Rapala VMC Corporation Annual Report 2005

Transcription

Rapala VMC Corporation | Annual Report 2005
RAPALA.COM
Rapala VMC Corporation (RAPIV) is a public company
listed on the Helsinki Stock Exchange
© 2005 Rapala VMC Corporation
Rapala VMC Corporation
Annual Report 2005
Rapala and
Year 2005 in Brief
Focus on
Fishing Tackle Business
Fishing Hook Business
14
Fishing Accessories Business
16
Other Products and Distribution
18
Financial Statements
Review of the Board of Directors
20
Auditor’s Report
23
Consolidated Financial Statements, IFRS
24
Key Figures
48
Parent Company Financial Statements, FAS
50
Investor Information
Corporate Governance
56
Board of Directors and Management
56
Shares and Shareholders
58
Information for Shareholders
60
Locations of Business Operations
61
Rapala in 2005
– Positioned for Growth
The financial year 2005 was dominated
by strong investment in business development to implement Group’s strategic
objective for profitable growth. Both
market coverage and product portfolio
were expanded and position in current
markets and product categories strengthened. New distribution companies were
established in Thailand and China and
acquired in Australia and Hungary. US
lure manufacturer Luhr Jensen, Finnish
knife manufacturer Marttiini and cross
country ski manufacturer Peltonen were
also acquired during 2005. The French
fishing line supplier Tortue was acquired
in January 2006 and the South African
distributor Tatlow & Pledger in February
2006. The integration of new businesses
has progressed on plan.
02
03
174
196
01
04
05
Operating Profit
22.1
10
19.9
Lure Business
167
8
18.4
Strategy, Strengths and Priorities
172
6
153
Statement by President and CEO
Rapala’s business organization can be
divided to manufacturing and distribution and, on the other hand, into four
different businesses, which are: Lures,
Fishing Hooks, Fishing Accessories as
well as Other Products and Distribution
of third party products. The Group
focuses on fishing tackle business, which
is represented by all the four businesses.
Rapala is an undisputed market leader
in hard-bodied lures, metal lures, treble
hooks and fillet knives. Other products
and third party distribution also include
some products, like hunting and winter
sports, which fit well into Rapala’s distribution network in the Nordic countries
and smoothen the seasonality of the fishing tackle business.
Rapala’s strategic objective is profitable growth. This strategy is founded
on three sub-strategies and established
strengths: a unique manufacturing,
sourcing and R&D platform including
e.g. the world’s largest lure factories in
Europe and China, a leading global distribution network in the fishing tackle
industry and a strong brand portfolio
with several leading brands.
EUR million
5
19.9
Rapala and Year 2005 in Brief
Net Sales
EUR million
Business Operations
and Strategic Priorities
22.9
Contents
01
02
03
04
05
Financially, the strong emphasis
on business development was twofold.
Investments in growth started to increase
Group net sales, which increased 13%
from last year and amounted to EUR
196 million. On the other hand, starting
of new operations, entering new markets,
launching of new product categories and
strong input in M&A activity decreased
the improvement in profits. Operating
profit increased from 2004 and totaled
EUR 22 million.
The business outlook for 2006
is quite positive and the Group is well
positioned for growth. Including the
completed acquisitions in 2005 and early
2006, it is expected that the Group’s net
sales for the financial year 2006 will
continue to increase with double digit
percentage.
Rapala Annual Report 2005
Rapala and
Year 2005 in Brief
Focus on
Fishing Tackle Business
14
16
18
Financial Statements
20
Auditor’s Report
23
24
Key Figures
48
50
Investor Information
56
Board of Directors and Management
56
58
Information for Shareholders
60
Locations of Business Operations
61
Rapala in 2005
– Positioned for Growth
by strong investment in business development to implement Group’s strategic
objective for profitable growth. Both
market coverage and product portfolio
were expanded and position in current
markets and product categories strengthened. New distribution companies were
acquired in Australia and Hungary. US
lure manufacturer Luhr Jensen, Finnish
knife manufacturer Marttiini and cross
country ski manufacturer Peltonen were
also acquired during 2005. The French
fishing line supplier Tortue was acquired
in January 2006 and the South African
distributor Tatlow & Pledger in February
2006. The integration of new businesses
02
03
174
196
01
04
05
Operating Profit
22.1
10
19.9
Lure Business
167
8
18.4
Strategy, Strengths and Priorities
172
6
153
Statement by President and CEO
Rapala’s business organization can be
divided to manufacturing and distribution and, on the other hand, into four
different businesses, which are: Lures,
Fishing Hooks, Fishing Accessories as
well as Other Products and Distribution
of third party products. The Group
focuses on fishing tackle business, which
is represented by all the four businesses.
Rapala is an undisputed market leader
in hard-bodied lures, metal lures, treble
hooks and fillet knives. Other products
and third party distribution also include
some products, like hunting and winter
sports, which fit well into Rapala’s distribution network in the Nordic countries
and smoothen the seasonality of the fishing tackle business.
Rapala’s strategic objective is profitable growth. This strategy is founded
on three sub-strategies and established
strengths: a unique manufacturing,
sourcing and R&D platform including
e.g. the world’s largest lure factories in
Europe and China, a leading global distribution network in the fishing tackle
industry and a strong brand portfolio
with several leading brands.
EUR million
5
19.9
Rapala and Year 2005 in Brief
Net Sales
EUR million
Business Operations
and Strategic Priorities
22.9
Contents
01
02
03
04
05
Financially, the strong emphasis
on business development was twofold.
Investments in growth started to increase
Group net sales, which increased 13%
from last year and amounted to EUR
196 million. On the other hand, starting
of new operations, entering new markets,
launching of new product categories and
strong input in M&A activity decreased
the improvement in profits. Operating
profit increased from 2004 and totaled
EUR 22 million.
The business outlook for 2006
is quite positive and the Group is well
positioned for growth. Including the
completed acquisitions in 2005 and early
2006, it is expected that the Group’s net
sales for the financial year 2006 will
continue to increase with double digit
percentage.
Statement by
President and CEO
“From both strategic and operational perspectives, last year was a very special one - it demonstrated the new boost in the implementation of our strategy while we continued to deliver financially sound returns”, states Jorma Kasslin, President and CEO of Rapala VMC Corporation.
The year 2005 was strongly dominated by
business development, new operations
and acquisitions.
We introduced a record number of
excellent new products for 2006 season
and signed a global and exclusive distribution agreement for Ultrabite. We
acquired Luhr Jensen’s fishing tackle
operations in the USA and achieved the
global number one position in metal
lures with the combined sales of Luhr
Jensen and Blue Fox products. Marttiini’s
knife manufacturing in Finland, Estonia
and China was also acquired to increase
Group profitability in the product segment where Rapala and Marttiini have
worked together for almost 40 years. We
opened new distribution companies in
China and Thailand, and acquired distribution companies in Hungary and Australia and finally at the beginning of this
year, in South Africa. The last two ones
are a major step forward in the development of our salt water business and they
follow the acquisition of Williamson
and Guigo made in 2004. Increasing
our ownership of Peltonen Skis to 80%
strengthened the Scandinavian distribution business for the winter season.
Organic growth also continued in
2005 and was led by new products like
the successful X-Rap lure that was sold
one million pieces. A lot of internal
process development and “housecleaning” was also undertaken. The global
sourcing team operating in China was
reorganized. A new CFO was appointed
and the Group finance regrouped. Some
changes were also made also in the US
and Scandinavian management teams.
Special focus on working capital
and cash flow continued throughout the
somewhat less than the net sales due to
the strong input on business development and the starting of new operations.
All these achievements could not
have been made without the excellent
performance of our personnel. I want
to take this opportunity to thank all of
you who made these achievements possible. I also want to welcome all the new
personnel who joined the Group during
2005 and early 2006. We are a big and
constantly growing family – now almost
4 000 people in 27 countries!
In November, there was a significant change in our ownership. The long
time owner, Rapala Normark N.V. sold
its shares to the French Viellard family, a
Belgian publicly listed investment company Sofina S.A. and William Ng. The
Board’s composition was also changed
in December. With the new ownership
structure and the current strategy, Rapala
is well positioned for growth.
The trading volume of Rapala
shares on the Helsinki Stock Exchange
increased significantly from 2004 levels
and the share price developed positively.
The shares traded between EUR 5.50
and EUR 6.88 and ended at EUR 6.10
at the end of the year. This represents an
increase of 4.8% over 2004.
The fishing tackle market was quite
stable during 2005 with some ups and
downs in individual countries. In this
respect, the market in 2006 seems, for
the time being, quite similar to that of
last year. In this business environment,
taking into account the products we are
offering for forthcoming season together
with all the new operations currently in
place, we expect 2006 to be a good and
interesting year for us.
year and positive results were achieved
especially in the USA. On the other
hand, the starting of new operations
and acquisitions increased the working
capital and negatively affected the free
cash flow. Focus on working capital and
cash flow as well as fixed costs will continue in 2006.
Our core business operations performed well in 2005. New production
and sales records were achieved in many
Group operations. The net sales for
2005, EUR 196 million, was an all time
high for the Group and represents
an increase of 13% over 2004.
Operating profit increased
from 2004 levels but
re l a t ive l y
Jorma Kasslin
President and CEO
Statement by
President and CEO
“From both strategic and operational perspectives, last year was a very special one - it demonstrated the new boost in the implementation of our strategy while we continued to deliver financially sound returns”, states Jorma Kasslin, President and CEO of Rapala VMC Corporation.
The year 2005 was strongly dominated by
business development, new operations
and acquisitions.
We introduced a record number of
excellent new products for 2006 season
and signed a global and exclusive distribution agreement for Ultrabite. We
acquired Luhr Jensen’s fishing tackle
operations in the USA and achieved the
global number one position in metal
lures with the combined sales of Luhr
Jensen and Blue Fox products. Marttiini’s
knife manufacturing in Finland, Estonia
and China was also acquired to increase
Group profitability in the product segment where Rapala and Marttiini have
worked together for almost 40 years. We
opened new distribution companies in
China and Thailand, and acquired distribution companies in Hungary and Australia and finally at the beginning of this
year, in South Africa. The last two ones
are a major step forward in the development of our salt water business and they
follow the acquisition of Williamson
and Guigo made in 2004. Increasing
our ownership of Peltonen Skis to 80%
strengthened the Scandinavian distribution business for the winter season.
Organic growth also continued in
2005 and was led by new products like
the successful X-Rap lure that was sold
one million pieces. A lot of internal
process development and “housecleaning” was also undertaken. The global
sourcing team operating in China was
reorganized. A new CFO was appointed
and the Group finance regrouped. Some
changes were also made also in the US
and Scandinavian management teams.
Special focus on working capital
and cash flow continued throughout the
somewhat less than the net sales due to
the strong input on business development and the starting of new operations.
All these achievements could not
have been made without the excellent
performance of our personnel. I want
to take this opportunity to thank all of
you who made these achievements possible. I also want to welcome all the new
personnel who joined the Group during
2005 and early 2006. We are a big and
constantly growing family – now almost
4 000 people in 27 countries!
In November, there was a significant change in our ownership. The long
time owner, Rapala Normark N.V. sold
its shares to the French Viellard family, a
Belgian publicly listed investment company Sofina S.A. and William Ng. The
Board’s composition was also changed
in December. With the new ownership
structure and the current strategy, Rapala
is well positioned for growth.
The trading volume of Rapala
shares on the Helsinki Stock Exchange
increased significantly from 2004 levels
and the share price developed positively.
The shares traded between EUR 5.50
and EUR 6.88 and ended at EUR 6.10
at the end of the year. This represents an
increase of 4.8% over 2004.
The fishing tackle market was quite
stable during 2005 with some ups and
downs in individual countries. In this
respect, the market in 2006 seems, for
the time being, quite similar to that of
last year. In this business environment,
taking into account the products we are
offering for forthcoming season together
with all the new operations currently in
place, we expect 2006 to be a good and
interesting year for us.
year and positive results were achieved
especially in the USA. On the other
hand, the starting of new operations
and acquisitions increased the working
capital and negatively affected the free
cash flow. Focus on working capital and
cash flow as well as fixed costs will continue in 2006.
Our core business operations performed well in 2005. New production
and sales records were achieved in many
Group operations. The net sales for
2005, EUR 196 million, was an all time
high for the Group and represents
an increase of 13% over 2004.
Operating profit increased
from 2004 levels but
re l a t ive l y
Jorma Kasslin
President and CEO
Strategy, Strengths
and Priorities
Rapala’s strategic objective is profitable
growth. This strategy is founded on three
sub-strategies and established strengths:
a unique manufacturing, sourcing and
R&D platform including the world’s largest lure factories in Europe and China, a
leading global distribution network in
the fishing tackle industry and a strong
brand portfolio with several leading
brands.
Established and
Continuously Developed
Strengths
The Group’s unique manufacturing platform consists of the world’s largest lure
factory in China, Europe’s largest manufacturing facility for lures with specialized
factories in Finland, Estonia and Ireland,
the most advanced treble hook production facility located in France, and high
quality knife manufacturing in Finland.
Rapala has also developed an extensive
sourcing platform and process to ensure
high quality but low cost third party
manufacturing for its selected products.
Rapala’s research and development is
globally well known and respected for
its capability to continuously bring new
high quality products with new and
exceptional features to meet the fishermen’s demanding expectations.
Today Rapala’s distribution network
covers the four major continents and is
locally present in 25 different countries.
It allows the Group to introduce new
products efficiently and effectively to the
market and to build long lasting partnerships and alliances with local retailers
and fishermen. On the other hand, the
wide distribution network also acts as a
channel for market and customer input,
which is used for product development.
In addition to its own distribution network, the Group also uses external distribution agents in more than 100 countries
where the sales volumes are lower than
in the core markets. Rapala also has a
distribution alliance with Shimano.
In addition to the global leading
brand in the fishing tackle industry,
Rapala, the Group’s brand portfolio
consists of several other well known
brands like Storm, Luhr Jensen, Blue Fox,
Williamson, VMC, Marttiini and Peltonen. The brand for any new product can
be chosen from this portfolio to match
the targeted market segment or price
category.
Focus on Fishing
Tackle Business
The Group’s core business consists
of lures, fishing hooks, fishing accessories and other fishing tackle. Lures
are amongst the lowest cost but highest value adding elements of fishing.
The consumable nature of lures and
some other fishing tackle products leads
to a stable replacement market. The
fisherman’s desire to have a tackle box
filled with a wide range of established
lures together with new “hot” lures ready
for all occasions and circumstances
makes the market both attractive and
demanding.
The fishing tackle market is also
very high on brand loyalty, which
increases the value of well known high
quality brands. As a result of the increasing trend for “catch and release”, the
use of live bait is declining. This has
increased and will further increase the
demand for high quality lures. One of
Rapala’s characteristics is that it has
developed a unique capability of being
both aspirational and affordable to the
mass market.
Strategy
Implementation in 2005
by strong investment in business devel-
opment to implement the Group’s
strategic objective for profitable growth.
Both the market coverage and the product portfolio were expanded and the
Group’s position in current markets
and product categories was strengthened. New distribution companies were
acquired in Switzerland, Australia and
Hungary. US lure manufacturer Luhr
Jensen, Finnish knife manufacturer
Marttiini and cross country ski manufacturer Peltonen were also acquired
during 2005. The French fishing line
supplier Tortue was acquired in January
2006 and the South African distributor
Tatlow & Pledger in February 2006. The
integration of new businesses has progressed on plan.
During 2005 the Group also finalized the development of new products
for 2006 season and introduced them
to distribution channels. The number
of new products introduced for 2006
season is the highest ever in the Group
history. The deliveries of these new
products started in the last quarter
of 2005 and they have reached or are
about to reach the retail stores by now.
In October 2005, the Group also signed
an exclusive world-wide distribution
agreement for sport fishing for the
pheromone biotechnology branded
as Ultrabite. In the future, Rapala will
launch lures and baits containing these
pheromones.
The investments and development initiatives made in 2005 will start
to bear fruit in 2006 while the Group
continues to implement its strategy for
profitable growth. Negotiations and discussions for new acquisitions continue
while new products and applications
are being planned and developed. New
products for 2007 season have just been
finalized and they will be introduced
to the distributors within the next few
months.
Usa
Canada
Japan
Brazil
Malaysia
Australia
China
Thailand
South Africa
Finland
Sweden
Denmark
Norway
France
Spain
Switzerland
Portugal
Estonia
Poland
Russia
Ukraine
Lithuania
Latvia
Czech Republic
Hungary
Shimano
local
importers
Italy
Germany
Netherlands
Belgium
Rest of Europe
Rest of World
Group brands
Strategic Objective
Own manufacturing and R&D
supply
Rapala’s vision is to become the global leader in the fishing tackle industry.
This will be achieved through profitable growth.
Distribution
Own distribution
Usa
Canada
Hardbaits
Japan
Rapala
Storm
Brazil
Spinners
Malaysia
Blue Fox
Australia
China
Thailand
Rapala
Finland
Ireland
Estonia
Product
Finland
Estonia
Sweden
Softbaits
Denmark
Storm
Big Game
Norway
Williamson
France
Other lures
Spain
Blue Fox
Switzerland
Luhr Jensen
Portugal
Source
Poland
Hooks
Russia
Terminal tackle
Knives
Ukraine
Skis
Lithuania
Willtech
Hong Kong
China
WMC
France
Latvia
Czech Republic
SOURCING
R&D
outsourced
Product
Knives
Accessories
Line
Rods & Reels
Clothes
Attractants
Hungary
Source
Willtech
China
Marttiini
Finland, Estonia
& China
Third party
Shimano
Other Fishing
Hunting
Winter Sports
Outdoor
Finland
USA
China
New Zealand
Sweden
Peltonen
Finland
Strategy, Strengths
and Priorities
Rapala’s strategic objective is profitable
growth. This strategy is founded on three
sub-strategies and established strengths:
a unique manufacturing, sourcing and
R&D platform including the world’s largest lure factories in Europe and China, a
leading global distribution network in
the fishing tackle industry and a strong
brand portfolio with several leading
brands.
Established and
Continuously Developed
Strengths
The Group’s unique manufacturing platform consists of the world’s largest lure
factory in China, Europe’s largest manufacturing facility for lures with specialized
factories in Finland, Estonia and Ireland,
the most advanced treble hook production facility located in France, and high
quality knife manufacturing in Finland.
