Statementscontinued - Rapala VMC Corporation

Transcription

Rapala VMC Corporation
Annual Report 2001
☛ It all began with a hungry Finnish guy
world were different, predators and baitfish always
and a carving knife. It was the 1930s when a simple
acted true to form. Big fish hammers wounded little
fisherman made an observation of
fish. That’s why Lauri tested each
simple genius: Big fish eat little
lure to make sure it swam true to
fish, especially little fish that are
the unique “wounded-minnow
wounded. So begins the greatest
action.” It wasn’t the fastest way to
fishing story ever told. As Lauri
make a fishing lure. But it was the
Rapala fished the waters of
only way to make a Rapala. (To this
Finland’s Lake Paijanne, he quietly
day, Rapala lures are hand-tuned
rowed and watched. And what he
and tank-tested to swim perfectly
saw was how hungry predator fish
right out of the box.) It’s an action
would dart into a school of minnows
as distinct to a Rapala as a
and attack the one that swam with a
fingerprint is to a person. An action
slightly off-center wobble. Over and
no other company has been able to
over again. ✭ Lauri realized that
duplicate. And so with every unfor-
if he could craft a lure that
gettable trip of a lifetime, every
mimicked the movements of a
successful Saturday afternoon with
wounded minnow, he could catch
a kid at the local fishing hole, the
★
THAT WHICH IS IRRESISTIBLE TO FISH WILL
ALWAYS BE IRRESISTIBLE TO THE FISHERMAN.
★
more fish, earn more money, and not spend time
Rapala legend grew. And a deep-seated trust began to
constantly baiting lines. So Lauri set to work. He
form between anglers and Rapala. Weekenders
whittled. Carved. And shaved. Eventually a lure
became hardcore. Dads became heroes. And more
began to take shape. Using a shoemaker’s knife and
and more fishermen began reaching for Rapala again
some sandpaper, he created his first successful lure
and again.
from cork in 1936. Tinfoil from chocolate bars formed
the lure’s outer surface. Melted photographic negatives
☛ A good day fishing. The undisputed
the protective coating. But most importantly, it perfect-
mother of invention. For millions, success could
ly imitated the action of a wounded minnow. Legend
be measured by the growing number of trophy fish
has it that Lauri sometimes caught 600 pounds of fish a
caught on Rapala lures. (To this day, no other lure
day with that new lure. And as word of his abundant
holds more world records.) And because we at Rapala
catches spread, the lure’s reputation grew. The rest, as
are tightly connected to the fishing community, we
they say, is history.
know what our fellow fishermen need, and what
they can’t live without. Like when the Shad Rap®
☛ The wiggle fish can’t resist. As fishermen
exploded onto the scene like a surface-to-air bass hell-
around the world began to catch more and bigger fish
bent on dinner. Word of the Shad Rap’s amazing abil-
with Rapala’s lure, it became clear that what triggered
ity to catch fish spread like wildfire. Tackle shops
them was the lure’s tantalizing wiggle and wobble.
sold out. Resort owners and mom-and-pop bait shops
Because even though fish throughout the
rented out Shad Raps by the day. And even by the
hour. (Yes, it was that good.) Twenty years later it’s
still one of fishing’s most successful lures. ✭
Contents
Likewise, the moment Rapala introduced Fish ’n
Fillet® knives they enhanced the fishing experience
for millions. Until then, fishermen had a long and
grizzly history of clumsily whittling down a prized
catch to something resembling a fillet of songbird.
The tapered design and unique flexibility of the Fish
’n Fillet made filleting easier, which is why to this
Group Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5
Review by President and CEO . . . . . . . . . . . . . . . . . 6-9
New Product Overview . . . . . . . . . . . . . . . . . . . . . 10-13
Marketing Overview. . . . . . . . . . . . . . . . . . . . . . . . 14-15
day they’re still the number one fillet knives in the
world. And so a foundation was laid. The successes of
the Original Floater,™ Shad Rap®, and Fish ’n Fillet
Report of the Board of Directors . . . . . . . . . . . . . . 16-19
Consolidated Income Statement . . . . . . . . . . . . . . . . . 20
were followed by other Rapala products that found
their way into tackle boxes and history books. Lures
like the Magnum,® the Rattlin’ Rapala,® the Fat Rap,®
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . 21
Consolidated Statement of Cashflow . . . . . . . . . . . . . 22
the CountDown,® the Husky Jerk,™ and the limited
edition Tail Dancer.™
Parent Company Income Statement . . . . . . . . . . . . . 23
☛ The legacy continues with new Rapala
Parent Company Balance Sheet . . . . . . . . . . . . . . . . . 24
offerings. There’s a reason more fishermen around
Parent Company Statement of Cashflow . . . . . . . . . 25
the world put their faith in Rapala. It’s a confidence
that stretches through 140 countries and is validated
each year by the millions of Rapala lures sold.
Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . 26-27
Notes to the Financial Statements . . . . . . . . . . . . 28-36
Simply put, Rapala products make better fishermen.
Nothing rushed to market, but carefully crafted from
Board of Directors’ Proposal to the
years of experience. No shortcuts. No gimmicks. No
Annual General Meeting. . . . . . . . . . . . . . . . . . . . . 37
flash in the pan, next greatest things. It is a legacy of
Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
unwavering quality that can be seen in every lure,
every fillet knife, every tool, and every cast of our
premium monofilament line. A legacy that continues
Rapala VMC Group 1997-2001 . . . . . . . . . . . . . . . . . 38
Calculation of Key Figures . . . . . . . . . . . . . . . . . . . . . . 39
with new Rapala offerings like premium graphite
rods, the world’s first long casting line, more new
lures, and new ways of catching more fish.
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . 40-41
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
☛ Rapala continues to stand the test of
Shares and Shareholders . . . . . . . . . . . . . . . . . . . . 42-43
time. Through the industry’s ups and
downs. Through the coldest cold fronts. Because
Information for Shareholders . . . . . . . . . . . . . . . . . . . 44
through it all, one simple truth has endured. That
Key Events During the Financial Year . . . . . . . . . . . 45
which is irresistible to fish will always be irresistible
to the fisherman.
The Original
Floating Rapala
Group Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Group Overview
RAPALA VMC GROUP
The size, scope and capabilities of the
Rapala VMC Group have increased
MANUFACTURING/R&D
dramatically during the past year.
VÄÄKSY,
FINLAND
Acquisitions, brand development and
INVERIN,
IRELAND
PÄRNU,
ESTONIA
MORVILLARS,
FRANCE
SOURCING
CIUDAD ACUNA,
MEXICO
COLUMBIA, SC
& CHINA
DISTRIBUTION
organic growth have elevated the
group to a new level and opened the
N. AMERICA
door to increased market potential.
NORMARK
U.S.
The combination of these strategic
EUROPE
•
•
•
•
•
•
•
NORMARK
CANADA
moves has positioned the group for
strong future sales and profit growth.
HONG KONG
& CHINA
LOGISTICAL
SUPPORT
VMC
U.S.
NORMARK
COMPANIES
FINLAND
SWEDEN
DENMARK
NORWAY
SPAIN
FRANCE
ESTONIA
•
•
•
•
VMC
COMPANIES
FRANCE
POLAND
RUSSIA
UKRAINE
•
•
•
NORMARK
PARTNERS
PORTUGAL
SWITZERLAND
UK
REST OF WORLD
•
•
•
SHIMANO
COMPANIES
ITALY
GERMANY
NETHERLANDS
•
LOCAL
IMPORTERS
RAPALA
JAPAN
REST OF
EUROPE
VMC
BRAZIL
RAPALA
LOCAL
JAPAN
IMPORTERS
The current structure of the Rapala VMC Group represents extensive global manufacturing and distribution capabilities. The group designs, develops, manufactures and
markets premium quality products under several well known brand names.
In addition, the group also markets and distributes fishing, hunting and
other outdoor-related products manufactured by third parties through its own
subsidiaries in Canada, Western Europe, Asia and South America. Normark
Ragot, France and Normark Spain shared the 2000 prize for the
“Best Shimano Distributor.”
New Storm soft plastic
lures are made by
Willtech Ltd.
Willtech Ltd. Factory
(Shenzhen, China)
The
Willtech
factory,
accredited
with ISO
9001
certification since 1999, employs more
than 2,000 people in China and 30 people
in the Hong Kong Headquarters,
including 100 people dedicated to
research and development. The Willtech
businesses have been developed as
OEM manufacturing operations
producing fishing and gift products for
worldwide distribution.
The Willtech
acquisition
builds upon the
Rapala VMC
Group’s global
manufacturing capacity
and competitiveness. Rapala
acquired Willtech in June 2001.
VMC Corporation Factory
(Morvillars, France)
VMC, established in 1910, is a world
leader in the
manufacture
of treble
hooks used
in sport
fishing and
sells hooks
to more than 90 countries. It’s primary
manufacturing is located in Morvillars,
France. VMC’s market share in the
worldwide treble hooks market is in
excess of 50%. VMC also has ancillary
operations in the manufacture of fishing
line and terminal tackle and in general
fishing tackle distribution. VMC’s
subsidiary, Waterqueen S.A., is one of
the leading tackle distribution
companies in France.
✪
✪✪ ✪
✪
✪✪✪✪✪ ✪
✪
✪✪ ✪
✪✪ ✪ ✪
✪
✪
✪✪
✪
✪
✪
✪
✪
✪
✪
✪
✪
✪
✪
Manufacturing/Sourcing
Exclusive Distribution Partners
Group Distribution Companies
Shimano Distribution Companies
World’s Leading Brand of Premium Fishing Equipment
With an estimated 50% market share in Europe and 30% share in the United States,
Rapala is the world’s leading brand of hard-bodied fishing lures. Rapala owns a solid
position in a fragmented global lure market where only a few companies have a
significant sales and market presence.
4
Rapala is now active in 70% of the U.S. Fishing Market
Historically, Rapala has been limited to the hardbait category within lures and around
10% of the total accessories category with filleting knives.
In 2002, Rapala will participate in several new categories, including accessories, line,
hooks/terminal and fishing rods (representing market potential of $580 million).
U.S. MARKET OVERVIEW BY CATEGORY
100
90
80
70
60
1999 WHOLESALE VALUE - $855m
$80
ACCESSORIES
LINE
$100
HOOKS/TERMINAL
$88
LURES
$195
KITS/COMBOS
$158
HARDBAITS
OTHER
50
40
Current Rapala world records include:
30
20
10
According to the IGFA, more world
record fish have been caught on Rapala
lures than any other type of lure.
REELS
$117
RODS
$117
0
Estimated values in Million of US$
In the US the Rapala brand is nearly three times better known than the closest
competing brand. In addition to organic growth, the Rapala brand has recently been
extended beyond the lure category, with the introduction of Rapala tools, accessories,
line, rods, hooks and terminal tackle. Rapala is the only brand to successfully enter
several categories within the fishing industry under one brand name.
•
•
•
•
•
•
•
All tackle: 31
Line class: 81
U.S. State Records (Freshwater): 6
Junior: 13
Total Current: 131
Retired: 63
Overall Rapala World Records: 194
The International Game Fish
Association (IGFA) is the definitive
source of world record gamefish.
BRAND DEVELOPMENT
PRIOR TO 1999
JAN 99
DEC 00
JAN 01
SEPT 01
JAN 02
HARD BAITS
KNIVES/ACCESSORIES
NEW ACCESSORIES
FISHING LINE
Your Best Shot
At AWorld Record
FISHING RODS
HOOKS
COBRANDED RETAIL HOOKS
HARD BAITS
SOFT PLASTIC LURES
SPINNERS
HARD BAITS
METAL LURES
Recent Acquisitions Combined with Brand Development
Result in Rapid Growth.
Introducing the strong Rapala brand into new, but related product categories,
forms a much larger market. In addition, new product categories offer increased
market potential. The Rapala brand alone, now competes in market segments
offering more than six times the sales potential available in 1998 when the
brand was basically limited to hard-bodied fishing lures and fillet knives.
The fishing tackle trade and consumers have readily accepted the
addition of new Rapala, VMC, Storm and Blue Fox products in already
competitive segments. Synergies in sales, marketing and distribution
will benefit the Rapala VMC Group and the fishing tackle trade.
230 lb./104.32kg, All Tackle World Record
Nile Perch Caught on a Rapala Magnum, December 2000
Angler William Toth needs help with his all-tackle world record Nile Perch,
hooked in Lake Nasser, Egypt December 2000. He was trolling a Rapala “Firetiger”
