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Oriola Oyj Earnings Release 2020
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Earnings Release
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Oriola
ORIOLA CORPORATION'S FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
Released on 18 February 2021 at 3 p.m.
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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Oriola January 1– December 31, 2020
January–December 2020 highlights
- The COVID-19 pandemic had a significant impact on Oriola's operating environment and operations. Pharmaceutical volumes declined in both the Finnish and the Swedish market.
- The distribution and the availability of pharmaceuticals secured well in both markets.
- Invoicing increased by 0.9% (increased 6.1%) to EUR 3,764.9 (3,733.1) million. On a constant currency basis invoicing increased by 0.1% and was EUR 3,738.6 million.
- Net sales increased by 4.6% (increased 10.9%) to EUR 1,800.8 (1,721.3) million. On a constant currency basis net sales increased by 3.8% and were EUR 1,787.1 million.
- Adjusted EBIT was EUR 21.0 (20.5) million. On a constant currency basis the adjusted EBIT was EUR 20.8 million.
- Profit for the period totalled EUR 11.3 (8.0) million and earnings per share were EUR 0.06 (0.04).
- The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.03 (0.09) per share is paid for 2020. In addition, it is proposed that the Annual General Meeting would authorise the Board of Directors to decide at its discretion on the payment of dividend up to a maximum of EUR 0.03 per share.
October–December 2020 highlights
- The pandemic continued to negatively impact Oriola's operating environment. Pharmaceutical volumes continued to decline.
- Strong online sales in Consumer, 107% vs. market growth of 66%.
- Invoicing increased by 0.8% (increased 5.4%) to EUR 986.6 (978.9) million. On a constant currency basis invoicing decreased by 1.7% and was EUR 962.1 million.
- Net sales increased by 4.4% (increased 13.2%) to EUR 466.2 (446.7) million. On a constant currency basis net sales increased by 1.5% and were EUR 453.5 million.
- Adjusted EBIT was EUR 8.0 (2.1) million driven by many parts of the business, for example dose dispensing. On a constant currency basis the adjusted EBIT was EUR 7.9 million.
- Profit for the period totalled EUR 4.1 (-0.2) million and earnings per share were EUR 0.02 (-0.00).
Business outlook for 2021
The adjusted EBIT on a constant currency basis stays on the same level or increases from the 2020 level.
The COVID-19 pandemic is expected to continue during 2021. Severity and duration of the pandemic remain unclear in Oriola's operating environment. Oriola's business outlook for 2021 is based on external market forecasts, agreements with pharmaceutical companies and pharmacies, and management assessments.
President and CEO Juko Hakala:
"2020 was an exceptional year for Oriola, with the COVID-19 pandemic impacting our operations significantly from March onwards. Pharmaceutical volumes declined during the year in both of our markets, resulting from the pandemic-related restrictions and allocation of healthcare resources. Our second quarter result was lost due to the first wave of the pandemic. During the year, society and also Oriola learned to adapt to the new situation, and prepare for the second wave of the pandemic.
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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In the fourth quarter of 2020, Oriola's invoicing remained stable and net sales grew slightly. Our profitability improved in many parts of our business, amounting to a fourth quarter adjusted EBIT of EUR 8.0 (2.1) million, making it the highest quarter in 2020.
The fourth quarter net sales¹ of Consumer grew by 2.6% to EUR 195.8 (190.8) million, driven by strong online sales. Adjusted EBIT increased to EUR 4.4 (1.1) million. The strategically important online channel grew by 107% compared to the same period last year. Oriola's brick-and-mortar pharmacies were also successful in the review period.
In Pharma, the fourth quarter net sales¹ increased by 0.7% to EUR 243.9 (242.2) million. Adjusted EBIT was EUR 4.1 (4.2) million. Changes in distribution agreements as well as additional operational costs related to the pandemic burdened Pharma's profitability.
The net sales¹ of Retail grew by 5.3% to EUR 120.1 (114.1) million in the fourth quarter. Adjusted EBIT improved to EUR 0.7 (-0.8) million. The profit improvement was primarily driven by the continued positive development of dose dispensing. The result of the business area was still impacted by the additional operational costs related to the pandemic.
In this exceptional year, we secured the distribution and the availability of pharmaceuticals well in both markets. This achievement was made possible by our employees, who have gone the extra mile and worked hard during 2020. This has been vital for the entire society, in line with our purpose "Health for life". In 2021, we are committed to continue our strategic programmes. Profitability and reliable operations remain our key priorities."
¹ On a constant currency basis.
| Key figures | 2020 | 2019 | Change | 2020 | 2019 | Change |
|---|---|---|---|---|---|---|
| EUR million | 10-12 | 10-12 | % | 1-12 | 1-12 | % |
| Invoicing | 986.6 | 978.9 | 0.8 | 3,764.9 | 3,733.1 | 0.9 |
| Net sales | 466.2 | 446.7 | 4.4 | 1,800.8 | 1,721.3 | 4.6 |
| Adjusted EBIT¹ | 8.0 | 2.1 | 286.8 | 21.0 | 20.5 | 2.6 |
| EBIT | 6.8 | 0.8 | 764.5 | 20.4 | 15.3 | 33.0 |
| Adjusted EBIT % | 1.7 | 0.5 | 1.2 | 1.2 | ||
| EBIT % | 1.5 | 0.2 | 1.1 | 0.9 | ||
| Profit for the period | 4.1 | -0.2 | 11.3 | 8.0 | 40.7 | |
| Earnings per share, EUR | 0.02 | -0.00 | 0.06 | 0.04 | 40.7 | |
| Net cash flow from operating activities | 45.7 | 27.3 | 58.3 | 84.4 | ||
| Gearing, % | 75.0 | 76.1 | ||||
| Equity ratio, % | 14.8 | 15.5 | ||||
| Return on capital employed (ROCE), % | 5.0 | 4.1 |
¹ Adjusting items are specified in note 12. Adjusting items.
In order to reflect the underlying business performance and to enhance comparability between financial periods Oriola discloses certain performance measures of historical performance, financial position and cash flows, as permitted in "Alternative performance measures" guidance issued by the European Securities and Markets Authority (ESMA). These measures should not be considered as a substitute for measures of performance in accordance with the IFRS. The calculation methods of these measures are provided in note 11. Alternative performance measures in the notes to this Financial Statements Release.
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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Oriola Corporation's Financial Statements Release for 1 January–31 December 2020
Operating environment
During 2020, the COVID-19 pandemic has rapidly changed Oriola's operating environment, as the restrictions set by authorities extensively impacted the functions of public healthcare and consumer behaviour. The second wave of the pandemic, which started to accelerate towards the end of the reporting period, intensified again these impacts especially in Sweden. The pandemic has weakened the operating conditions of healthcare and the pharmaceutical volumes have declined. In addition, the demand for health and wellbeing products has declined due to the citizens' decreased mobility, and the share of online sales of the market has increased significantly. The continuation of the pandemic increases uncertainty in both the Finnish and the Swedish markets.
The pandemic has increased society's preparedness for securing availability of pharmaceuticals and other health-care products. The demand for many pandemic related products that promote health safety, such as face masks and services, has increased. The importance of high-quality pharmaceutical availability compliant with regulations, and particularly expertise in cold chain management, has been highlighted during the pandemic.
Ageing population and growth in speciality pharmaceuticals are driving the long-term growth of the pharmaceutical market in both of Oriola's operating countries. In 2020 the pharmaceutical volumes declined due to the pandemic. In January–December 2020, the pharmaceutical wholesale market value grew by 5.1% (7.6%) in Sweden (source: IQVIA) and 2.1% (5.2%) in Finland in local currencies (source: LTK), mainly due to the significant increase in pharmaceutical sales in the first quarter. Parallel imports' share of the Swedish pharmaceutical market was 9.8% (9.2%) (source: Apoteksförening).
Health and wellbeing trends, as well as the growth in e-commerce are growing the pharmacy business in Sweden. The pharmacy market is experiencing a digital transformation driven by fast growing e-commerce, which accelerated in 2020 due to the pandemic. Online sales accounts already for 18% (12%) of the total pharmacy market in Sweden by the end of December 2020. The pharmacy market in Sweden grew by 4.6% (4.0%) in Swedish krona driven by strong increase in online market (source: Apoteksförening). At the end of December, there were 1,433 (1,426) pharmacies in Sweden.
The pharmacy network in Finland has remained unchanged and the share of online sales is small. There are 819 pharmacy outlets in Finland and 132 service points of pharmacies. Pharmacies are owned by approximately 600 proprietary pharmacists and the two Universities of Helsinki and Kuopio.
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Strategic programmes
Oriola has published two group-wide strategic programmes: one focusing on cost savings and operational excellence, and the other one on strengthening and developing customer experience.
The strategic programme 20by20 Excellence focuses on Oriola's efficiency and profitability. The target was to deliver EUR 20 million annualised savings by the end of the year 2020 compared to the 2018 cost level.
The 20by20 Excellence programme continued systematically throughout the year 2020 but slowed down due to the COVID-19 pandemic. By the end of 2020, approximately 75% or approximately EUR 15 million of the savings target was reached. The main savings have realised in logistics operations in Finland, personnel costs, IT costs, changes in loyalty programme, as well as direct and indirect purchasing. As part of the programme, Oriola has closed 9 pharmacies in Sweden during 2019–2020.
The slowdown of the programme due to the pandemic has led to the decision to continue the 20by20 programme in 2021. Cost efficiency is the key target for the company in 2021.