Rapala has also developed an extensive
sourcing platform and process to ensure
high quality but low cost third party
manufacturing for its selected products.
Rapala’s research and development is
globally well known and respected for
its capability to continuously bring new
high quality products with new and
exceptional features to meet the fishermen’s demanding expectations.
Today Rapala’s distribution network
covers the four major continents and is
locally present in 25 different countries.
It allows the Group to introduce new
products efficiently and effectively to the
market and to build long lasting partnerships and alliances with local retailers
and fishermen. On the other hand, the
wide distribution network also acts as a
channel for market and customer input,
which is used for product development.
In addition to its own distribution network, the Group also uses external distribution agents in more than 100 countries
where the sales volumes are lower than
in the core markets. Rapala also has a
distribution alliance with Shimano.
In addition to the global leading
brand in the fishing tackle industry,
Rapala, the Group’s brand portfolio
consists of several other well known
brands like Storm, Luhr Jensen, Blue Fox,
Williamson, VMC, Marttiini and Peltonen. The brand for any new product can
be chosen from this portfolio to match
the targeted market segment or price
category.
Focus on Fishing
Tackle Business
The Group’s core business consists
of lures, fishing hooks, fishing accessories and other fishing tackle. Lures
are amongst the lowest cost but highest value adding elements of fishing.
The consumable nature of lures and
some other fishing tackle products leads
to a stable replacement market. The
fisherman’s desire to have a tackle box
filled with a wide range of established
lures together with new “hot” lures ready
for all occasions and circumstances
makes the market both attractive and
demanding.
The fishing tackle market is also
very high on brand loyalty, which
increases the value of well known high
quality brands. As a result of the increasing trend for “catch and release”, the
use of live bait is declining. This has
increased and will further increase the
demand for high quality lures. One of
Rapala’s characteristics is that it has
developed a unique capability of being
both aspirational and affordable to the
mass market.
Strategy
Implementation in 2005
by strong investment in business devel-
opment to implement the Group’s
strategic objective for profitable growth.
Both the market coverage and the product portfolio were expanded and the
Group’s position in current markets
and product categories was strengthened. New distribution companies were
acquired in Switzerland, Australia and
Hungary. US lure manufacturer Luhr
Jensen, Finnish knife manufacturer
Marttiini and cross country ski manufacturer Peltonen were also acquired
during 2005. The French fishing line
supplier Tortue was acquired in January
2006 and the South African distributor
Tatlow & Pledger in February 2006. The
integration of new businesses has progressed on plan.
During 2005 the Group also finalized the development of new products
for 2006 season and introduced them
to distribution channels. The number
of new products introduced for 2006
season is the highest ever in the Group
history. The deliveries of these new
products started in the last quarter
of 2005 and they have reached or are
about to reach the retail stores by now.
In October 2005, the Group also signed
an exclusive world-wide distribution
agreement for sport fishing for the
pheromone biotechnology branded
as Ultrabite. In the future, Rapala will
launch lures and baits containing these
pheromones.
The investments and development initiatives made in 2005 will start
to bear fruit in 2006 while the Group
continues to implement its strategy for
profitable growth. Negotiations and discussions for new acquisitions continue
while new products and applications
are being planned and developed. New
products for 2007 season have just been
finalized and they will be introduced
to the distributors within the next few
months.
Usa
Canada
Japan
Brazil
Malaysia
Australia
China
Thailand
South Africa
Finland
Sweden
Denmark
Norway
France
Spain
Switzerland
Portugal
Estonia
Poland
Russia
Ukraine
Lithuania
Latvia
Czech Republic
Hungary
Shimano
local
importers
Italy
Germany
Netherlands
Belgium
Rest of Europe
Rest of World
Group brands
Strategic Objective
Own manufacturing and R&D
supply
Rapala’s vision is to become the global leader in the fishing tackle industry.
This will be achieved through profitable growth.
Distribution
Own distribution
Usa
Canada
Hardbaits
Japan
Rapala
Storm
Brazil
Spinners
Malaysia
Blue Fox
Australia
China
Thailand
Rapala
Finland
Ireland
Estonia
Product
Finland
Estonia
Sweden
Softbaits
Denmark
Storm
Big Game
Norway
Williamson
France
Other lures
Spain
Blue Fox
Switzerland
Luhr Jensen
Portugal
Source
Poland
Hooks
Russia
Terminal tackle
Knives
Ukraine
Skis
Lithuania
Willtech
Hong Kong
China
WMC
France
Latvia
Czech Republic
SOURCING
R&D
outsourced
Product
Knives
Accessories
Line
Rods & Reels
Clothes
Attractants
Hungary
Source
Willtech
China
Marttiini
Finland, Estonia
& China
Third party
Shimano
Other Fishing
Hunting
Winter Sports
Outdoor
Finland
USA
China
New Zealand
Sweden
Peltonen
Finland
Hard-bodied
and Soft Plastic Lures
Rapala is an undisputed market leader in hard-bodied lures and Storm is one of the leading
soft plastic lure brands. The net sales of Fishing Lures, including all Group brands,
were some EUR 68 million in 2005.
Dominance in
freshwater and
strong growth in
saltwater fishing
Rapala’s lure brands continued to be
the global number one choice for sport
fishermen during 2005. The industry
stalwarts, Rapala, Storm and Blue Fox,
all enjoyed one of their strongest years
ever, with highly successful new product
launches. The classic core lure families
continued selling in strong volumes.
Hard baits, soft plastics and the new
revolutionary hybrids, complimented
by metal lures and lures for big game
fishing all strengthened their respective
positions in the market. Together, our
lure brands cover the fisherman’s every
need from practical entry level to sophisticated hi-end products.
The Group’s “new kid on the block”,
Williamson, was re-launched with awardwinning success making it instantly the
only true worldwide big game brand.
The success of Williamson is a typical
example of Rapala’s dedication to follow its strategic initiatives. Williamson
is likely to set the new standards for big
game saltwater fishing products, just like
the Storm soft plastics did for freshwater fishing a couple of years back. Both
brands are known for their innovative,
new concept lures that look and perform like nothing before them in their
categories.
Rapala hard-bodied
lures
Our slogan “premium quality for the
mass market” has never been more accurate than in 2005. The all-time best selling
lure families like Originals, Countdowns,
Shad Raps and Magnums stayed as number one choices while fishermen also
lined up for new extensions to the latest
families like the DT’s and Glass Series.
Year 2005 saw the most successful
product launch in the history of Rapala.
Introduced in summer of 2004, the Rapala
X-Rap™ sold more than million pieces
worldwide during 2005. These new lures
literally flew off from the store shelves as
demand was nothing short of a phenomenal. X-Rap’s combination of technical
innovation with Rapala’s classic craftsmanship proved to be irresistible to both
fishermen and fish. Great castability, an
extravagant swimming action, fish attracting rattle, vibration and flash very seldom
come in one package. X-Rap is an exceptional lure by any standard and the success
of the 10 cm version made it a promising
launch pad for future extensions for both
freshwater and saltwater fishing.
Already a formula proven by the
Glass Husky Jerk and Glass Shad Rap,
the Glass Fat Rap was another great new
category for 2005. The new Glass Fat Rap
seems to catch almost any fresh water
fish. The chameleon-like glass finishes
make the difference.
The record breaking 10 cm X-Rap,
launched in 2005, will get two brothers
for the 2006 season. The new 8 cm and
14 cm X-Raps both have multi-species
applications and, based on early field
reports, will be winners. The giant
X-Rap Magnum 30, swimming at a depth
of 30 feet, has potential to be a massive
breakthrough in saltwater fishing. Never
before has any lure had the ability to
dive to 9 meters when trolled at 10 knots.
The ultra durable X-Rap Magnum 30 is
virtually unbreakable and is tailor-made
for fishing for the world’s biggest sport
fish in extreme conditions.
Storm soft plastic and
hard-bodied lures
The Group’s investments in new technology and innovative product development have really paid off. Originally
known from its legendary hard baits, in
“All Rapala-branded lures
and a proportion of the
Storm hard-bodied lure
range are manufactured
in the Group’s European
manufacturing facility that
has been developed to meet
the demand for high quality
but low cost products
and, at the same time, to
add value to the Group’s
product development”, says
Juhani Pehkonen, Head of
Fishing Lures.
Rapala X-Rap
The launch of X-Rap for 2005 was one of
the most successful product launches
in the Group’s history with worldwide
sales of over 1.2 million lures in the
first year. With the introduction of XRap, Rapala opened a whole new slash
bait lure category, offering lures that
have a very unique action and multiple
fishing applications.
just three years Storm has also become a
major player in soft plastic baits around
the world. The Swim Bait Shad category
is unquestionably the world’s best selling
and most copied fish shaped soft plastic
product line. The brand awareness has
never been higher. Storm offers the most
versatile product range on the market.
The Wild Eye Live Series, called
Naturistics outside of the USA, with their
unbelievable life-like finishes almost
look more authentic than the real bait
fish. The range was launched in the USA
and extended internationally with excellent results. The color extensions on the
Swim Bait Shad and Suspending Swim
Bait were also successful.
For the 2006 season, the unique
hybrid range, the combination of hard
baits and soft plastic baits are the hero
lures for Storm. Offering the best of both
worlds, these five different lure families
not only offer very realistic finishes but
also a wide array of features including
internal rattle and weight shifting systems.
The segmented Kickin’ Minnow is another
modern, jointed-type of lure with a segmented body and holographic mesh insert
that is introduced for the 2006 season.
10
Storm WildEye Swim Shad
Since their introduction in 2001, Storm
pre-rigged soft baits with internal
weights have taken the industry by
storm. These ready-to-fish lures are
now undisputed market leaders in
their category, and one of the most
copied products in the business – one
form of flattery in itself.
11
Hard-bodied
and Soft Plastic Lures
Rapala is an undisputed market leader in hard-bodied lures and Storm is one of the leading
soft plastic lure brands. The net sales of Fishing Lures, including all Group brands,
were some EUR 68 million in 2005.
Dominance in
freshwater and
strong growth in
saltwater fishing
Rapala’s lure brands continued to be
the global number one choice for sport
fishermen during 2005. The industry
stalwarts, Rapala, Storm and Blue Fox,
all enjoyed one of their strongest years
ever, with highly successful new product
launches. The classic core lure families
continued selling in strong volumes.
Hard baits, soft plastics and the new
revolutionary hybrids, complimented
by metal lures and lures for big game
fishing all strengthened their respective
positions in the market. Together, our
lure brands cover the fisherman’s every
need from practical entry level to sophisticated hi-end products.
The Group’s “new kid on the block”,
Williamson, was re-launched with awardwinning success making it instantly the
only true worldwide big game brand.
The success of Williamson is a typical
example of Rapala’s dedication to follow its strategic initiatives. Williamson
is likely to set the new standards for big
game saltwater fishing products, just like
the Storm soft plastics did for freshwater fishing a couple of years back. Both
brands are known for their innovative,
new concept lures that look and perform like nothing before them in their
categories.
Rapala hard-bodied
lures
Our slogan “premium quality for the
mass market” has never been more accurate than in 2005. The all-time best selling
lure families like Originals, Countdowns,
Shad Raps and Magnums stayed as number one choices while fishermen also
lined up for new extensions to the latest
families like the DT’s and Glass Series.
Year 2005 saw the most successful
product launch in the history of Rapala.
Introduced in summer of 2004, the Rapala
X-Rap™ sold more than million pieces
worldwide during 2005. These new lures
literally flew off from the store shelves as
demand was nothing short of a phenomenal. X-Rap’s combination of technical
innovation with Rapala’s classic craftsmanship proved to be irresistible to both
fishermen and fish. Great castability, an
extravagant swimming action, fish attracting rattle, vibration and flash very seldom
come in one package. X-Rap is an exceptional lure by any standard and the success
of the 10 cm version made it a promising
launch pad for future extensions for both
freshwater and saltwater fishing.
Already a formula proven by the
Glass Husky Jerk and Glass Shad Rap,
the Glass Fat Rap was another great new
category for 2005. The new Glass Fat Rap
seems to catch almost any fresh water
fish. The chameleon-like glass finishes
make the difference.
The record breaking 10 cm X-Rap,
launched in 2005, will get two brothers
for the 2006 season. The new 8 cm and
14 cm X-Raps both have multi-species
applications and, based on early field
reports, will be winners. The giant
X-Rap Magnum 30, swimming at a depth
of 30 feet, has potential to be a massive
breakthrough in saltwater fishing. Never
before has any lure had the ability to
dive to 9 meters when trolled at 10 knots.
The ultra durable X-Rap Magnum 30 is
virtually unbreakable and is tailor-made
for fishing for the world’s biggest sport
fish in extreme conditions.
Storm soft plastic and
hard-bodied lures
The Group’s investments in new technology and innovative product development have really paid off. Originally
known from its legendary hard baits, in
“All Rapala-branded lures
and a proportion of the
Storm hard-bodied lure
range are manufactured
in the Group’s European
manufacturing facility that
has been developed to meet
the demand for high quality
but low cost products
and, at the same time, to
add value to the Group’s
product development”, says
Juhani Pehkonen, Head of
Fishing Lures.
Rapala X-Rap
The launch of X-Rap for 2005 was one of
the most successful product launches
in the Group’s history with worldwide
sales of over 1.2 million lures in the
first year. With the introduction of XRap, Rapala opened a whole new slash
bait lure category, offering lures that
have a very unique action and multiple
fishing applications.
just three years Storm has also become a
major player in soft plastic baits around
the world. The Swim Bait Shad category
is unquestionably the world’s best selling
and most copied fish shaped soft plastic
product line. The brand awareness has
never been higher. Storm offers the most
versatile product range on the market.
The Wild Eye Live Series, called
Naturistics outside of the USA, with their
unbelievable life-like finishes almost
look more authentic than the real bait
fish. The range was launched in the USA
and extended internationally with excellent results. The color extensions on the
Swim Bait Shad and Suspending Swim
Bait were also successful.
For the 2006 season, the unique
hybrid range, the combination of hard
baits and soft plastic baits are the hero
lures for Storm. Offering the best of both
worlds, these five different lure families
not only offer very realistic finishes but
also a wide array of features including
internal rattle and weight shifting systems.
The segmented Kickin’ Minnow is another
modern, jointed-type of lure with a segmented body and holographic mesh insert
that is introduced for the 2006 season.
10
Storm WildEye Swim Shad
Since their introduction in 2001, Storm
pre-rigged soft baits with internal
weights have taken the industry by
storm. These ready-to-fish lures are
now undisputed market leaders in
their category, and one of the most
copied products in the business – one
form of flattery in itself.
11
Williamson
Trolling Lures
The Group took a big step to
strengthen its position in the
salt water and big game fishing
markets with the purchase
of Williamson lures in 2004.
The quality of the Williamson
lures, like the world record
producing Big Blue Cavitator,
has been raised well above the
competition, and Williamson
is now the only worldwide big
game brand.
Blue Fox Vibrax
Big Game and Metal Lures
“Our manufacturing operations in China are the largest in the industry
worldwide providing us with an excellent competitive edge”, says
William Ng, Head of Chinese manufacturing operations and Hong
Kong office.
Combined Blue Fox and Luhr Jensen production makes the Group the world’s largest
manufacturer and distributor of metal lures. Williamson is one of the leading brands
for big game salt water fishing.
Williamson
big game lures
Rapala acquired the big game brand
Williamson in 2004 and started to
invest heavily in R&D and product
design in order to make the famous
South African lure brand truly global.
The Group’s dedicated offshore fishing
specialists restructured and upgraded
the Williamson product lines. At the
same time, production was transferred
from South Africa to China. The results
of this development work are groundbreaking. Today, each Williamson product has detailed features like hook locking systems or loop protection and they
incorporate the super sharp high quality
VMC hooks. The attention to sophisticated design is typical for all Williamson
products: small or large trolling lures,
metal or lipless baits, teasers or acces-
sories. The Williamson product range
consists of 14 product families.
The Group’s big game position was
further strengthened by the acquisition of
two key distributors in the world’s major
big game markets in 2005: Freetime in
Australia and Tatlow & Pledger in South
Africa. Supported by Rapala’s distributing power, the strongest distribution
network in the industry, Williamson has
become one of the leading players in big
game fishing in a short time. Not only
are its lures widely accepted by big game
fisherman, but they have got recognition
from the trade as well. The Live Little
Tunny, won the prize for the best new
lure at the Australian Tackle Show AFTA
in August 2005.
The core ranges of both large and
light trolling lures like the Advocate and
Big Blue Cavitator were re-introduced
to the market in 2005 with upgraded
finishes and newly designed packaging.
The Williamson metal, tuna, mackerel
and lipless lures, together with teasers
and feather lures were introduced to
the market for the first time through
the Group’s distribution network. All
these products received an excellent
reception.
The new “Live” series of natural lifelike lures introduced for the 2006 season
is set to be a breakthrough in big game
fishing. Five new pre-rigged models
imitate the live bait fish not only by color
and texture, but also with an incredibly lifelike action. Available unrigged
or pro-rigged, the new “Live”series of
Live Little Tunny, Bunker, Ribbonfish,
Squid and Ballyhoo is a revolution for
big game fishing, removing the need for
live baits and making chartered fishing
trips much more effective and big game
fishing focused.
12
Blue Fox metal lures
Blue Fox is the Group’s metal brand
offering a wide, versatile range of products. The classics like Pixee spoons and
Vibrax spinners are used by millions of
fishermen every year for salmon and
trout fishing while Musky Buck is a must
for musky or pike fishing.
More recent innovations like the
Double Header or Trout Quiver have
found a permanent position in tackle
boxes worldwide.
Most of Blue Fox lures are produced in China but few series are still
manufactured in Europe.
Luhr Jensen hard-bodied
and metal lures
Rapala acquired Luhr Jensen in October
2005. Hailing from Hood River, Portland,
13
Oregon, Luhr Jensen is a legend in lures
and trolling accessories. The company’s
great tradition of craftsmanship and
durable, quality finishes on products like
the Crippled Herring, Crocodile, Bangtail
and Dipsy Diver need no introduction
to salmon, trout or pike fishermen. Luhr
Jensen has a huge market share and is the
market leader in the North-West of the
USA. It dominates salmon fishing but the
products are sold successfully all around the
world for other applications as well. Luhr
Jensen, with its history of more than 70
years and an excellent reputation, is a good
addition to the Group’s brand portfolio.
