group) were the following:
| Board of Directors and | Benefits from | |||
|---|---|---|---|---|
| Name | Position | committee work | Group companies | Total |
| Martti Selin | Chairman | 66,600 | 66,600 | |
| Timo Komulainen | Vice Chairman | 39,600 | 36,900 | 76,500 |
| Tuomo Heikkilä | Member | 33,000 | 33,000 | |
| Esa Kaarto | Member | 31,800 | 20,180 | 51,980 |
| Runar Lillandt | Member | 18,900 | 2,700 | 21,600 |
| Maisa Romanainen | Member | 12,048 | 12,048 | |
| Harri Sivula | Member | 27,000 | 27,000 | |
| Matti Tikkakoski | Member | |||
| TOTAL | 228,948 | 59,780 | 288,728 |
The members of the Board have no share incentive plans or share-based bonus schemes.
The bonus scheme for the management of Atria Plc consists of a fixed monthly salary, merit pay, pension benefits and a share incentive plan. The company has no option scheme in place.
The Atria Plc Board of Directors decides on the remuneration, other financial benefits and the criteria applied in the merit pay system for the Group CEO and the Management Team, as well as the merit pay principles used for other management members.
The Group's vice-president and the CEO decide on the rewarding of the members of the management teams of the various business units according to the one-over-one principle. The merit pay systems for the management teams of business areas are approved by the President and CEO.
The retirement age for the President and CEO is 63 years. However, the President and CEO has the right to retire at age 60. The amount of pension is based on the President and CEO's annual earnings at Atria Group as specified by the Board of Directors. In 2010, the group pension contributions of the President and CEO were 24% of annual earnings, which included monetary salary and fringe benefits without cash payments of incentive schemes.
According to the President and CEO's contract, the
period of notice is 6 months and the salary for the period of notice is 12 months' salary. There are no terms and conditions for any other compensation based on termination of employment.
The maximum amount of merit pay for Atria Plc's President and CEO and the Management Team is 30% to 50% of the annual salary, depending on the effect on the result and the level of competence required to perform the duties. The criteria in Atria Plc's merit pay system are the profit requirements at Group level and in the person's responsibility area, the working capital and, for some employees, the personal performance. In addition to the President and CEO, Deputy CEO and Management Team, Atria Plc's merit pay system covers approximately 60 people at the executive and supervisory levels.
In addition to the merit pay system, Atria Plc's Board of Directors has decided to adopt a share-based incentive programme for Atria Group's key personnel. The aim of the share incentive plan is to combine the objectives of the owners and key personnel in order to increase the company's value. The aim is also to commit the key personnel to the company and to offer them a competitive incentive plan based on holding the company shares.
| Fixed | Share-based | Pension | |||||
|---|---|---|---|---|---|---|---|
| monthly salary | Merit pay | Fringe benefits | incentive | contributions | 2010 Total | ||
| President and CEO | 457,057 | 68,796 | 19,292 | 9,129 | 133,373 | 687,647 | |
| Management Team | 1,694,805 | 241,368 | 108,331 | 32,104 | 270,820 | 2,347,427 | |
| TOTAL | 2,151,861 | 310,164 | 127,623 | 41,233 | 404,193 | 3,035,074 |
| Name Responsibility |
Matti Tikkakoski President and CEO until 3 March 2011, Atria Plc, Atria Finland Executive Vice President Atria Group |
Juha Gröhn Vice President & Dep uty CEO, President & CEO, Atria Plc, since 18 March 2011, Executive Vice President, Atria Scandinavia Meat Raw Material Producement and Atria Concept |
Juha Ruohola Executive Vice President, Atria Russia Primary Production |
Tomas Back CFO, Executive Vice President, Atria Baltic Finance and Administration |
|
|---|---|---|---|---|---|
| Joined Atria in | 2005 | 1990 | 1999 | 2007 | |
| Year of Birth | 1953 | 1963 | 1965 | 1964 | |
| Education | BSc (Econ.) | MSc (Food Sc.) | MSc (Agriculture and Forestry), eMBA |
MSc (Econ.) | |
| Relevant work experience |