The strategic programme Customer Experience focuses on developing and implementing more customer-oriented processes and tools, organisation and culture. The target for the programme is to strengthen customer trust and satisfaction in Oriola's B2B business. The company's activities are customer-oriented also during the COVID-19 pandemic. Customer communication and collaboration has been lifted as one of the key activities to ensure timely information flow and the influencing opportunities between all stakeholders during the pandemic. The Net Promoter Score (NPS), measuring customer satisfaction, continued to develop positively, especially in Finland.
Sustainability
Oriola's sustainability strategy is strongly linked to the company's purpose, "Health for life". As a company operating in health and wellbeing sector, Oriola improves the prerequisites for healthier life especially in the context of three key sustainability themes: society, people and planet. Oriola is committed to the UN Sustainable Development Goals (SDGs) and has defined long-term sustainability goals aligned with the SDGs.
Oriola plays an important role in the society in ensuring safe and on-time deliveries and sustainable usage of pharmaceuticals. Oriola's mission is to bring its customers sustainable products and solutions for health and wellbeing. Oriola's target is to increase the share of sustainable products in the sales of private label products and introduce new services to promote people's health.
According to our vision, Oriola enables a healthier tomorrow for people and societies. Competent and engaged employees are the key success factor and the foundation of sustainable business for Oriola. The Company's goal is high employee engagement and raising the engagement index to an excellent level, as well as optimising employee turnover.
Oriola's Environmental Policy outlines the commitment to reduce environmental impacts of the company's operations. Oriola's goal is to achieve carbon neutrality by 2030. Oriola has set 100% renewable energy and increasing recycling rate to 85% by the end of the 2022 as short-term targets towards this long-term carbon neutrality goal.
Oriola's quality management is founded on the laws and regulatory requirements applicable in the pharmaceutical sector, and on quality management standards. Pharmaceutical distribution and wholesale are regulated by the Good Distribution Practice (GDP) of the European Medicines Agency (EMA).
In the first quarter, Oriola published as part of the Annual Report company's first Global Reporting Initiative (GRI) supplement that was prepared in accordance with GRI Standards. The GRI supplement's
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environmental data was assured by an independent sustainability expert. In addition, Oriola achieved the second best (B) level in Carbon Disclosure Project (CDP) reporting from the year 2019. CDP is a worldwide initiative for evaluating environmental data and scoring companies' climate and environmental actions.
In the second quarter, Oriola focused on securing the availability of the pharmaceuticals for its part, as well as helping consumers during the COVID-19 pandemic. Oriola both took care of the health security of its employees, and ensured the availability of pharmaceuticals to the citizens by prioritising pharmaceutical deliveries, as well as by building a national stock in Sweden for certain pharmaceuticals together with four Swedish regions and another wholesaler. The company also introduced new pharmacy services in Sweden, such as COVID-19 antibody tests.
In the third quarter, Oriola continued supporting people and the society through comprehensive pharmaceutical distribution and pharmacy activities. During the reporting period, Oriola took a significant step towards its goal of carbon neutrality by switching to carbon neutral district heating at the Mankkaa site. The change reduces Oriola's $\mathrm{CO}_{2}$ emissions by $23\%$ and increases the share of renewable energy used in the Group to more than $90\%$. Additionally, in the first half of the year, the company's recycling rate was increased to $74.3\%$ compared to $70.6\%$ in 2019. During the quarter, Mölnlycke, Enköping and Stockholm sites were audited against ISO 14001 standard's requirements, resulting in renewed certification.
In the fourth quarter, Oriola continued to support the health security and the availability of pharmaceuticals in the society. For example, by the end of the reporting period over 70,000 COVID-19 antibody tests had been performed in the company's pharmacies in Sweden. Also the work to enhance the health safety of Oriola's own employees continued with for example mass testings at the company's Swedish sites to keep COVID-19 from spreading. In line with the goal, Oriola increases the share of the sustainable products in the private label assortment. At the end of 2020 the share was $18\%$. Oriola's employee engagement index increased to 78 (77) and employee turnover was $10.2\%$ ($9.2\%$) in 2020. The share of the renewable energy increased to $91.5\%$ ($76.7\%$) and the recycling rate increased to $74.1\%$ ($70.6\%$) in 2020. In environmental work, Oriola achieved in 2020 level A-, which is the best Leadership level in Carbon Disclosure Project (CDP) reporting. In addition, Oriola was included in the OMX Sustainability Finland Index for responsible investment in December.
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Group financial performance January–December 2020
Invoicing and net sales
Invoicing increased by 0.9% (increased 6.1%). On a constant currency basis invoicing increased by 0.1% (increased 8.4%).
Net sales increased by 4.6% (increased 10.9%) to EUR 1,800.8 (1,721.3) million. On a constant currency basis net sales increased by 3.8% (increased 13.6%), driven by the value growth in the pharmaceutical market, changes in the distribution agreements for pharmaceuticals and increased sales of the health and wellbeing products.
Profitability
Adjusted EBIT increased by 2.6% (decreased 40.6%) to EUR 21.0 (20.5) million. The profit was burdened by changes in customer agreements, decreased volumes in brick-and-mortar as well as operative costs related to the ramp-up phase of the Swedish distribution centre and additional costs caused by the COVID-19 pandemic. Dose dispensing business developed well and had a positive impact on the result. In addition, cost savings improved profitability. In Sweden, Oriola received government compensations for socials costs, sick leaves and short-term lay-offs totalling EUR 1.5 million to cover the negative impacts of the pandemic. The compensations are reported as a reduction of personnel expenses in the consolidated statement of comprehensive income. Adjusting items totalled EUR -0.6 (-5.1) million, and the EBIT was EUR 20.4 (15.3) million. The adjusted EBIT on a constant currency basis was EUR 20.8 million.
Net financial expenses were EUR 6.0 (5.2) million. Profit for the period was EUR 11.3 (8.0) million. Income taxes for January–December were EUR 3.1 (2.1) million, which corresponds to an effective tax rate of 21.3% (20.8%). Earnings per share were EUR 0.06 (0.04).
Group financial performance October–December 2020
Invoicing and net sales
Invoicing increased by 0.8% (increased 5.4%). On a constant currency basis invoicing decreased by 1.7% (increased 7.6%), which was mainly due to changes in customer agreements.
Net sales increased by 4.4% (increased 13.2%) to EUR 466.2 (446.7) million. On a constant currency basis net sales increased by 1.5% (increased 15.9%).
Profitability
Adjusted EBIT increased to EUR 8.0 (2.1) million. The profit was positively impacted by the growth in dose-dispensing business, cost savings in pharmacies as well as decreased marketing and general expenses. The profit was still burdened by changes in customer agreements as well as operative costs in the Swedish distribution centre and additional costs caused by the COVID-19 pandemic. In Sweden, Oriola received government compensations for socials costs, sick leaves and short-term lay-offs totalling EUR 0.3 million to cover the negative impacts of the pandemic. The compensations are reported as a reduction of personnel expenses in the consolidated statement of comprehensive income. Adjusting items during the reporting period totalled EUR -1.2 (-1.3) million, and the EBIT was EUR 6.8 (0.8) million. The adjusted EBIT on a constant currency basis was EUR 7.9 million.
Net financial expenses were EUR 1.8 (1.1) million. Profit for the period was EUR 4.1 (-0.2) million. Earnings per share were EUR 0.02 (-0.00).
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Consumer
Consumer business area offers products and services for health and wellbeing for customers through Kronans Apotek, the third largest pharmacy chain in Sweden.
| Key Figures | 2020 | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | 2019 | 2020 | 2019 |
|---|---|---|---|---|---|---|---|---|---|---|
| EUR million | 10-12 | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | 1-12 | 1-12 |
| Invoicing | 208.6 | 194.5 | 189.0 | 206.1 | 196.3 | 186.4 | 193.1 | 192.2 | 798.2 | 768.1 |
| Net Sales | 203.0 | 190.5 | 184.8 | 202.4 | 190.8 | 182.6 | 188.8 | 187.9 | 780.7 | 750.1 |
| Adjusted EBIT | 4.4 | 4.3 | 0.3 | 5.4 | 1.1 | 4.9 | 2.9 | 2.8 | 14.4 | 11.7 |
| EBIT | 4.4 | 4.2 | 0.4 | 6.3 | -1.2 | 0.8 | 2.9 | 2.8 | 15.3 | 5.3 |
| Adjusted EBIT % | 2.2 | 2.2 | 0.2 | 2.7 | 0.6 | 2.7 | 1.5 | 1.5 | 1.8 | 1.6 |
| EBIT % | 2.2 | 2.2 | 0.2 | 3.1 | -0.6 | 0.4 | 1.5 | 1.5 | 2.0 | 0.7 |
| Number of personnel at the end of period | 1,621 | 1,711 | 1,631 | 1,715 | 1,692 | 1,712 | 1,698 | 1,543 | 1,621 | 1,692 |
Market environment
The pharmacy market in Sweden grew by 4.6% (4.0%) in Swedish krona (source: Apoteksförening) and the number of pharmacies increased by 6 in 2020.
Online sales in the Swedish pharmacy market continued to grow fast and reached approximately 18% (12%) of the pharmacy market by the end of December 2020.
Oriola's market share in the pharmacy market in Sweden in January–December 2020 was 16.6% (16.9%) (source: Apoteksförening). The relative share of OTC and traded goods from the net sales was 25.0% (25.0%). At the end of 2020, Oriola had 325 (324) pharmacies in Sweden. Oriola established 5 new pharmacies and closed 4 pharmacies during the reporting period.
million, received in Sweden. Adjusting items totalled EUR 0.9 (-6.4) million, and EBIT was EUR 15.3 (5.3) million.