The brand will be re-introduced globally
through the Group’s distribution network
in 2006.
During a transition period ending after
mid-2006, the production of Luhr Jensen
products will be transferred from the USA
to the Group’s factories mainly in China.
For the 2005 season, a new
depth concept for the Vibrax
spinners was developed with
the Shallow and Deep Super
Vibrax ranges. The new Super
Vibrax spinners are produced
at the Group’s Chinese factory
and incorporate new jewelryquality engravings on the blade.
Luhr Jensen
Rapala is the world’s leading
brand in hard-bodied lures,
and after the acquisition of
Luhr Jensen and their broad
range of metal lures like the
legendary Krocodile, the Group
is now also the world’s largest
manufacturer of metal lures.
Williamson
Trolling Lures
The Group took a big step to
strengthen its position in the
salt water and big game fishing
markets with the purchase
of Williamson lures in 2004.
The quality of the Williamson
lures, like the world record
producing Big Blue Cavitator,
has been raised well above the
competition, and Williamson
is now the only worldwide big
game brand.
Blue Fox Vibrax
Big Game and Metal Lures
“Our manufacturing operations in China are the largest in the industry
worldwide providing us with an excellent competitive edge”, says
William Ng, Head of Chinese manufacturing operations and Hong
Kong office.
Combined Blue Fox and Luhr Jensen production makes the Group the world’s largest
manufacturer and distributor of metal lures. Williamson is one of the leading brands
for big game salt water fishing.
Williamson
big game lures
Rapala acquired the big game brand
Williamson in 2004 and started to
invest heavily in R&D and product
design in order to make the famous
South African lure brand truly global.
The Group’s dedicated offshore fishing
specialists restructured and upgraded
the Williamson product lines. At the
same time, production was transferred
from South Africa to China. The results
of this development work are groundbreaking. Today, each Williamson product has detailed features like hook locking systems or loop protection and they
incorporate the super sharp high quality
VMC hooks. The attention to sophisticated design is typical for all Williamson
products: small or large trolling lures,
metal or lipless baits, teasers or acces-
sories. The Williamson product range
consists of 14 product families.
The Group’s big game position was
further strengthened by the acquisition of
two key distributors in the world’s major
big game markets in 2005: Freetime in
Australia and Tatlow & Pledger in South
Africa. Supported by Rapala’s distributing power, the strongest distribution
network in the industry, Williamson has
become one of the leading players in big
game fishing in a short time. Not only
are its lures widely accepted by big game
fisherman, but they have got recognition
from the trade as well. The Live Little
Tunny, won the prize for the best new
lure at the Australian Tackle Show AFTA
in August 2005.
The core ranges of both large and
light trolling lures like the Advocate and
Big Blue Cavitator were re-introduced
to the market in 2005 with upgraded
finishes and newly designed packaging.
The Williamson metal, tuna, mackerel
and lipless lures, together with teasers
and feather lures were introduced to
the market for the first time through
the Group’s distribution network. All
these products received an excellent
reception.
The new “Live” series of natural lifelike lures introduced for the 2006 season
is set to be a breakthrough in big game
fishing. Five new pre-rigged models
imitate the live bait fish not only by color
and texture, but also with an incredibly lifelike action. Available unrigged
or pro-rigged, the new “Live”series of
Live Little Tunny, Bunker, Ribbonfish,
Squid and Ballyhoo is a revolution for
big game fishing, removing the need for
live baits and making chartered fishing
trips much more effective and big game
fishing focused.
12
Blue Fox metal lures
Blue Fox is the Group’s metal brand
offering a wide, versatile range of products. The classics like Pixee spoons and
Vibrax spinners are used by millions of
fishermen every year for salmon and
trout fishing while Musky Buck is a must
for musky or pike fishing.
More recent innovations like the
Double Header or Trout Quiver have
found a permanent position in tackle
boxes worldwide.
Most of Blue Fox lures are produced in China but few series are still
manufactured in Europe.
Luhr Jensen hard-bodied
and metal lures
Rapala acquired Luhr Jensen in October
2005. Hailing from Hood River, Portland,
13
Oregon, Luhr Jensen is a legend in lures
and trolling accessories. The company’s
great tradition of craftsmanship and
durable, quality finishes on products like
the Crippled Herring, Crocodile, Bangtail
and Dipsy Diver need no introduction
to salmon, trout or pike fishermen. Luhr
Jensen has a huge market share and is the
market leader in the North-West of the
USA. It dominates salmon fishing but the
products are sold successfully all around the
world for other applications as well. Luhr
Jensen, with its history of more than 70
years and an excellent reputation, is a good
addition to the Group’s brand portfolio.
The brand will be re-introduced globally
through the Group’s distribution network
in 2006.
During a transition period ending after
mid-2006, the production of Luhr Jensen
products will be transferred from the USA
to the Group’s factories mainly in China.
For the 2005 season, a new
depth concept for the Vibrax
spinners was developed with
the Shallow and Deep Super
Vibrax ranges. The new Super
Vibrax spinners are produced
at the Group’s Chinese factory
and incorporate new jewelryquality engravings on the blade.
Luhr Jensen
Rapala is the world’s leading
brand in hard-bodied lures,
and after the acquisition of
Luhr Jensen and their broad
range of metal lures like the
legendary Krocodile, the Group
is now also the world’s largest
manufacturer of metal lures.
Fishing Hooks
VMC branded treble hooks are market leaders with
a worldwide market share approaching 50%. The Group also
produces single hooks. The net sales of Fishing Hooks were
some EUR 17 million in 2005.
The world’s
leading hooks
New products and
development in 2005
The Group’s fishing hooks are branded
VMC, which is the leading treble hook
brand, and a market leader with a worldwide market share close to 50%. The
VMC range of hooks also includes a wide
range of single hooks, which together
with the treble hook range are sold to
more than 70 countries. One fourth of
the manufactured hooks are used within
the Group and the rest is sold outside the
Group to both lure manufacturers and
distributors.
Advanced technology and strong
product development are key success
factors for VMC hooks. The hook plant
in France manufactures large quantities
of hooks with a short lead time, which
results in good reactivity, capability
for proactivity and high quality. The
technological edge is a combination of
automated mechanical forming, heat
treatment of steel and chemical finishing
with electroplating. Successful innovations as well as value adding key customer
partnerships in product development
and high quality customer service are a
major strength in the Group fishing hook
business, and have contributed to VMC’s
position as the market leader.
New innovations introduced to the market and sold in 2005 included a range of
Sure Set and Spark Point hooks, as well
as new ringed hooks. Sure Set is a revolutionary hook shape, which combines a
wide gap single hook with a treble hook.
Spark Point is developed to ensure permanent hook sharpness, whilst energy
channels accelerate penetration speed.
To meet the worldwide demand
for low cost hooks, the Group started to
produce labour intensive hooks in the
Group’s Chinese manufacturing plant in
2005. These products include jig hooks,
large scale hooks and commercial fishing
hooks. The VMC hook plant in France is
still very competitive due to its high level
of automation and advanced technology.
SURE SET
Sure Set is the revolutionary new
VMC hook shape, which combines
a wide gap single hook with a
treble hook. The eye has been
rotated to be in-line with the largest branch and it provides lures
with perfect balance, exceptional
swimming action even at high
trolling speeds and instant
penetration and hook setting.
Sure Set hugs the lure body to
prevent the hook from pivoting
during attack. Extra wide gap Sure
Set shape also ensures maximum
scope in attack and hooking rate.
New products and
development for 2006
season
For the 2006 season, the Sure Set and
Spark Point ranges are extended. New
auto-line hooks featuring a very sharp
ground point, have been developed for
commercial fishing, and new big game
hooks have been designed for deep sea
fishing
A short history of
VMC hooks
The family firm of Viellard, Migeon and
Company, established in 1796, started to
produce fishing hooks in France in 1910.
At that time, each hook was individually
hand crafted. The first automatic treble
hook machine was introduced in 1974,
increasing the daily production volumes
from 5 000 hooks a day to 60 000 hooks.
This development was followed by international expansion, which led to VMC
treble hooks becoming a market leader
in 1990’s. In 2000, VMC was acquired by
and merged with Rapala.
“The combination of highly
automated French manufacturing and low cost labour
intensive production in China
is a good platform to keep and
further develop our competitive position”, says Stanislas
de Castelnau, Head of Fishing
Hooks.
14
15
Fishing Hooks
VMC branded treble hooks are market leaders with
a worldwide market share approaching 50%. The Group also
produces single hooks. The net sales of Fishing Hooks were
some EUR 17 million in 2005.
The world’s
leading hooks
New products and
development in 2005
The Group’s fishing hooks are branded
VMC, which is the leading treble hook
brand, and a market leader with a worldwide market share close to 50%. The
VMC range of hooks also includes a wide
range of single hooks, which together
with the treble hook range are sold to
more than 70 countries. One fourth of
the manufactured hooks are used within
the Group and the rest is sold outside the
Group to both lure manufacturers and
distributors.
Advanced technology and strong
product development are key success
factors for VMC hooks. The hook plant
in France manufactures large quantities
of hooks with a short lead time, which
results in good reactivity, capability
for proactivity and high quality. The
technological edge is a combination of
automated mechanical forming, heat
treatment of steel and chemical finishing
with electroplating. Successful innovations as well as value adding key customer
partnerships in product development
and high quality customer service are a
major strength in the Group fishing hook
business, and have contributed to VMC’s
position as the market leader.
New innovations introduced to the market and sold in 2005 included a range of
Sure Set and Spark Point hooks, as well
as new ringed hooks. Sure Set is a revolutionary hook shape, which combines a
wide gap single hook with a treble hook.
Spark Point is developed to ensure permanent hook sharpness, whilst energy
channels accelerate penetration speed.
To meet the worldwide demand
for low cost hooks, the Group started to
produce labour intensive hooks in the
Group’s Chinese manufacturing plant in
2005. These products include jig hooks,
large scale hooks and commercial fishing
hooks. The VMC hook plant in France is
still very competitive due to its high level
of automation and advanced technology.
SURE SET
Sure Set is the revolutionary new
VMC hook shape, which combines
a wide gap single hook with a
treble hook. The eye has been
rotated to be in-line with the largest branch and it provides lures
with perfect balance, exceptional
swimming action even at high
trolling speeds and instant
penetration and hook setting.
Sure Set hugs the lure body to
prevent the hook from pivoting
during attack. Extra wide gap Sure
Set shape also ensures maximum
scope in attack and hooking rate.
New products and
development for 2006
season
For the 2006 season, the Sure Set and
Spark Point ranges are extended. New
auto-line hooks featuring a very sharp
ground point, have been developed for
commercial fishing, and new big game
hooks have been designed for deep sea
fishing
A short history of
VMC hooks
The family firm of Viellard, Migeon and
Company, established in 1796, started to
produce fishing hooks in France in 1910.
At that time, each hook was individually
hand crafted. The first automatic treble
hook machine was introduced in 1974,
increasing the daily production volumes
from 5 000 hooks a day to 60 000 hooks.
This development was followed by international expansion, which led to VMC
treble hooks becoming a market leader
in 1990’s. In 2000, VMC was acquired by
and merged with Rapala.
“The combination of highly
automated French manufacturing and low cost labour
intensive production in China
is a good platform to keep and
further develop our competitive position”, says Stanislas
de Castelnau, Head of Fishing
Hooks.
14
15
Fishing Accessories
Rapala supplies a wide range of fishing accessories. The main product categories are fishing
knives, fishing tools, fishing lines, fishing clothes, fishing glasses and other fishing related tackle.
The net sales of Fishing Accessories were some EUR 38 million in 2005.
Accessories designed
for fishermen
Rapala designs and supplies dozens of
different accessories and fishing related
products that are targeted to meet the
demands of fishermen. The manufacturing of most of these products is
outsourced, but the Group is in charge
of the innovation, design, branding,
supplier selection, supply chain management, quality control, marketing, and in
most cases also of the packaging. In 2005,
the most important product categories
included fishing knives, fishing tools,
fishing lines and fishing glasses. The fishing accessories also include rods, reels
and combos (combination of rods, reels
and sometimes additional items of fishing tackle) as well as other fishing related
products.
Rapala fishing knives have a long
tradition. The Group has been selling
these under the Rapala brand for more
than 40 years, and the Rapala filleting
knives are the market leader in the Unites
States – with over 35 million knives sold
worldwide since their introduction.
Rapala fishing tools are built from
experience. Launched five years ago, these
practical tools have become the dominant player in this category throughout
the fishing world. This category includes
products such as scales, spring balances,
fishing pliers, line cutters, hook removers
and tackle boxes.
Rapala fishing lines are at the top
of the league. Award winning monofilament lines and the technically advanced
braided line Rapala Titanium Braid have
a stronghold in the fishing line category
in all continents. Storm fishing lines
– Storm Thunder Line – were also introduced. These fishing lines are aimed at
the opening price point category for the
value conscious consumer.
Rapala Vision Gear fishing glasses
are setting the standards both for their
optical quality and for their smart packaging concept, allowing mass merchants
to sell quality fishing glasses to demanding fishermen. Storm RackPak – a com-
pletely new way to sell a value added rod
& reel combo – “all you need for your
fishing day” in a patent pending carrying
and storage pack.
New accessories in 2005
The acquisition of Marttiini was completed in November. This deal included
the Finnish knife factory in Rovaniemi,
the knife sheaths factory in Estonia and
the 49% share in the Chinese knife jointventure with Rapala. This acquisition
further strengthened the filleting knife
business of the Group, and Rapala is
now the market leader worldwide. It also
brought new Marttiini branded products to the Group’s hunting and outdoor
business. Marttiini, founded in 1928,
has been the principal knife supplier to
Rapala since the early 1960´s and prior to
the deal the Group already bought some
40% of Marttiini’s capacity.
During the first half of 2005 Rapala
and Marttiini worked together to build
up and finalise the new capacity in their
joint venture knife manufacturing plant
in China. The sales of the new Chinese
knives started in the second quarter and
the ramp-up of production progressed
on plan during the second half of the
year. This investment allows Rapala to
meet the demand for low cost knives and
further develop the specialisation of each
knife unit.
“Rapala and Marttiini knives,
Rapala ProGuide fishing tools
and the new Rapala ProWear
clothing collection represent
the sharpest edge of our fishing
accessories – all crafted from
experience”, says Lars Ollberg,
Sales and Marketing Director
for Fishing Accessories.
Fish ’n Fillet
Introduced in 1967, the Rapala
Fish ’n Fillet knife was the first of
its kind in the world – and marked
the start of the, Rapala–Marttiini
partnership that has prospered
ever since. It is the world’s best
selling fillet knife, and in 2005 the
Fish ‘n Fillet knife total sales broke
the 35 million mark. On top of that,
educational material produced
by Rapala has taught millions of
fishermen to fillet their catch.
The Rapala fishing game, Rapala Pro
Fishing, was launched to the consumer
market with phenomenal success in late
2004, and sold through 2005. The game
was made under a licence agreement with
Activision Inc, one of the leading computer game manufacturers in the world.
The game offers great fishing action, all
with Rapala gear. The game is sold in all
key formats.
The Rapala Vision Gear fishing
glasses were introduced to the consumer
market in 2005. The Rapala Junior Pro
tackle program was offered globally after
a very good response in the USA. Rapala
increased its presence in some of its key
customers with a wide variety of tackle
developed solely for these individual
customers. Also several new fishing tools
with a focus on the popular Catch &
Release style of fishing were introduced.
New products
for 2006 season
After a two-year design and development
process, the Rapala ProWear fisherman´s
clothing program was introduced to the
trade in 2005. Fishing tackle shops around
the world will receive their first shipments
during the spring of 2006, and the initial
response has been excellent. The product program consists of waterproof and
windproof jackets and trousers, wading
gear, shirts made of special protective
fabrics as well as hats and gloves designed
especially for fishing.
Several volume priced knives were
introduced under the Rapala brand,
and Marttiini introduced their first ever
folding knife program to the market.
Both these new product categories are
manufactured in the Group’s new knife
factory in China and will be introduced
to consumers in the spring of 2006.
The Rapala Junior Pro program
was introduced to countries outside
North America. Several new fishing tools
saw daylight, and with the expanding
program and right price points, the sales
and market share of these products are
expected to develop favourably.
16
17
Fishing Accessories
Rapala supplies a wide range of fishing accessories. The main product categories are fishing
knives, fishing tools, fishing lines, fishing clothes, fishing glasses and other fishing related tackle.
The net sales of Fishing Accessories were some EUR 38 million in 2005.
Accessories designed
for fishermen
Rapala designs and supplies dozens of
different accessories and fishing related
products that are targeted to meet the
demands of fishermen. The manufacturing of most of these products is
outsourced, but the Group is in charge
of the innovation, design, branding,
supplier selection, supply chain management, quality control, marketing, and in
most cases also of the packaging. In 2005,
the most important product categories
included fishing knives, fishing tools,
fishing lines and fishing glasses. The fishing accessories also include rods, reels
and combos (combination of rods, reels
and sometimes additional items of fishing tackle) as well as other fishing related
products.
Rapala fishing knives have a long
tradition. The Group has been selling
these under the Rapala brand for more
than 40 years, and the Rapala filleting
knives are the market leader in the Unites
States – with over 35 million knives sold
worldwide since their introduction.
Rapala fishing tools are built from
experience. Launched five years ago, these
practical tools have become the dominant player in this category throughout
the fishing world. This category includes
products such as scales, spring balances,
fishing pliers, line cutters, hook removers
and tackle boxes.
Rapala fishing lines are at the top
of the league. Award winning monofilament lines and the technically advanced
braided line Rapala Titanium Braid have
a stronghold in the fishing line category
in all continents. Storm fishing lines
– Storm Thunder Line – were also introduced. These fishing lines are aimed at
the opening price point category for the
value conscious consumer.
Rapala Vision Gear fishing glasses
are setting the standards both for their
optical quality and for their smart packaging concept, allowing mass merchants
to sell quality fishing glasses to demanding fishermen. Storm RackPak – a com-
pletely new way to sell a value added rod
& reel combo – “all you need for your
fishing day” in a patent pending carrying
and storage pack.