Magnum when the big fish struck. Toth needed 45 minutes to land the fish. Throughout
the world – big fish eat little fish swimming like a Rapala.
5
Review by President and CEO
I
n each of the last two years the Group has progressed to new highs in
sales and trading profits, resulting from a combination of organic
growth, acquisitions and a continuing strong US dollar. However, during
that same period much more progression has taken place behind the scenes
than has to date been reflected in the results. Indeed, the 2001 results reflect
more the investments and expenditures that precede, and are necessary to
build the platform for, a period of strong sales and profit growth, than the
returns on such outlays.
In November 2000, we completed the combination of our Group with
VMC Pêche SA (“VMC”), a leading manufacturer of fish hooks based in
France. Despite the disparity in size between ourselves and VMC, we see
this very much as a combination rather than an acquisition in part because the consideration was 100% shares and
in part because of the spirit of the transaction and our common vision for the future direction of the combined
group, which we renamed Rapala VMC. Following the combination we welcomed two VMC directors, Christophe
Viellard and Emmanuel Viellard, to the Board of the enlarged Group.
The addition of the world’s leading treble hook manufacturer to the Group provides us with the benefit of vertical
integration since Rapala is one of the biggest volume manufacturer-consumers of hooks in the world but until now
has purchased only limited quantities from VMC. More importantly the marriage of VMC technology with
Rapala’s brand and distribution strength provides us, through co-branding in the US, with the opportunity to take
hook market share in the retail arena in addition to developing the OEM business that has traditionally been
VMC’s strength.
Our association with VMC led us, through the extensive contacts that VMC has throughout the world among lure
manufacturers, to the acquisition in June 2001 of Willtech, a China based lure manufacturer which had been
developed into a leading position over the previous ten years by its owner, Mr William Ng.
Willtech, employing around 2,000 people, is a growing and profitable business in its own right, primarily
manufacturing own label product for major retailers. However, the real attraction to us was the significant upside
that we were perhaps uniquely placed within the industry to exploit - the perfect combination of Willtech
manufacturing capability in product areas in which we were currently not present, with Rapala VMC brands that
could be successfully extended to such products, underpinned by our worldwide distribution strength. The first such
products will be soft plastic lures which were successfully launched only one month after finalizing the acquisition.
Organically, rather than through acquisition, we successfully introduced Rapala branded monofilament fishing line
and a range of fishing accessories during the past year. These products were well received by the trade and reached
our first year sales expectations. The accessory products quickly established the Rapala brand as the market leader
in what until then had been a very fragmented category. We knew that entering the fishing line market was a
rather different proposition requiring long-term commitment to the category, with a broadly marketed initial
launch supported by consistently superior product and continual grass roots promotion. It was particularly
gratifying to have both of the lines that comprised our limited initial launch recently be included within the top five
out of 85 lines tested in a published independent study in the US.
6
Review by President and CEO continued
For the coming year we have increased the product range in both accessories and fishing line and for the first time
will be launching a range of Rapala branded fishing rods in the North American market. These products will not
be available in European markets since in many of those territories we are the exclusive distributor of Shimano
rods and reels.
In entering other product categories with the Rapala brand we are careful to position our product range in a manner
that is consistent with what the brand has represented for several decades, namely premium quality for the mass
market. We do not seek to exploit niches within the market and we do not allow our reputation for quality to be
compromised. We are mindful of the need to remain faithful to these values with a clear and focused brand position.
Three years ago the target market for our entire US product range, which was primarily limited to hard-bodied
lures and fillet knives, was no more than approximately $120 million and our share was around 35%. The new
product categories that we have entered place us in a market with an estimated wholesale value in the US of around
$580 million and we are only at the beginning of being able to exploit this significantly increased potential.
Of course, all of this increased potential does not come without a price. The repositioning of the Group, for that is
truly what it is, has occupied a significant amount of resources, both managerial and financial dating back to the
time of the IPO in December 1998. The 2001 year was undoubtedly the year in which the Group results began to
substantially reflect the costs of such a strategy with the major part of the benefit to start to follow only in future
years. However, we believe that we have chosen a wise path that will protect and augment the future value of the
Group and that will be evident in a strong improvement in performance in the 2002 year.
Though our acquisitions and product extensions have been the most high profile events of the past year, our
management team has also been active in several other areas crucial to the ongoing success of the Group.
Our distribution companies in Europe enjoyed double digit sales growth as the benefits of the Scandinavian
acquisitions made in early 2000 began to be felt in the form of stronger market positions. I have referred previously
to a desire to curtail growth in this area of the Group’s business, and a significant part of the sales increase derived
from the prior year acquisitions rather than organic growth in the existing businesses. This part of our business is
very beneficial in providing us with an automatic route to market for many of the new Group branded products
that we are launching. However, there is a continuing need for us to closely address the economics of this business
and ensure that tighter working capital and margin controls improve the return on capital employed.
Our Japanese distribution subsidiary, which like our US distribution company markets only Group branded and
not third party product, continues to grow strongly in only its second year of operation, albeit from a small base.
The Japanese market is very different to the Western markets that we have traditionally catered to and the past two
years have been useful in determining which specific products will be required to make a meaningful impact in a
market that is dominated by domestic manufacturers.
Within our manufacturing operations the past year saw the termination of all Storm lure manufacturing in Mexico.
This has been transferred to our European plants in Finland and Estonia with the Mexican facility continuing to
operate as a logistical support unit for our US distribution company, performing functions that until now have been
outsourced to third parties. The concentration of our hard-bodied lure manufacturing within our European
7
framework enables us to avoid duplication of fixed costs, exercise more direct management control, ensure
consistent quality and maximize our returns.
In our US distribution company we implemented a new enterprise management system during the course of the
past year. This ensures that our technological development keeps track with that of our most sophisticated
customers and in addition to enabling us to manage our business more efficiently and economically will strengthen
our key account relationships.
Our direct to consumer e-commerce pilot was operational for six months during the past year. However, the need to
limit the product offering to items peripheral to our core business and the insufficient “traffic” to the site led to
inadequate returns on what we would have needed to invest to maintain the site. Accordingly we terminated the
activity but will continue to monitor the development of web-based business and its appropriateness for our activities.
Our performance is particularly pleasing in a difficult market environment, although not surprising since our
business has historically shown a resilience in times of economic downturn. Several US-based manufacturers are
under increasing pressure to relocate their manufacturing activities to lower cost countries, with China being the
destination of choice for much of the industry. In our core lure business the Willtech acquisition places us ahead of
the curve and gives us a strategic cost advantage for the future for products outside of our current range of hardbodied lures, which will remain in our equally competitive European manufacturing system.
We foresee further changes within the industry and will be alert to any opportunities that this may present. However,
we are at the same time extremely satisfied with the organization and structure that we have built over the last two
years and believe that with no further significant change it is poised to deliver superior returns to its shareholders.
Our management team remains intact. We have had no turnover at all in any key management position during the
last three years and in key areas have been able to add quality individuals respected throughout the industry to help
us drive the business to the next level, the threshold of which we currently find ourselves on.
With regard to our financial position, in my review last year when the Group had net borrowings of EUR 107
million I informed you of our target to reduce borrowings by 50%, or around EUR 50 million, within the following
four years. At the end of the first of those four years our net borrowings have increased to EUR 130 million.
Virtually all of the EUR 23 million increase is attributable either to cash paid or debt assumed in connection with
the VMC and Willtech transactions (EUR 14 million) or to accounting revaluations reflecting the stronger US
dollar (EUR 7 million). Absent these two factors, our net borrowings increased by around EUR 2 million
primarily due to temporarily reduced profitability (as we “invested “ in developing and marketing new product
areas) and higher levels of working capital. Despite this I reiterate that it remains our intention to achieve the EUR
50 million reduction in net borrowings within the remaining three of the four years that I initially set as the target.
This is considerably in excess of what is required of us under our banking arrangements.
This will not happen without regular and diligent attention on the part of management in every company around
the Group but I believe that our prospects for strong profitable growth coupled with the ability to reduce some of the
clearly excess working capital (primarily inventories) can generate this reduction in our borrowing requirements.
To further emphasize this, the Board is putting in place specific bonus parameters for the coming three years that
8
will be more strongly tied to cashflow and net profitability than to the growth that we expect. I am confident that
we can achieve the targets that we have set for ourselves within the prescribed time period.
Finally, given the dependence of the Group on the US market for such a substantial proportion of its revenues and
profits, I must attempt to address the potential impact of the tragic events of September 11 on our business. The
general consensus of the impact is that the already weakening US economy was pushed further towards recession,
with the travel and tourism industry probably worst affected. I would reiterate what I mentioned before - our
business has historically shown a resilience in times of economic downturn. We believe that this is primarily
because of the low cost, high value added and generally consumable nature of what has historically been our staple
product – the lure. It is generally one of the last things that dedicated consumers will decide not to buy, and we