October–December 2020
The net sales increased by 6.4% (remained stable) to EUR 203.0 (190.8) million. On a constant currency basis net sales increased by 2.6% (increased 3.2%).
Adjusted EBIT increased to EUR 4.4 (1.1) million. Cost savings had a positive impact on Consumer result. The impact of the pandemic was partly offset by government compensations totalling EUR 0.2 million, received in Sweden. Adjusting items totalled EUR -0.0 (-2.3) million, and EBIT was EUR 4.4 (-1.2) million.
January–December 2020
The net sales increased by 4.1% (decreased 0.2%) to EUR 780.7 (750.1) million. On a constant currency basis net sales increased by 3.1% (increased 3.0%). Oriola's online sales grew by 85%, faster than the market (+59%), and it accounts for 6.6% (3.7%) of Oriola's Consumer sales in Sweden.
Adjusted EBIT increased by 22.8% (decreased 28.2%) to EUR 14.4 (11.7) million. Cost savings had a positive impact on profitability. The restricted consumer mobility caused by the COVID-19 pandemic has impacted the demand especially in shopping centres. The negative impact of the pandemic was partly offset by government compensations totalling EUR 1.0
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Pharma
Pharma business area provides tailored logistics, expert and advisory services for pharmaceutical companies, as well as a wide range of pharmaceutical products for pharmacies, hospital pharmacies and veterinarians.
| Key Figures | 2020 | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | 2019 | 2020 | 2019 |
|---|---|---|---|---|---|---|---|---|---|---|
| EUR million | 10-12 | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | 1-12 | 1-12 |
| Invoicing | 763.7 | 706.8 | 690.0 | 745.5 | 768.5 | 715.5 | 734.3 | 692.3 | 2,906.0 | 2,910.6 |
| Net Sales | 249.4 | 234.7 | 232.9 | 244.2 | 242.2 | 231.4 | 244.9 | 199.6 | 961.2 | 918.1 |
| Adjusted EBIT | 4.1 | 3.0 | 2.1 | 3.6 | 4.2 | 5.2 | 4.7 | 3.5 | 12.8 | 17.7 |
| EBIT | 4.1 | 3.0 | 2.1 | 3.2 | 4.1 | 4.8 | 4.7 | 3.5 | 12.4 | 17.1 |
| Adjusted EBIT % | 1.6 | 1.3 | 0.9 | 1.5 | 1.7 | 2.3 | 1.9 | 1.8 | 1.3 | 1.9 |
| EBIT % | 1.6 | 1.3 | 0.9 | 1.3 | 1.7 | 2.1 | 1.9 | 1.8 | 1.3 | 1.9 |
| Number of personnel at the end of period | 448 | 454 | 451 | 440 | 468 | 469 | 501 | 490 | 448 | 468 |
Market environment
The pharmaceutical market value at wholesale prices in Sweden grew by 5.1% (7.6%) in Swedish krona in 2020 (source: IQVIA). According to Oriola's estimate, Oriola's share of the Swedish pharmaceutical wholesale market was approximately 47% (44%).
The Finnish pharmaceutical market value at wholesale prices grew by 2.1% (5.2%) in 2020 (source: LTK). According to Oriola's estimate, Oriola's share of the Finnish pharmaceutical wholesale market was approximately 42% (46%).
January–December 2020
Invoicing decreased by 0.2% (increased 7.9%) to EUR 2,906.0 (2,910.6) million compared to previous year. On a constant currency basis invoicing decreased by 0.8% (increased 10.0%). Net sales increased by 4.7% (increased 22.4%) to EUR 961.2 (918.1) million, and on a constant currency basis, net sales increased by 4.0% (increased 24.8%). This was driven by the sales growth in expensive prescription pharmaceuticals as well as changes in the distribution agreements for pharmaceuticals.
Adjusted EBIT decreased by 27.8% (decreased 16.3%) to EUR 12.8 (17.7) million. Changes in customer agreements as well as operative costs related to the ramp-up phase of the Swedish distribution centre and additional costs caused by the COVID-19 pandemic had a negative impact on Pharma's result. The good development in expert services offered to pharmaceutical companies impacted the result positively during the reporting period. Adjusting items totalled EUR -0.4 (-0.5) million, and EBIT was EUR 12.4 (17.1) million.
October–December 2020
Invoicing decreased from the previous year by 0.6% (increased 6.1%) to EUR 763.7 (768.5) million. On a constant currency basis invoicing decreased by 2.9% (increased 8.2%). Net sales increased by 3.0% (increased 24.0%) to EUR 249.4 (242.2) million. On a constant currency basis, net sales increased by 0.7% (increased 26.4%).
Adjusted EBIT decreased by 3.3% (increased 2.6%) to EUR 4.1 (4.2) million. Changes in customer agreements had a negative impact on Pharma's fourth quarter result. Adjusting items totalled EUR -0.0 (-0.1) million, and EBIT was EUR 4.1 (4.1) million.
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Retail
Retail business area offers a wide range of health and wellbeing products to pharmacies, groceries, veterinarians, private and public healthcare operators and retailers, as well as services for pharmacies, including staffing and dose-dispensing services.
| Key Figures | 2020 | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | 2019 | 2020 | 2019 |
|---|---|---|---|---|---|---|---|---|---|---|
| EUR million | 10-12 | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | 1-12 | 1-12 |
| Invoicing | 124.4 | 119.1 | 121.5 | 121.6 | 114.5 | 114.0 | 116.5 | 111.9 | 486.7 | 456.9 |
| Net Sales | 124.0 | 118.8 | 120.9 | 121.2 | 114.1 | 113.6 | 116.3 | 111.6 | 484.9 | 455.5 |
| Adjusted EBIT | 0.7 | 1.5 | -0.3 | 0.2 | -0.8 | 0.3 | 0.2 | -0.6 | 2.0 | -0.9 |
| EBIT | -0.5 | 1.5 | -0.3 | 0.3 | -0.6 | -0.4 | 0.2 | -0.6 | 0.9 | -1.4 |
| Adjusted EBIT % | 0.5 | 1.2 | -0.3 | 0.2 | -0.7 | 0.3 | 0.2 | -0.5 | 0.4 | -0.2 |
| EBIT % | -0.4 | 1.2 | -0.2 | 0.2 | -0.5 | -0.4 | 0.2 | -0.5 | 0.2 | -0.3 |
| Number of personnel at the end of period | 583 | 550 | 563 | 541 | 590 | 603 | 576 | 528 | 583 | 590 |
Market environment
In retail business, Oriola offers a wide range of healthcare products both in traded goods and in OTC pharmaceuticals. Traded goods are sold through pharmacies and grocery stores. In Sweden, the traded goods and OTC pharmaceuticals market grew by 7.7% (6.2%) in 2020.
In dose-dispensing business, Oriola offers pharmaceuticals and dose dispensing for private and public healthcare sectors. The total market size for dose dispensing is approximately 230,000 patients in Sweden and 60,000 patients in Finland. Oriola is the market leader in Sweden serving over 97,000 patients. In Finland, Oriola serves approximately 23,000 patients.
In staffing business in Finland, 272 pharmacies out of 819 pharmacies were using Oriola's services during the year 2020.
January–December 2020
Net sales increased by 6.5% (increased 6.0%) to EUR 484.9 (455.5) million. On a constant currency basis net sales increased by 5.5% (increased 8.9%), mainly driven by the growth in dose-dispensing sales in Sweden as well as increase in demand for COVID-19 pandemic related products.
Adjusted EBIT increased to EUR 2.0 (-0.9) million, which was mainly due to the positive development of dose-dispensing business. However, in Sweden the result was burdened by the operative costs related to the ramp-up phase of the Swedish distribution centre and additional costs caused by the COVID-19 pandemic. Adjusting items totalled EUR -1.1 (-0.5) million, and EBIT was EUR 0.9 (-1.4) million.
October–December 2020
Net sales increased by 8.7% (increased 6.5%) to EUR 124.0 (114.1) million. On a constant currency basis net sales increased by 5.3% (increased 9.5%), mainly driven by the growth in dose-dispensing sales in Sweden as well as increase in demand for COVID-19 pandemic related products.
Adjusted EBIT increased to EUR 0.7 (-0.8) million, which was mainly due to the good development of dose dispensing business. Adjusting items totalled EUR -1.2 (0.2) million, and EBIT was EUR -0.5 (-0.6) million.
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Balance sheet, cash flow and financing
Oriola's total assets at the end of December 2020 were EUR 1,165.6 (1,030.6) million. Equity attributable to the equity holders was EUR 169.6 (157.2) million. The change in fair value of the financial assets measured at fair value through other comprehensive income increased the equity during the reporting period by EUR 8.0 million. The translation differences increased the equity by EUR 9.8 million. The equity was decreased by the dividend of EUR 16.3 million distributed to the shareholders in April 2020. Cash and cash equivalents totalled EUR 168.2 (70.8) million. Net cash flow from operating activities in January–December 2020 was EUR 58.3 (84.4) million, of which changes in working capital accounted for EUR 4.0 (26.5) million. Net cash flow from investing activities was EUR -31.4 (-21.8) million. Net cash flow from financing activities was EUR 70.4 (-57.6) million.