New accessories in 2005
The acquisition of Marttiini was completed in November. This deal included
the Finnish knife factory in Rovaniemi,
the knife sheaths factory in Estonia and
the 49% share in the Chinese knife jointventure with Rapala. This acquisition
further strengthened the filleting knife
business of the Group, and Rapala is
now the market leader worldwide. It also
brought new Marttiini branded products to the Group’s hunting and outdoor
business. Marttiini, founded in 1928,
has been the principal knife supplier to
Rapala since the early 1960´s and prior to
the deal the Group already bought some
40% of Marttiini’s capacity.
During the first half of 2005 Rapala
and Marttiini worked together to build
up and finalise the new capacity in their
joint venture knife manufacturing plant
in China. The sales of the new Chinese
knives started in the second quarter and
the ramp-up of production progressed
on plan during the second half of the
year. This investment allows Rapala to
meet the demand for low cost knives and
further develop the specialisation of each
knife unit.
“Rapala and Marttiini knives,
Rapala ProGuide fishing tools
and the new Rapala ProWear
clothing collection represent
the sharpest edge of our fishing
accessories – all crafted from
experience”, says Lars Ollberg,
Sales and Marketing Director
for Fishing Accessories.
Fish ’n Fillet
Introduced in 1967, the Rapala
Fish ’n Fillet knife was the first of
its kind in the world – and marked
the start of the, Rapala–Marttiini
partnership that has prospered
ever since. It is the world’s best
selling fillet knife, and in 2005 the
Fish ‘n Fillet knife total sales broke
the 35 million mark. On top of that,
educational material produced
by Rapala has taught millions of
fishermen to fillet their catch.
The Rapala fishing game, Rapala Pro
Fishing, was launched to the consumer
market with phenomenal success in late
2004, and sold through 2005. The game
was made under a licence agreement with
Activision Inc, one of the leading computer game manufacturers in the world.
The game offers great fishing action, all
with Rapala gear. The game is sold in all
key formats.
The Rapala Vision Gear fishing
glasses were introduced to the consumer
market in 2005. The Rapala Junior Pro
tackle program was offered globally after
a very good response in the USA. Rapala
increased its presence in some of its key
customers with a wide variety of tackle
developed solely for these individual
customers. Also several new fishing tools
with a focus on the popular Catch &
Release style of fishing were introduced.
New products
for 2006 season
After a two-year design and development
process, the Rapala ProWear fisherman´s
clothing program was introduced to the
trade in 2005. Fishing tackle shops around
the world will receive their first shipments
during the spring of 2006, and the initial
response has been excellent. The product program consists of waterproof and
windproof jackets and trousers, wading
gear, shirts made of special protective
fabrics as well as hats and gloves designed
especially for fishing.
Several volume priced knives were
introduced under the Rapala brand,
and Marttiini introduced their first ever
folding knife program to the market.
Both these new product categories are
manufactured in the Group’s new knife
factory in China and will be introduced
to consumers in the spring of 2006.
The Rapala Junior Pro program
was introduced to countries outside
North America. Several new fishing tools
saw daylight, and with the expanding
program and right price points, the sales
and market share of these products are
expected to develop favourably.
16
17
Peltonen
“Peltonen is one of the leading
brands of cross-country skis,
enjoying a 30% market share in
Finland and a 7% share in other
distribution markets. The volume
of high quality skis manufactured
in Finland has grown at more than
10% a year during the last three
years. The most important export
markets are Germany, Russia,
France and Norway. Peltonen
sponsors Teemu Kattilakoski, the
leading Finnish male crosscountry skier who recorded
excellent results in both the 2003
and 2005 World Championships.
As part of this long standing and
very successful agreement Teemu
Kattilakoski advises Peltonen on
ski design.”
Rapala also produces cross country skis and some other non-core products to compliment the
seasonality of its core business. In addition to the Group branded products, Rapala also distributes
third party products for sport fishing, hunting, outdoor and winter sports. The net sales of Other
Products and Distribution were some EUR 78 million in 2005, of which EUR 40 million in Sport Fishing.
Sport Fishing
Since 1993, the Group distributes
Shimano rods and reels in 11 European
countries and in South Africa. Shimano
is one of the leading global brands in this
product category. On its turn, Shimano
distributes Rapala’s products in four
countries in Europe. This European distribution cooperation has lasted already
for 13 years.
Rapala also distributes several other
non-Group fishing tackle brands, especially in the newly acquired distribution
companies. In addition, Rapala distributes fishing related third party products
and equipment that it does not have in
its own product portfolio. These include
e.g. fish finders (Humminbird), tackle
boxes (Plano), down riggers (Cannon)
and electric outboard motors (Minn
Kota).
In 2005, the Group signed a worldwide exclusive distribution agreement
for the sport fishing market for a pheromone biotechnology brand called Ultrabite. Ultrabite is a pheromone based fish
attractant developed by CEFAS (Centre
for Environment, Fisheries and Aquaculture Sciences) governmental laboratories
in the UK, which generates natural and
irresistible feeding behavior in fish. In
the future, Rapala will launch a wide
range of lures and baits containing these
pheromones. As a result of acquisitions
done in 2005, the Group already sells
Remington, Blaser, Winchester, Mauser,
Tikka, Sako and CZ), ammunition
(Norma, Winchester, CCI and Remington), cartridges (Eley Hawk, Rottweil
and Gyttorp), optics (Leica, Bushnell,
Schmidt & Bender and Tasco) and clothing (Geoff Anderson, Blaser and Beretta).
The Group branded hunting products
(Marttiini, Wild Game and Normark)
include hunting knives, clothing and
other hunting related accessories.
some Ultrabite related products and also
distributes other non-Group branded
baits and attractants.
Hunting
Hunting, as well as winter sports, plays
an important role in the Group distribution business in the Nordic countries
where the fishing tackle business is very
slow in the autumn and the winter. The
Group has distributed hunting products
since the 1960’s and is today one of the
leading distributors of hunting products
in the Nordic countries.
The most important hunting products and brands distributed by Rapala
are rifles and shotguns (Beretta, Franchi,
18
Winter Sports
Rapala has distributed winter sport
equipment in Finland since 1999 and
started this business also in Norway in
2005. The most important winter sports
products and brands are cross country
skis (Peltonen), ski poles (Rex), ski wax
(Rex), bindings (Rottefella) and cross
country ski boots (Alpina). Peltonen
brand is owned by Rapala since 2002. In
2005, the Group increased its shareholding in the ski manufacturer Peltonen
Ski Oy from 19% to 80% to secure and
develop the distribution of Peltonen
products. Already before the acquisition,
Rapala was a significant customer to
19
Peltonen buying some 50% of Peltonen
Ski Oy’s production. In addition to the
manufacture of skis in the Hartola factory in Finland, Peltonen also sources
lower priced models from other ski
manufacturers.
Outdoor
Rapala is also an important distributor
of some other non-Group branded outdoor products and equipment. The most
important outdoor products and brands
distributed are GPS units (Magellan),
hiking and trekking products (Vaude,
TermoSwed, Tuckland and Garmont)
and sports optics (Leica, Bushnell, Tasco).
The Group branded outdoor products
include knives, backpacks and boots.
Other Products
To utilize its manufacturing capabilities
and compensate for the seasonality of
the core business, the Group also produces some other products mainly as a
contract manufacturer for the consumer
and electronics industry.
Peltonen
“Peltonen is one of the leading
brands of cross-country skis,
enjoying a 30% market share in
Finland and a 7% share in other
distribution markets. The volume
of high quality skis manufactured
in Finland has grown at more than
10% a year during the last three
years. The most important export
markets are Germany, Russia,
France and Norway. Peltonen
sponsors Teemu Kattilakoski, the
leading Finnish male crosscountry skier who recorded
excellent results in both the 2003
and 2005 World Championships.
As part of this long standing and
very successful agreement Teemu
Kattilakoski advises Peltonen on
ski design.”
Rapala also produces cross country skis and some other non-core products to compliment the
seasonality of its core business. In addition to the Group branded products, Rapala also distributes
third party products for sport fishing, hunting, outdoor and winter sports. The net sales of Other
Products and Distribution were some EUR 78 million in 2005, of which EUR 40 million in Sport Fishing.
Sport Fishing
Since 1993, the Group distributes
Shimano rods and reels in 11 European
countries and in South Africa. Shimano
is one of the leading global brands in this
product category. On its turn, Shimano
distributes Rapala’s products in four
countries in Europe. This European distribution cooperation has lasted already
for 13 years.
Rapala also distributes several other
non-Group fishing tackle brands, especially in the newly acquired distribution
companies. In addition, Rapala distributes fishing related third party products
and equipment that it does not have in
its own product portfolio. These include
e.g. fish finders (Humminbird), tackle
boxes (Plano), down riggers (Cannon)
and electric outboard motors (Minn
Kota).
In 2005, the Group signed a worldwide exclusive distribution agreement
for the sport fishing market for a pheromone biotechnology brand called Ultrabite. Ultrabite is a pheromone based fish
attractant developed by CEFAS (Centre
for Environment, Fisheries and Aquaculture Sciences) governmental laboratories
in the UK, which generates natural and
irresistible feeding behavior in fish. In
the future, Rapala will launch a wide
range of lures and baits containing these
pheromones. As a result of acquisitions
done in 2005, the Group already sells
Remington, Blaser, Winchester, Mauser,
Tikka, Sako and CZ), ammunition
(Norma, Winchester, CCI and Remington), cartridges (Eley Hawk, Rottweil
and Gyttorp), optics (Leica, Bushnell,
Schmidt & Bender and Tasco) and clothing (Geoff Anderson, Blaser and Beretta).
The Group branded hunting products
include hunting knives, clothing and
other hunting related accessories.
some Ultrabite related products and also
distributes other non-Group branded
baits and attractants.
Hunting
Hunting, as well as winter sports, plays
an important role in the Group distribution business in the Nordic countries
where the fishing tackle business is very
slow in the autumn and the winter. The
Group has distributed hunting products
since the 1960’s and is today one of the
leading distributors of hunting products
in the Nordic countries.
The most important hunting products and brands distributed by Rapala
are rifles and shotguns (Beretta, Franchi,
18
Winter Sports
Rapala has distributed winter sport
equipment in Finland since 1999 and
started this business also in Norway in
2005. The most important winter sports
products and brands are cross country
skis (Peltonen), ski poles (Rex), ski wax
(Rex), bindings (Rottefella) and cross
country ski boots (Alpina). Peltonen
brand is owned by Rapala since 2002. In
2005, the Group increased its shareholding in the ski manufacturer Peltonen
Ski Oy from 19% to 80% to secure and
develop the distribution of Peltonen
products. Already before the acquisition,
Rapala was a significant customer to
19
Peltonen buying some 50% of Peltonen
Ski Oy’s production. In addition to the
manufacture of skis in the Hartola factory in Finland, Peltonen also sources
lower priced models from other ski
manufacturers.
Outdoor
Rapala is also an important distributor
of some other non-Group branded outdoor products and equipment. The most
important outdoor products and brands
distributed are GPS units (Magellan),
hiking and trekking products (Vaude,
TermoSwed, Tuckland and Garmont)
and sports optics (Leica, Bushnell, Tasco).
The Group branded outdoor products
include knives, backpacks and boots.
Other Products
To utilize its manufacturing capabilities
and compensate for the seasonality of
the core business, the Group also produces some other products mainly as a
contract manufacturer for the consumer
and electronics industry.
Market, Operations
and Sales
22.1
19.9
18.4
03
04
01
02
33.8%
l North America 36%
l Europe 58%
l Rest of the World 6%
03
04
05
NET Sales by Product Line
dept-to-Equity Ratio
(gearing)
at end of period
173.5
24.9
19.9
16.0
12.1
l
l
l
l
Lures 34%
Fishing Hooks 9%
Fishing Accessories 19%
Other Products and
Distribution 39%
20
124.1%
196.1
26.9
22.1
19.2
14.7
136.6%
Net sales
EBITDA
Operating profit (EBIT)
Profit before taxes
Net profit for the period
156.1%
2004
215.7%
2005
03
04
05
EUR million
358.0%
Key Figures
01
21
02
Key figures
2005
2004
Net cash generated from operating activities, MEUR
Net cash used in investing activities, MEUR
Net interest-bearing debt at end of period, MEUR
Equity-to-assets ratio at end of period, %
Debt-to-equity ratio at end of period, %
12.5
16.6
95.9
33.8 %
124.1 %
9.2
8.6
81.7
32.0 %
136.6 %
05
Equity-to-Asset Ratio
at end of period
32.0%
Operating profit increased from previous year and totaled EUR 22.1 million
(EUR 19.9 million). Operating margin
remained at 11.3% (11.4%) and return
on capital employed at 14.1% (14.1%).
The profitability was affected by the startup costs in newly established operations
and strong investment in business development. Business development expenses
and start-up costs will continue still
for some time while new initiatives are
planned and implemented.
All geographical segments generated a positive operating profit for 2005
while most of the profits where generated
in Europe. For more detailed geographi-
NET Sales by Market Area
02
Financial Results
01
31.7%
05
EUR million
19.9
04
03
23.9%
02
l North America 29%
l Europe 59%
17.3%
01
22.9
196
Operating Profit
174
167
172
153
EUR million
The general market conditions were quite
good and stable during 2005. No major
changes where noted in the key markets
like North America and West Europe
while few individual smaller markets
somewhat tightened. New markets like
East Europe and Asia continued to grow
faster than the markets in general.
Net sales were up 13% from last
year and amounted to EUR 196.1 million
(2004: EUR 173.5 million). The increase
in sales came from all geographical segments and the growth was relatively
strongest in the new markets. Lures sales
increased 21% and accessories 22% while
the sales of fishing hooks and accessories
remained at previous year levels. Sales of
other products and distribution of third
party products increased 5%. The businesses started or acquired during 2005
increased the net sales for 2005 in excess
of EUR 6 million. For more detailed
geographical and product line segment
information see the note 3 to the consolidated financial statements.
Investment in strategic development of the Group’s product and brand
portfolio and distribution network continued throughout 2005 and was even
strengthened toward the end of the year.
For more details on acquisitions see the
section “Strategy Implementation” in this
review and the note 4 to the consolidated
financial statements.
NET Sales by Unit Location
Net Sales
cal segment information see the note 3 to
the consolidated financial statements.
Financial expenses were below previous year level since the positive foreign
exchange gains more than compensated
the increased interest expenses.
Net profit for 2005 amounted to
EUR 14.7 million (EUR 12.1 million)
and earning per share (basic) was 0.39
EUR (0.32 EUR).
This purchase price represents on an
average an EBITDA multiple of 4–5.
Net interest-bearing debt increased
to EUR 95.9 million (Dec 2004: EUR
81.7 million) as a result of the acquisitions done in 2005. Thanks to good profitability, equity-to-asset ratio increased
to 33.8% (Dec 2004: 32.0%) and gearing decreased to 124.1% (Dec 2004:
136.6%).
Cash Flow
and Financial Position
Strategy
Implementation
Cash flow from operating activities
increased from 2004 and amounted to
EUR 12.5 million.
A project to reduce working capital
continued during the year and it focused
in 2005 especially on the US operations,
where the set targets were achieved. Due
to the amount of new and acquired
operations, more work on working capital management is still needed and the
project will continue in 2006. During
2005, the working capital increased EUR
4.2 million excluding acquisitions. The
comparable inventories (excluding the
effect of newly acquired or established
businesses) increased 2% from 2004,
which is clearly less than the sales growth
in comparable operations, which was
almost 10%.
Capital expenditure for 2005,
including acquisitions, amounted to
EUR 16.6 million (EUR 8.6 million).
The total purchase price for all acquisitions closed in 2005 is EUR 15.4 million
of which EUR 6.6 million is allocated
to working capital, EUR 10.4 million
to fixed assets and 2.2 to liabilities (net).
Rapala VMC Corporation’s strategic
objective is profitable growth. This
strategy is founded on three sub-strategies and established strengths: a unique
manufacturing and sourcing platform
including e.g. the world’s largest lure
factories in Europe and China, a leading
global distribution network in the fishing tackle industry and a strong brand
portfolio with several leading brands.
During 2005 and the beginning of
2006, the Group management negotiated and closed several acquisitions. Also
several new operations were established
and started.
The strengthening of the Group’s
distribution network started with the
purchase of the Swiss distributor FunFish in May and was followed with the
acquisition of the Australian distribution
company Freetime in July. The remaining 33% minority stake of Rapala’s Danish distribution company was purchased
in August and the Hungarian distributor
Eurohold in October. The acquisition
of the South African fishing tackle distributor Tatlow & Pledger was closed in
Market, Operations
and Sales
22.1
19.9
18.4
03
04
01
02
33.8%
l North America 36%
l Europe 58%
03
04
05
NET Sales by Product Line
dept-to-Equity Ratio
(gearing)
at end of period
173.5
24.9
19.9
16.0
12.1
l
l
l
l
Lures 34%
Fishing Hooks 9%
Fishing Accessories 19%
Other Products and
Distribution 39%
20
124.1%
196.1
26.9
22.1
19.2
14.7
136.6%
Net sales
EBITDA
Operating profit (EBIT)
Profit before taxes
156.1%
2004
215.7%
2005
03
04
05
EUR million
358.0%
Key Figures
01
21
02
Key figures
2005
2004
Net cash generated from operating activities, MEUR
Net cash used in investing activities, MEUR
Net interest-bearing debt at end of period, MEUR
Debt-to-equity ratio at end of period, %
12.5
16.6
95.9
33.8 %
124.1 %
9.2
8.6
81.7
32.0 %
136.6 %
05
Equity-to-Asset Ratio
at end of period
32.0%
Operating profit increased from previous year and totaled EUR 22.1 million
(EUR 19.9 million). Operating margin
remained at 11.3% (11.4%) and return
on capital employed at 14.1% (14.1%).
The profitability was affected by the startup costs in newly established operations
and strong investment in business development. Business development expenses
and start-up costs will continue still
for some time while new initiatives are
planned and implemented.
All geographical segments generated a positive operating profit for 2005
while most of the profits where generated
in Europe. For more detailed geographi-
NET Sales by Market Area
02
Financial Results
01
31.7%
05
EUR million
19.9
04
03
23.9%
02
l North America 29%
l Europe 59%
17.3%
01
22.9
196
Operating Profit
174
167
172
153
EUR million
The general market conditions were quite
good and stable during 2005. No major
changes where noted in the key markets
like North America and West Europe
while few individual smaller markets
somewhat tightened. New markets like
East Europe and Asia continued to grow
faster than the markets in general.