believe we have a large core of dedicated consumers. Furthermore our business has not historically been dependent
on strong tourism activity; we generally sell products to consumers in their home areas for local use.
Even though I have spent much of this review reporting to you how our business is changing, at this juncture we still
retain much of our past character and our core revenues and profits will for some time continue to be primarily
dependent on our branded lure sales. Of the other areas we have entered, the hook business is very much dependent
on lure sales. Accessories and rods are in general higher price point items and are potentially more susceptible to
consumer spending slowdowns than lures but these categories are not yet major contributors to overall Group profits.
So although our businesses do not appear to be subject to the same uncertainties that affect many others, at such a
time of general uncertainty it is counter-intuitive to be overly bullish regarding future prospects. However, based
on information currently available to us and in our best judgment, we believe that the Group remains positioned for
a year of strong sales growth and stronger profit growth.
19 October 2001
Jorma Kasslin
President and Chief Executive Officer
9
New Product Overview
The new product introductions include
innovative extensions to the Rapala and Storm
Strong Growth Plans
for 2002 Season
range of hard-bodied lures, additions to the
fishing line and accessory categories, which the
2002 new product introductions
group entered last year, and for the first time a
will give the Rapala VMC Group
range of premium quality fishing rods.
a meaningful presence in market
categories in which it is not
Winner2001 ICAST Best New Product
currently present. The foundation
Across five different series, all
Rapala rods are premium
quality, yet competitively
priced. Made of the most advanced, lightweight highmodulus graphite and the latest design technology.
for the continued broadening of
the group’s product range has been
established over the course of the
The introduction of fishing rods is of particular
importance since the retail market is estimated at $150
million in the U.S. The market is very fragmented with
the largest single brand representing approximately
15% of the overall market and a substantial part of the
market held by brands outside of the major companies
in the category. Initial trade feedback confirms that
there are strong prospects for a premium quality yet
competitively priced product marketed under a brand
with the strength of Rapala.
last eighteen months, first with
the expansion of the product
development team in the U.S. and
China and subsequently through
the combination with VMC and
Willtech. These initiatives have
enabled the Group to expand from
its historically narrow product
range of lures, fish filleting knives
and a limited range of accessory
products into a broad range
fishing tackle company with
representation in most categories
in the U.S. Rapala will now be
active in markets with a total
value of around $600 million,
which is nearly six times the size
ProGuide
Digital Scales
of the group’s traditional market.
™
Weighing scales are one of
many new Rapala accessories
to hit the market in 2001-02.
Custom-designed to meet the
needs of today’s anglers. Each
Rapala accessory has features
that really make sense when
you’re out on the water.
Designed by
fishermen,
for fishermen.
The Rapala product
development team keeps
fingers on the pulse of
anglers of the world to
develop effective, marketdriven new products.
Winner – 2001 ICAST
Best New Product Packaging
New for 2002, Rapala
Long Cast fishing
line. New Long Cast
Line is a key component of the Rapala Long
Cast system of line, lure and fishing rods.
10
Rapala Fishing Lures
More than 100 variations of new
lure products have been launched
for 2002. Including four new
models. It’s the most aggressive
Rapala has ever been in bringing
new lure products to market. In
addition, the 2002 Fishing
Equipment Catalog will be more
widely distributed than ever
before, to both the fishing trade
and consumers.
Premium Rapala/VMC Hooks
and Terminal Tackle
The creation and marketing of
Rapala VMC hooks was a natural
step for the merged Rapala and VMC
companies. Both premier brands
trusted by fishermen around the
world. A complete line of hooks and
terminal tackle are available for
every fishing application.
New Limited Edition Rapala
Long Cast Minnow
The aerodynamic shape of the lure
combined with shifting internal weights and
balsa construction makes this a long casting
lure with classic Rapala swimming action.
An internal weight transfer system is encapsulated within the
balsa wood body of the Long Cast Minnow. The weights shift to the
back of the lure for maximum casting distance. On the retrieve, the
weights shift forward to provide the legendary balanced Rapala
wobbling action.
New Jointed Shad Rap
An extension of the popular Shad Rap family, the Jointed Shad Rap is positioned
as the “hero lure” for 2002. It’s a multi-specie lure with mass market appeal.
Winner – 2001
Outdoor Life “Gear
Guide” Award
Voted by Outdoor Life
writers as Best-of-the-Best.
Rapala products have
earned the trust and respect
of journalists around the
world. They’re known to
work as promised in the
unpredictable outdoors.
New Saltwater Skitterwalk
New lures specifically designed for saltwater fishing will help Rapala gain market
share in this growing segment.
11
New Product Overview
“Cover the Water” with Blue Fox
The Blue Fox brand has also benefited from the
acquisition of Willtech Ltd. with a completely new
assortment of in-line spinners. Laser holographic and
hand painted finishes, stainless steel shafts, brass gears
and VMC hooks are some of the features of the new Blue
Fox spinners. In addition, the lures vary in swimming
depth from 0 to 5 feet, allowing anglers to “Cover the
Water” with the new line of Blue Fox Spinners.
Taking the World by Storm
Storm lures have been positioned to complement the more
expensive, better quality Rapala line of hard-bodied lures.
However, Storm lures have been upgraded to include the
features anglers require (e.g., sonic-welded bodies, pad
printing, polycarbonate swimming lips and consistent
swimming action). Additions and improvements to the
Rapala and Storm line of lures have helped the Group
command more shelf space and gain market share in the hardbodied lure category.
Kits from Blue Fox Offer Anglers the Lures
They Want at a Great Value.
The Blue Fox “Cover the Water” spinners, come complete with
the perfect storage system. The Quick-Pick Modular Tackle
System features a keystone locking method. Anglers can slide
them together to match their needs. Total size and configuration
possibilities are endless.
Storm Special Color Program
In 2002 tackle dealers have the opportunity to order custom
lure colors and designs directly from the factory. This type of
program is revolutionary in the industry and greatly
appreciated by dealers. It allows each dealer to have a unique
and “exclusive” Storm product to sell.
12
New Storm Soft Plastics
Introduced at the American Sportfishing Association’s annual trade show held in Las Vegas, Nevada, July 2001, the soft plastic
lures were designed and manufactured by Willtech Ltd. and serve as a prime example of the capabilities of the recently acquired
company. The lures feature revolutionary construction techniques, with holographic foils embedded into the bodies, built-in rattles
and unique colors.
Realistic lizards, crawfish, worms, grubs,
squids and more comprise the lineup of the
new Storm soft plastics. Natural looking eyes,
tentacles, flared gills, claws, feet, etc. have
captured the attention of the market. In
addition, new technology comes into play with
PVC material with added blocking agent for
strength, salt impregnation for scent, internal
rattle chambers for noise and holographic foil
for extra flash.
Storm is known as the contemporary,
irreverent, “yellow brand” of the fishing
industry. Bright, dynamic retail displays
have been developed to showcase the new
Storm soft plastic lures. Packaging,
displays and advertising have been
designed with a similar look and theme to
create visual continuity for this new
product line.
13
In 2001, Rapala established a
dedicated press relations
department to handle all forms of
public relations activities around
the world. Extensive media
coverage achieved by Rapala
offers comprehensive and credible
third-party endorsements that
can’t be achieved through
advertising.
In addition, aggressive business
moves in recent months, such as
acquisitions and new product
introductions, have created
abundant “news” for the industry.
Marketing Overview
The tradition of awardwinning Rapala marketing
programs continues.
The Magazine Publishers of America’s
prestigious “Kelly” award. For the third
consecutive season, the
Rapala ad campaign
was selected as one of
the 25 best in America.
Other finalists include
Nike , Absolut Vodka,
Harley-Davidson and Porsche cars.
®
®
®
®
The EFFIE is
presented annually by
the New York based
American Marketing
Association in
recognition of the year’s
most effective advertising
campaigns – campaigns that have
delivered superior results in
meeting the objectives they were
designed to achieve. Past winners
include Sea-Doo , Kodak , Yamaha ,
Sony , Schwinn and other high profile
consumer brands. Measures of effectiveness include (based on FY 2000 results):
®
®
®
®
The launch of
the New Jointed
Shad Rap will
include
extensive TV,
magazine and
PR support.
®
• Rapala VMC Group sales
increased 17%
• Unaided brand awareness
increased from 38% to 47%
• Rapala VMC Group profits
increased 17.4%
Sponsored by the American Association
of Advertising Agencies, only five
awards are given each year to honor
excellence by a U.S.
based AAAA
member. Carmichael
Lynch Advertising
received the 4A’s
award based on work produced on behalf
of Rapala.
The Point-Of-Purchase
Advertising Industry Selected the
“Rapala Center” as best in the
industry. Nearly 100 Rapala
Centers are located with major
U.S. retailers. The in-store
displays reinforce Rapala’s
leadership position in the market
and educate consumers on how to
use Rapala products. The displays
allow enough space for new Rapala
fishing line, accessories, rods,
hooks and terminal tackle.
Rapala billboards “intercept” anglers on
migratory routes to their favorite fishing
destination or tackle shop.
The Rapala Trophy
Dealer program rewards
key dealers for meeting certain
stocking levels and establishing
Rapala “Pro Shops.” An extra effort
has been put forth to establish Rapala
Trophy Dealers in geographic regions
that show high market potential.
Marketing partnerships with
key retailers help build
incremental sales
Reaching consumers with dynamic
product displays and strong marketing
messages in the retail environment,
where consumers buy fishing products,
gives Rapala a competitive advantage.
14
Aggressive “Catch of the Day”
promotions
rapala.com
Emerging markets represent significant
growth potential. The internet allows
fishermen from around the world to
access the latest news from Rapala –
and daily fishing tips from the Rapala
Pro Staff.
Rapala Pro Staff member, Mike Gofron
celebrates victory in the Pro Walleye
Tour Championship, September 2001.
Mike’s key to success. . . the new Rapala
Jointed Shad Rap and Rapala Tail Dancer.
A network of high profile anglers
increases the level of Rapala brand
exposure at key fishing events,
establishes credibility for Rapala
products, adds to the flow of new product
development ideas and provides fieldtesting capabilities.
Designed to build incremental sales and
increase market share the “Catch of the
Day” theme provides the Rapala sales
force with frequent opportunities to meet
with customers in the trade and offers
the trade and consumers with frequent
opportunities to buy promotional goods
from Rapala. Each promotion is
designed to achieve a specific objective
(e.g., generate trial of new product,
accelerate sales of slow moving product,
take advantage of a competitive
weakness, etc.)
Rapala unites with
other category
leading “super
brands” to form
cross promotions.
Marketing partnerships
with leading consumer
brands help raise the
profile of the Rapala brand
among a broader market of
consumers. In addition, cross
promotions with non-competing brands
leverage budgets and build incremental
sales. In addition, a dedicated “business