At the end of December 2020, interest-bearing debt was EUR 295.3 (190.3) million. During the second quarter of 2020, Oriola Corporation prepared for the instability in the financing markets caused by the COVID-19 pandemic by drawing term-loans totalling EUR 70 million. The non-current interest-bearing liabilities amounted to EUR 127.8 (123.6) million and current interest-bearing liabilities amounted to EUR 167.4 (66.8) million. Non-current interest-bearing liabilities mainly consist of loans from financial institutions totalling EUR 65.9 (57.8) million and non-current lease liabilities totalling EUR 61.9 (65.7) million. Current interest-bearing liabilities mainly consist of commercial paper issues of EUR 78.6 (35.0) million, advance payments from Finnish pharmacies totalling EUR 17.0 (13.2) million, loans from financial institutions totalling EUR 52.0 (0.0) million and current lease liabilities totalling EUR 19.8 (18.6) million. Interest-bearing net debt was EUR 127.1 (119.6) million and gearing 75.0% (76.1%).
The non-recourse trade receivables sales programmes are in use in Sweden. At the end of December 2020, a total of EUR 179.6 (166.5) million in trade receivables had been sold. The average interest rate on the interest-bearing liabilities excluding lease liabilities was 1.09% (0.97%).
The committed long-term revolving credit facility of EUR 100.0 million and the credit limits totalling EUR 35.0 million were unused at the end of December 2020.
At the end of the reporting period Oriola's equity ratio was 14.8% (15.5%). Return on capital employed was 5.0% (4.1%) and return on equity 6.9% (4.9%).
Investments and depreciation
Gross investments in January–December 2020 totalled EUR 32.8 (21.8) million and consisted mainly of investments in logistics, information systems, and renewal of pharmacies as well as an additional investment totalling EUR 4.8 million in Doktor.se, a leading Swedish e-health provider, in their latest investment round. The new investment does not have a significant effect on Oriola's ownership, which is currently approximately 14% of Doktor.se.
Depreciation, amortisation and impairment amounted to EUR 41.6 (45.3) million. In 2020, impairment charges totalling EUR 0.6 million were recognised relating to the Swedish Retail business. In 2019 impairment charges totalling EUR 3.5 million were recognised relating to restructurings and the renewal of the Swedish pharmacy online shop.
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Personnel
At the end of December 2020, Oriola had 2,730 (2,818) employees, 59% (60%) of whom worked in Consumer, 16% (17%) in Pharma, and 21% (21%) in Retail. The Group administration employed 3% (2%) of the total number of employees. The average number of personnel in January–December 2020 was 2,687 (2,800). Personnel numbers consist of members of staff in active employment calculated as full-time equivalents.
The total amount of wages, salaries and bonuses in 2020 was EUR 126.7 million (EUR 127.5 million in 2019 and EUR 121.4 million in 2018)
Corporate Governance
Annual General Meeting
The Annual General Meeting (AGM), held on 17 March 2020, adopted the financial statements and discharged the members of the Board of Directors and the President and CEO from liability for the financial year ending 31 December 2019.
The AGM resolved that a dividend of EUR 0.09 per share would be paid on the basis of the balance sheet adopted for the financial year ending 31 December 2019. The dividend was paid to shareholders registered in the company's shareholders register held by Euroclear Finland Ltd on the dividend record date 19 March 2020. The payment date of the dividend was 15 April 2020.
The AGM confirmed that the Board of Directors is composed of seven members. Current members of the Board of Directors Mr Juko-Juho Hakala, Ms Anja Korhonen, Ms Mariette Kristenson, Ms Eva Nilsson Bagenholm, Mr Harri Pärssinen and Ms Lena Ridström were re-elected to the Board of Directors and Mr Panu Routila elected new member of the Board of Directors. Mr Panu Routila was elected Chairman of the Board of Directors.
The AGM confirmed that the fee for the term of office of the Chairman of the Board of Directors is EUR 60,000, the fee for the term of office of the Vice Chairman of the Board of Directors and for the Chairman of the Board's Audit Committee is EUR 36,000 and the fee for the term of office of other members of the Board of Directors is EUR 30,000. Of the annual fee, 60 per cent shall be paid in cash and 40 per cent shall be used to acquire Oriola Corporation's class B shares for the Board members on the Nasdaq Helsinki Stock Exchange within two weeks from the release of the Interim Report 1 January - 31 March 2020 of the company. The Chairman of the Board of Directors receives an attendance fee of EUR 1,000 per meeting and the other members EUR 500 per meeting. Attendance fees are correspondingly also paid to the chairmen and the members of Board and company committees. Travel expenses are compensated in accordance with the travel policy of the company.
Authorised Public Accountants KPMG Oy Ab, who has put forward authorised public accountant Ms Kirsi Jantunen as principal auditor, was re-elected as the auditor of the company. The auditor's fees shall be paid according to invoice approved by the company.
The AGM resolved, in accordance with Chapter 3, Section 14 a, subsection 3 of the Finnish Companies Act, on the forfeiture of the rights to all the shares entered in the joint account as well as the rights attached to such shares. This concerned, under Chapter 3, Section 14 a, subsection 3 of the Finnish Companies Act, the rights to all such Oriola Corporation's shares entered in the joint account that had not been requested to be registered in the book-entry system in accordance with Chapter 6, Section 3 of the Act on the Book-Entry System and Settlement Activities prior to the resolution concerning the matter by the AGM. On 24 August 2020, a total of 63,650 class A shares and 59,900 class B shares on the Joint Account became the company's treasury shares. The provisions of the Finnish Companies Act on treasury shares apply to the forfeited shares.
All decisions of the Annual General Meeting are available on the company's website www.oriola.com.
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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The constitutive meeting of the Board of Directors
In its constitutive meeting convening after the AGM, the Board of Directors of Oriola Corporation elected Eva Nilsson Bågenholm as Vice Chairman of the Board of Directors.
The Board appointed Ms Anja Korhonen (Chairman), Mr Harri Pärssinen, Ms Lena Ridström and Mr Panu Routila to the Board's Audit Committee, and Ms Eva Nilsson Bågenholm (Chairman), Mr Juko-Juho Hakala, Ms Mariette Kristenson and Mr Panu Routila to the Board's Compensation and Human Resources Committee.
The Board of Directors has assessed the independence of the members of the Board of Directors, and determined that all members of the Board of Directors are independent of the company and its significant shareholders.
Composition of Oriola Corporation's Shareholders' Nomination Board
The largest shareholders of Oriola Corporation appointed on 24 September 2020 in accordance with the rules of procedure of the Shareholders' Nomination Board Mr Mikael Aro, Ms Annika Ekman, Mr Peter Immonen, Mr Pekka Pajamo and Mr Into Ylppö to the Nomination Board.
Pekka Pajamo was elected chairman of the Nomination Board. Panu Routila, Chairman of the Board of Directors of Oriola, will serve as an expert member of the Nomination Board.
The Corporate Governance Statement
The Corporate Governance Statement for 2020 will be published as part of the Report of the Board of Directors, in accordance with the Finnish Corporate Governance Code 2020. The statement can be viewed on the company's website at: http://www.oriola.com/CorporateGovernance.
Authorisations
The Annual General Meeting authorised the Board to decide on a share issue against payment in one or more issues, including the right to issue new shares or to assign treasury shares held by the company. The authorisation covers a combined maximum of 5,500,000 class A shares and 12,500,000 class B shares of the company and includes the right to derogate from the shareholders' pre-emptive subscription right. The authorisation is in force for 18 months following the decision of the Annual General Meeting.
The Board was also authorised to decide on a share issue against payment of class B shares in one or more issues including the right to issue new class B shares or assign class B treasury shares held by the company. The authorisation covers a combined maximum of 18,000,000 class B shares of the company including the right to derogate from the shareholders' pre-emptive subscription right. The authorisation is in force for a maximum of 18 months following the decision of the Annual General Meeting.
The Annual General Meeting authorised the Board to decide on a share issue of class B shares without payment to the Company and on a directed share issue of class B shares in order to execute the share-based incentive plan for Oriola Group's executives and the share savings plan for Oriola Group's key personnel. The maximum number of new class B shares to be issued under this authorisation is 250,000, which represents of 0.14 % of all shares in the Company. The authorisation is in force for eighteen (18) months from the decision of the Annual General Meeting.
The Annual General Meeting authorised the Board to decide on repurchasing up to 18,000,000 of the company's own class B shares. Shares may be repurchased also in a proportion other than in which shares are owned by the shareholders. The authorisation is in force for a maximum of 18 months following the decision of the Annual General Meeting.
All decisions of the Annual General Meeting 2020 are available on the company's website www.oriola.com.
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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Changes in the Group Management Team
Thomas Gawell, Vice President, Pharma business area, left the company on 17 February 2020. Fredrik Pamp, who previously worked as Sales and Marketing director in Pharma business area, was appointed Vice President, Pharma business area as of 17 February 2020.
After these changes Oriola's Group Management Team consisted of 10 members at the end of 2020: Robert Andersson, President and CEO; Katarina Gabrielson, Vice President, Retail business area; Anne Kariniemi, Vice President, Operations; Helena Kukkonen, CFO; Tuula Lehto, Vice President, Communications and Sustainability; Charlotte Nyström, CIO; Fredrik Pamp, Vice President, Pharma business area; Petter Sandström, General Counsel; Teija Silver, Vice President, HR; Anders Torell, Vice President, Consumer business area.
Oriola Corporation shares
| Trading of shares | Jan-Dec 2020 | Jan-Dec 2019 | ||
|---|---|---|---|---|
| class A | class B | class A | class B | |
| Trading volume, million | 3.3 | 48.6 | 3.8 | 24.1 |
| Trading volume, EUR million | 6.7 | 92.6 | 7.7 | 50.9 |
| Highest price, EUR | 2.25 | 2.27 | 2.56 | 2.53 |
| Lowest price, EUR | 1.62 | 1.52 | 1.86 | 1.86 |
| Closing quotation, end of period, EUR | 1.99 | 1.90 | 2.02 | 2.03 |
Oriola Corporation's market capitalisation on 31 December 2020 was EUR 349.9 (367.2) million.