• 1978–1980 Product Manager, Orion Corporation • 1980–2002 various managerial positions at Huhtamäki Plc, Vice President 1999– 2002 • 2003–2005 Vice President, Å&R Carton AB • 2005 - 3 March 2011 President and CEO, Atria Plc • 1 September 2010– 1 February 2011 Managing Director, Atria Finland Ltd |
• 1990–1991 Foreman, Lihapolar • 1991–1993 Business Development Manager, Itikka Lihapolar • 1993–1998 Director, Slaughterhouse Industry, Atria Ltd • 1999–2003 Director, Meat Product and Convenience Food Industries, Atria Ltd • 2003–2004 Director, Steering, Vice President, Atria Ltd • 2004–2006 Director, Meat Industry, Vice President, Atria Ltd • 2006-2010 Managing Director, Atria Finland Ltd, Vice President, Atria Plc, Atria Baltic • 2010– Deputy CEO, Executive Vice President, Atria Scandinavia • 18 March 2011– President and CEO, Atria Plc |
• 1990–1992 Agronomist, Central Union of Agricultural Producers and Forest Owners (MTK), Tampere Region • 1992–1994 Acting Executive Director, Central Union of Agricultural Producers and Forest Owners (MTK), Tampere Region • 1994–1997 Purchasing Director, LSO Foods Oy • 1997–1999 President and CEO, Lihakunta Co-operative • 1999–2001 President and CEO, Lithells AB • 2001–2003 Director, Convenience Food Industry, Atria Ltd • 2003–2005 Director, Meat Product and Convenience Food Industries, Atria Ltd • 2005–2006 Director, Meat Product Industry, Atria Ltd • 2006– Director, Atria Russia business area |
• 1990–2007 Business Controller, Chief Financial Officer, Huhtamäki Oyj (Helsinki, Lausanne, DeSoto, Kansas, Espoo) • 2007 - CFO, Atria Plc • 2010– CFO, Executive Vice President, Atria Baltic |
| Matti Tikkakoski Juha Gröhn Juha Ruohola Tomas Back President and CEO Vice President & Dep Executive Vice CFO, Executive Vice until 3 March 2011, uty CEO, President & President, Atria Russia President, Atria Baltic Atria Plc, Atria Finland CEO, Atria Plc, since 18 Executive Vice President March 2011, Executive Vice President, Atria |
Merja Leino Group Vice President |
Jarmo Lindholm Group Vice President |
Pasi Luostarinen Group Vice President |
Jukka Mäntykivi Group Vice President |
Kirsi Matero Group Vice President |
|---|---|---|---|---|---|
| Scandinavia Meat Raw Material Primary Production Finance and Producement and Atria Administration Concept |
Quality, Product Safety and Sustainability |
Product Leadership | Strategic Process | Purchasing, Steering, Logistics and IT |
Human Resources |
| 1990 1999 2007 |
1996 | 2002 | 2000 | 2001 | 2010 |
| 1963 1965 1964 |
1960 | 1973 | 1966 | 1961 | 1968 |
| MSc (Agriculture and MSc (Econ.) Forestry), eMBA |
PhD (Phil.) | MSc (Econ.) | MSc (Econ.) | MSc (Soc.Sc.) | MSc (Econ.) |
| • 1990–1992 • 1990–2007 Business Agronomist, Central Controller, Chief Union of Agricultural Financial Officer, Producers and Forest Huhtamäki Oyj Owners (MTK), (Helsinki, Lausanne, Tampere Region DeSoto, Kansas, • 1992–1994 Acting Espoo) Executive Director, • 2007 - CFO, Atria Plc Central Union • 2010– CFO, Executive of Agricultural Vice President, Atria Producers and Forest Baltic Owners (MTK), Tampere Region • 1994–1997 Purchasing Director, LSO Foods Oy • 1997–1999 President and CEO, Lihakunta Co-operative • 1999–2001 President and CEO, Lithells AB • 2001–2003 Director, Convenience Food Industry, Atria Ltd • 2003–2005 Director, Meat Product and Convenience Food Industries, Atria Ltd • 2005–2006 Director, Meat Product Industry, Atria Ltd • 2006– Director, Atria Russia business area |
• 1987–1991 Product Developer, Huhtamäki Oy Jalostaja • 1991–1995 Packaging Development Manager, Unilever Oy • 1995–1996 National Coordinator, Networked Centre of Expertise for the Food Processing Industry (ELO) • 1996–2010 Group Vice President, Convenience Food, Quality Development and Product Safety, Atria Finland Ltd/ Atria Plc • 2010– Group Vice President, Quality, Product Safety and Sustainability , Atria Plc / Atria Finland Ltd, Director, Convenience Food, Atria Finland Ltd |
• 1998–2000 Customer Service Manager & e-Business, Unilever Finland • 2000–2002 Account Manager, Marketing Manager, AC Nielsen • 2002–2005 Marketing Manager, Atria Ltd • 2005–2010 Group Vice President, Product Group Management and Product Development, Commercial Director, Atria Finland Ltd • 2010– Group Vice President, Product Leadership, Brand Management and Product Development, Atria Plc |