Net sales were up 13% from last
year and amounted to EUR 196.1 million
(2004: EUR 173.5 million). The increase
in sales came from all geographical segments and the growth was relatively
strongest in the new markets. Lures sales
increased 21% and accessories 22% while
the sales of fishing hooks and accessories
remained at previous year levels. Sales of
other products and distribution of third
party products increased 5%. The businesses started or acquired during 2005
increased the net sales for 2005 in excess
of EUR 6 million. For more detailed
geographical and product line segment
information see the note 3 to the consolidated financial statements.
Investment in strategic development of the Group’s product and brand
portfolio and distribution network continued throughout 2005 and was even
strengthened toward the end of the year.
For more details on acquisitions see the
section “Strategy Implementation” in this
review and the note 4 to the consolidated
financial statements.
NET Sales by Unit Location
Net Sales
cal segment information see the note 3 to
the consolidated financial statements.
Financial expenses were below previous year level since the positive foreign
exchange gains more than compensated
the increased interest expenses.
Net profit for 2005 amounted to
EUR 14.7 million (EUR 12.1 million)
and earning per share (basic) was 0.39
EUR (0.32 EUR).
This purchase price represents on an
average an EBITDA multiple of 4–5.
Net interest-bearing debt increased
to EUR 95.9 million (Dec 2004: EUR
81.7 million) as a result of the acquisitions done in 2005. Thanks to good profitability, equity-to-asset ratio increased
to 33.8% (Dec 2004: 32.0%) and gearing decreased to 124.1% (Dec 2004:
136.6%).
Cash Flow
and Financial Position
Strategy
Implementation
Cash flow from operating activities
increased from 2004 and amounted to
EUR 12.5 million.
A project to reduce working capital
continued during the year and it focused
in 2005 especially on the US operations,
where the set targets were achieved. Due
to the amount of new and acquired
operations, more work on working capital management is still needed and the
project will continue in 2006. During
2005, the working capital increased EUR
4.2 million excluding acquisitions. The
comparable inventories (excluding the
effect of newly acquired or established
businesses) increased 2% from 2004,
which is clearly less than the sales growth
in comparable operations, which was
almost 10%.
Capital expenditure for 2005,
including acquisitions, amounted to
EUR 16.6 million (EUR 8.6 million).
The total purchase price for all acquisitions closed in 2005 is EUR 15.4 million
of which EUR 6.6 million is allocated
to working capital, EUR 10.4 million
to fixed assets and 2.2 to liabilities (net).
Rapala VMC Corporation’s strategic
objective is profitable growth. This
strategy is founded on three sub-strategies and established strengths: a unique
manufacturing and sourcing platform
including e.g. the world’s largest lure
factories in Europe and China, a leading
global distribution network in the fishing tackle industry and a strong brand
portfolio with several leading brands.
During 2005 and the beginning of
2006, the Group management negotiated and closed several acquisitions. Also
several new operations were established
and started.
The strengthening of the Group’s
distribution network started with the
purchase of the Swiss distributor FunFish in May and was followed with the
acquisition of the Australian distribution
company Freetime in July. The remaining 33% minority stake of Rapala’s Danish distribution company was purchased
in August and the Hungarian distributor
Eurohold in October. The acquisition
of the South African fishing tackle distributor Tatlow & Pledger was closed in
knife manufacturing joint venture proceeded on plan. As a result of the acquisition of Marttiini Oy, this joint venture
is now 100% owned by the Group. The
launch of Rapala’s new product line for
fishing clothing (Rapala ProWear) has
proceeded on plan and will be available
for season 2006.
Changes in Ownership
and Board or Directors
In November, there was a significant
change in the Group ownership. The
long time main shareholder, Rapala
Normark N.V. sold its shares to the
French Viellard family, a Belgian publicly listed investment company, Sofina
S.A. and William Ng. The Board’s composition was also changed accordingly
in December. Hardy McLain representing Rapala Normark N.V. and Manjit
Dale resigned from the Board and Marc
Speeckaert, representing Sofina, joined
the Board. At the same time, Emmanuel
Viellard was elected Chairman of the
Board. For more detailed information on shareholders and corporate
governance see the chapters “Shares
and Shareholders” and “Corporate
Governance” attached to the consolidated financial statements.
Personnel
The number of personnel increased during the year with 625 persons and was
3 986 at year end. This increase results
mainly from the acquisitions made and
new operations started during 2005 as
well as the expansion of the Group’s
Chinese manufacturing facilities.
3 986
3 361
3 235
3 129
2 807
personnel
01
02
03
04
Auditor’s Report
Outlook for 2006
The market outlook for 2006 looks
stable in key markets like North
America and Western Europe and looks
especially good in the new markets like
East Europe, South Africa, Australia
and Asia.
Including the completed acquisitions in 2005 and early 2006, it
is expected that the Group’s net sales for
the financial year 2006 will continue to
increase with double digit percentage.
The profitability of the Group’s
ongoing operations continues to be
good. Pursuing acquisitions and business development as well as integration
of acquired businesses has increased
the fixed costs and this will continue in
2006. Also fixed costs on several start-up
operations will continue to negatively
affect the profitability until the sales
volumes are high enough to cover the
costs and deliver the targeted margins.
As a result of the acquisitions, also the
depreciation will increase. Therefore,
operating profit is expected to be in
absolute terms above last year level but
achieving the 2005 operating margin
level (operating profit per net sales) will
be challenging. The full benefit of the
completed acquisitions will materialize
from 2007 onward.
The project to reduce working capital, especially inventories, and to improve
cash flow from operations will continue
in 2006. The target is to see an improvement on ongoing operations while the
new acquisitions and start-ups will tie
additional working capital.
Group management continues
planning and negotiations regarding
further acquisitions and business combinations to implement the Group’s
strategy.
To the shareholders of Rapala VMC Corporation
We have audited the accounting records, the financial statements and the
administration of Rapala VMC Corporation for the 12-month period ended
31 December 2005. The Board of Directors and the Managing Director have
prepared the Report of the Board of Directors and the consolidated financial
statements in accordance with International Financial Reporting Standards as
adopted by the EU and the parent company’s financial statements prepared
in accordance with prevailing regulations in Finland, that includes parent
company’s balance sheet, income statement, cash flow statement and the notes
to the financial statements. Based on our audit, we express an opinion on the
consolidated financial statements, the parent company’s financial statements
and on the administration of the parent company.
We have conducted the 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 the management
as well as evaluating the overall financial statement presentation. The purpose
of our audit of administration is to examine that the members of the Board of
Directors and the Managing Director of the parent company have complied with
the rules of the Companies’ Act.
Consolidated financial statements
In our opinion the consolidated financial statements prepared in accordance with
International Financial Reporting Standards as adopted by the EU give a true and
fair view, as referred to in the International Financial Reporting Standards as
adopted by the EU and defined in the Finnish Accounting Act, of the consolidated
results of operations as well as of the financial position. The consolidated
financial statements can be adopted.
Parent company’s financial statements
and administration
In our opinion the parent company’s financial statements have been prepared
in accordance with the Finnish Accounting Act and other rules and regulations
governing the preparation of financial statements in Finland. The financial
statements give a true and fair view, as defined in the Finnish Accounting Act,
of the parent company’s result of operations as well as of the financial position.
The 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 distribution of retained earnings is in compliance with the
Companies’ Act.
PROPOSAL FOR
PROFIT DISTRIBUTION
Persons
February 2006. The Group also signed a
worldwide exclusive distribution agreement for sport fishing for the pheromone
based fish attractant branded as Ultrabite.
In the future, Rapala will launch lures
and baits containing these pheromones.
On a larger scale, the impact on sales
will be seen only in 2007 and onwards.
In addition to these acquisitions, new
sales companies were opened in Malaysia,
China and Thailand.
The acquisition of lure and other
fishing tackle business of Luhr Jensen &
Sons, Inc (“Luhr Jensen”), a Hood River
(Oregon, USA) based manufacturer of
fishing lures and accessories was closed
in October. Luhr Jensen manufactures
a wide range of lures for freshwater and
saltwater species. It is the market leader in
the Pacific Northwest and Alaska (USA)
and in British Columbia (Canada). With
Rapala and Luhr Jensen combined, the
Group is now the world’s largest manufacturer of metal fishing lures. This deal
contributes to the Group’s brand strategy
and portfolio while it leverages Rapala’s
unique manufacturing and distribution
platforms. The production of Luhr Jensen
products will be transferred to the Rapala
factories, primarily Rapala’s factory
located in China, during a 12-month
transition period.
The acquisition of Finnish knife
manufacturer Marttiini was closed in
November. The deal included the Finnish knife factory in Rovaniemi, the knife
sheaths factory in Estonia and the 49%
share in the Chinese knife joint-venture
with Rapala. This acquisition further
strengthened the filleting knife business of the Group and Rapala is now
the market leader worldwide. Rapala
added Marttiini brand to its portfolio
of global brands, and Rapala´s own distribution companies in 25 countries will
strengthen the distribution of Marttiinibranded knives.
The acquisition of 61% of Peltonen
Ski in November was done to ensure the
distribution of increasing volumes of skis
through the Group distribution companies in Finland and Norway. Wintersports, together with hunting, have an
important role in the Group distribution business in Nordic countries were
the fishing tackle business is very slow in
autumn and winter time.
The integration of new businesses
In addition to these acquisitions,
ramp-up of production at the Chinese
05
The Board of Directors proposes to
the Annual General Meeting that a
dividend of EUR 0.11 for 2005 (EUR
0.09 for 2004) per share be paid from
the Group’s distributable funds and
that any remaining distributable funds
be allocated to retained earnings.
According to the financial statements,
at December 31, 2005 the Group’s distributable funds total EUR 55.7 million
and those of the parent company total
EUR 54.4 million.
22
Helsinki, February 17, 2006
ERNST & YOUNG OY
Authorised Public Accounting Firm
Juha Nenonen
Authorised Public Accountant
23
knife manufacturing joint venture proceeded on plan. As a result of the acquisition of Marttiini Oy, this joint venture
is now 100% owned by the Group. The
launch of Rapala’s new product line for
fishing clothing (Rapala ProWear) has
proceeded on plan and will be available
for season 2006.
Changes in Ownership
and Board or Directors
In November, there was a significant
change in the Group ownership. The
long time main shareholder, Rapala
Normark N.V. sold its shares to the
French Viellard family, a Belgian publicly listed investment company, Sofina
S.A. and William Ng. The Board’s composition was also changed accordingly
in December. Hardy McLain representing Rapala Normark N.V. and Manjit
Dale resigned from the Board and Marc
Speeckaert, representing Sofina, joined
the Board. At the same time, Emmanuel
Viellard was elected Chairman of the
Board. For more detailed information on shareholders and corporate
governance see the chapters “Shares
and Shareholders” and “Corporate
Governance” attached to the consolidated financial statements.
Personnel
The number of personnel increased during the year with 625 persons and was
3 986 at year end. This increase results
mainly from the acquisitions made and
new operations started during 2005 as
well as the expansion of the Group’s
Chinese manufacturing facilities.
3 986
3 361
3 235
3 129
2 807
personnel
01
02
03
04
Auditor’s Report
Outlook for 2006
The market outlook for 2006 looks
stable in key markets like North
America and Western Europe and looks
especially good in the new markets like
East Europe, South Africa, Australia
and Asia.
Including the completed acquisitions in 2005 and early 2006, it
is expected that the Group’s net sales for
the financial year 2006 will continue to
increase with double digit percentage.
The profitability of the Group’s
ongoing operations continues to be
good. Pursuing acquisitions and business development as well as integration
of acquired businesses has increased
the fixed costs and this will continue in
2006. Also fixed costs on several start-up
operations will continue to negatively
affect the profitability until the sales
volumes are high enough to cover the
costs and deliver the targeted margins.
As a result of the acquisitions, also the
depreciation will increase. Therefore,
operating profit is expected to be in
absolute terms above last year level but
achieving the 2005 operating margin
level (operating profit per net sales) will
be challenging. The full benefit of the
completed acquisitions will materialize
from 2007 onward.
The project to reduce working capital, especially inventories, and to improve
cash flow from operations will continue
in 2006. The target is to see an improvement on ongoing operations while the
new acquisitions and start-ups will tie
additional working capital.
Group management continues
planning and negotiations regarding
further acquisitions and business combinations to implement the Group’s
strategy.
To the shareholders of Rapala VMC Corporation
We have audited the accounting records, the financial statements and the
administration of Rapala VMC Corporation for the 12-month period ended
31 December 2005. The Board of Directors and the Managing Director have
prepared the Report of the Board of Directors and the consolidated financial
statements in accordance with International Financial Reporting Standards as
adopted by the EU and the parent company’s financial statements prepared
in accordance with prevailing regulations in Finland, that includes parent
company’s balance sheet, income statement, cash flow statement and the notes
to the financial statements. Based on our audit, we express an opinion on the
consolidated financial statements, the parent company’s financial statements
and on the administration of the parent company.
We have conducted the 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 the management
as well as evaluating the overall financial statement presentation. The purpose
of our audit of administration is to examine that the members of the Board of
Directors and the Managing Director of the parent company have complied with
the rules of the Companies’ Act.
Consolidated financial statements
In our opinion the consolidated financial statements prepared in accordance with
International Financial Reporting Standards as adopted by the EU give a true and
fair view, as referred to in the International Financial Reporting Standards as
adopted by the EU and defined in the Finnish Accounting Act, of the consolidated
results of operations as well as of the financial position. The consolidated
financial statements can be adopted.
Parent company’s financial statements
and administration
In our opinion the parent company’s financial statements have been prepared
in accordance with the Finnish Accounting Act and other rules and regulations
governing the preparation of financial statements in Finland. The financial
statements give a true and fair view, as defined in the Finnish Accounting Act,
of the parent company’s result of operations as well as of the financial position.
The 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 distribution of retained earnings is in compliance with the
Companies’ Act.
PROPOSAL FOR
PROFIT DISTRIBUTION
Persons
February 2006. The Group also signed a
worldwide exclusive distribution agreement for sport fishing for the pheromone
based fish attractant branded as Ultrabite.
In the future, Rapala will launch lures
and baits containing these pheromones.
On a larger scale, the impact on sales
will be seen only in 2007 and onwards.
In addition to these acquisitions, new
sales companies were opened in Malaysia,
China and Thailand.
The acquisition of lure and other
(Oregon, USA) based manufacturer of
fishing lures and accessories was closed
in October. Luhr Jensen manufactures
a wide range of lures for freshwater and
saltwater species. It is the market leader in
the Pacific Northwest and Alaska (USA)
and in British Columbia (Canada). With
Rapala and Luhr Jensen combined, the
Group is now the world’s largest manufacturer of metal fishing lures. This deal
contributes to the Group’s brand strategy
and portfolio while it leverages Rapala’s
unique manufacturing and distribution
platforms. The production of Luhr Jensen
products will be transferred to the Rapala
factories, primarily Rapala’s factory
located in China, during a 12-month
transition period.
The acquisition of Finnish knife
manufacturer Marttiini was closed in
November. The deal included the Finnish knife factory in Rovaniemi, the knife
sheaths factory in Estonia and the 49%
share in the Chinese knife joint-venture
with Rapala. This acquisition further
strengthened the filleting knife business of the Group and Rapala is now
the market leader worldwide. Rapala
added Marttiini brand to its portfolio
of global brands, and Rapala´s own distribution companies in 25 countries will
strengthen the distribution of Marttiinibranded knives.
The acquisition of 61% of Peltonen
Ski in November was done to ensure the
distribution of increasing volumes of skis
through the Group distribution companies in Finland and Norway. Wintersports, together with hunting, have an
important role in the Group distribution business in Nordic countries were
the fishing tackle business is very slow in
autumn and winter time.
The integration of new businesses
In addition to these acquisitions,
ramp-up of production at the Chinese
05
The Board of Directors proposes to
the Annual General Meeting that a
dividend of EUR 0.11 for 2005 (EUR
0.09 for 2004) per share be paid from
the Group’s distributable funds and
that any remaining distributable funds
be allocated to retained earnings.
According to the financial statements,
at December 31, 2005 the Group’s distributable funds total EUR 55.7 million
and those of the parent company total
EUR 54.4 million.