In January–December 2020, the traded volume of Oriola Corporation shares, excluding treasury shares, corresponded to 28.6% (15.3%) of the total number of shares.
At the end of 2020, the company had a total of 181,486,213 (181,486,213) shares, of which 53,748,313 (55,434,273) were class A shares and 127,737,900 (126,051,940) were class B shares. The company held a total of 173,206 (84,903) treasury shares, of which 63,650 (-) were class A shares and 109,556 (84,903) were class B shares. The treasury shares held by the company account for 0.10% (0.05%) of the company's shares and 0.11% (0.01%) of the votes.
Under Article 3 of the Articles of Association, a shareholder may demand conversion of class A-shares into class B shares. During the first quarter of 2020, 306,960 class A shares were converted into class B shares. The conversion was entered into the Trade Register on 3 February 2020. During the second quarter of 2020, 1,379,000 class A shares were converted into class B shares. The conversion was entered into the Trade Register on 11 June 2020. After the conversions there are 53,748,313 class A shares and 127,737,900 class B shares in the company. The total number of shares is 181,486,213 and the total number of votes is 1,202,704,160.
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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Flagging announcements
Oriola Corporation received on 15 May 2020 from Heikki Herlin a disclosure under Chapter 9, Section 5 of the Securities Markets Act, according to which the control of Mariatorp Oy has been transferred to Heikki Herlin after the distribution of inheritance of Niklas Herlin.
Mariatorp Oy's (business ID 2690035-7) ownership of Oriola Corporation's share capital is 11.0% and total share of voting rights is 10.9% comprising a total of 20,000,000 shares of which 6,000,000 A shares and 14,000,000 B shares.
Risks and uncertainty factors
Oriola's risk management seeks to identify, measure and manage risks that may threaten Oriola's operations and the achievement of set goals.
Oriola operates in regulated pharmaceutical distribution and retail markets monitored by authorities in both operating countries. The main megatrends impacting Oriola's business environment are ageing of the population, increased spending on health and wellbeing, growth in speciality pharmaceuticals, the digitalisation of the retail trade and services, sustainability as well as possible pandemics.
Oriola has identified the following principal strategic and operational risks that may have an adverse impact on the results: Changes in the pharmaceutical market regulation and related licences, pricing, parallel import and public reimbursement, as well as increased competition through the growing number of companies and pharmacies in e-commerce, the decreasing share of single channel distribution in public healthcare, and the loss of several key pharmaceutical company agreements. In addition, the changes in the resources of public healthcare as well as restrictions set by the authorities on companies' businesses and citizens' mobility caused by the pandemic may have an adverse impact on Oriola's result.
The main financial risks for Oriola involve currency rate, liquidity, interest rate and credit risks. Changes in the value of the Swedish krona have an impact on Oriola's net sales, earnings and consolidated statement of financial position. Changes in cash flow forecasts may cause impairment of goodwill.
More information of Oriola's risk management can be found from Oriola's website: www.oriola.com/investors/corporate-governance/risks/.
Near-term risks and uncertainty factors
Oriola's strategic development projects involve operational risks which may have an effect on the profitability when realised. Oriola has several significant IT system projects ongoing. The company has defined separate risk management plans for all IT projects and aims to ensure the seamless go-lives of the systems through thorough planning. The ramp-up of the expansion and automation of the distribution centre in Sweden was completed in the last quarter of 2020. The process optimisation and efficiency improvements will continue in this area. The continuation of the pandemic might slow down the progress in these.
During 2020, the COVID-19 pandemic has rapidly changed Oriola's operating environment as the restrictions set by the authorities and consumer caution impacted the consumer behaviour. The measures caused by the pandemic have led to the decrease of healthcare services as well as affected the demand for pharmaceuticals and health and wellbeing products. This has inevitably also had an impact on Oriola's business. As the pandemic continues, Oriola's business environment stays volatile, which may have an impact on Oriola's net sales and profitability. The impacts of the pandemic on the valuation of Oriola's assets are closely monitored. Based on the assessments, COVID-19 pandemic is currently not expected to have such long-term impacts on Oriola's financial performance, that would require adjustments to the carrying amounts of the assets.
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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Oriola is prepared for the risks caused by the COVID-19 pandemic. In the contingency planning, the company has considered especially securing the health of its personnel, availability of workforce, safety in distribution centres and pharmacies as well as growing need for pharmaceutical stocking. In addition, Oriola is actively discussing with both customers and authorities about quickly changing needs and their management. Oriola has also increased its readiness and competencies related to remote work and meeting customers remotely.
Oriola is from time to time involved in legal actions, claims and other proceedings. It is Oriola’s policy to provide for amounts related to the proceedings if liability is probable and such amounts can be estimated with reasonable accuracy. Taking into account all available information to date, the legal actions, claims and other proceedings are not expected to have material impact on the financial position of the Group.
Business outlook for 2021
The adjusted EBIT on a constant currency basis stays on the same level or increases from the 2020 level.
The COVID-19 pandemic is expected to continue during 2021. Severity and duration of the pandemic remain unclear in Oriola’s operating environment. Oriola’s business outlook for 2021 is based on external market forecasts, agreements with pharmaceutical companies and pharmacies, and management assessments.
Events after the period
After the reporting period, on 27 January 2021, the Shareholders’ Nomination Board submitted its proposal to the 2021 Annual General Meeting concerning the composition of the Board of Directors as follows: The number of members of the Board of Directors would be six. The present members of the Board of Directors Juko-Juho Hakala, Anja Korhonen, Eva Nilsson Bågenholm, Harri Pärssinen, Lena Ridström and Panu Routila would be re-elected. Panu Routila would be re-elected as Chairman of the Board of Directors. Current member of the Board of Directors Mariette Kristenson has informed the Nomination Board that she is not available for re-election to the Board of Directors.
After the reporting period, on 1 February 2021, Oriola announced, that Robert Andersson leaves his position as President and CEO as of 1 February 2021 and continues as an adviser to the Board of Directors until 31 July 2021. The recruitment process to find a new CEO has been started. Juko Hakala, currently a member of Oriola’s Board of Directors, has been appointed CEO on an interim basis for the period until a new permanent CEO is appointed.
Profit distribution proposal
Oriola Group’s parent company is Oriola Corporation, whose distributable funds according to the balance sheet as at 31 December 2020 were EUR 325.6 (335.2) million. Oriola Corporation’s result for the financial year 2020 was EUR 6.9 (8.2) million. Earnings per share of the Oriola Group were EUR 0.06 (0.04).
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.03 (0.09) per share is paid for 2020. The Board of Directors further proposes that the remaining non-restricted equity, EUR 320,201,301.18 be retained and carried forward. In addition, it is proposed that the Annual General Meeting would authorise the Board of Directors to decide at its discretion on the payment of dividend up to a maximum of EUR 0.03 per share.
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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Annual General Meeting
Oriola Corporation's Annual General Meeting will be held on 16 March 2021. The matters specified in article 10 of the Articles of Association and other proposals of the Board of Directors, if any, will be dealt with at the meeting. The Board of Directors will decide on the notice of the Annual General Meeting and the proposals contained in it at a later date. The notice to convene will be available on the company's website at www.oriola.com on 23 February 2021 at the latest.
Publication of the Financial Statements
Oriola Corporation will publish its 2020 Financial Statements by 23 February 2021.