• 1991–1993 Product Manager, Oy Mallasjuoma • 1993–1996 Product Group Manager, Fazer Confectionery Ltd • 1996–1997 Trade Development Manager, British American Tobacco Nordic • 1997–2000 Marketing Director, Valio • 2000–2006 Marketing Director, Atria Plc • 2007–2010 Group Vice President, Brand Management and Cold Cuts, Atria Plc • 2010– Group Vice President, Strategy Process, Atria Plc |
• 1990–1992 Controller, Valio Ltd, Northern Finland profit centre, Oulu • 1992–1994 IT Systems Manager, Valio Ltd, Northern Finland profit centre, Oulu • 1995–1998 IT Manager, Valio Ltd, Butter and Powdered Ingredients, Seinäjoki • 1998–1999 Chief Financial Officer, Valiojäätelö Ice Cream business, Helsinki • 1999–2001 Chief Information Officer, Valio Ltd, Group Administration, Helsinki • 2001–2003 Chief Information Officer, Atria Plc • 2003-2010 Group Vice President, Information Management, Steering and Logistics, Atria Plc • 2010– Group Vice President, Procurement, Information Management, |
• 1998–2003 Business HR Manager, Compe tence Development Manager / Consultant, Nokia Networks and Nokia Mobile Phones • 2004–2007 Senior Business HR Mana ger, Nokia Mobile Phones • 2007–2010 HR Director, Pfizer Oy • 2010– Group Vice President, Human Resources, Atria Plc |
The programme will comprise three one-year accrual periods, i.e., calendar years 2010, 2011 and 2012. Where applicable, payments will be made in 2011, 2012 and 2013, 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 Board of Directors will decide on the earnings criteria and the targets to be established for them every year for each period. The shares earned on the basis of the system may not be transferred for a period of two years from the end of the accrual period. The maximum number of shares to be paid out within the whole system during a period of three years is 300,300. However, no shares are transferred based on the 2010 result.
Additional information on share incentive plans can be found in Note 24, Share-Based Payments to the financial statements.
Managerial group pension benefits confirmed by Atria's Board of Directors have been arranged for the members of the Atria Group Management Team who are covered by Finnish social security. The retirement age of the group pension insurance is 63 years for the members of the Management Team. The pension plan is payment-based, and the annual premium is based on the insured monthly salary (monetary salary and fringe benefits) as specified by the Board of Directors. Equivalent pension benefits have been separately arranged for the members of the Management Team who are not covered by Finnish social security.
The operating principles of internal control are confirmed by the company's Board of Directors. Atria's internal control includes comprehensive risk management and independent internal audit. The aim of internal control is to ensure that Atria's operations are efficient and in line with the company's strategy, all financial and operational reports are reliable, the Group's operations are legal and the company's internal principles and codes of conduct are followed.
A description of the main features of internal control and risk management in relation to the financial reporting process can be found in a statement published by the company on corporate governance.
The purpose of risk management is to support the execution of Atria's strategy and the achievement of targets, and to secure business continuity. Atria Group's risk management goals, principles, responsibilities and powers are specified
in its Risk Management Policy approved by the Board of Directors, 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 a uniform operating model for risk identification and reporting in all business areas. The model forms an integral part of annual strategic planning. Risks are managed in accordance with the specified approved principles in all business areas and Group operations. In risk assessment, an action plan is defined according to which the identified risks are managed.
Risks are defined as external or internal (within Atria Group) events that may have a positive or negative impact on the execution of the company's strategy, the achievement of its targets and the continuity of business.