development” team has been put in place
to further leverage the Rapala brand via
licensing, sales of peripheral items and
to gain new outlets of distribution.
Unaided - Favorite Brand of Fishing Lure
21%
The Rapala brand often appears in large
and unsuspecting venues. High impact
brand messages generate consumer
awareness and reinforce Rapala’s
leadership position.
8%
8%
7%
7%
BE
R
N
OR
M
AN
BA
N
DI
EX
T
CA
LI
BU
R
ST
OR
M
M
BO
RA
PA
L
A
5%
Source: 2001 Bass Club Digest Subscriber Survey, U.S.
Aggressive marketing campaigns
combined with products that perform as
promised, keep the Rapala brand top-ofmind among anglers. In addition to having
high levels of brand awareness, research
indicates consumers perceive Rapala as a
premium brand and their number one
choice for future lure purchases.
15
Rapala teaches the world to
fish with “Top-To-Bottom”
educational materials.
In 2002, a complete Top-To-Bottom
“educational” marketing campaign will
help introduce new products, support
core products and teach anglers when,
where and how to use Rapala products.
Teaching anglers how to be successful
with our products creates loyalty and
repeat sales.
Report of the Board of Directors
General
In 2000/01 the Group once again achieved record sales and trading profits, with increases of 30.4% and 5.5%
respectively; a satisfying performance in the face of sometimes difficult retail conditions and in a year of transition
and investment for the future.
The Group has deliberately continued to invest in the development of incremental future business streams as part
of its long-term strategy of maintaining and broadening its pre-eminent market position. Inevitably in following
such a course, there is a period of investment and expenditure in advance of the expected returns. The past year
has been such a period, with expenditure in product development, marketing and initial inventory building to
support the new ventures. This has temporarily suppressed the rate of growth in profits to a level below that
enjoyed in net sales.
Furthermore, initial action taken to reduce working capital levels in the existing businesses, in particular
liquidating older and slower moving inventories, resulted in temporarily lower margins on certain products.
These factors combined to reduce the Group’s operating profit before depreciation margin to below 20% (17.8%
compared to 22.0% in the prior year) but since these causes are temporary in nature the margin is expected to
revert to in excess of 20% in the 2001/02 year.
Overall, the Group is on track with all of its strategic initiatives and is poised for further strong development in
sales and, in particular, profitability.
Net sales
Net sales for the year were EUR 152.5 million compared to EUR 116.9 million in the prior year, an increase of
30.4%. Sales growth derived from three main elements - organic growth in the principal existing businesses
(10.4%), the inclusion of VMC for eight months and Willtech for one month (14.6%) and the impact of foreign
exchange rate changes, primarily the US dollar strengthening against the Euro (5.4%).
Group branded products
The North American market is the core market for the Group’s branded products, typically representing around
80% of lure sales and being the primary area of focus for the initial launch of Rapala branded accessories and
fishing line. Net sales increased by 20.2% (8.6% on a constant currency basis).
This performance was fuelled by the first significant sales of accessories, new lure products and fishing line, and
also the liquidation of certain slower-moving inventory items. Excluding the impact of these, the recurring
business tracked slightly below prior year levels, nevertheless an encouraging performance given the continuing
concerns in the general retail environment in the US. It also stresses the importance of new product to the
maintenance of sales growth and the crucial need for continued investment in extending our product offering,
which we have been committed to over the last eighteen months.
Retail sell through of our product at major US customers was up between 5% and 10% on average. Coupling the
sell-through rate at retail with our sales experience into the retail and distribution channels gives reason to believe
16
Report of the Board of Directors continued
that inventories in the distribution channels are slightly lighter than at the end of the prior year which should
augur well for the coming year.
Direct export sales of fishing lures increased by 16.7% (9.8% at constant currency rates) as our Japanese operations
become more established and the Storm brand is spread throughout a wider distribution network than previously.
European distribution businesses
Sales in the Group’s European distribution businesses increased by 12.0% compared to the prior year from EUR
56.4 million to EUR 63.2 million with little impact from changes in exchange rates. Growth was recorded in all
countries, with the majority of the increase being in the Nordic region through the benefit of the prior year
addition of distribution lines from Sini Guldmann and S-Vapen.
Businesses acquired during the year
VMC contributed sales of EUR 16.7 million in its first eight months within the Group and Willtech sales were
EUR 0.4 million for the one month since acquisition.
Profitability
Fixed costs increased by 41.1% over corresponding prior year levels (36.3% at constant currency rates). This net
increase derives from three main areas – the impact of current year acquisitions (VMC and Willtech, together
19.1%), the impact of development and marketing costs to generate future revenue streams (7.9%), and general
increases in the recurring business (9.3%). The 9.3% increase in fixed costs in the recurring business includes a
higher cost base within Nordic and Japanese distribution, reflecting acquisitions or start-ups in the prior year
(3.3%), the full year impact of the US management team which was expanded during the previous year to take the
business forward in this key market (1.6%), and certain non-recurring costs related to the closure of Storm
manufacturing in Mexico (0.9%). Excluding each of these, the underlying growth in fixed costs on a comparable
basis to the prior year is 3.5%.
The Group’s operating profit before depreciation for the year was EUR 27.1 million (prior year EUR 25.7
million). The operating margin of 17.8% (22.0%) reflects the stronger growth in the lower margin European
distribution businesses but more significantly a certain delay between the incurrence of costs and the generation of
revenues in the new business areas. In the current year approximately EUR 3.1 million of fixed costs are
attributable to the new business areas in the US, mainly the investment in product development and marketing
for new product lines and the commencement of amortization of previously deferred development costs. These
costs are being either recognized as incurred (EUR 2.5 million of the total costs) or amortized over 2-3 years (EUR
0.6 million), but will benefit revenues over a longer period. The revenues associated with these areas in the
current year were EUR 4.2 million, hence the temporary negative impact on operating margins.
Net financing income and expense includes net interest expense of EUR 9.5 million (EUR 7.4 million) due to
higher average base interest rates for the first part of the year on higher US dollar borrowings. Higher borrowings
result from the assumption of VMC debt, part of the acquisition consideration for Willtech and higher working
capital levels. Net foreign exchange translation (non-cash) losses were EUR 4.2 million compared to EUR 1.4
million (restated) in the prior year reflecting the strengthening of the US dollar against the Euro during the year.
17
Extraordinary items in the prior year consisted of the cumulative impact of the change in accounting policy for
foreign exchange translation differences to the start of that fiscal year, partially offset by certain non-recurring
costs associated with the closure of Storm manufacturing activities in Oklahoma.
Profit before reserves and taxes was EUR 6.0 million (EUR 12.8 million) since increases in depreciation and
interest costs (due to acquisitions and higher working capital levels), combined with higher foreign exchange
translation losses and the non-recurrence of net extraordinary income, exceeded the increase in trading profits.
The Group’s effective tax rate decreased from 30.5% in the prior year to an abnormally low 12.1% in the current
year. This is primarily due to the major portion of the Group’s current year taxable profits being recorded in
lower tax rate jurisdictions with profitability in the higher rate jurisdictions (in particular the US) being
temporarily depressed since these jurisdictions have primarily incurred the development and marketing
expenditure, and temporarily reduced distribution margins referred to earlier in this report. On an ongoing basis
the Group’s effective tax rate is expected to revert to around 27%.
Net profit for the period was EUR 5.4 million (EUR 9.2 million).
Earnings per share, which exclude extraordinary items, were EUR 0.16 (prior year EUR 0.25) and equity per
share increased to EUR 1.01 (prior year EUR 0.72).
Financing
Net cashflow provided by operations (before capital expenditure) was EUR 12.9 million (EUR 21.1 million). The
reduction is entirely due to growth in working capital levels, primarily inventories to support the entry into new
business areas and receivables following the stronger fourth quarter sales.
Operating cashflow in the final quarter was strong at EUR 15.8 million (EUR 14.6 million) as the Group started
its program for reducing inventory levels.
Net cash outflow for the year, including cash paid or debt assumed for acquisitions of EUR 14.0 million (EUR 4.9
million), was EUR 16.1 million (EUR 2.0 million net cash inflow) but due to the translation effects of exchange
rate changes net borrowings increased by a further EUR 7.4 million.
Capital expenditure
Gross capital expenditure for the year totaled EUR 4.0 million (EUR 3.6 million) with the major part of the
expenditure due to the ongoing implementation of a new enterprise management computer system in the US and
manufacturing investments to support the brand extension and new lure programs.
Research and development
Total identified research and development expenditure for the year was EUR 2.5 million (EUR 1.4 million) or
1.7% of net sales. The amount of such expenditure recognized in the income statement for the year was EUR 2.2
million (EUR 0.7 million).
18
Personnel
The Group had an average of 1,248 employees during the period (859). The increase principally reflects the
combination with VMC in December 2000.
At the year end the Group had 2,807 employees (874). The increase reflects the combination with VMC and the
acquisition of Willtech.
Group structure
On 15 November 2000 the Group acquired a 99.9% stake in VMC Pêche SA.
On 29 June 2001 the Group acquired 100% of Willtech Industrial Limited.
All acquisitions and combinations are consolidated into the Group’s results as from the effective date of the transaction.
Shares and shareholders
On July 31, 2001 the Company had 946 (916) registered shareholders. The number of shares in issue is
37,543,458. During the financial year the share price fluctuated between EUR 3.90 and EUR 5.80, and the last
quoted price of the year was EUR 4.30. The total volume of shares traded during the year was 4,136,865 shares.
The total market value of the issued shares was EUR 161.4 million at July 31, 2001.
In December 2000 the Company paid dividends of EUR 0.7 million, corresponding to EUR 0.02 per share.
Future prospects
Against a backdrop of difficult market conditions, and bearing in mind the impact of the development efforts in
new product areas, the trading results for the year are in line with expectations.
The second half year saw the first significant contribution of the Group’s brand extension products and justified
the conviction that the Rapala brand could support entry into non-traditional product areas.
The enlargement of the Group’s sphere of activities through the addition of VMC and Willtech and the internal
development of products in other categories has enabled the Group to expand from its historically narrow product
range of lures, fish filleting knives and a limited range of accessory products towards a broad range fishing tackle
company with representation in most categories.