22
Helsinki, February 17, 2006
ERNST & YOUNG OY
Authorised Public Accounting Firm
Juha Nenonen
Authorised Public Accountant
23
Consolidated Financial
Statements, IFRS
CONSOLIDATED CASH FLOW STATEMENT
EUR million
Note
2005
14.7
Adjustments
Reversal of non-cash items
Minority interest
0.0
Income taxes
11
4.5
Financial income and expenses
10
2.9
Depreciation and impairments
9
4.8
Expenses from share-based option programs
8, 27
1.4
Translation differences
10
-1.0
Other items
-1.6
Interest paid
-4.2
Interest received
0.4
Income taxes paid
-5.3
Other financial items, net
0.0
Total adjustments
2.0
CONSOLIDATED INCOME STATEMENT
2005
2004
Net sales
3
196.1
Other operating income
5
0.8
Change in inventory of finished products and work in progress
-0.3
Production for own use
0.1
Use of materials and supplies
7
-81.9
Employee benefit expenses
8
-47.0
Other operating expenses
6
-40.9
Operating profit before depreciation and impairments
26.9
9
-4.8
Operating profit
22.1
10
-2.9
Profit before taxes
19.2
Income taxes
11
-4.5
14.7
173.5
EUR million
Note
Attributable to
Equity holders of the Company
14.7
0.0
Minority interest
Earnings per share
28
Earnings per share, EUR
0.39
Diluted earnings per share, EUR
0.39
Weighted average numbers of shares, 1000 shares
37 871
Diluted weighted average numbers of shares, 1000 shares
37 889
0.8
6.6
0.1
-76.7
-42.2
-37.3
24.9
Change in working capital
Change in receivables
Change in inventories
Change in short-term liabilities
Total change in working capital
Net cash generated from operating activities
-5.0
19.9
-3.8
16.0
-3.9
12.1
Net cash used in investing activities
Purchases of intangible assets
13
Proceeds from disposal of tangible assets
12
Purchases of tangible assets
12
Purchases of available-for-sale investments
14
Acquisitions 4
Total net cash used in investing activities
12.0
0.1
0.32
0.32
37 543
37 560
Net cash generated from financing activities
Dividends paid
Borrowings of debt
Repayments of debt
Proceeds from issue of shares
Total net cash generated from financing activities
Change in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Foreign exchange rate effect
Cash and cash equivalents at the end of the financial year
17
24
25
2004
12.0
0.1
3.9
3.8
5.0
1.4
1.0
0.3
-2.8
0.3
-3.5
-0.7
8.9
-5.6
2.3
-0.9
-4.2
-8.2
-6.0
2.5
-11.7
12.5
9.2
-0.5
0.4
-5.7
-0.4
-10.4
-16.6
0.0
0.5
-6.2
-0.2
-2.8
-8.6
-3.4
26.5
-17.7
2.0
7.4
-4.5
31.0
-19.9
0.0
6.6
3.2
14.8
1.2
19.2
7.1
8.1
-0.4
14.8
Consolidated Financial
Statements, IFRS
CONSOLIDATED CASH FLOW STATEMENT
EUR million
Note
2005
14.7
Adjustments
Minority interest
0.0
Income taxes
11
4.5
10
2.9
9
4.8
Expenses from share-based option programs
8, 27
1.4
10
-1.0
Other items
-1.6
Interest paid
-4.2
Interest received
0.4
Income taxes paid
-5.3
0.0
Total adjustments
2.0
CONSOLIDATED INCOME STATEMENT
2005
2004
Net sales
3
196.1
5
0.8
Change in inventory of finished products and work in progress
-0.3
0.1
7
-81.9
8
-47.0
Other operating expenses
6
-40.9
26.9
9
-4.8
Operating profit
22.1
10
-2.9
Profit before taxes
19.2
Income taxes
11
-4.5
14.7
173.5
EUR million
Note
Attributable to
14.7
0.0
Minority interest
Earnings per share
28
0.39
0.39
37 871
37 889
0.8
6.6
0.1
-76.7
-42.2
-37.3
24.9
-5.0
19.9
-3.8
16.0
-3.9
12.1
13
12
12
14
Acquisitions 4
12.0
0.1
0.32
0.32
37 543
37 560
Dividends paid
Borrowings of debt
Repayments of debt
Cash and cash equivalents at the beginning of the financial year
Foreign exchange rate effect
Cash and cash equivalents at the end of the financial year
17
24
25
2004
12.0
0.1
3.9
3.8
5.0
1.4
1.0
0.3
-2.8
0.3
-3.5
-0.7
8.9
-5.6
2.3
-0.9
-4.2
-8.2
-6.0
2.5
-11.7
12.5
9.2
-0.5
0.4
-5.7
-0.4
-10.4
-16.6
0.0
0.5
-6.2
-0.2
-2.8
-8.6
-3.4
26.5
-17.7
2.0
7.4
-4.5
31.0
-19.9
0.0
6.6
3.2
14.8
1.2
19.2
7.1
8.1
-0.4
14.8
CONSOLIDATED BALANCE SHEET
EUR million
Note
2005
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2004
ASSETS
Non-current assets
Goodwill
13
47.5
Other intangible assets
13
7.6
Other capitalized expenditure
13
0.6
Land 12
2.0
Buildings
12
10.5
Machinery and equipment
12
13.6
Other tangible assets
12
3.3
Advance payments and construction in progress
12
0.3
Available-for-sale investments
14
0.6
Interest-bearing receivables
16
0.3
Non interest-bearing receivables
16
0.1
Deferred tax assets
11
5.5
Total non-current assets
92.0
Current assets
Inventory
15
72.2
0.0
16
Trade and other non interest-bearing receivables
16
45.5
Cash and cash equivalents
17
19.2
Total current assets
136.9
Total assets
228.9
Attributable to equity holders of the Company
Share
EUR million
capital
41.3
2.8
0.3
1.9
9.4
10.6
2.9
0.1
0.2
0.0
0.1
4.6
74.1
Equity on 1.1.2004
Change in translation
differences
Net profit for the
financial year
Total recognized income
and expenses Dividends paid
Stock option program
Other changes
Equity on 31.12.2004
differences
and expenses Private offering
Dividends paid
Shares subscribed
with options
Other changes
63.0
0.4
34.9
14.8
113.1
187.2
Share
premium
Translation Retained
MinorityTotal
fund
differences
earnings
interest
equity
3.4
11.2
-2.8
41.5
0.5
53.7
0.0
0.0
-2.3
0.0
0.0
-2.3
0.0
0.0
0.0
12.0
0.1
12.1
0.0
0.0
0.0
0.0
3.4
0.0
0.0
0.0
0.0
11.2
-2.3
0.0
0.0
0.0
-5.1
12.0
-4.5
1.4
-0.6
49.8
0.1
0.0
0.0
0.0
0.6
9.8
-4.5
1.4
-0.6
59.8
0.0
0.0
0.0
0.0
0.6
0.0
0.0
14.7
0.0
0.0
0.6
14.7
0.0
0.0
0.0
0.0
3.2
0.0
0.6
0.0
0.0
14.7
0.0
-3.4
0.0
0.0
0.0
15.3
3.2
-3.4
0.1
0.0
0.0
3.5
1.9
0.0
0.0
16.3
0.0
0.0
0.0
-4.5
0.0
1.4
-0.6
61.9
0.0
0.0
-0.5
0.2
2.0
1.4
-1.0
77.3
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
3.5
16.3
Reserve fund
Retained earnings
42.7
Net income for the period
14.7
Total shareholders’ equity
18
77.1
Minority interest
0.2
Non-current liabilities
Interest-bearing loans and borrowings
22
60.4
Pension obligations
19
0.7
2.0
Deferred tax liabilities
11
Other interest-bearing liabilities
22
0.0
Total non-current liabilities
63.1
Current liabilities
22
55.5
31.2
Trade and other non interest-bearing payables
23
Provisions
20
1.7
21, 22
0.0
Total current liabilities
88.5
Total shareholder’s equity and liabilities
228.9
3.4
11.2
32.7
12.0
59.2
0.6
30.3
0.7
1.5
0.1
32.6
66.6
27.1
0.9
0.1
94.8
187.2
26
27
CONSOLIDATED BALANCE SHEET
EUR million
Note
2005
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2004
ASSETS
Non-current assets
Goodwill
13
47.5
13
7.6
13
0.6
Land 12
2.0
Buildings
12
10.5
12
13.6
12
3.3
Advance payments and construction in progress
12
0.3
14
0.6
16
0.3
Non interest-bearing receivables
16
0.1
Deferred tax assets
11
5.5
92.0
Current assets
Inventory
15
72.2
0.0
16
Trade and other non interest-bearing receivables
16
45.5
17
19.2
136.9
Total assets
228.9
Attributable to equity holders of the Company
Share
EUR million
capital
41.3
2.8
0.3
1.9
9.4
10.6
2.9
0.1
0.2
0.0
0.1
4.6
74.1
Equity on 1.1.2004
differences
Net profit for the
financial year
and expenses Dividends paid
Other changes
differences
and expenses Private offering
Dividends paid
Shares subscribed
with options
Other changes
63.0
0.4
34.9
14.8
113.1
187.2
Share
premium
Translation Retained
MinorityTotal
fund
differences
earnings
interest
equity
3.4
11.2
-2.8
41.5
0.5
53.7
0.0
0.0
-2.3
0.0
0.0
-2.3
0.0
0.0
0.0
12.0
0.1
12.1
0.0
0.0
0.0
0.0
3.4
0.0
0.0
0.0
0.0
11.2
-2.3
0.0
0.0
0.0
-5.1
12.0
-4.5
1.4
-0.6
49.8
0.1
0.0
0.0
0.0
0.6
9.8
-4.5
1.4
-0.6
59.8
0.0
0.0
0.0
0.0
0.6
0.0
0.0
14.7
0.0
0.0
0.6
14.7
0.0
0.0
0.0
0.0
3.2
0.0
0.6
0.0
0.0
14.7
0.0
-3.4
0.0
0.0
0.0
15.3
3.2
-3.4
0.1
0.0
0.0
3.5
1.9
0.0
0.0
16.3
0.0
0.0
0.0
-4.5
0.0
1.4
-0.6
61.9
0.0
0.0
-0.5
0.2
2.0
1.4
-1.0
77.3
Share capital
3.5
16.3
Reserve fund
Retained earnings
42.7
14.7
18
77.1
Minority interest
0.2
22
60.4
Pension obligations
19
0.7
2.0
11
22
0.0
63.1
Current liabilities
22
55.5
31.2
Trade and other non interest-bearing payables
23
Provisions
20
1.7
21, 22
0.0
88.5
Total shareholder’s equity and liabilities
228.9
3.4
11.2
32.7
12.0
59.2
0.6
30.3
0.7
1.5
0.1
32.6
66.6
27.1
0.9
0.1
94.8
187.2
26
27
Notes to Consolidated Financial Statements
1. Accounting principles
for the consolidated
accounts
Company’s background
Rapala VMC Oyj (“Company”) is a
Finnish public limited liability company
organized under the laws of Finland,
domiciled in Asikkala and listed on the
Helsinki stock exchange since 1998. The
company and its subsidiaries (“Rapala”
or “the Group”) operate in 26 countries
and the Company is one of the leading
fishing tackle companies in the world.
Basis for preparing the consolidated
financial statements
These are the first consolidated financial statements that have been prepared
in accordance with International
Financial Reporting Standards (IFRS).
In accordance with IFRS 1, these first
consolidated financial statements under
IFRS are prepared under the IFRS rules
valid as of December 31, 2005. The date
of transition from Finnish Accounting
Standards (FAS) to IFRS was January 1,
2004. The consolidated financial statements have been prepared on a historical cost basis, unless otherwise stated.
The consolidated financial statements
are presented in millions of euros. The
effects of the adoption of IFRS are summarized in note 2 (Adoption of IFRS).
Comparative figures for 2004 presented
in these consolidated financial statements have been restated to comply
with IFRS.
Use of estimates
The preparation of the consolidated
financial statements in accordance with
IFRS requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities,
the disclosure of contingent assets and
liabilities at the date of the consolidated
financial statements, and the reported
amounts of income and expenses during the reporting period. Accounting
estimates are employed in the consolidated financial statements to determine
reported amounts, including the realizability of certain assets, the useful lives
of tangible and intangible assets, income
taxes and other items. Actual results may
differ from these estimates.
Management judgments
In the process of applying the Group’s
accounting principles, management has
made certain judgments that affect the
amounts recognized in the consolidated
financial statements. These are mainly
related to impairment testing, defined
benefit pension plans, share-based payments and allocation of the purchase
price of business combinations.
Consolidation principles
comprise the financial statements of the
Company and its subsidiaries in which it
holds, directly or indirectly, over 50% of
the voting rights. The financial statements
of the subsidiaries are prepared for the
same reporting year as the parent company,
using consistent accounting policies.
Acquired companies are accounted
for using the purchase method of
accounting, which involves allocating
the cost of the business combination
to the fair value of the assets acquired
and liabilities and contingent liabilities
assumed at the date of acquisition. In
accordance with the exemption under
IFRS 1, acquisitions prior to the IFRS
transition date have not been restated.
The previous values, calculated in accordance with FAS, are taken as the deemed
cost. Prior to the IFRS transition date, the
difference between the acquisition cost
and the subsidiary’s equity at the time
of acquisition has been allocated, where
applicable, to the underlying assets. The
reminding difference has been shown as
goodwill on consolidation and amortized
on a straight-line basis over the asset’s
expected useful life. Under IFRS, goodwill on consolidation is not amortized
but tested for impairment annually. The
consolidated financial statements include
the results of acquired companies for
the period from the completion of the
acquisition. Conversely, divestments are
included up to their date of sale.
The investments in subsidiaries
have been eliminated using the acquisition cost method. All transactions
between Group companies as well as
assets and liabilities, dividends and unrealized internal margins in inventories
and tangible assets have been eliminated
in the consolidated financial statements.
Minority interest is presented separately
from the net profit and disclosed as a
separate item in the equity in accordance
with the share of the minority interest.
Foreign currency transactions and
translations
Each entity in the Group determines
its own functional currency and items
included in the financial statements
of each entity are measured using that
functional currency. Foreign currency
transactions are translated into euros
using the exchange rates prevailing at
the dates of the transactions. Receivables
and liabilities in foreign currencies are
translated into euros at the exchange
rates prevailing at the balance sheet
date. Monetary assets and liabilities
denominated in foreign currencies are
retranslated at the functional currency
rate of exchange prevailing at the balance sheet date. Foreign exchange gains
and losses for operating business items
are recorded in the appropriate income
statement account before operating
profit. Foreign exchange gains and losses
from financial assets and liabilities, and
from the translation of monetary assets
and liabilities denominated in foreign
currencies, are recognized in financial
income and expenses.
The consolidated financial statements are presented in euros, which is the
Company’s functional and reporting currency. Income statements of subsidiaries,
whose functional and reporting currencies
are not euros, are translated into the Group
reporting currency using the average
exchange rate for the year. Their balance
sheets are translated using the exchange
rate of balance sheet date. All exchange
differences arising on the translation are
entered in equity. On the disposal of a
subsidiary, whose functional and reporting currency is not euro, the cumulative
translation difference for that entity is recognized in the income statement as part of
the gain or loss on the sale.
Revenue recognition
Net sales comprise of gross sales less sales
taxes, discounts and exchange rate differences arising from sales denominated
in foreign currency. Sales of goods are
recognized after the significant risks and
rewards of ownership of the good have
passed to the buyer and no significant
28
uncertainties remain regarding the consideration, associated costs and possible
return of goods. The costs of shipping
and distributing products are included in
cost of sales. However, where the Group
is responsible for arranging transport
for its sales, costs are included in revenue in the value of the goods billed to
customer.
Research and development costs
Research and development costs are
expensed as they are incurred, unless
they relate to a clearly defined project
that meets certain criteria. Development
costs for such projects are capitalized if
they are separately identifiable and if the
products are assessed to be technically
feasible and commercially viable and the
related future revenues are expected to
exceed the aggregate 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 expenses are
amortized on a straight-line basis over
their expected useful lives.
the Group’s interest in the net fair value
of the identifiable asset, liabilities and
contingent liabilities. Goodwill is tested
annually for impairment. Goodwill is
measured at cost less any accumulated
impairment loss, and is not amortized.
Intangible assets
Intangible assets include customer relations, trademarks, capitalized development expenses, patents, copyrights,
licenses and software. An intangible asset
is recognized only if it is probable that the
future economic benefits that are attributable to the asset will flow to the Group,
and the cost of the asset can be measured
reliably. Intangible assets are stated at
cost, amortized on a straight-line basis
over the expected useful lives which vary
from 3 to 10 years and adjusted for any
impairment charges. The expected useful
life for most trademarks is indefinite and
therefore these intangibles are measured
at cost less any accumulated impairment
loss and not amortized. The valuation of
intangible assets acquired in a business
combination is based on fair value as at
the date of acquisition.
Income taxes
Property, plant and equipment
The Group’s income tax expense includes
taxes of the Group companies based on
taxable profit for the period, together
with tax adjustments for previous periods and the change in deferred income
taxes. The income tax effects of items
recognized directly in equity are similarly
recognized.
Deferred taxes are provided using
the liability method, as measured with
enacted tax rates, to reflect the temporary differences at the balance sheet
date between the tax bases of assets and
liabilities and their carrying amounts
for financial reporting purposes. The
main temporary differences arise from
the depreciation difference on property,
plant and equipment, fair valuation of
net assets in acquired companies, intragroup inventory profits, pension and
other provisions, untaxed reserves and
tax losses carried forward. Temporary
differences are recognized as a deferred
tax asset to the extent that it is probable
that future taxable profits will be available, against which the deductible temporary difference can be utilized.
Property, plant and equipment are
stated at historical cost, amortized on a
straight-line basis over the expected useful life and adjusted for any impairment
charges. The valuation of property, plant
and equipment acquired in a business
combination are based on fair value as
at the date of acquisition. Land is not
depreciated as it is deemed to have an
indefinite life.
Depreciation is based on the following expected useful lives:
Buildings 20 years
Machinery and equipment 5–10 years
Other tangible fixed assets 3–10 years
Expected useful lives of non-current
assets are reviewed at each balance sheet
date and, where they differ significantly
from previous estimates, depreciation
periods are changed accordingly. Ordinary
maintenance and repair costs are expenses
as incurred. The cost of significant renewals and improvements are capitalized and
depreciated over the remaining useful
lives of the related assets. Gains and losses
on sales and disposals are determined by
comparing the received proceeds with
the carrying amount and are included in
operating profit. Borrowing costs related
to investments are recognized as an
expense when incurred.
Goodwill
Goodwill represents the excess of the
cost of the business combination over
29
Government grants
Government or other grants are recognized
as income on a systematic basis over the
periods necessary to match them with the
related costs, which they are intended to
compensate. Government grants relating to
purchase of property, plant and equipment
are recognized as revenue on a systematic
basis over the useful life of the asset. In the
balance sheet, grants are deducted from the
value of the asset they relate to. The grants
are recognized as income as lower depreciations over the useful life of the asset. The
Group has not received government grants
in 2005 and 2004.
Impairments
Carrying amounts of property, plant
and equipment and other non-current
assets, including goodwill and intangible
assets, are reviewed at each balance sheet
date for potential impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Goodwill is in all
cases tested annually. For the purposes of
assessing impairment, assets are grouped
at the lowest cash generating unit level
for which there are separately identifiable, mainly independent, cash inflows
and outflows. An impairment loss is the
amount by which the carrying amount
of the assets exceeds the recoverable
amount. The recoverable amount is the
asset’s value in use. The value in use is
determined by reference to discounted
future net cash flows expected to be
generated by the asset. A previously recognized impairment loss is reversed only
if there has been a change in the estimates used to determine the recoverable
amount. However, the reversal must not
cause that the adjusted value is higher
than the carrying amount that would
have been determined if no impairment
loss had been recognized in prior years.
Impairment losses recognized for goodwill are not reversed.
Accounting for Leases
Leases of property, plant and equipment,
where the Group has substantially all the
rewards and risks of ownership, are classified as finance leases. Finance leases are
capitalized at the inception of the lease
at the lower of the fair value of the leased
property or the estimated present value
of the underlying lease payments.