Atria is subject to many different risks. For reporting purposes, Atria's risks are divided into four categories: business risks, financial risks, operational risks and accident risks.
Business risks are related, for example, to business decisions, resources allocation, the way in which changes in the business environment are responded to, or management systems in general.
Financial risks refer, for example, to the risk of insufficient financial resources in the short or medium term, the risk of the counterparties failing to meet their financial obligations or the risk of changes in market prices affecting the company.
Operational risks are defined as deficiencies or malfunctions in processes or systems, risks related to people's actions and risks related to legislation or other regulations.
Accident risks refer to external or internal (within Atria) events or malfunctions that cause damage or loss.
The Board of Directors approves the Risk Management Policy and supervises its implementation. The President and CEO is responsible for organising risk management.
The Group Management Team and the management teams of the business units are responsible for identifying and assessing risks and for implementing risk management in their respective areas of responsibility. The management of financial risks is centralised in the Group's Treasury unit. The CFO gathers and reports the most significant risks identified to the Board of Directors at least once a year. The CFO is responsible for development, guidelines and support in risk management and reporting. External advisers are also used in the development work.
Atria has an internal audit function that is independent of the rest of the organisation and supports Group administration and business area management in achieving their goals. The main task of internal audit is to analyse and assess the efficiency and functionality of the company's risk management and internal control. Within its task, the function assesses the following areas:
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 President and CEO of the Group.
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. Internal audit also serves as an expert in development projects related to its task domain and carries out separate studies on the assignment of the Board of Directors or the Group's top management. The Internal Auditor reports to the President and CEO. A summary of the audit results is presented to the Board of Directors at least once a year.
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 of Finland. The term of service of the auditors shall end at the conclusion of the Annual General Meeting following their election.
The auditor provides Atria's shareholders with an
Auditor's Report document in accordance with the law, in conjunction with the company's financial statements, and reports regularly to the Board of Directors and the management. The auditor participates in a Board meeting at least once a year, on which occasion a discussion of the audit plan and the results of auditing is arranged.
In 2010, Atria Plc's Annual General Meeting elected PricewaterhouseCoopers Oy, a firm of authorised public accountants, as the company's auditor until the closing of the next AGM. The audit firm has notified that the auditor with the principal responsibility shall be Authorised Public Accountant Juha Wahlroos.
In 2010, the Group paid a total of 546,000 euros in auditor's remuneration (excluding due diligence work related to mergers). The whole Group paid a total of 172,000 euros for services not related to auditing.
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.
Atria publishes financial information in real time on its web pages at www.atriagroup.com. 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]
Atria Plc published a total of 23 stock exchange releases in 2010. The releases can be found on the Atria Group website www.atriagroup.com.
18 Jun Maisa Romanainen joins Atria's Board of Directors
23 Jun Changes in Atria Scandinavia management
Atria's performance has been monitored by at least the following analysts:
Mark Mattila Tel. +358 9 6134 6398 e-mail: [email protected]
Carnegie Investment Bank AB Timo Heinonen Tel. +358 9 6187 1234 e-mail: [email protected]
Evli Pankki Oyj
Linnea Peltomäki Tel. +358 9 4766 9641 e-mail: [email protected]
SEB Enskilda Jutta Rahikainen Tel. +358 9 616 287 13 e-mail: [email protected]
Nordea Markets
Rauli Juva Tel. +358 9 165 59944 e-mail: [email protected] Handelsbanken Capital Markets Robin Santavirta Tel. +358 10 444 2483 e-mail: [email protected]
Danske Markets Equities Kalle Karppinen Tel. +358 10 236 4794 e-mail: [email protected]
Pohjola Pankki Oyj Matias Rautionmaa Tel. +358 10 252 4408 e-mail: [email protected]
E. Öhman J:or Fondkommission AB Elina Pennala Tel. +358 9 886 660 43 e-mail: [email protected]
Head office: Atriantie 1, Nurmo, Finland PO Box 900, FI-60060 ATRIA
Tel. +358 20 472 8111 Fax +358 6 416 8440
Läkkisepäntie 23 FI-06300 Helsinki, Finland Fax +358 9 774 1035
Atria Finland Telephone number for all of
Atria Finland´s offices Tel. +358 20 472 8111
Head office: Atriantie 1, Nurmo, Finland PO Box 900, FI-60060 ATRIA Fax +358 6 416 8440
Invoicing address: PO Box 1000 FI-60061 ATRIA
[email protected] [email protected] www.atria.fi
Itikanmäenkatu 3, Seinäjoki, Finland PO Box 900, FI-60060 ATRIA Fax +358 6 416 8202
Financial administration: Itikanmäenkatu 3, Seinäjoki, Finland
PO Box 900, FI-60060 ATRIA Fax +358 6 416 8207
Läkkisepäntie 23 FI-06300 Helsinki, Finland Fax +358 9 774 1035
Yrittäjäntie 60 FI-03600 Karkkila, Finland Fax +358 9 387 2732
Rahikkatie 95 FI-61850 Kauhajoki, Finland Fax +358 6 231 3377
Ankkuritie 2, Kuopio, Finland PO Box 147, FI-70101 Kuopio Fax +358 17 262 7776
Pusurinkatu 48 FI-30100 Forssa, Finland Tel. +358 3 41 541 Fax +358 3 415 4244
Atriantie 1, Nurmo, Finland PO Box 900, FI-60060 ATRIA Fax +358 6 416 8038
Atria-Tekniikka Oy Atriantie 1, Nurmo, Finland PO Box 900, FI-60060 ATRIA Fax +358 6 416 8038
Augustendalsvägen 19 PO 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 Helsinborg, Sweden Tel. +46 19 300 300 Fax +46 42 38 14 61
[email protected] www.atria.se
Office: Augustendalsvägen 19 PO Box 1229 SE-131 28 Nacka Strand, Sweden Tel. +46 19 300 300 Fax +46 8 556 306 60
Drottninggatan 14 SE-252 21 Helsingborg, Sweden Tel. +46 19 300 300 Fax +46 42 38 14 61
Augustendalsvägen 19 PO Box 1229 SE-131 28 Nacka Strand, Sweden Tel. +46 19 300 300 Fax +46 8 556 306 60
Drottninggatan 14 SE-252 21 Helsingborg, Sweden Tel. +46 19 300 300 Fax +46 42 38 14 61
Augustendalsvägen 19 Box 1229 SE-131 28 Nacka Strand, Sweden Tel. +46 19 300 300 Fax +46 8 556 306 60
Skogholmsgatan 12 PO Box 446 SE-201 24 Malmö, Sweden Tel. +46 19 300 300 Fax +46 40 224 273
Hjälmarydsvägen 2 PO 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 PO 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
Prästkragens väg 9 PO Box 188 SE-132 26 Saltsjö-Boo, Sweden Tel. +46 19 300 300
Ridderheims Delikatesser Södra Långebergsgatan 12 SE-421 32 Västra Frölunda, Sweden Tel. +46 31 722 5500 Fax +46 31 722 5505
Göteborgsvägen 19 SE-521 30 Falköping, Sweden Tel. +46 515 77 66 00 Fax +46 515 77 66 80
Langmarksvej 1 DK-8700 Horsens, Denmark Tel. +45 76 28 25 00 Fax +45 76 28 25 01
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
Ryabinovaya street 32 RUS-121471 Moscow, Russia Tel. +7 495 448 6704 Fax +7 495 4448 4503
[email protected] www.atriarussia.ru
Atria Eesti AS Metsa str. 19 EE-68206 Valga, Estonia Tel. +372 76 79 900 Fax +372 76 79 901
Põlva maakond EE-63601 Vastse-Kuuste, Estonia Tel. +372 7970 216 Fax +372 7970 215
[email protected] [email protected] www.atria.ee
122
Atria Finland Ltd's controller Tapani Junna has left Atria's handprint in this Annual Report with his drawings.
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 2010 is published on the Internet at www.atriagroup.com
Concept and production: Selander & Co. Communication Agency Pictures: Studio Sami Helenius (portraits), other photos: Atria Printing house: Hämeen Kirjapaino Oy, 4/2011
Atria Plc P.O. BOX 900, FI-60060 ATRIA FINLAND Tel. +358 20 472 8111 Fax: +358 6 416 8440 www.atria.fi www.atriagroup.com
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