The Group has grown quickly, and inevitably encountered the temporary strains that this places on an
organization and its balance sheet. The 2000/01 year was something of a crossroads in the development of the
Group, during which period a temporary decline in margins and cashflow was a necessary precursor to fuel the
future growth in both of these measures. The Group is now positioned on a different growth track which should
see strong double digit increases in sales and trading profits in the next financial year, despite our expectation that
market conditions will remain challenging.
19
Consolidated Income Statement
Notes
Net sales
Other operating income
Operating expenses
Operating profit before depreciation
2001
Year ended 31 July
2000
(1000 EUR)
(1000 EUR)
1
2
3
152,467
1,169
(126,550)
27,086
116,931
,655
(91,924)
25,662
4
(7,193)
19,893
(5,635)
20,027
Financial income and expenses
Income before extraordinary items and taxes
5
(13,894)
5,999
(9,182)
10,845
Extraordinary items
Income before taxes
6
,00–
5,999
1,985
12,830
Income taxes
Minority interest
Net income
8
(726)
,132
5,405
(3,915)
,288
9,203
Depreciation on fixed assets and
other capitalized expenditure
Operating profit
12
20
Consolidated Balance Sheet
2001
As of 31 July
2000
(1000 EUR)
(1000 EUR)
1,338
3,566
56,040
,653
61,597
,723
3,674
40,105
,718
45,220
2,211
8,876
10,930
3,266
,325
25,608
1,981
6,549
5,889
,894
,864
16,177
9
,125
, 50
,175
,220
, 25
,245
10
8
11
60,273
1,375
55,555
15,656
132,859
43,169
3,089
43,237
12,984
102,479
220,239
164,121
3,379
11,183
17,901
5,405
37,868
2,835
–
10,626
9,203
22,664
,147
,229
,356
72,988
108,880
182,224
2,365
73,442
65,421
141,228
220,239
164,121
Notes
ASSETS
Non-current assets
INTANGIBLE ASSETS
Intangible rights
Goodwill
Group goodwill
Other capitalized expenditure
TANGIBLE ASSETS
Land and water
Buildings
Machinery and equipment
Other tangible assets
Advance payments and construction in progress
INVESTMENTS
Other shares and participations
Other receivables
Current assets
Inventories
Deferred tax assets
Short-term receivables
Cash in hand and at bank
9
9
TOTAL ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
Reserve fund
Retained earnings
Net income for the period
12
Minority interest
Liabilities
Deferred tax liabilities
Long-term liabilities
Short-term liabilities
8
14
15
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
21
Consolidated Statement of Cashflow
2001
Year ended 31 July
2000
(1000 EUR)
(1000 EUR)
27,086
25,662
(3,812)
(6,744)
(3,635)
(14,191)
(3,233)
0(,663)
0(,715)
(4,611)
Net cash provided by operations
12,895
21,051
Interest paid
Interest received
Income taxes paid
Net cash provided by operating activities
(9,878)
,495
(1,556)
1,956
(7,448)
,708
(3,305)
11,006
Cash used in investing activities:
Purchases of fixed assets
Proceeds from disposal of fixed assets
Acquisition of subsidiary companies
Net cash used in investing activities
(4,026)
,627
(13,951)
(17,350)
(3,581)
–
(4,881)
(8,462)
Cash flows used in financing activities:
Dividends paid
Net cash used in financing activities
(724)
,
(724)
,
(,530)
(,530)
16,118
106,571
7,386
130,075
(2,014)
94,400
14,185
106,571
Change in net working capital:
Increase in receivables
Increase in inventories
Decrease in short-term liabilities
Net (Decrease)/Increase in net borrowings
Net borrowings at beginning of period
Effect of exchange rate changes on net borrowings
Net borrowings at end of period
22
Parent Company Income Statement
Notes
Net sales
Other operating income
Operating expenses
2001
Year ended 31 July
2000
(1000 EUR)
(1000 EUR)
1
2
3
21,986
,336
(16,982)
5,340
17,666
,204
(13,648)
4,222
4
(1,243)
4,097
(1,175)
3,047
Financial income and expenses
5
(3,894)
,203
(3,008)
,039
Extraordinary items
Income before appropriations and taxes
6
1,424
1,627
1,430
1,469
7
8
12
,266
(788)
,
1,105
,393
,013
1,875
Depreciation on fixed assets and
other capitalized expenditure
Operating profit
Appropriations
Income taxes
Net income
23
Parent Company Balance Sheet
Notes
2001
As of 31 July
2000
(1000 EUR)
(1000 EUR)
,031
3,860
3,891
,046
4,183
4,229
,220
1,499
2,813
,046
,160
4,738
,220
1,432
2,326
,046
,801
4,825
52,144
1,619
,057
53,820
21,382
1,769
,052
23,203
4,583
76,200
5,769
86,552
4,005
59,658
3,241
66,904
149,001
99,161
3,379
11,183
15,316
1,105
30,983
2,835
,00–
14,164
1,875
18,874
ASSETS
Non-current assets
INTANGIBLE ASSETS
Intangible rights
TANGIBLE ASSETS
Land and water
Buildings
Advance payments and construction in progress
INVESTMENTS
Shares in subsidiaries
Receivables from group undertakings
Other shares
Current assets
Inventories
Cash in hand and at bank
9
9
9, 18
9, 18
10
11
TOTAL ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
Share capital
Reserve fund
Retained earnings
12
Appropriations
13
,096
,362
Liabilities
Long-term liabilities
Short-term liabilities
14
15
39,170
78,752
117,922
38,024
41,901
79,925
149,001
99,161
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
24
Parent Company Statement of Cashflow
Change in net working capital:
Increase in receivables
(Increase)/Decrease in inventories
Increase in short-term liabilities
Net cash used by operations
Interest paid
Interest received
Income taxes paid
Net cash used by operating activities
Cash used in investing activities:
Purchases of fixed assets
Proceeds from disposal of fixed assets
Acquisition of subsidiary companies
Dividends received
Group contribution received
Net cash provided by/(used in) investing activities
Cash flows used in financing activities:
Dividends paid
Net cash used in financing activities
Net Increase in net borrowings
Net borrowings at beginning of period
Effect of exchange rate changes on net borrowings
Net borrowings at end of period
2001
Year ended 31 July
2000
(1000 EUR)
(1000 EUR)
5,340
4,222
(14,092)
(579)
,
,460
(14,211)
(11,606)
,526
,327
(10,753)
(8,871)
(6,531)
(6,641)
3,528
,338
(11,646)
(4,474)
2,393
(288)
,
(8,900)
(, 818)
,00–
(6,387)
3,311
1,424
(2,470)
(1,461)
,009
(1,568)
2,965
1,430
1,375
(724)
,
(724)
,
(530)
,
(530)
,
14,840
74,040
6,461
95,341
25
8,055
58,494
7,491
74,040
Accounting Principles
PRINCIPLES OF CONSOLIDATION
Scope of consolidation
The consolidated financial statements present the financial position and results of operations of the parent company
and those companies in which the parent company held directly or indirectly more than 50% of the voting power at
the end of the parent company’s financial year.
The results of subsidiaries acquired or sold during the period are included in the consolidated financial statements
from the date of purchase or up to the date of the sale.
Consolidation method
Transactions between group companies and internal margins in inventories have been eliminated in the
consolidated financial statements.
Shareholdings in group companies have been eliminated by deducting the fair value of the subsidiary’s net assets
acquired at the date of acquisition from the acquisition cost of its shares. The difference between acquisition cost and
the fair value of the subsidiary’s net assets at the date of acquisition has been shown as goodwill.
In certain countries, tax legislation allows allocations to be made to untaxed reserves. These allocations are not
subject to taxation on condition that the corresponding deductions have also been made in the accounts. In the
consolidated financial statements, the yearly allocations — reserves as well as the difference between the
depreciation according to plan and depreciation accepted by tax laws — have been included within net income,
excluding the change in the associated deferred tax liability. The deferred tax liability is determined from the
accumulation of untaxed reserves. The accumulation of untaxed reserves, excluding the associated deferred tax
liability, is included in shareholders’ equity in the Consolidated Balance Sheet. The deferred tax liabilities and
deferred tax assets of Group companies caused by timing differences between income and corresponding taxable
revenue as well as between expenses and corresponding tax deductible expenditure are shown in the Balance Sheet
and Income Statement as a separate item in taxes on a prudent basis.
Taxes shown in the Consolidated Income Statement include income taxes to be paid on the basis of local tax
legislations as well as the effect of the yearly change in the deferred tax liability and deferred tax assets, determined
by using current tax rates.
Conversion of Foreign Subsidiary Financial Statements
For the purposes of inclusion in the consolidated financial statements, the balance sheets of foreign subsidiaries are
translated into Euros at the exchange rates prevailing at the balance sheet date. The income statements of foreign
subsidiaries are translated at the average exchange rates for the financial year. The resulting net translation
adjustments are recorded in non-restricted equity.
FOREIGN CURRENCY ITEMS AND EXCHANGE RATE DIFFERENCES
Foreign currency transactions are translated into local currency using the exchange rate prevailing at the date of the
transaction. At the balance sheet date, assets and liabilities denominated in foreign currencies are translated at the
rates of exchange prevailing at that date. The resulting translation gains or losses, both realized and unrealized, are
recognized in the income statement unless they relate to borrowings denominated in foreign currencies which have a
maturity of greater than twelve months from the balance sheet date, in which case they are recorded in the balance
sheet within current assets (cumulative net losses) or current liabilities (cumulative net gains).
REVENUE RECOGNITION
Revenue from goods sold and services rendered is recognized when all significant risks associated with the relevant
goods or service are transferred to the buyer and no significant uncertainties remain regarding the consideration,
associated costs and possible return of goods. Net sales is comprised of gross billings less discounts and excise tax.
26
Accounting Principles
continued
RESEARCH AND DEVELOPMENT COSTS
Research costs are expensed as incurred. Development costs are generally expensed as incurred unless they relate to
clearly defined projects to enter new business segments in which the Group is not currently active other than
through distribution on behalf of third parties. Development costs for such projects are capitalized if they are
separately identifiable and if the Group assesses the products to be technically feasible and commercially viable,
expects that related revenues will exceed the aggregate of deferred and future development costs and related
production, selling and administrative expenses, and if adequate resources exist or will be available to complete
the project.
Capitalized development costs are amortized by the straight line method over a maximum of five years.
INVENTORIES
Inventories are recorded at the lower of cost and net realizable value, calculated on a first-in, first-out basis. The cost
of finished goods and work-in-progress includes direct materials, wages and salaries plus social costs, and other
direct costs. Inventories are shown net of a reserve for obsolete or slow-moving inventories.
FIXED ASSETS
Fixed assets, tangible and intangible, are recorded at historical cost less accumulated depreciation. Depreciation is
recorded on a straight-line basis over the estimated useful life of an asset or through the date of disposal. Land and
water areas are not depreciated. The estimated useful economic lives of fixed assets are as follows:
Intangible assets, excluding goodwill
Goodwill
Buildings
Other tangible fixed assets
3 - 8 years
14 - 20 years
20 years
5 - 10 years
3 - 10 years
Goodwill, the excess of the cost over the fair value of the net assets of an acquired business, is amortized by the
straight-line method over a maximum period of 20 years. The directors consider that an amortization period of this
length is justified by the strength and longevity of the group’s principal brands, which have been long established in
consumer markets which have shown little susceptibility to changing demand patterns.
The value of the consideration paid for the purchase of the shares of VMC Pêche was determined to be equal to the
fair value of the net assets received. This treatment was adopted as permitted under Finnish GAAP for a transaction
in which the consideration consists entirely of shares.
PENSION COSTS
All of the Group’s pension arrangements are of a defined contribution nature, with the majority being local statutory