Lease payments are apportioned
between the finance charges and reduction of the lease liability so as to achieve a
1. Accounting principles
for the consolidated
accounts
Company’s background
Rapala VMC Oyj (“Company”) is a
Finnish public limited liability company
organized under the laws of Finland,
domiciled in Asikkala and listed on the
Helsinki stock exchange since 1998. The
company and its subsidiaries (“Rapala”
or “the Group”) operate in 26 countries
and the Company is one of the leading
fishing tackle companies in the world.
Basis for preparing the consolidated
financial statements
These are the first consolidated financial statements that have been prepared
in accordance with International
Financial Reporting Standards (IFRS).
In accordance with IFRS 1, these first
consolidated financial statements under
IFRS are prepared under the IFRS rules
valid as of December 31, 2005. The date
of transition from Finnish Accounting
Standards (FAS) to IFRS was January 1,
2004. The consolidated financial statements have been prepared on a historical cost basis, unless otherwise stated.
are presented in millions of euros. The
effects of the adoption of IFRS are summarized in note 2 (Adoption of IFRS).
Comparative figures for 2004 presented
in these consolidated financial statements have been restated to comply
with IFRS.
Use of estimates
The preparation of the consolidated
financial statements in accordance with
IFRS requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities,
the disclosure of contingent assets and
liabilities at the date of the consolidated
financial statements, and the reported
amounts of income and expenses during the reporting period. Accounting
estimates are employed in the consolidated financial statements to determine
reported amounts, including the realizability of certain assets, the useful lives
of tangible and intangible assets, income
taxes and other items. Actual results may
differ from these estimates.
Management judgments
In the process of applying the Group’s
accounting principles, management has
made certain judgments that affect the
amounts recognized in the consolidated
financial statements. These are mainly
related to impairment testing, defined
benefit pension plans, share-based payments and allocation of the purchase
price of business combinations.
Consolidation principles
comprise the financial statements of the
Company and its subsidiaries in which it
holds, directly or indirectly, over 50% of
the voting rights. The financial statements
of the subsidiaries are prepared for the
same reporting year as the parent company,
using consistent accounting policies.
Acquired companies are accounted
for using the purchase method of
accounting, which involves allocating
the cost of the business combination
to the fair value of the assets acquired
and liabilities and contingent liabilities
assumed at the date of acquisition. In
accordance with the exemption under
IFRS 1, acquisitions prior to the IFRS
transition date have not been restated.
The previous values, calculated in accordance with FAS, are taken as the deemed
cost. Prior to the IFRS transition date, the
difference between the acquisition cost
and the subsidiary’s equity at the time
of acquisition has been allocated, where
applicable, to the underlying assets. The
reminding difference has been shown as
goodwill on consolidation and amortized
on a straight-line basis over the asset’s
expected useful life. Under IFRS, goodwill on consolidation is not amortized
but tested for impairment annually. The
consolidated financial statements include
the results of acquired companies for
the period from the completion of the
acquisition. Conversely, divestments are
included up to their date of sale.
The investments in subsidiaries
have been eliminated using the acquisition cost method. All transactions
between Group companies as well as
assets and liabilities, dividends and unrealized internal margins in inventories
and tangible assets have been eliminated
in the consolidated financial statements.
Minority interest is presented separately
from the net profit and disclosed as a
separate item in the equity in accordance
with the share of the minority interest.
Foreign currency transactions and
translations
Each entity in the Group determines
its own functional currency and items
included in the financial statements
of each entity are measured using that
functional currency. Foreign currency
transactions are translated into euros
using the exchange rates prevailing at
the dates of the transactions. Receivables
and liabilities in foreign currencies are
translated into euros at the exchange
rates prevailing at the balance sheet
date. Monetary assets and liabilities
denominated in foreign currencies are
retranslated at the functional currency
rate of exchange prevailing at the balance sheet date. Foreign exchange gains
and losses for operating business items
are recorded in the appropriate income
statement account before operating
profit. Foreign exchange gains and losses
from financial assets and liabilities, and
from the translation of monetary assets
and liabilities denominated in foreign
currencies, are recognized in financial
income and expenses.
The consolidated financial statements are presented in euros, which is the
Company’s functional and reporting currency. Income statements of subsidiaries,
whose functional and reporting currencies
are not euros, are translated into the Group
reporting currency using the average
exchange rate for the year. Their balance
sheets are translated using the exchange
rate of balance sheet date. All exchange
differences arising on the translation are
entered in equity. On the disposal of a
subsidiary, whose functional and reporting currency is not euro, the cumulative
translation difference for that entity is recognized in the income statement as part of
the gain or loss on the sale.
Revenue recognition
Net sales comprise of gross sales less sales
taxes, discounts and exchange rate differences arising from sales denominated
in foreign currency. Sales of goods are
recognized after the significant risks and
rewards of ownership of the good have
passed to the buyer and no significant
28
uncertainties remain regarding the consideration, associated costs and possible
return of goods. The costs of shipping
and distributing products are included in
cost of sales. However, where the Group
is responsible for arranging transport
for its sales, costs are included in revenue in the value of the goods billed to
customer.
Research and development costs
Research and development costs are
expensed as they are incurred, unless
they relate to a clearly defined project
that meets certain criteria. Development
costs for such projects are capitalized if
they are separately identifiable and if the
products are assessed to be technically
feasible and commercially viable and the
related future revenues are expected to
exceed the aggregate 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 expenses are
amortized on a straight-line basis over
their expected useful lives.
the Group’s interest in the net fair value
of the identifiable asset, liabilities and
contingent liabilities. Goodwill is tested
annually for impairment. Goodwill is
measured at cost less any accumulated
impairment loss, and is not amortized.
Intangible assets
Intangible assets include customer relations, trademarks, capitalized development expenses, patents, copyrights,
licenses and software. An intangible asset
is recognized only if it is probable that the
future economic benefits that are attributable to the asset will flow to the Group,
and the cost of the asset can be measured
reliably. Intangible assets are stated at
cost, amortized on a straight-line basis
over the expected useful lives which vary
from 3 to 10 years and adjusted for any
impairment charges. The expected useful
life for most trademarks is indefinite and
therefore these intangibles are measured
at cost less any accumulated impairment
loss and not amortized. The valuation of
intangible assets acquired in a business
combination is based on fair value as at
the date of acquisition.
Income taxes
Property, plant and equipment
The Group’s income tax expense includes
taxes of the Group companies based on
taxable profit for the period, together
with tax adjustments for previous periods and the change in deferred income
taxes. The income tax effects of items
recognized directly in equity are similarly
recognized.
Deferred taxes are provided using
the liability method, as measured with
enacted tax rates, to reflect the temporary differences at the balance sheet
date between the tax bases of assets and
liabilities and their carrying amounts
for financial reporting purposes. The
main temporary differences arise from
the depreciation difference on property,
plant and equipment, fair valuation of
net assets in acquired companies, intragroup inventory profits, pension and
other provisions, untaxed reserves and
tax losses carried forward. Temporary
differences are recognized as a deferred
tax asset to the extent that it is probable
that future taxable profits will be available, against which the deductible temporary difference can be utilized.
Property, plant and equipment are
stated at historical cost, amortized on a
straight-line basis over the expected useful life and adjusted for any impairment
charges. The valuation of property, plant
and equipment acquired in a business
combination are based on fair value as
at the date of acquisition. Land is not
depreciated as it is deemed to have an
indefinite life.
Depreciation is based on the following expected useful lives:
Buildings 20 years
Machinery and equipment 5–10 years
Other tangible fixed assets 3–10 years
Expected useful lives of non-current
assets are reviewed at each balance sheet
date and, where they differ significantly
from previous estimates, depreciation
periods are changed accordingly. Ordinary
maintenance and repair costs are expenses
as incurred. The cost of significant renewals and improvements are capitalized and
depreciated over the remaining useful
lives of the related assets. Gains and losses
on sales and disposals are determined by
comparing the received proceeds with
the carrying amount and are included in
operating profit. Borrowing costs related
to investments are recognized as an
expense when incurred.
Goodwill
Goodwill represents the excess of the
cost of the business combination over
29
Government grants
Government or other grants are recognized
as income on a systematic basis over the
periods necessary to match them with the
related costs, which they are intended to
compensate. Government grants relating to
purchase of property, plant and equipment
are recognized as revenue on a systematic
basis over the useful life of the asset. In the
balance sheet, grants are deducted from the
value of the asset they relate to. The grants
are recognized as income as lower depreciations over the useful life of the asset. The
Group has not received government grants
in 2005 and 2004.
Impairments
Carrying amounts of property, plant
and equipment and other non-current
assets, including goodwill and intangible
assets, are reviewed at each balance sheet
date for potential impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Goodwill is in all
cases tested annually. For the purposes of
assessing impairment, assets are grouped
at the lowest cash generating unit level
for which there are separately identifiable, mainly independent, cash inflows
and outflows. An impairment loss is the
amount by which the carrying amount
of the assets exceeds the recoverable
amount. The recoverable amount is the
asset’s value in use. The value in use is
determined by reference to discounted
future net cash flows expected to be
generated by the asset. A previously recognized impairment loss is reversed only
if there has been a change in the estimates used to determine the recoverable
amount. However, the reversal must not
cause that the adjusted value is higher
than the carrying amount that would
have been determined if no impairment
loss had been recognized in prior years.
Impairment losses recognized for goodwill are not reversed.
Accounting for Leases
Leases of property, plant and equipment,
where the Group has substantially all the
rewards and risks of ownership, are classified as finance leases. Finance leases are
capitalized at the inception of the lease
at the lower of the fair value of the leased
property or the estimated present value
of the underlying lease payments.
Lease payments are apportioned
between the finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining
balance of the liability. The corresponding rental obligations, net of finance
charges, are included in interest-bearing
liabilities with the interest element of the
finance charge being recognized in the
income statement over the lease period.
Property, plant and equipment acquired
under finance lease contracts are depreciated over the shorter of the estimated
useful life of the asset or lease period.
Leases of assets, where the lessor
retains all the risks and benefits of ownership, are classified as operating leases.
Payments made there under, and under
rental agreements, are expensed on a
straight-line basis over the lease periods.
When an operating lease is terminated
before the expiry of the lease period, any
obligatory payment to the lessor by way
of penalty is recognized as an expense in
the period in which termination takes
place. Lease termination benefits are
recognized on a discounted basis.
Derivative financial instruments
The Group is exposed to financial
risks related especially to changes in
foreign currency exchange rates and
interest rates for loans and borrowings.
Derivative financial instruments are used,
from time to time, to hedge financial risk.
All derivatives are initially recognized at
fair value on the date derivative contract
is entered into, and are subsequently
remeasured at fair value. Determination
of fair values is based on quoted market
prices and rates, discounting of cash
flows and option valuation models.
Changes in the fair value of
derivative financial instrument that are
designated and effective as hedges of
future cash flows are recognized directly
in equity and the ineffective portion is
recognized immediately in the income
statement. Gains and losses from derivative instruments recognized in income
statement are presented before operating profit and in financial income
and expenses only when the derivative
instrument is assigned to financial assets
or liabilities. Accumulated fair value
changes recognized in equity are released
into income as adjustments to sales or
purchases in the period when the hedged
cash flow affects income or if the hedged
subsidiary is sold or liquidated.
If hedge accounting is applied, the
accounting for hedging instruments is
dependent on the particular nature of
the hedging relationship. In these cases,
hedging programs are documented
according to the requirement of IAS 39
and designated hedging instruments are
subject to prospective and retrospective
testing of effectiveness.
Currently, all derivatives of the Group,
if any, are foreign currency forwards to
which hedge accounting is not applied.
Investments
Investments are classified as held-fortrading, held-to-maturity or availablefor-sale investments. Financial assets
are classified as held for trading if they
are acquired for the purpose of selling in the near future. Financial assets
with fixed or determinable payments
and fixed maturity are classified as
held-to-maturity when the Group has a
positive intention and ability to hold to
maturity. Investments that are not classified in the two preceding categories
are classified as available-for-sale. The
Group determines the classification of
its financial assets after initial recognition and, where allowed and appropriate re-evaluates this designation at
each financial year-end. At present, all
investments of the Group are classified
as available-for-sale.
When available-for-sale investments are recognized initially, they are
measured at fair value by using quota
market rates and market prices, discounted cash flow analyses and other
appropriate valuation models. Certain
unlisted equities for which fair values cannot be measured reliably are
reported at cost less impairment. The
fair value changes of available-for-sale
investments are recognized in shareholders’ equity. When the investment
is disposed of, the related accumulated
fair value changes are released from
shareholders’ equity and recognized in
the profit and loss account. Purchases
and sales of available-for-sale investments are recognized on the trade date,
i.e. the date that the Group commits to
purchase the asset.
Interest-bearing loan receivables
Loans and receivables are recognized
at the settlement date and measured at
amortized cost using the effective interest
rate method. Initially recognized amount
includes directly attributable transactions
costs. Gains and losses are recognized in
income statement when loans and receivables are derecognized or impaired, as well
as through the amortization process.
Inventories
Inventories are stated at the lower of
cost or net realizable value. Cost is determined by the first-in, first-out (FIFO)
method or, alternatively, weighted average cost where it approximates FIFO.
The cost of finished goods and work in
progress comprises raw materials, direct
labor, depreciation, other direct costs
and related production overheads, but
excludes borrowing costs. Net realizable value is the estimated selling price
in the ordinary course of business, less
the estimated costs of completion and
the estimated costs necessary to make
the sale.
eration received less directly attributable
transactions costs. After initial recognitions, they are subsequently measured at
method. Gains and losses are recognized
in the income statement when the liabilities are derecognized as well as through
the amortization process.
tributions to defined contribution plans
are charged to the income statement in
the year to which they relate.
The Group operates defined benefit pension plans in France only. For
defined benefit plans, pension costs
are assessed using the projected unit
credit actuarial valuation method, in
which the costs of providing pensions
is charged to the income statement so
as to spread the regular cost over the
service lives of employees in accordance
with the advice of qualified actuaries
who carry out a full valuation of the
plan. The pension obligation is mea-
Employee benefits
Throughout the Group operates various
pension plans in accordance with local
conditions and practices. The plans are
classified as either defined contribution
plans or defined benefit plans. The con-
sured as the present value of estimated
future cash outflows. All actuarial
gains and losses are spread forward
over the average remaining service lives
of employees. In accordance with the
exemption under IFRS 1, all cumulative
actuarial gains and losses have been recognized in retained earnings at the date
of transition, January 1, 2004.
Share-based payments
The Group has applied the requirements of
IFRS 2 (Share-based Payment) to all stock
options granted after November 7, 2002
that were unvested as of January 1, 2005.
Trade receivables
Trade receivables are carried at their
anticipated realizable value, which is the
original invoice amount less an estimated
valuation allowance for uncollectible
amounts. A valuation allowance of trade
receivables is made when there is objective evidence that the Group will not be
able to collect all amounts due according
to the original terms of the receivables.
DEFINITION OF KEY FIGURES
Net interest-bearing liabilities
=
Total interest-bearing liabilities - total interest-bearing assets
Capital employed
=
Shareholders’ equity + minority interest + net interest-bearing liabilities
Working capital
=
Inventories + total non interest-bearing assets - total non interest-bearing liabilities
Return on capital employed (ROCE), %
=
Operating profit Capital employed (average for the period)
x 100
Return on equity (ROE), %
=
Net profit for the financial year Shareholders’ equity + minority interest (average for the period)
x 100
Debt-to-equity ratio (Gearing), %
=
Net interest-bearing liabilities Shareholders’ equity + minority interest
x 100
Equity-to-assets ratio, %
=
(Shareholders’ equity + minority interest) Total shareholder’s equity and liabilities - advance payments received
x 100
=
Net profit for the period attributable to the equity holders
Adjusted average number of shares during the period
Dividend per share, EUR
=
Dividend for the period
Adjusted number of shares at the end of the period
Dividend/earnings ratio, %
=
Equity per share, EUR
=
Effective dividend yield, %
=
Dividend per share Adjusted share price at the end of the financial year
Price/earnings ratio
=
Adjusted share price at the end of the financial year
Earnings per share
Average share price, EUR
=
EUR amount traded during the period
Adjusted number of shared traded during the period
Year-end market capitalization, EUR
=
Number of shares x share price at the end of the year
Average number of personnel
=
Calculated as average of monthly averages
Cash and cash equivalents comprise cash
in hand, deposits held at call with banks,
other short-term highly liquid investments with original maturities of three
months or less, and bank overdrafts.
Bank overdrafts are included within borrowings in current liabilities.
Treasury shares
If the company or its subsidiaries recognizes own equity instruments (treasury
shares) these are deducted from equity.
No gain or loss is recognized in profit or
loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. At present, the Group holds no
such shares.
Provisions
Provisions are recognized in the balance
sheet when the Group has a present legal
or constructive obligation as a result of a
past event, and it is probable that an outflow of resources embodying economic
benefits will be required to settle the
obligation and a reliable estimate can be
made of the amount of the obligation.
Interest-bearing loans
and borrowings
All loans and borrowings are initially
recognized at the fair value of the consid-
30
31
x 100
constant rate of interest on the remaining
balance of the liability. The corresponding rental obligations, net of finance
charges, are included in interest-bearing
liabilities with the interest element of the
finance charge being recognized in the
income statement over the lease period.
Property, plant and equipment acquired
under finance lease contracts are depreciated over the shorter of the estimated
useful life of the asset or lease period.
Leases of assets, where the lessor
retains all the risks and benefits of ownership, are classified as operating leases.
Payments made there under, and under
rental agreements, are expensed on a
straight-line basis over the lease periods.
When an operating lease is terminated
before the expiry of the lease period, any
obligatory payment to the lessor by way
of penalty is recognized as an expense in
the period in which termination takes
place. Lease termination benefits are
recognized on a discounted basis.
Derivative financial instruments
The Group is exposed to financial
risks related especially to changes in
foreign currency exchange rates and
interest rates for loans and borrowings.
Derivative financial instruments are used,
from time to time, to hedge financial risk.
All derivatives are initially recognized at
fair value on the date derivative contract
is entered into, and are subsequently
remeasured at fair value. Determination
of fair values is based on quoted market
prices and rates, discounting of cash
flows and option valuation models.
Changes in the fair value of
derivative financial instrument that are
designated and effective as hedges of
future cash flows are recognized directly
in equity and the ineffective portion is
recognized immediately in the income
statement. Gains and losses from derivative instruments recognized in income
statement are presented before operating profit and in financial income
and expenses only when the derivative
instrument is assigned to financial assets
or liabilities. Accumulated fair value
changes recognized in equity are released
into income as adjustments to sales or
purchases in the period when the hedged
cash flow affects income or if the hedged
subsidiary is sold or liquidated.