Financial calendar 2021
Annual General Meeting, Tuesday, 16 March 2021
January-March Interim Report, Tuesday, 27 April 2021
January-June Half Year Financial Report, Tuesday, 20 July 2021
January-September Interim Report, Wednesday, 27 October 2021
Espoo, 18 February 2021
Oriola Corporation
Board of Directors
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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Consolidated statement of comprehensive income (IFRS)
| EUR million | Note | 2020
10-12 | 2019
10-12 | 2020
1-12 | 2019
1-12 |
| --- | --- | --- | --- | --- | --- |
| Net sales | 9, 10 | 466.2 | 446.7 | 1,800.8 | 1,721.3 |
| Other operating income | | 2.6 | 2.8 | 9.5 | 11.1 |
| Materials and supplies | | -371.8 | -355.8 | -1,438.7 | -1,364.5 |
| Employee benefit expenses | | -43.3 | -44.9 | -172.3 | -173.4 |
| Other operating expenses | | -35.9 | -34.9 | -137.2 | -133.9 |
| Depreciation, amortisation and impairments | 3 | -11.0 | -13.1 | -41.6 | -45.3 |
| EBIT | 9 | 6.8 | 0.8 | 20.4 | 15.3 |
| Financial income and expenses | | -1.8 | -1.1 | -6.0 | -5.2 |
| Profit before taxes | | 5.1 | -0.3 | 14.3 | 10.1 |
| Income taxes | | -1.0 | 0.2 | -3.1 | -2.1 |
| Profit for the period | | 4.1 | -0.2 | 11.3 | 8.0 |
Other comprehensive income
Items which may be reclassified subsequently to profit or loss:
| Translation differences recognised in comprehensive income during the reporting period | 12.5 | 5.5 | 9.8 | -4.4 |
|---|---|---|---|---|
| Translation differences reclassified to profit and loss during the reporting period | - | 0.0 | - | 0.0 |
| Cash flow hedge | 0.1 | 0.3 | -0.2 | 0.2 |
| Income tax relating to other comprehensive income | -0.0 | -0.1 | 0.0 | -0.0 |
| 12.6 | 5.7 | 9.6 | -4.2 | |
| Items which will not be reclassified to profit or loss: | ||||
| Financial assets recognised at fair value through other comprehensive income | 6 | - | 8.0 | - |
| Actuarial gains/losses on defined benefit plans | -0.4 | -2.8 | -0.4 | |
| Income tax relating to other comprehensive income | 0.0 | 0.6 | 0.0 | 0.6 |
| -0.4 | -2.2 | 7.6 | -2.2 | |
| Total comprehensive income for the period | 16.4 | 3.4 | 28.6 | 1.6 |
| Profit attributable to | ||||
| Parent company shareholders | 4.1 | -0.2 | 11.3 | 8.0 |
| Total comprehensive income attributable to | ||||
| Parent company shareholders | 16.4 | 3.4 | 28.6 | 1.6 |
Earnings per share attributable to parent company shareholders, EUR:
| Basic | 2 | 0.02 | -0.00 | 0.06 | 0.04 |
|---|---|---|---|---|---|
| Diluted | 2 | 0.02 | -0.00 | 0.06 | 0.04 |
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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Consolidated statement of financial position (IFRS)
| EUR million | Note | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|---|
| Non-current assets | |||
| Property, plant and equipment | 3 | 162.2 | 158.3 |
| Goodwill | 3 | 278.7 | 270.5 |
| Other intangible assets | 3 | 69.8 | 66.9 |
| Other non-current assets | 6 | 22.3 | 9.7 |
| Deferred tax assets | 4.4 | 4.5 | |
| Non-current assets total | 537.3 | 509.9 | |
| Current assets | |||
| Inventories | 250.1 | 234.2 | |
| Trade receivables | 188.6 | 187.4 | |
| Income tax receivables | 3.4 | 6.1 | |
| Other receivables | 18.1 | 22.2 | |
| Cash and cash equivalents | 168.2 | 70.8 | |
| Current assets total | 628.3 | 520.7 | |
| Assets total | 1,165.6 | 1,030.6 | |
| EUR million | Note | 31 Dec 2020 | 31 Dec 2019 |
| --- | --- | --- | --- |
| Equity | |||
| Share capital | 36.2 | 36.2 | |
| Fair value reserve | 7.7 | -0.1 | |
| Contingency fund | 19.4 | 19.4 | |
| Invested unrestricted equity reserve | 74.8 | 74.8 | |
| Other reserves | 0.1 | 0.1 | |
| Translation differences | -23.1 | -32.9 | |
| Retained earnings | 54.5 | 59.7 | |
| Equity attributable to the parent company shareholders | 169.6 | 157.2 | |
| Non-current liabilities | |||
| Deferred tax liabilities | 13.9 | 14.3 | |
| Pension obligations | 18.9 | 17.1 | |
| Interest-bearing liabilities | 127.8 | 123.6 | |
| Other non-current liabilities | 0.9 | 0.7 | |
| Non-current liabilities total | 161.6 | 155.7 | |
| Current liabilities | |||
| Trade payables | 620.3 | 606.7 | |
| Provisions | 4 | 0.8 | 2.8 |
| Interest-bearing liabilities | 167.4 | 66.8 | |
| Income tax payables | - | 1.0 | |
| Other current liabilities | 45.9 | 40.4 | |
| Current liabilities total | 834.5 | 717.7 | |
| Equity and liabilities total | 1,165.6 | 1,030.6 |
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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Consolidated statement of changes in equity (IFRS)
| EUR million | Share capital | Funds | Translation differences | Retained earnings | Equity total |
|---|---|---|---|---|---|
| Equity 1 Jan 2019 | 36.2 | 94.0 | -28.6 | 76.3 | 177.9 |
| Adjustment of adoption of IFRS 16^{1} | - | - | - | -6.3 | -6.3 |
| Restated equity 1 Jan 2019 | 36.2 | 94.0 | -28.6 | 70.0 | 171.6 |
| Comprehensive income for the period | |||||
| Net profit for the period | - | - | - | 8.0 | 8.0 |
| Other comprehensive income: | |||||
| Cash flow hedge | - | 0.2 | - | - | 0.2 |
| Actuarial gains and losses | - | - | - | -2.8 | -2.8 |
| Income tax relating to other comprehensive income | - | -0.0 | - | 0.6 | 0.6 |
| Translation difference | - | - | -4.4 | - | -4.4 |
| Translation difference reclassified to profit and loss | - | - | 0.0 | - | 0.0 |
| Comprehensive income for the period total | - | 0.1 | -4.4 | 5.8 | 1.6 |
| Transactions with owners | |||||
| Dividend distribution | - | - | - | -16.3 | -16.3 |
| Share-based incentive | - | - | - | 0.4 | 0.4 |
| Purchase of own shares | - | - | - | -0.1 | -0.1 |
| Transactions with owners total | - | - | - | -16.1 | -16.1 |
| Equity 31 Dec 2019 | 36.2 | 94.2 | -32.9 | 59.7 | 157.2 |
| Equity 1 Jan 2020 | 36.2 | 94.2 | -32.9 | 59.7 | 157.2 |
| --- | --- | --- | --- | --- | --- |
| Comprehensive income for the period | |||||
| Net profit for the period | - | - | - | 11.3 | 11.3 |
| Other comprehensive income: | |||||
| Financial assets recognised at fair value through other comprehensive income | - | 8.0 | - | - | 8.0 |
| Cash flow hedge | - | -0.2 | - | - | -0.2 |
| Actuarial gains and losses | - | - | - | -0.4 | -0.4 |
| Income tax relating to other comprehensive income | - | 0.0 | - | 0.0 | 0.1 |
| Translation difference | - | - | 9.8 | - | 9.8 |
| Comprehensive income for the period total | - | 7.8 | 9.8 | 10.9 | 28.6 |
| Transactions with owners | |||||
| Dividend distribution | - | - | - | -16.3 | -16.3 |
| Share-based incentive | - | - | - | 0.2 | 0.2 |
| Purchase of own shares | - | - | - | -0.1 | -0.1 |
| Transactions with owners total | - | - | - | -16.2 | -16.2 |
| Equity 31 Dec 2020 | 36.2 | 102.0 | -23.1 | 54.5 | 169.6 |
1 Net of tax
FINANCIAL STATEMENTS RELEASE 1 JANUARY - 31 DECEMBER 2020
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Condensed consolidated statement of cash flows (IFRS)
| EUR million | 2020
1-12 | 2019
1-12 |
| --- | --- | --- |
| Profit for the period | 11.3 | 8.0 |
| Depreciation, amortisation and impairments | 41.6 | 45.3 |
| Financial income and expenses | 6.0 | 5.2 |
| Income taxes | 3.1 | 2.1 |
| Other adjustments | -1.4 | 1.7 |
| Change in working capital | 4.0 | 26.5 |
| Cash flow from financial items and taxes | -6.4 | -4.4 |
| Net cash flow from operating activities | 58.3 | 84.4 |
| Net cash flow from investing activities | -31.4 | -21.8 |
| Net cash flow from financing activities | 70.4 | -57.6 |
| Net change in cash and cash equivalents | 97.3 | 5.0 |
| Cash and cash equivalents at the beginning of the period | 70.8 | 65.8 |
| Translation differences | 0.1 | 0.0 |
| Net change in cash and cash equivalents | 97.3 | 5.0 |
| Cash and cash equivalents at the end of the period | 168.2 | 70.8 |
Notes to the Financial Statements Release January–December 2020
1. Principal accounting policies
This Financial Statements Release has been prepared in accordance with IFRS standards (IAS 34 Interim Financial Reporting) and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2019. The accounting policies and calculation methods applied in the report are the same as those in the 31 December 2019 annual financial statements, however with the addition of the standards and interpretations published by the International Accounting Standards Board (IASB) that are mandatory as of 1 January 2020. These standards did not have a significant impact on the Group in the current reporting period and they are not expected to have a material impact on the Group in the future reporting periods and on foreseeable future transactions. This Financial Statements Release does not include all of the information and notes presented in the annual financial statements. The figures in this Financial Statements Release are based on audited 2020 Financial Statements.
During 2020, the COVID-19 pandemic has rapidly changed Oriola's operating environment as the restrictions set by the authorities and consumer caution impacted the consumer behaviour. The measures caused by the pandemic have led to the decrease of healthcare services as well as significantly affected the demand for pharmaceuticals and health and wellbeing products. This has inevitably also had an impact on Oriola's business.
In Sweden, Oriola has received government compensations for socials costs, sick leaves and short-term lay-offs totalling EUR 1.5 million to cover the negative impacts of the pandemic. The compensations are reported as a reduction of personnel expenses in the consolidated statement of comprehensive income.
The impacts of the pandemic on the valuation of Oriola's assets have been closely monitored during the reporting period. Based on the assessments, COVID-19 pandemic is currently not expected to have such long-term impacts on Oriola's financial performance, that would require adjustments to the carrying amounts of the assets.
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During the second quarter of 2020, Oriola Corporation prepared for the instability in the financing markets caused by the COVID-19 pandemic by drawing term-loans totalling EUR 70 million. At the end of the reporting period, the financial covenants included in the agreements with the financial institutions were fulfilled.