arrangements. Pension costs are funded as incurred.
STATEMENT OF CASH FLOW
Changes in financial position are presented as cash flows classified by operating, investing and financing
activities. Cash flows of foreign subsidiary companies are converted to Euros at the average exchange rates for the
financial year.
27
Notes to the Financial Statements
Group
Parent Company
2001
2000
2001
2000
(1000 EUR)
(1000 EUR)
(1000 EUR)
(1000 EUR)
141,512
10,955
00,00–,
152,467
107,971
8,960
00,00–,
116,931
,428
20,931
,627
21,986
,472
16,786
,408
17,666
17,271
63,824
71,372
152,467
17,070
53,741
46,120
116,931
,792
5,904
15,290
21,986
,387
2,595
14,684
17,666
,079
1,090
1,169
,,069
,586
,655
,079
,257
,336
,069
,0135
,204
(6,729)
, (71)
(6,000)
,(54)
(, 318)
,(46)
, 216
,(54)
64,025
51,063
7,354
4,570
,732
1,812
59,769
1,243
,352
46,604
(261)
,
, 58
6,787
,313
,119
5,164
25,638
1,888
5,145
32,671
17,951
1,453
2,690
22,094
5,655
,891
,533
7,079
4,915
,615
,540
6,070
34,110
126,550
23,226
91,924
3,116
16,982
2,414
13,648
859
,237,
, 216
1. NET SALES
Net sales by business area
Trade
Production
Other
Net sales by market area
Finland
North America
Other markets
2. OTHER OPERATING INCOME
Rents received
Other
3. OPERATING EXPENSES
(Increase)/Decrease in
stocks of finished products
Production for own use
Raw materials and services
Purchases during the financial year
(Increase)/Decrease in
inventory of raw materials
External services
Staff expenses:
Wages and salaries
Pension expenses
Other social security expenses
Other operating expenses
Voluntary staff expenses are recorded under other operating expenses.
Average number of personnel
1,248
,
28
Notes to the Financial Statements continued
Group
Parent Company
2001
2000
2001
2000
(1000 EUR)
(1000 EUR)
(1000 EUR)
(1000 EUR)
Intangible rights
Goodwill
Buildings
,162
,407
,455
,541
2,403
3,968
,052
,180
,434
,417
1,846
2,929
,015
,00–
,440
,152
,636
1,243
,015
,00–
,428
,124
,608
1,175
Group goodwill
3,225
7,193
2,706
5,635
,00–
,00–
3,311
4,588
,00–
,547
2,746
,111
,00–
,620
1,421
,014
3,281
,098
2,689
,00–
2,373
,075
5,315
,00–
,00–
(10,011)
(7,001)
(286)
,
(13,894)
,00–
(7,961)
(2,825)
(, 451)
(9,182)
,00–
(6,323)
(6,697)
(253)
,
(3,894)
,00–
(4,865)
(10,401)
,(93)
(3,008)
2,509
,00–
,(524)
1,985
,00–
1,430
,0(6)
1,424
,00–
1,430
,00–
1,430
,071
,195
,266
,044
,349
,393
4. DEPRECIATION
Depreciation according to plan
5. FINANCIAL INCOME AND EXPENSES
Dividend income from group companies
Other interest and financial income:
Interest income from group companies
Interest income from third parties
Foreign exchange gains
Other financial income
Interest and other financial expenses:
Interest expense to group companies
Interest expense to third parties
Foreign exchange losses
Other financial expenses
6. EXTRAORDINARY ITEMS
Impact of changed accounting practice
Group contribution received
Other extraordinary items
,00–
,00–
,00–
,00–
7. APPROPRIATIONS
Change in accelerated depreciation
Buildings
29
Group
2001
2000
(1000 EUR)
(1000 EUR)
Parent Company
2001
2000
(1000 EUR)
(1000 EUR)
8. INCOME TAXES
Income taxes for the financial year
Change in deferred taxes
Taxes from previous financial years
Change in deferred taxes arises from:
Appropriations
Consolidation measures
(, 480)
,295
(541)
,
(726)
,
(3,647)
(281)
,
,013
(3,915)
2,009
(1,714)
,295
(2,031)
1,750
(281)
,
, 00–
, 00–
,(788)
,(788)
,00–
,00–
,013
,013
Deferred tax assets and liabilities
Deferred tax assets and liabilities of the parent company are not presented in the company’s Balance Sheet.
Deferred tax assets arising from
consolidation measures
1,375
3,089
,356
2,365
Accumulated depreciation
1,078
,893
,(11)
,(105)
1,855
(, 517)
,803
,169
,(14)
,120
1,078
(355)
,
, 124
, 00–
, 00–
, 00–
, 124
, (93)
,124
,00–
,00–
,00–
,124
,(78)
Book value, 31 July
1,338
,723
, 0 31
,046
4,955
,174
,125
5,254
(1,688)
3,564
,829
,562
4,955
(1,281)
3,566
3,674
Deferred tax liabilities arising from
appropriations
9. NON-CURRENT ASSETS
Intangible rights
Acquisition cost, beginning of period
Increase
Decrease
Translation adjustments
Goodwill
Increase
Book value, 31 July
30
Group
2001
2000
(1000 EUR)
(1000 EUR)
Parent Company
2001
2000
(1000 EUR)
(1000 EUR)
continued
Group Goodwill
Increase
74,528
17,890
1,270
93,688
(37,648)
70,558
,384
3,586
74,528
(34,423)
56,040
40,105
4,566
,117
,00–
,273
4,956
(4,303)
4,978
,033
(1,108)
,663
4,566
(3,848)
7,167
,117
,00–
,00–
7,284
(3,424)
7,165
,002
,00–
,00–
7,167
(2,984)
,653
,718
3,860
4,183
Land and water
Increase
1,981
,00–
,230
1,794
,00–
,187
,220
,00–
,00–
,220
,00–
,00–
Book value, 31 July
2,211
1,981
,220
,220
10,155
3,617
(, 153)
(, 596)
13,023
(4,147)
9,144
1,108
,00–
,(97)
10,155
(3,606)
3,446
,241
,00–
,00–
3,687
(2,188)
3,371
,075
,00–
,00–
3,446
(2,014)
8,876
6,549
1,499
1,432
19,721
9,701
(1,953)
(304)
,
27,165
(16,235)
17,758
2,763
(342)
,
(458)
,
19,721
(13,832)
9,112
1,101
,00–
,00–
10,213
(7,400)
8,385
,727
,00–
,00–
9,112
(6,786)
10,930
5,889
2,813
2,326
Increase
,894
2,372
,132
,762
,046
,00–
,046
,00–
Book value, 31 July
3,266
,894
,046
,046
Book value, 31 July
Increase
Decrease
Book value, 31 July
Buildings
Increase
Decrease
Book value, 31 July
Increase
Decrease
Book value, 31 July
31
Group
2001
2000
(1000 EUR)
(1000 EUR)
Parent Company
2001
2000
(1000 EUR)
(1000 EUR)
continued
Advance payments and construction
in progress
Increase
Decrease
,864
,00–
(539)
,
,164
,700
,00–
,801
,00–
,(641)
,164
,637
,00–
Book value, 31 July
,325
,864
,160
,801
Shares in subsidiaries
Increase
Decrease
21,382
30,820
, (58)
19,869
1,513
,00–
Book value, 31 July
52,144
21,382
Receivables from group undertakings
Book value, beginning of period
Increase
1,769
(, 150)
1,713
,056
Book value, 31 July
1,619
1,769
Other shares
Increase
Decreases
,220
,00–
,(95)
,057
,163
,00–
,052
,005
,00–
,052
,00–
,00–
Book value, 31 July
,125
,220
,057
,052
Other receivables
Book value, beginning of period
,025
,025
,042
,(17)
Book value, 31 July
,050
,025
5,563
4,348
50,362
60,273
3,483
2,855
36,831
43,169
1,708
2,215
,660
4,583
1,450
2,106
,449
4,005
10. INVENTORIES
Raw materials and consumables
Work in progress
Finished products/goods
32
Group
Parent Company
2001
2000
2001
2000
(1000 EUR)
(1000 EUR)
(1000 EUR)
(1000 EUR)
35,685
,827
3,658
15,385
25,440
1,368
1,605
14,824
,200
,561
,037
2,267
,285
,393
,028
2,154
,00–
,00–
,00–
,00–
,00–
,00–
9,119
45,864
18,152
5,210
41,234
10,354
55,555
43,237
76,200
59,658
Share capital, beginning of period
Transfer from reserve fund
New shares issued
2,835
,00–
,544
2,649
,186
,,00–
2,835
,,00–
,544
2,649
,186
,,00–
Share capital, 31 July
3,379
2,835
3,379
2,835
11. RECEIVABLES
Trade receivables
Loan receivables
Other receivables
Prepaid expenses and accrued income
Receivables from group companies
Trade receivables
Loan receivables
Prepaid expenses and accrued income
12. SHAREHOLDERS’ EQUITY
Reserve fund, beginning of period
Transfer to share capital
Premium on new shares issued
,00–
,00–
11,183
,109
(, 109)
,,00–
,00–
,00–
11,183
,109
(109)
,
,,00–
Reserve fund, 31 July
11,183
,00–
11,183
,00–
Retained earnings, beginning of period
Translation difference
Transfer to share capital
Dividends distributed
19,829
(1,204)
,00–
(724)
,
5,405
9,706
1,527
,(77)
(530)
,
9,203
16,039
,00–
,00–
(724)
,
1,105
14,771
,00–
,(77)
(530)
,
1,875
Retained earnings, 31 July
23,306
19,829
16,420
16,039
,587
1,063
No.
37,543,458
EUR
3,378,911
No.
31,498,150
EUR
2,834,834
Share of accelerated depreciation
allocated to shareholders’ equity
Parent company share capital by share type
1 vote per share
33
Group
2001
2000
(1000 EUR)
(1000 EUR)
Parent Company
2001
2000
(1000 EUR)
(1000 EUR)
,096
,362
13. APPROPRIATIONS
Accelerated depreciation
14. LONG-TERM LIABILITIES
Loans from credit institutions
Other loans
66,021
6,967
72,988
73,442
,00–
73,442
32,271
6,899
39,170
38,024
,00–
38,024
79,710
,043
8,125
5,148
15,854
46,113
,034
6,123
6,896
6,255
68,839
,161
,550
8,425
,00–
39,257
,017
,497
1,823
,00–
,00–
,00–
108,880
,00–
,00–
65,421
,764
,013
78,752
,253
,054
41,901
15. SHORT-TERM LIABILITIES
Loans from credit institutions
Advances received
Trade payables
Accrued liabilities and deferred income
Other current liabilities
Liabilities to group companies
Trade payables
Accrued liabilities and deferred income
34
Group
Parent Company
2001
2000
2001
2000
(1000 EUR)
(1000 EUR)
(1000 EUR)
(1000 EUR)
1,280
,196
,00–
16. INFORMATION RELATED TO
ADMINISTRATION MEMBERS OF
GROUP COMPANIES
Salaries and remuneration to members
of administrative bodies
Group company Presidents and members
of the Board of Directors
1,718
Management pension commitments
Pension arrangements have been made, on a defined contribution basis, for some directors of the group companies.
The arrangements will enable them to retire on a pension from the age of 55 years at the earliest.
17. GUARANTEES
Guarantees for own and group companies
Pledged shares, book value
Pledged deposits
Mortgages on moveable assets
Mortgages on real estate
Guarantees
Leasing commitments
,00–
,023
12,106
6,786
,859
1,580
,00–
,024
12,222
6,786
,102
1,596
,045
,00–
5,895
6,030
,766
,024
,045
,00–
5,895
6,030
,00–
,00–
,032
,212
,032
,212
,032
,035
,032
,035
,00–
,055
12,106
6,786
1,071
1,580
21,598
,00–
,056
12,222
6,786
,314
1,596
20,974
,045
,032
5,895
6,030
,801
,024
12,827
,045
,032
5,895
6,030
,035
,00–
12,037
Open positions under forward currency contracts:
Principal amount
19,854
Inherent loss
(, 119)
8,380
(1,245)
19,854
(, 119)
8,380
(1,245)
Guarantees on behalf of third parties
Pledged deposits
Guarantees
Total guarantees
Pledged shares, book value
Pledged deposits
Mortgages on moveable assets
Mortgages on real estate
Guarantees
Leasing commitments
Contingent Liabilities
The company from time to time enters into forward currency contracts to partially hedge US dollar
denominated revenues received in Europe.
35
18. SHARES AND HOLDINGS IN OTHER COMPANIES
Subsidiary companies
Country
Rapire Teo
NC Holdings I, Inc.
Normark Corporation
Normark Innovations, Inc.
Ensambles Deportivos S.A.
Normark Inc.
Normark Sport Ltd.
Normark Scandinavia Ab
Normark Trading Ab
Normark A/S
Normark Denmark A/S
Rapala B.V.
Normark B.V.
Normark Tracker Marine B.V.
Rapala Holding France SA
Normark Ragot SA
S.I.P.P. SARL
Normark Corporation SA
Normark Sport Finland Oy
Normark Suomi Oy
KL Teho Oy
Rapala Eesti As
Normark Eesti Oü
Elbe Normark A/S
Rapala Japan KK Ltd.
VMC Pêche SA
Waterqueen France
WMC Waterqueen Angelzubehör
VMC Waterqueen Poland
Aquaco France
Cannelle Pêche France
Elite International France
V.M.C. Russia
V.M.C. Do Brasil
V.M.C. Waterqueen UK
V.M.C. Waterqueen Ukrainia
V.M.C. Inc USA
Willtech Industrial Ltd.
Willtech (PRC) Ltd.
Ireland
USA
USA
USA
Mexico
Canada
UK
Sweden
Sweden
Norway
Denmark
Holland
Holland
Holland
France
France
France
Spain
Finland
Finland
Finland
Estonia
Estonia
Norway
Japan
France
France
Germany
Poland
France
France
France
Russia
Brasil
UK
Ukrainia
USA
Hong Kong
China
Parent company
Group
holding
%
Group
voting
%
Group
equity
interest
1000 EUR
Holding
%
Holding
number
100
100
100
80
81
100
100
100
100
100
67
100
100
100
100
100
100
100
100
100
100
100
100
91
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
81
100
100
100
100
100
67
100
100
100
100
100
100
100
100
100
100
100
100
91
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
22,060
(32,490)
39,175
(882)
,
,017
4,892
(1,697)
,539
,014
,00–
, 811
1,305
, (43)
, (95)
1,133
2,575
,(66)
1,247
1,627
, 718
1,926
,061
,023
,864
,00(2)
5,544
, 210
,00–
,309
,00–
,037
,0(4)
,005
,0(67)
, (72)
,069
,887
8,446
(244)
100
100
–
–
–
–
–
100
–
–
–
100
–
–
100
–
–
100
50
–
100
100
–
91
100
100
–
–
–
–
–
–
–
–
–
–
–
99
–
68,999
,623
461,327
154,562
FIM
USD
,045
9,177
20,000
2,000,000
SEK
4,449
,043
43,000
NLG
1,674
65,000
65,000,000
FRF
,771
20,000
10,000
,
100,600
,100
,,
,683
,200
58,549
62,000,000
1,000,000
ESP
FIM
10,060,000
1,055,000
FIM
EEK
750,000
10,000,000
5,855,000
NOK
JPY
FRF
,883
,163
,
2,620
,279
,
1,433
,079
5,222
,099
100
HKD
25,349
Nominal
value
Currency
Total
Book
value
1000 EUR
Profit/loss in
most recent
fiscal year
1000 EUR
Closing
Date
Acc.
period
months
11,140
(3,081)
,744
(613)
,
,007
,995
(151)
,
,161
,001
,00–
,(99)
,034
,(19)
,(13)
,(32)
,123
,(15)
,060
,021
,060
,031
(110)
,
,021
,217
,015
,2 84
,384
,00–
,072
,0(2)
,041
,073
,049
,015
,00–
,011
,126
(122)
,
(244)000
,,
52,144
10,184
,029
,013
Associated companies
Kiinteistö Oy Bringhaga
Finland
24
24
,057
24
Finland
Finland
19
19
39
19
,
Other shares held by parent company
Resenär Oy
Other shares
Total
Other shares total
,028
,020
18
FIM
,022
,006
,028
52,201
36
31/12/2000
12
Board of Directors’ Proposal to the Annual General Meeting
The Group’s distributable equity according to the consolidated balance sheet is EUR 23.306 million. The parent
company’s distributable equity is EUR 16.420 million. The Board of Directors proposes that a dividend of EUR 0.02
be paid on each of the 37,543,458 shares for a total of EUR 750,869 and that the remaining EUR 354,405 be retained
and carried forward.
Vääksy, 20 September 2001
Eero Makkonen
Chairman of the Board of Directors
Hardy McLain
Member of the Board
Jan-Henrik Schauman
Member of the Board
Manjit Dale
Member of the Board
Jorma Kasslin
Member of the Board
President and CEO
Emmanuel Viellard
Member of the Board
Christophe Viellard
Member of the Board
Auditors’ Report
To the shareholders of Rapala VMC Corporation
We have audited the accounting, the financial statements, the consolidated financial statements and the corporate
governance of Rapala VMC Corporation for the period 1 August 2000 - 31 July 2001. The financial statements,
which include the report of the Board of Directors, consolidated and parent company income statements, balance
sheets and notes to the financial statements, have been prepared by the Board of Directors and the Managing Director.
Based on our audit we express an opinion on these financial statements and on corporate governance.
We have conducted our audit in accordance with Finnish Standards on Auditing. Those standards require that we
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management as well
as evaluating the overall financial statement presentation. The purpose of our audit of corporate governance is to
examine that the members of the Board of Directors and the Managing Director have legally complied with the rules
of the Companies Act.
In our opinion the financial statements have been prepared in accordance with the Finnish Accounting Act and
other rules and regulations governing the preparation of financial statements. The financial statements give a true
and fair view, as defined in the Accounting Act, of both the consolidated and parent company’s result of operations
as well as of the financial position. The financial statements with the consolidated financial statements can be
adopted and the members of the Board of Directors and the Managing Director of the parent company can be
discharged from liability for the period audited by us. The proposal by the Board of Directors regarding the
distributable equity is in compliance with the Companies Act.
Vääksy, 22 October 2001
Tilintarkastajien Oy - Ernst & Young
Authorized Public Accounting Firm
Pekka Luoma
Authorized Public Accountant
37
Rapala VMC Group 1997 - 2001
Key financial ratios
2001
2000
1999
Net sales
as a percentage of net sales
Operating profit
Income before taxes and minority interests
Net income
1000 EUR
1000 EUR
%
1000 EUR
%
1000 EUR
%
1000 EUR
%
1000 EUR
%
152,467
27,086
17.8
19,893
13.0
5,999
3.9
5,999
3.9
5,405
3.5
116,931
25,662
21.9
20,027
17.1
10,845
9.3
12,830
11.0
9,203
7.9
99,954
21,905
21.9
17,050
17.1
9,044
9.0
8,347
8.4
6,810
6.8
101,154
25,333
25.0
20,625
20.4
15,051
14.9
15,174
15.0
11,377
11.2
95,193
22,664
23.8
19,564
20.6
12,388
13.0
12,361
13.0
8,905
9.4
Gross investments in fixed assets
1000 EUR
%
4,026
2.6
3,581
3.1
2,845
2.8
1,564
1.9
1,381
1.5
Research and development expenditure
1000 EUR
%
2,526
1.7
1,369
1.2
454
0.5
420
0.4
336
0.4
1,248
859
831
765
785
37,868
220,239
17.3
9.9
17.3
22,664
164,121
42.7
14.7
14.0
12,464
134,124
49.0
14.2
9.7
17,586
115,946
55.3
20.7
15.5
21,269
115,727
43.8
19.6
19.8
EUR
0.16
0.02**
12.5**
0.47**
26.9
1.01
0.25
0.02
8.0
0.35
22.8
0.72
0.24
0.02
7.0
0.24
29.3
0.40
0.36
0.35
96.1
–
–
0.54
0.28
0.51
182.3
–
–
0.71
EUR
EUR
EUR
EUR
4.30
3.90
5.80
4.72
5.70
4.51
7.20
6.08
7.00
5.89
8.41
7.33
–
–
–
–
–
–
–
–
4,136,865
11.85
5,099,225
16.19
3,089,241
9.81
–
–
–
–
3,379
161,437
751**
2,835
179,539
724
2,649
220,381
530
265
265
10,932
16,230
37,543,458
31,498,150
31,498,150
3,149,815
3,149,815
Personnel, year average
Balance sheet
Return on equity
Return on investment
Equity ratio
1000 EUR
1000 EUR
%
%
%
1998
1997*
Key share ratios
Earnings per share
Dividend per share
Dividend earnings
Effective dividend yield
Price / earnings ratio
Equity per share
Share Price
Trading 31 July
Trading low
Trading high
Average share price
EUR
EUR
%
%
Shares Traded
Number of shares traded
Number of shares traded % of all shares
%
Share capital
Year end market capitalization
Dividend
1000 EUR
1000 EUR
1000 EUR
Number of shares
* In order to facilitate comparability of the financial statements over the two year period presented, the consolidated
financial statements present the combined financial position and results of operations on a pro forma basis as at the
end of and for those periods during which the Rapala Group did not have legal ownership of NC Holdings I Inc.
** proposed
38
Calculation of Key Figures
Return on equity:
Income before extraordinary items - taxes (excluding taxes on extraordinary items)
Equity + minority interest (average during the period)
Return on investment:
Income before extraordinary items + interest paid + other financing cost
Total amount of equity and liabilities - non-interest bearing debts
(average during the period)
Equity ratio:
Shareholders’ equity + minority interest
Total amount of equity and liabilities - advance payments received
Earnings per share:
x 100
x 100
x 100
Income before extraordinary items - minority interest - taxes (excluding taxes
on extraordinary items)
Weighted average number of shares
Dividend earnings
Proposed dividend per share
Earnings per share
Equity per share:
Shareholders’ equity in balance sheet (excluding minority interest)
Number of shares
Effective dividend yield:
Dividend per share
Share price at the end of financial year
Price earnings ratio:
Share price at the end of financial year
Earnings per share
Year-end market capitalization:
Number of shares multiplied by the share price at the end of the year
Average number of personnel:
Calculated as average of monthly averages
39
x 100
Corporate Governance
The operation of Rapala VMC Group’s Board of Directors and the Company’s administrative practices are largely in
compliance with the corporate governance guidelines for the administration of listed companies as recommended by the
Helsinki Exchanges, and prepared jointly by the Finnish Central Chamber of Commerce and the Confederation of
Industry and Employers.
The duties and responsibilities of the Board of Directors
The Board of Directors’ duties and responsibilities are principally based on the Finnish Companies Act and the
Company’s Articles of Association. All matters of key importance to the Group are decided on by the Board of Directors.
These include appointment of the President and CEO, approval and confirmation of strategic guidelines, approval of
quarterly and annual financial reports, business plans, annual budgets, and press releases as well as deciding on major
investments and disposals.
Election and terms of Board members
The Articles of Association provide that the Group’s Board consists of no less than five and no more than ten members.
The current board comprises seven members: the Group’s President, the President of VMC Pêche and five expert
members not primarily employed by the Group.
Board members are elected by the Annual General Meeting, which generally takes place in December. According to the
Articles of Association the Annual General Meeting shall convene annually before the end of December. The term of a
Board member is until the date of the next Annual General Meeting.
The Board of Directors elects a Chairman to serve until the date of the next Annual General Meeting. During the financial
year the board met 15 times. Board meetings usually take place at the Group’s offices when the board is visiting Group
companies.
President
The President is appointed by the Board of Directors. Since 1998 Mr Jorma Kasslin has acted as the Company’s President
and Chief Executive Officer and as a member of the Board.
Business organization and responsibilities
The Rapala VMC Group comprises the Parent Company and manufacturing and distribution subsidiaries. All of these
subsidiaries report to the parent company.
Responsibility for the management and direction of these subsidiaries rests with each company’s Board of Directors which
typically comprises the subsidiary’s President, the Group President, CFO and Company Counsel. In addition they have
management teams of their own.
Product distribution is organized through sales companies which the Group has in 14 countries. In other countries
independent importers and distributors undertake product distribution. In line with Group strategy, the objective is that
the group sales companies and major independent distributors distribute the Group’s full range of products unless local
market circumstances dictate otherwise.
Remuneration Committee
The Board of Directors has appointed a Remuneration Committee that is chaired by the Chairman of the Board, Mr Eero
Makkonen. Its members are drawn from the company’s non-executive directors and currently consist of Mr Jan-Henrik
Schauman and Mr Emmanuel Viellard.
40
Corporate Governance continued
Committee members’ appointments run concurrently with a directors term as a member of the Board of Directors.
The Committee’s tasks include approval of the remuneration and employment policies applied to the company’s senior
management, including terms of employment contracts, remuneration and benefit levels and bonus arrangements.
The Committee is charged with ensuring that the remuneration scheme is consistent with the company’s goals.
Insider register
In February 2000 Rapala VMC Group adopted a set of guidelines on insider shareholdings based on the new regulations
on insider shareholdings prepared by the Helsinki exchanges. The Group’s guidelines on insider shareholdings follow to a
great extent the principles of the regulations on insider shareholdings prepared by the Helsinki exchanges.
Audit
Ernst & Young is responsible for the audit of the majority of Group companies globally. The auditors of Rapala VMC
Corporation, Tilintarkastajien Oy - Ernst & Young, are responsible for instructing and co-ordinating the audit in all Group
companies. The auditor in charge of the audit of Rapala VMC Corporation is Pekka Luoma. The fact that the group has no
separate internal audit function of its own is reflected in the scope and content of the audit.
Board of Directors
The current members of the Board of Directors are:
Eero Makkonen (Chairman)
Hardy McLain
B.Sc. Eng.
Year of birth: 1946
Chairman of Skanska Oy
Shareholding: 6,000
B.A. MBA
Year of birth: 1953
Managing Director and Partner
CVC Capital Partners Europe Ltd
Shareholding: 0
Jorma Kasslin (Managing Director,
Group President and Chief Executive Officer
Manjit Dale
M.A. (Econ.)
Year of birth: 1965
Partner DB Capital Partners
Shareholding: 0
M.Sc. (Eng.)
Year of birth: 1953
Shareholding: 6,000
Jan-Henrik Schauman
Christophe Viellard
M. Sc. (Econ.) MBA
Year of birth: 1945
Shareholding: 1,400
Diploma ESCP
Year of birth: 1942
President VMC Pêche SA
Shareholding: 0
Emmanuel Viellard
B.A. CPA
Year of birth: 1963
Vice Chairman and Executive
Vice President of GFI Industries
Shareholding: 0
41
Shares and Shareholders
Shares and Voting Rights
Rapala VMC Oyj’s minimum share capital is EUR 2.835 million and its maximum authorized share capital is
EUR 11.339 million, within which limits the share capital may be increased or decreased without amending the
Articles of Association. On July 31, 2000 the share capital fully paid and reported in the Trade Register was EUR
3.379 million.
The book value of a share is EUR 0.09. The number of shares is 37,543,458. Each share is entitled to one vote.
Shareholder Register
The shares of the company belong to the Book Entry Securities System.
Shareholders should notify the particular register holding their Book Entry Account about changes in address or
account numbers for payment of dividends and other matters related to ownership of shares.
Authorizations
The Board has following authorizations to issue shares:
• Share Option Program of 1998
• Share Option Program of 2000
• 22 June, 2000 the Board was authorized to decide on an increase of the share capital by a maximum of