2. Earnings per share
| 2020 | 2019 | 2020 | 2019 | |
|---|---|---|---|---|
| EUR million | 10-12 | 10-12 | 1-12 | 1-12 |
| Profit attributable to equity owners of the parent | 4.1 | -0.2 | 11.3 | 8.0 |
Average number of outstanding shares (1000 shares)
| Basic | 181,420 | 181,401 | 181,389 | 181,395 |
|---|---|---|---|---|
| Diluted | 181,478 | 181,486 | 181,464 | 181,486 |
Earnings per share (EUR)
| Basic | 0.02 | -0.00 | 0.06 | 0.04 |
|---|---|---|---|---|
| Diluted | 0.02 | -0.00 | 0.06 | 0.04 |
3. Tangible and intangible assets
| Changes in property, plant and equipment, EUR million | 2020 | 2019 |
|---|---|---|
| Carrying amount at the beginning of the period | 75.6 | 77.2 |
| Increases | 15.7 | 13.4 |
| Decreases | -0.2 | -0.1 |
| Reclassifications | -0.1 | -1.1 |
| Depreciation | -12.2 | -11.6 |
| Impairments | 0.1 | -1.0 |
| Foreign exchange rate differences | 2.0 | -1.2 |
| Carrying amount at the end of the period | 81.0 | 75.6 |
| Changes in right-of-use assets EUR million | 2020 | 2019 |
| --- | --- | --- |
| Carrying amount at the beginning of the period | 82.7 | 97.3 |
| Increases | 14.9 | 6.4 |
| Decreases | -0.0 | -0.4 |
| Depreciation | -18.8 | -18.7 |
| Foreign exchange rate differences | 2.5 | -2.0 |
| Carrying amount at the end of the period | 81.2 | 82.7 |
| Changes in goodwill, EUR million | 2020 | 2019 |
| --- | --- | --- |
| Carrying amount at the beginning of the period | 270.5 | 274.3 |
| Foreign exchange rate differences | 8.2 | -3.7 |
| Carrying amount at the end of the period | 278.7 | 270.5 |
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| Changes in other intangible assets, EUR million | 2020 | 2019 |
|---|---|---|
| Carrying amount at the beginning of the period | 66.9 | 75.1 |
| Increases | 12.3 | 6.7 |
| Decreases | - | -0.1 |
| Reclassifications | 0.1 | 0.2 |
| Amortisation | -10.1 | -11.5 |
| Impairments | -0.6 | -2.5 |
| Foreign exchange rate differences | 1.3 | -1.0 |
| Carrying amount at the end of the period | 69.8 | 66.9 |
4. Provisions
At the end of the reporting period the Group's provisions in the consolidated statement of financial position totalled EUR 0.8 (2.8) million. The provisions in 2020 consist of restructuring provisions relating to the cooperation negotiations in 2019 aiming to improve operational efficiency and continue re-organising operations in Finland and in Sweden and to changes in the Group Management Team as well as of a provision relating to an onerous contract in Retail business area.
The provisions at the end of 2019 consisted of restructuring provisions relating to the cooperation negotiations in 2019 aiming to improve operational efficiency and continue re-organising operations in Finland and in Sweden.
5. Derivatives
| 31 Dec 2020 EUR million | Positive fair value | Negative fair value | Nominal values of contracts | |
|---|---|---|---|---|
| Derivatives recognised as cash flow hedges | ||||
| Interest rate swaps | - | 0.4 | 71.9 | |
| Derivatives measured at fair value through profit and loss | ||||
| Foreign currency forward and swap contracts | 0.1 | 0.1 | 12.8 | |
| 31 Dec 2019 EUR million | Positive fair value | Negative fair value | Nominal values of contracts | |
| --- | --- | --- | --- | --- |
| Derivatives recognised as cash flow hedges | ||||
| Interest rate swaps | 0.0 | 0.3 | 49.8 | |
| Derivatives measured at fair value through profit and loss | ||||
| Foreign currency forward and swap contracts | 0.1 | 0.2 | 71.9 |
Derivatives measured at fair value through profit and loss are mainly related to hedging of the Group's internal transactions. Fair values of the derivatives have been recognised to balance sheet in gross amount as the derivatives contracts are related to credit events and cannot be netted in financial statements. The Group has not given nor received collateral to/from derivatives counterparties.
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6. Fair value hierarchy
| 31 Dec 2020 | ||||
|---|---|---|---|---|
| EUR million | Level 1 | Level 2 | Level 3 | Total |
| Assets | ||||
| Derivatives measured at fair value through profit and loss | - | 0.1 | - | 0.1 |
| Other investments measured at fair value through OCI | - | - | 22.2 | 22.2 |
| Trade receivables for sale | - | 15.1 | - | 15.1 |
| Liabilities | ||||
| Derivatives designated as hedges | - | 0.4 | - | 0.4 |
| Derivatives measured at fair value through profit and loss | - | 0.1 | - | 0.1 |
| 31 Dec 2019 | ||||
| --- | --- | --- | --- | --- |
| EUR million | Level 1 | Level 2 | Level 3 | Total |
| Assets | ||||
| Derivatives designated as hedges | - | 0.0 | - | 0.0 |
| Derivatives measured at fair value through profit and loss | - | 0.0 | - | 0.0 |
| Other investments measured at fair value through OCI | - | - | 9.4 | 9.4 |
| Trade receivables for sale | - | 15.6 | - | 15.6 |
| Liabilities | ||||
| Derivatives designated as hedges | - | 0.2 | - | 0.2 |
| Derivatives measured at fair value through profit and loss | - | 0.1 | - | 0.1 |
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).
Reconciliation of financial assets recognised at fair value according to the level 3
| 2020 | 2019 | |
|---|---|---|
| Financial assets on level 3, EUR million | 1-12 | 1-12 |
| Book value at the beginning of the period | 9.4 | 9.4 |
| Acquisition of shares | 4.8 | - |
| Change in fair value | 8.0 | - |
| Book value at the end of the period | 22.2 | 9.4 |
Financial assets recognised at fair value through other comprehensive income (level 3) include Oriola's holding in Swedish online medical centre Doktor.se. The applied valuation method for the shares in Doktor.se is based on realised transactions and the present value of discounted cash flows.
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7. Commitments and Contingent Liabilities
| EUR million | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|
| Commitments for own liabilities | ||
| Guarantees on behalf of own companies | 7.3 | 7.0 |
| Mortgages on company assets | 2.1 | 2.0 |
| Other guarantees and liabilities | 9.9 | 1.1 |
| Total | 19.3 | 10.1 |
| Committed future minimum lease liabilities | 1.1 | 0.8 |
The most significant guarantees are bank guarantees against Swedish wholesale company's trade payables. In addition, Oriola Corporation has granted parent company guarantees of EUR 0.3 (0.4) million against other subsidiaries' trade payables.
Committed future minimum lease liabilities consist of leasing commitments related to low-value assets and short-term leases, to which the Group elected to apply recognition exemptions permitted by IFRS 16.
8. Related parties
Related parties in the Oriola Group are deemed to comprise the members of the Board of Directors and the President and CEO of Oriola Corporation, the other members of the Group Management Team of the Oriola Group, the immediate family of the aforementioned persons and the companies controlled by the aforementioned persons, the Group's subsidiaries and joint ventures. The Group has transactions between the group companies in the ordinary course of business. The Group has no significant business transactions with other related parties.
9. Segment information
Oriola's operations are divided into three business areas: Consumer, Pharma and Retail. These three business areas are also Oriola's financial reporting segments.
| 1-12/2020 | |||||
|---|---|---|---|---|---|
| EUR million | Consumer | Pharma | Retail | Group items | Total |
| External invoicing | 798.1 | 2,662.8 | 304.0 | - | 3,764.9 |
| Internal invoicing | 0.1 | 243.2 | 182.7 | -426.0 | - |
| Invoicing | 798.2 | 2,906.0 | 486.7 | -426.0 | 3,764.9 |
| External net sales | 780.6 | 718.0 | 302.2 | - | 1,800.8 |
| Internal net sales | 0.1 | 243.2 | 182.7 | -426.0 | - |
| Net sales | 780.7 | 961.2 | 484.9 | -426.0 | 1,800.8 |
| EBIT | 15.3 | 12.4 | 0.9 | -8.2 | 20.4 |
| Adjusted EBIT | 14.4 | 12.8 | 2.0 | -8.2 | 21.0 |
| Assets | 442.3 | 374.1 | 132.5 | 216.7 | 1,165.6 |
| Liabilities | 123.4 | 586.6 | 67.0 | 219.1 | 996.0 |
| Investments | 13.0 | 9.1 | 4.9 | 5.9 | 32.8 |
| Depreciation, amortisation and impairments | 26.7 | 8.4 | 6.5 | 0.1 | 41.6 |
| Average number of personnel | 1,596 | 451 | 562 | 77 | 2,687 |
FINANCIAL STATEMENTS RELEASE 1 JANUARY – 31 DECEMBER 2020
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| 1-12/2019 | |||||
|---|---|---|---|---|---|
| EUR million | Consumer | Pharma | Retail | Group items | Total |
| External invoicing | 767.9 | 2,680.5 | 284.8 | - | 3,733.1 |
| Internal invoicing | 0.2 | 230.2 | 172.1 | -402.5 | - |
| Invoicing | 768.1 | 2,910.6 | 456.9 | -402.5 | 3,733.1 |
| External net sales | 750.0 | 687.9 | 283.4 | - | 1,721.3 |
| Internal net sales | 0.2 | 230.2 | 172.1 | -402.5 | - |
| Net sales | 750.1 | 918.1 | 455.5 | -402.5 | 1,721.3 |
| EBIT | 5.3 | 17.1 | -1.4 | -5.7 | 15.3 |
| Adjusted EBIT | 11.7 | 17.7 | -0.9 | -8.1 | 20.5 |
| Assets | 426.3 | 356.5 | 138.5 | 109.2 | 1,030.6 |
| Liabilities | 119.1 | 594.4 | 47.7 | 112.1 | 873.4 |
| Investments | 9.2 | 6.1 | 5.8 | 0.7 | 21.8 |
| Depreciation, amortisation and impairments | 31.3 | 8.2 | 5.7 | 0.1 | 45.3 |
| Average number of personnel | 1,674 | 486 | 570 | 70 | 2,800 |
Geographical information
| 1-12/2020 | |||||
|---|---|---|---|---|---|
| EUR million | Sweden | Finland | Other countries | Total | |
| Net sales | 1,275.6 | 404.7 | 120.5 | 1,800.8 | |
| Assets | 784.6 | 381.1 | - | 1,165.6 | |
| Investments | 21.9 | 10.9 | - | 32.8 | |
| Average number of personnel | 2,084 | 603 | - | 2,687 | |
| 1-12/2019 | |||||
| --- | --- | --- | --- | --- | --- |
| EUR million | Sweden | Finland | Other countries | Total | |
| Net sales | 1,218.8 | 407.9 | 94.6 | 1,721.3 | |
| Assets | 760.5 | 270.1 | - | 1,030.6 | |
| Investments | 18.1 | 3.8 | - | 21.8 | |
| Average number of personnel | 2,097 | 701 | 1 | 2,800 |
10. Disaggregation of revenue
In the following table, the Group's external revenue is disaggregated by the Group's major revenue streams and reconciled with the Group's reportable segments.