EUR 540,000. A maximum of 6,000,000 new shares may be offered for subscription.
• 4 December, 2000 the Board was authorized to decide on an increase of the share capital by a maximum of
EUR 531,000. A maximum of 5,900,000 new shares may be offered for subscription.
Pursuant to the authorizations the Board has increased the share capital as follows:
• 14 November, 2000 EUR 423,595.80 by issuing 4,706,620 shares.
• 28 June, 2001 EUR 120,481.22 by issuing 1,338,688 shares.
Option Schemes for Management
In 1998 a Share Option Program for senior and middle management was put in place. In all 59 managers
received options, exercisable on or after October 15 2001. In 2000 a Share Option Program for senior and middle
management was put in place. In all 80 managers received options, exercisable on or after October 15 2001. The
program represents a 7.6% interest in the company’s outstanding shares.
Trading and Performance of the Company’s Shares
Rapala VMC´s shares, symbol RAP1V, are quoted on HEX Ltd, Helsinki Securities and Derivatives Exchanges
(previously Helsinki Stock Exchange).
The 2001 closing price on July 31 was EUR 4.30. The highest price in 2000/01 was EUR 5.80, the average price
was EUR 4.72, and the lowest price was EUR 3.90.
The share price fell 25 % in the twelve months period ended July 31, 2001. The All-share HEX index fell 43.33 %
during the same period.
4,136,865 Rapala VMC shares were traded on HEX Helsinki Exchanges during 2000/01. This represents 11.85 %
of all shares.
At the end of the year the market capitalization of the outstanding shares was EUR 161.4 million. Earnings per
share was EUR 0.16 (2000: EUR 0.25).
Share Ownership
At the end of 2000/01 the non-Finland held stake of the share capital was 46.40 %. The percentage of shares
registered in the name of a nominee was 50.56 %.
For further information about ownership see page 43.
Dividend
The Board of Directors proposes to the AGM that a dividend of EUR 0.02 per share will be paid.
Investor Information
Rapala VMC has an investor relations Internet website on which is published in real time all company releases in
English. The address of the Internet site is www.rapala.com. The financial information calendar for 2000/01 is
on page 44.
42
Shares and Shareholders continued
10 biggest shareholders according to the share register at 31 July 2001
Amount
of shares
(x1000)
Percentage
of shares %
Percentage
of votes %
13,738
5,228
300
281
62
27
25
12
10
10
17,419
431
37,543
36.59
13.93
0.80
0.75
0.17
0.07
0.07
0.03
0.03
0.03
46.40
1.13
100.00
36.59
13.93
0.80
0.75
0.17
0.07
0.07
0.03
0.03
0.03
46.40
1.13
100.00
Percentage
of shares %
Percentage
of votes %
00.29
46.55
01.55
0.00
01.05
50.56
100.00
00.29
46.55
01.55
0.00
01.05
50.56
100.00
10 biggest shareholders
Rapala Normark N.V.
Viellard Migeon & Cie
LEL Työeläkekassa
Keskinäinen vakuutusyhtiö Eläke-Fennia
Hakapaino Oy
Enskilda Securities Ab Helsingforsfilial
Sijoitusrahasto Gyllenberg small firm
Herlin Antti
Esiintyvien taiteilijoiden E-Kassa
Hämmäinen Heikki
Hallintarekisteröidyt
Other
Shareholders by shareholder category
Companies
Financial institutions
Public institutions
Non-Profit institutions
Individuals
Foreign
Total
Shareholders of Rapala VMC Group according to the amount of shares owned at 31 July 2001
Shares
1 -100
101 - 500
501 - 1,000
1,001 - 10,000
10,001 - 1,000,000
1,000,001 Total
Number of
shareholders
%
326 34.46
412 43.55
121 12.79
76
8.03
5
0.53
6
0.64
946 100.00
Number of
shares
28,108
115,892
102,151
214,130
225,400
36,857,777
37,543,458
%
0.07
0.31
0.27
0.57
0.60
98.18
100.00
Amount of shares owned by the members of the Board of Directors or CEO at 31 July 2001
Amount of shares
% of shares
% of votes
13,400
0.04
0.04
43
Information for Shareholders
In 2001/2002 the interim reports will be published as follows:
Interim report for the period 1 August 2001 – 31 October 2001, on 5 December 2001.
Interim report for the period 1 August 2001 – 31 January 2002, on 6 March 2002.
Interim report for the period 1 August 2001 – 30 April 2002, on 5 June 2002.
The reports will be published at 10:00 am Finnish time and will be immediately available on the Internet at
www.rapala.com. Also, an international teleconference will be arranged on each day of publication at 4:00 pm.
Finnish time.
Financial publications (in English and Finnish) may be ordered from:
Rapala VMC Oyj, Investor Relations, PO Box 19, FIN 17201 VÄÄKSY, tel. +358-3-883-920,
fax. +358-3-883-9500, e-mail: paivi.loippo@rapala.fi.
44
Key Events During the Financial Year
15 November 2000
The combination with VMC, the leading treble hook manufacturer in the world, is completed. Rapala issues
4,706,620 shares, representing 13% of the enlarged share capital of the Group, in exchange for 99.99% of the shares
of VMC Pêche S.A.
21 December 2000
Rapala Normark Corporation changes its name to Rapala VMC Corporation.
December 2000
The first shipments of Rapala branded line and fishing accessories are made in the US. The culmination of almost
one year of design and development work, this represents the first significant extension of the Rapala brand into
other fishing tackle categories since the introduction of the Fish’n Fillet knives in 1965.
4 January 2001
The following management appointments are announced:
Mr Steve Greer, previously Group Chief Financial Officer and US Chief Operating Officer, is appointed Group
Deputy Managing Director and Chief Financial Officer.
Mr Bruce Brown, previously Vice President of Product Development in the US, is appointed President of the
Group’s US subsidiary, Normark Corporation.
Mr Juhani Pehkonen, previously Director of Manufacturing, is appointed Director of Lure Division.
Mr Aku Valta, formerly the Group’s Asian area sales manager, is appointed export sales manager for Storm lures.
The Group also establishes a dedicated Accessory Division. Mr Lars Ollberg, formerly the Group’s export sales
manager for Storm lures, is appointed Director of Sales and Marketing - Accessory Division, with responsibility
for worldwide sales excluding North America.
28 May 2001
At the annual US sales meeting the Group announces the expansion of its product range for the 2002 fishing tackle
season. These include innovative extensions to the Rapala, Storm and Blue Fox range of lures, additions to the
fishing line and accessory categories which the Group entered in the prior year and, for the first time, a range of
premium quality fishing rods.
29 June 2001
The Group acquires Willtech Industries Limited (‘Willtech’), a Hong Kong and China based manufacturer of
fishing lures and giftware. The initial consideration is 1,338,688 shares and $5 million cash, together valued at
$10 million, with a further $5-11 million to be paid depending on future performance.
11 July 2001
At the annual ICAST fishing tackle trade show the Group reveals a new range of Storm branded soft plastic lures
(to be manufactured by Willtech) and Rapala VMC co-branded retail hooks. Rapala wins “Best of Show” awards
for the rods and for fishing line packaging.
45
Group Companies
Rapala VMC Oyj
Tehtaantie 2
Box 19
17201 Vääksy
FINLAND
Tel: 358-3-883-920
Fax: 358-3-883-9500
Rapala Normark B.V.
Avenue Emile Demot 19
B-1000 BRUSSELS
BELGIUM
Tel: 32-2-639-1372
Fax: 32-2-648-2244
Normark Suomi Oy
Box 17
41801 Korpilahti
FINLAND
Tel: 358-14-820-711
Fax: 358-14-821-007
Normark Scandinavia AB
Hamnplan 11
753 19 Uppsala
SWEDEN
Tel: 46-18-14-20-10
Fax: 46-18-15-05-15
Normark Scandinavia AB
Torsgärdet
Box 74
782 22 Malung
SWEDEN
Tel: 46-280-12565
Fax: 46-280-71400
Normark Corporation
10395 Yellow Circle Drive
Minnetonka, MN 55343
USA
Tel: 1-952-933-7060
Fax: 1-952-933-0046
KL-Teho Oy
Box 21
41801 Korpilahti
FINLAND
Tel: 358-14-840-1200
Fax: 358-14-840-1212
Normark Inc.
1350 Phillip Murray Avenue
Oshawa, Ontario L1J 6Z9
CANADA
Tel: 1-905-571-3001
Fax: 1-905-433-0111
Rapire Teo
Inverin
Co. Galway
IRELAND
Tel: 353-91-593211
Fax: 353-91-593078
Normark Denmark AS
Endelaverej 1
8900 Randers
DENMARK
Tel: 45-87-114-170
Fax: 45-86-447-183
Rapala B.V.
Normark B.V.
VMC Europe
MeesPierson Trmst
Box 548
3000 am Rotterdam
NETHERLANDS
Tel: 31-10-4035819
Fax: 31-10-4048004
Rapala Japan Ltd.
1011 Sakusai-Cho
Kishiwada-Shi
Osaka,596-0826
JAPAN
Tel: 81-724-30-5610
Fax: 81-724-30-5612
Rapala Holding France S.A.
Normark Ragot S.A.
S.I.P.P. Sarl
B.P. 482
F-22604 Loudeac Cedex
FRANCE
Tel: 33-296-280-578
Fax: 33-296-286-024
Normark Corporation S.A.
C/Isla Alegranza, S/N, Naves 13-14
28700 S.S. De Los Reyes
(Madrid),
SPAIN
Tel: 34-91-761-3090
Fax: 34-91-761-3091
Normark Eesti A/S
Instituudi Tee 2
2051 Harku
ESTONIA
Tel: 372-657-1078
Fax: 372-657-1086
Rapala Eesti A/S
Lao 8
80042 Pärnu
ESTONIA
Tel: 372-447-8470
Fax: 372-447-6242
Elbe A/S
Grini Naeringspark 3
PO Box 113
1332 Österås
NORWAY
Tel: 47-67-167400
Fax: 47-67-167401
Normark Innovations, Inc.
400 Northeast Drive
Suite A
Columbia, SC 29203
USA
Tel: 1-803-786-9228
Fax: 1-803-786-5862
VMC Pêche S.A.
90 120 Morvillars
FRANCE
Tel: 33-3-84-57-34-34
Fax: 33-3-84-23-50-90
90 120 Méziré
FRANCE
Tel: 33-3-84-36-61-90
Fax: 33-3-84-36-61-94
Waterqueen S.A.
Z.I. Sud. Chalon sur Saône- BP # 8
71 380 Saint Marcel
FRANCE
Tel: 33-3-85-42-73-33
Fax: 33-3-85-93-15-65
Cannelle Pêche S.A.
ZA Saint Aubin
BP. # 27
49 130 Les Ponts de Cé
FRANCE
Tel: 33-2-41-44-60-18
Fax: 33-2-41-44-67-61
Elite International
3, Rue Henri Bosselin
59 750 Feignies
FRANCE
Tel: 33-3-27-39-26-04
Fax : 33-3-27-39-26-01
VMC Waterqueen Polska
Ul. Dluga 30
05 092 Lomianki
POLAND
Tel: 48-22-751-09-80
Fax: 48-22-751-33-57
VMC Waterqueen ZAO
Supermarché « Novii Kolisei »
16 Olimpiiskii prospect
129 090 Moscow
RUSSIA
Tel./Fax: 7-095-755-6037
VMC Pêche do Brasil Ltda.
Rua Cassio Martins Vilaça No. 74
Pacaembú –Sao Paulo
CEP 01249-000
BRASIL
Tel./Fax: 55-11-38-75-72-51
VMC Inc.
1901 Oakcreat Avenue – #10
Saint Paul, MN 55113
USA
Tel: 1-651-636-9649
Fax: 1- 651-636-7053
Willtech Industrial Ltd.
Unit A, 10/F
Block 2
Kwai Tak Industrial Centre
No. 15-33 Kwai Tak St.
Kwai Chung
N.T. HONG KONG
Tel: 852-24-09-84-08
Fax: 852-24-08-63-86
Willtech (PRC) Ltd.
Schenzhen Buju Kong Tang Woo
Tan Kong Village
CHINA
Tel: 86-755-87-62-006
Fax: 86-755-87-62-086
Certain statements in this report are forward-looking and are based on management’s expectations at the time made. Therefore, they involve risks and
uncertainties and are subject to change due to changes in general economic conditions or industry conditions.
Rapala VMC Corporation, incorporated under the laws of the Republic of Finland, is listed on the Helsinki Stock Exchange (HEX Helsinki Exchanges), Finland.
46
©2001 Rapala
Skitter Walk®
Topwater
Skitter Pop
Topwater
Skitter Prop
Topwater
™
™
Original Floater
™
™
Jointed
Runs Topwater -7 feet
Runs Topwater -9 feet
Long Cast Minnow
Runs 1-5 feet
™
Shallow Shad Rap®
Runs 2-10 feet
CountDown®
Runs 2-13 feet
Shad Rap® Runs 2-14 feet
Magnum® Floater
Tail Dancer
Runs 3-11 feet
™
Runs 3-12 feet
Fat Rap®
Runs 3-18 feet
Husky Jerk
Runs 4-8 feet
™
Shad Rap® RS
Runs 4-10 feet
Super Shad Rap®
Runs 5-9 feet
Jointed Shad Rap®
Runs 6-8 feet
Rattlin’ Rapala®
Variable depths
CountDown® Magnum®
Down Deep Husky Jerk
Runs 9-25 feet
™
Runs 12-16 feet
Down Deep Rattlin’ Fat Rap®
Runs 15-20 feet
Balanced Jigging®
Variable depths
How to Choose the Right Rapala to Catch More Fish.
Each Rapala lure has been designed as a “tool” for a specific fishing application. How you use each Rapala lure
will vary depending upon fishing conditions. Some days fish feed on the surface and a topwater lure is the key to
success. Other days, they’re suspending or feeding on the bottom and a sinking or deep diving lure will be the
right strategy. Therefore, as conditions vary, your strategy must vary in an effort to locate fish. No matter
where they are, top-to-bottom, use this graph to choose the right Rapala and catch more fish.
Many factors like line weight & trolling/retrieve speed effect lure swimming depth. Depths indicated are the range of depths that a lure family swims under optimum conditions. See packaged lures for specific size depth ranges.
47
rapala.com
© 2001 Rapala VMC Corporation
Printed in Finland by Markprint, 2001

Statementscontinued - Rapala VMC Corporation

Transcription

Similar documents

Registration Form COFRET ` 10

Business Zone Brinje – Križpolje

The Mighty Yokanga Salmon

catalog-rapala-2013

OPENINGS - Minetti S.p.A.

Circular No 1

CRUISE IN THE CARIBBEAN

OCtOber 15 - Animals inside out

COSTA GARRAF, SITGES Apartamento

COSTA GARRAF, SITGES Apartamento