| 1-12/2020 | ||||
|---|---|---|---|---|
| EUR million | Consumer | Pharma | Retail | Total |
| Wholesale | - | 658.0 | 166.3 | 824.3 |
| Retail sale | 780.6 | - | - | 780.6 |
| Services | - | 60.0 | 135.9 | 195.9 |
| Net sales total | 780.6 | 718.0 | 302.2 | 1,800.8 |
| 1-12/2019 | ||||
| --- | --- | --- | --- | --- |
| EUR million | Consumer | Pharma | Retail | Total |
| Wholesale | - | 623.8 | 166.6 | 790.4 |
| Retail sale | 750.0 | - | - | 750.0 |
| Services | - | 64.2 | 116.7 | 180.9 |
| Net sales total | 750.0 | 687.9 | 283.4 | 1,721.3 |
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11. Alternative performance measures
| Key figures | 2020 | 2019 | Change | 2020 | 2019 | Change |
|---|---|---|---|---|---|---|
| EUR million | 10-12 | 10-12 | 1-12 | 1-12 | % | |
| Invoicing | 986.6 | 978.9 | 0.8 | 3,764.9 | 3,733.1 | 0.9 |
| Net sales | 466.2 | 446.7 | 4.4 | 1,800.8 | 1,721.3 | 4.6 |
| Adjusted EBIT¹ | 8.0 | 2.1 | 286.8 | 21.0 | 20.5 | 2.6 |
| EBIT | 6.8 | 0.8 | 764.5 | 20.4 | 15.3 | 33.0 |
| Adjusted EBIT % | 1.7 | 0.5 | 1.2 | 1.2 | ||
| EBIT % | 1.5 | 0.2 | 1.1 | 0.9 | ||
| Profit for the period | 4.1 | -0.2 | 11.3 | 8.0 | 40.7 | |
| Earnings per share, EUR | 0.02 | -0.00 | 0.06 | 0.04 | 40.7 | |
| Net cash flow from operating activities | 45.7 | 27.3 | 58.3 | 84.4 | ||
| Gross capital expenditure | 32.8 | 21.8 | ||||
| Net interest-bearing debt | 127.1 | 119.6 | ||||
| Gearing, % | 75.0 | 76.1 | ||||
| Equity per share, EUR | 0.94 | 0.87 | ||||
| Equity ratio, % | 14.8 | 15.5 | ||||
| Return on equity (ROE), % | 6.9 | 4.9 | ||||
| Return on capital employed (ROCE), % | 5.0 | 4.1 | ||||
| Average number of shares, 1000 pcs² | 181,389 | 181,395 | ||||
| Average number of personnel | 2,687 | 2,800 | ||||
| Number of personnel at the end of the period | 2,730 | 2,818 |
¹ Adjusting items are specified in note 12. Adjusting items.
² Treasury shares held by the company not included.
Reconciliation of alternative performance measures to IFRS
| Invoicing | 2020 | 2019 | 2020 | 2019 |
|---|---|---|---|---|
| EUR million | 10-12 | 10-12 | 1-12 | 1-12 |
| Net sales | 466.2 | 446.7 | 1,800.8 | 1,721.3 |
| + Acquisition cost of consignment stock | 514.5 | 526.5 | 1,945.9 | 1,993.2 |
| + Cash discounts | 5.7 | 5.7 | 18.1 | 18.6 |
| + Exchange rate differences on sales | 0.1 | -0.0 | 0.1 | 0.0 |
| Invoicing | 986.6 | 978.9 | 3,764.9 | 3,733.1 |
| Adjusted EBIT | 2020 | 2019 | 2020 | 2019 |
| --- | --- | --- | --- | --- |
| EUR million | 10-12 | 10-12 | 1-12 | 1-12 |
| EBIT | 6.8 | 0.8 | 20.4 | 15.3 |
| - Adjusting items included in EBIT | 1.2 | 1.3 | 0.6 | 5.1 |
| Adjusted EBIT | 8.0 | 2.1 | 21.0 | 20.5 |
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| Alternative performance measures on a constant currency basis | 2020 | 2019 | 2020 | 2019 |
|---|---|---|---|---|
| EUR million | 10-12 | 10-12 | 1-12 | 1-12 |
| Invoicing | 986.6 | 978.9 | 3,764.9 | 3,733.1 |
| Translation difference | -24.5 | 21.2 | -26.3 | 82.0 |
| Invoicing calculated on a constant currency basis | 962.1 | 1,000.1 | 3,738.6 | 3,815.1 |
| Net sales | 466.2 | 446.7 | 1,800.8 | 1,721.3 |
| Translation difference | -12.7 | 10.8 | -13.7 | 42.1 |
| Net sales calculated on a constant currency basis | 453.5 | 457.5 | 1,787.1 | 1,763.4 |
| Adjusted EBIT | 8.0 | 2.1 | 21.0 | 20.5 |
| Translation difference | -0.1 | -0.2 | -0.2 | 0.4 |
| Adjusted EBIT calculated on a constant currency basis | 7.9 | 1.9 | 20.8 | 20.9 |
Calculation of alternative performance measures
| Alternative performance measure | Definitions |
|---|---|
| Invoicing = | Net sales + acquisition cost of consignment stock + cash discounts + exchange rate differences on sales |
| EBIT = | Net sales less material purchases and exchange rate differences on sales and purchases, less employee benefit expenses and other operating expenses, less depreciation, amortisation and impairment plus other operating income plus share of results in joint venture. |
| Adjusted EBIT = | EBIT excluding adjusting items |
| Adjusting items = | Adjusting items include gains or losses from the sale or discontinuation of business operations or assets, gains or losses from restructuring business operations, and impairment losses of goodwill and other non-current assets, or other income or expenses arising from rare events, and changes in estimates regarding the realisation of contingent consideration arising from business acquisitions. |
| Invoicing on a constant currency basis = | Invoicing calculated with the average exchange rate of the corresponding period of the comparative year |
| Net sales on a constant currency basis = | Net sales calculated with the average exchange rate of the corresponding period of the comparative year |
| Adjusted EBIT on a constant currency basis = | Adjusted EBIT calculated with the average exchange rate of the corresponding period of the comparative year |
| Net debt = | Interest-bearing liabilities – cash and cash equivalents |
| Investments = | Capitalised investments in property, plant and equipment and in intangible assets including goodwill arising from business combinations, as well as investments in associates and joint ventures and in other shares and holdings |
| Return on capital employed (ROCE), % = | EBIT |
| Total assets – Non-interest-bearing liabilities (average between the beginning and the end of the year) | |
| x 100 | |
| Return on equity (ROE), % = | Profit for the period |
| Equity total (average between the beginning and the end of the year) | |
| x 100 | |
| Gearing, % = | Net debt |
| Equity total | |
| x 100 | |
| Equity ratio, % = | Equity total |
| Total assets – Advances received | |
| x 100 |
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12. Adjusting items
Adjusted EBIT excludes gains or losses from the sale or discontinuation of business operations or assets, gains or losses from restructuring business operations, and impairment losses of goodwill and other non-current assets, or other income or expenses arising from rare events, and changes in estimates regarding the realisation of contingent consideration arising from business acquisitions.
| Adjusting items included in EBIT EUR million | 2020 | 2019 | 2020 | 2019 |
|---|---|---|---|---|
| 10-12 | 10-12 | 1-12 | 1-12 | |
| Restructuring costs | 0.1 | 0.2 | 0.8 | -5.1 |
| Costs and impairment charges relating to Hehku | 0.0 | 1.0 | 0.1 | 2.4 |
| Costs and impairment charges relating to onerous contract | -1.2 | - | -1.2 | - |
| Impairment of other intangible assets | - | -2.5 | - | -2.5 |
| Other | -0.1 | - | -0.4 | - |
| Adjusting items total | -1.2 | -1.3 | -0.6 | -5.1 |
Adjusting items in 2020 consist of changes in restructuring provisions, restructuring costs related to the changes in the Group Management Team, costs relating to an onerous contract in Retail business area, an adjustment to current liabilities related to the Swedish Consumer business as well as proceeds related to Hehku. Adjusting items in 2019 consist of restructuring costs including impairment charges totalling EUR 1.0 million, impairment charges on intangible assets related to the Consumer business in Sweden as well as a provision release relating to Hehku.