If hedge accounting is applied, the
accounting for hedging instruments is
dependent on the particular nature of
the hedging relationship. In these cases,
hedging programs are documented
according to the requirement of IAS 39
and designated hedging instruments are
subject to prospective and retrospective
testing of effectiveness.
Currently, all derivatives of the Group,
if any, are foreign currency forwards to
which hedge accounting is not applied.
Investments
Investments are classified as held-fortrading, held-to-maturity or availablefor-sale investments. Financial assets
are classified as held for trading if they
are acquired for the purpose of selling in the near future. Financial assets
with fixed or determinable payments
and fixed maturity are classified as
held-to-maturity when the Group has a
positive intention and ability to hold to
maturity. Investments that are not classified in the two preceding categories
are classified as available-for-sale. The
Group determines the classification of
its financial assets after initial recognition and, where allowed and appropriate re-evaluates this designation at
each financial year-end. At present, all
investments of the Group are classified
as available-for-sale.
When available-for-sale investments are recognized initially, they are
measured at fair value by using quota
market rates and market prices, discounted cash flow analyses and other
appropriate valuation models. Certain
unlisted equities for which fair values cannot be measured reliably are
reported at cost less impairment. The
fair value changes of available-for-sale
investments are recognized in shareholders’ equity. When the investment
is disposed of, the related accumulated
fair value changes are released from
shareholders’ equity and recognized in
the profit and loss account. Purchases
and sales of available-for-sale investments are recognized on the trade date,
i.e. the date that the Group commits to
purchase the asset.
Interest-bearing loan receivables
Loans and receivables are recognized
at the settlement date and measured at
rate method. Initially recognized amount
includes directly attributable transactions
costs. Gains and losses are recognized in
income statement when loans and receivables are derecognized or impaired, as well
as through the amortization process.
Inventories
Inventories are stated at the lower of
cost or net realizable value. Cost is determined by the first-in, first-out (FIFO)
method or, alternatively, weighted average cost where it approximates FIFO.
The cost of finished goods and work in
progress comprises raw materials, direct
labor, depreciation, other direct costs
and related production overheads, but
excludes borrowing costs. Net realizable value is the estimated selling price
in the ordinary course of business, less
the estimated costs of completion and
the estimated costs necessary to make
the sale.
eration received less directly attributable
transactions costs. After initial recognitions, they are subsequently measured at
method. Gains and losses are recognized
in the income statement when the liabilities are derecognized as well as through
the amortization process.
tributions to defined contribution plans
are charged to the income statement in
the year to which they relate.
The Group operates defined benefit pension plans in France only. For
defined benefit plans, pension costs
are assessed using the projected unit
credit actuarial valuation method, in
which the costs of providing pensions
is charged to the income statement so
as to spread the regular cost over the
service lives of employees in accordance
with the advice of qualified actuaries
who carry out a full valuation of the
plan. The pension obligation is mea-
Employee benefits
Throughout the Group operates various
pension plans in accordance with local
conditions and practices. The plans are
classified as either defined contribution
plans or defined benefit plans. The con-
sured as the present value of estimated
future cash outflows. All actuarial
gains and losses are spread forward
over the average remaining service lives
of employees. In accordance with the
exemption under IFRS 1, all cumulative
actuarial gains and losses have been recognized in retained earnings at the date
of transition, January 1, 2004.
Share-based payments
The Group has applied the requirements of
IFRS 2 (Share-based Payment) to all stock
options granted after November 7, 2002
that were unvested as of January 1, 2005.
Trade receivables
Trade receivables are carried at their
anticipated realizable value, which is the
original invoice amount less an estimated
valuation allowance for uncollectible
amounts. A valuation allowance of trade
receivables is made when there is objective evidence that the Group will not be
able to collect all amounts due according
to the original terms of the receivables.
DEFINITION OF KEY FIGURES
Net interest-bearing liabilities
=
Total interest-bearing liabilities - total interest-bearing assets
Capital employed
=
Shareholders’ equity + minority interest + net interest-bearing liabilities
Working capital
=
Inventories + total non interest-bearing assets - total non interest-bearing liabilities
=
Operating profit Capital employed (average for the period)
x 100
=
Net profit for the financial year Shareholders’ equity + minority interest (average for the period)
x 100
Debt-to-equity ratio (Gearing), %
=
Net interest-bearing liabilities Shareholders’ equity + minority interest
x 100
Equity-to-assets ratio, %
=
(Shareholders’ equity + minority interest) Total shareholder’s equity and liabilities - advance payments received
x 100
=
Adjusted average number of shares during the period
Dividend per share, EUR
=
Dividend/earnings ratio, %
=
=
Effective dividend yield, %
=
Dividend per share Adjusted share price at the end of the financial year
=
Adjusted share price at the end of the financial year
Earnings per share
Average share price, EUR
=
EUR amount traded during the period
Adjusted number of shared traded during the period
Year-end market capitalization, EUR
=
Number of shares x share price at the end of the year
Average number of personnel
=
Calculated as average of monthly averages
Cash and cash equivalents comprise cash
in hand, deposits held at call with banks,
other short-term highly liquid investments with original maturities of three
months or less, and bank overdrafts.
Bank overdrafts are included within borrowings in current liabilities.
Treasury shares
If the company or its subsidiaries recognizes own equity instruments (treasury
shares) these are deducted from equity.
No gain or loss is recognized in profit or
loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. At present, the Group holds no
such shares.
Provisions
Provisions are recognized in the balance
sheet when the Group has a present legal
or constructive obligation as a result of a
past event, and it is probable that an outflow of resources embodying economic
benefits will be required to settle the
obligation and a reliable estimate can be
made of the amount of the obligation.
Interest-bearing loans
and borrowings
All loans and borrowings are initially
recognized at the fair value of the consid-
30
31
x 100
The Group has two separate share-based
payment programs. These options are
valued at fair value per grant date using
Black-Scholes-Merton option-pricing
model and recognized as personnel
expense in the income statement with a
corresponding increase to equity. Grant
date is the date at which the entity and
another party agree to a share-based payment arrangement, being when the entity
and the counter party have a shared
understanding of the terms and conditions of the arrangement. Fair value of
the options is expensed over the vesting period. Vesting period is the period
during which all the specified vesting
conditions of a share-based payment
arrangement are to be satisfied. When
the options are exercised, the proceeds
received, net of any transaction costs, are
credited to share capital (nominal value)
and share premium.
2. Adoption of IFRS
Rapala converted from Finnish Accounting
Standards (FAS) to International Financial
Reporting Standards (IFRS) before its
first-quarter interim report in 2005.
The application of IFRS was published
on May 10, 2005. The information was
unaudited and some adjustments have
been made thereafter. Rapala applies
IFRS as of January 1, 2005.
The Group’s date of transition to
IFRS accounting standards is January 1,
2004. In accordance with IFRS 1 (Firsttime Adoption of IFRS), the first financial
statements under IFRS are prepared under
the IFRS rules being in force as of December 31, 2005. The Group has adopted
IFRS 1 and used the exemptions from the
requirements of IAS 19 (Employee Benefits), IFRS 3 (Business Combinations)
and IFRS 2 (Share-based Payment).
The most significant changes to FAS
based financial information relate to the
treatment of goodwill, recording financial leases in the balance sheet, expensing
the costs of the Group’s stock option
program at fair value, and reversal of
capitalized foreign exchange differences
on long-term loans. The reconciliation of
extraordinary items to operating income
and expenses has changed the structure
of the income statement but not the
equity and net profit for the period.
There is no material differences between
the cash flow statement prepared under
IFRS and the cash flow statement presented under FAS.
The following section presents the
main effects of the changes in accounting
principles and effects of the transition to
IFRS on the Group’s opening balance
sheet for January 1, 2004 and consolidated financial statements for 2004
EFFECTS OF IFRS ON INCOME STATEMENT (2004)
EUR million
Earnings per share
Earnings per share is calculated by dividing the net profit attributable to the
shareholders of the Company by the
weighted average number of shares in
issue during the year, excluding shares
purchased by the Group and held as
treasury shares, if any.
Diluted earnings per share
amounts have been calculated as if
the stock options were exercised at the
beginning of the period. In addition to
the weighted average number of shares
outstanding, the denominator includes
the incremental shares obtained
through the assumed exercise of the
options. The assumption of exercise is
not reflected in earnings per share when
the exercise price of the options exceeds
the average market price of the shares
during the period. The options have a
diluting effect only when the average
market price of the share during the
period exceeds the exercise price of the
warrants and options.
Rounding of figures
All figures in these accounts have been
rounded. Consequently the sum of
individual figures can deviate from the
presented sum figure. Key figures have
been calculated using exact figures.
FAS
IFRS-effects
IFRS
Net sales
10
174.5
-1.0
Other operating income and expenses
1, 4, 6–8, 12 -154.5
0.8
Operating profit
20.0
-0.2
2, 3, 7, 10
-6.1
2.2
Profit before taxes
13.9
2.1
Extraordinary expenses
12
-1.4
1.4
Income taxes
5
-3.7
-0.2
8.8
3.3
173.5
-153.7
19.9
-3.8
16.0
0.0
-3.9
12.1
Attributable to
Equity holders of company
8.7
3.3
Minority interest
0.1
0.0
KEY FIGURES (2004)
12.0
0.1
FASIFRS
Basic earnings per share, EUR
0.27
0.27
Return on equity, %
18.5
Return on capital employed, %
14.5
Dividends
The dividend proposed by the Board of
Directors is not deducted from distributable equity until approved by the Annual
General Meeting of Shareholders.
Footnote
0.32
0.32
21.3
14.1
EFFECTS OF IFRS ON BALANCE SHEET (Jan 1, 2004)
RECONCILIATION OF NET PROFIT (2004)
EUR million
Footnote
EUR million
2004
Net profit for the period before minority
interest according to FAS
8.8
Goodwill amortizations
1
3.6
Financial instruments
2
-0.6
Foreign exchange rates
3
2.0
Stock options
4
-1.4
Deferred taxes
5
-0.2
Other IFRS adjustments
13
-0.1
Total IFRS adjustments
3.3
Profit for the period according to IFRS
12.1
Footnote
Jan 1
Dec 31
32
IFRS-effects
IFRS
Fixed assets
7, 10
66.7
1.2
Inventories
6
58.8
0.5
Receivables and other current assets
2, 3, 5
37.9
0.3
8.1
0.0
Total assets
171.5
2.0
Equity
53.8
-0.6
Minority interest
0.5
0.0
Long-term debt
7, 8
21.1
2.3
Short-term debt
5
96.1
0.3
Total equity and liabilities
171.5
2.0
67.9
59.3
38.2
8.1
173.5
EUR million
Equity according to FAS
53.8
55.8
Goodwill amortizations 1
0.0
3.6
2
0.5
-0.1
3
-2.0
0.0
Stock options 4
0.0
-0.1
Inventories
6
0.5
0.6
Leases
7
-0.1
-0.2
Employee benefits
8
-0.6
-0.7
Deferred taxes
5
1.5
1.1
Minority interest
9
0.5
0.6
Goodwill impairment
10
-0.4
-0.4
Accrual
11
0.0
-0.4
-0.1
4.0
Equity according to IFRS
53.7
59.8
FAS
53.2
0.5
23.3
96.4
173.5
EFFECTS OF IFRS ON BALANCE SHEET (Dec 31, 2004)
RECONCILIATION OF EQUITY (2004)
EUR million
Footnote
33
Footnote
FAS
IFRS-effects
IFRS
Fixed assets
1, 7, 10
64.8
4.7
Inventories
6
62.4
0.6
5, 11
39.3
0.6
14.8
0.0
Total assets
181.3
5.9
Equity
55.8
3.5
Minority interest
0.6
0.0
Long-term debt
7, 8
28.7
2.4
Short-term debt
2, 4, 5, 11
96.1
0.1
181.3
5.9
69.5
63.0
39.9
14.8
187.2
59.2
0.6
31.1
96.3
187.2
KEY FIGURES (Dec 31, 2004)
FASIFRS
Equity ratio, %
Debt-to-equity ratio, %
1.49
31.1
142.7
1.58
32.0
136.6
The Group has two separate share-based
payment programs. These options are
valued at fair value per grant date using
Black-Scholes-Merton option-pricing
model and recognized as personnel
expense in the income statement with a
corresponding increase to equity. Grant
date is the date at which the entity and
another party agree to a share-based payment arrangement, being when the entity
and the counter party have a shared
understanding of the terms and conditions of the arrangement. Fair value of
the options is expensed over the vesting period. Vesting period is the period
during which all the specified vesting
conditions of a share-based payment
arrangement are to be satisfied. When
the options are exercised, the proceeds
received, net of any transaction costs, are
credited to share capital (nominal value)
and share premium.
2. Adoption of IFRS
Rapala converted from Finnish Accounting
Standards (FAS) to International Financial
Reporting Standards (IFRS) before its
first-quarter interim report in 2005.
The application of IFRS was published
on May 10, 2005. The information was
unaudited and some adjustments have
been made thereafter. Rapala applies
IFRS as of January 1, 2005.
The Group’s date of transition to
IFRS accounting standards is January 1,
2004. In accordance with IFRS 1 (Firsttime Adoption of IFRS), the first financial
statements under IFRS are prepared under
the IFRS rules being in force as of December 31, 2005. The Group has adopted
IFRS 1 and used the exemptions from the
requirements of IAS 19 (Employee Benefits), IFRS 3 (Business Combinations)
and IFRS 2 (Share-based Payment).
The most significant changes to FAS
based financial information relate to the
treatment of goodwill, recording financial leases in the balance sheet, expensing
the costs of the Group’s stock option
program at fair value, and reversal of
capitalized foreign exchange differences
on long-term loans. The reconciliation of
extraordinary items to operating income
and expenses has changed the structure
of the income statement but not the
equity and net profit for the period.
There is no material differences between
the cash flow statement prepared under
IFRS and the cash flow statement presented under FAS.
The following section presents the
main effects of the changes in accounting
principles and effects of the transition to
IFRS on the Group’s opening balance
sheet for January 1, 2004 and consolidated financial statements for 2004
EFFECTS OF IFRS ON INCOME STATEMENT (2004)
EUR million
Earnings per share
Earnings per share is calculated by dividing the net profit attributable to the
shareholders of the Company by the
weighted average number of shares in
issue during the year, excluding shares
purchased by the Group and held as
treasury shares, if any.
Diluted earnings per share
amounts have been calculated as if
the stock options were exercised at the
beginning of the period. In addition to
the weighted average number of shares
outstanding, the denominator includes
the incremental shares obtained
through the assumed exercise of the
options. The assumption of exercise is
not reflected in earnings per share when
the exercise price of the options exceeds
the average market price of the shares
during the period. The options have a
diluting effect only when the average
market price of the share during the
period exceeds the exercise price of the
warrants and options.
Rounding of figures
All figures in these accounts have been
rounded. Consequently the sum of
individual figures can deviate from the
presented sum figure. Key figures have
been calculated using exact figures.
FAS
IFRS-effects
IFRS
Net sales
10
174.5
-1.0
Other operating income and expenses
1, 4, 6–8, 12 -154.5
0.8
Operating profit
20.0
-0.2
2, 3, 7, 10
-6.1
2.2
Profit before taxes
13.9
2.1
Extraordinary expenses
12
-1.4
1.4
Income taxes
5
-3.7
-0.2
8.8
3.3
173.5
-153.7
19.9
-3.8
16.0
0.0
-3.9
12.1
Attributable to
Equity holders of company
8.7
3.3
Minority interest
0.1
0.0
KEY FIGURES (2004)
12.0
0.1
FASIFRS
Basic earnings per share, EUR
0.27
0.27
Return on equity, %
18.5
Return on capital employed, %
14.5
Dividends
The dividend proposed by the Board of
Directors is not deducted from distributable equity until approved by the Annual
General Meeting of Shareholders.
Footnote
0.32
0.32
21.3
14.1
EFFECTS OF IFRS ON BALANCE SHEET (Jan 1, 2004)
RECONCILIATION OF NET PROFIT (2004)
EUR million
Footnote
EUR million
2004
Net profit for the period before minority
interest according to FAS
8.8
Goodwill amortizations
1
3.6
2
-0.6
3
2.0
Stock options
4
-1.4
Deferred taxes
5
-0.2
Other IFRS adjustments
13
-0.1
3.3
Profit for the period according to IFRS
12.1
Footnote
Jan 1
Dec 31
32
IFRS-effects
IFRS
Fixed assets
7, 10
66.7
1.2
Inventories
6
58.8
0.5
2, 3, 5
37.9
0.3
8.1
0.0
Total assets
171.5
2.0
Equity
53.8
-0.6
Minority interest
0.5
0.0
Long-term debt
7, 8
21.1
2.3
Short-term debt
5
96.1
0.3
171.5
2.0
67.9
59.3
38.2
8.1
173.5
EUR million
Equity according to FAS
53.8
55.8
Goodwill amortizations 1
0.0
3.6
2
0.5
-0.1
3
-2.0
0.0
Stock options 4
0.0
-0.1
Inventories
6
0.5
0.6
Leases
7
-0.1
-0.2
Employee benefits
8
-0.6
-0.7
Deferred taxes
5
1.5
1.1
Minority interest
9
0.5
0.6
Goodwill impairment
10
-0.4
-0.4
Accrual
11
0.0
-0.4
-0.1
4.0
Equity according to IFRS
53.7
59.8
FAS
53.2
0.5
23.3
96.4
173.5
EFFECTS OF IFRS ON BALANCE SHEET (Dec 31, 2004)
RECONCILIATION OF EQUITY (2004)
EUR million
Footnote
33
Footnote
FAS
IFRS-effects
IFRS
Fixed assets
1, 7, 10
64.8
4.7
Inventories
6
62.4
0.6
5, 11
39.3
0.6
14.8
0.0
Total assets
181.3
5.9
Equity
55.8
3.5
Minority interest
0.6
0.0
Long-term debt
7, 8
28.7
2.4
Short-term debt
2, 4, 5, 11
96.1
0.1
181.3
5.9
69.5
63.0
39.9
14.8
187.2
59.2
0.6
31.1
96.3
187.2
KEY FIGURES (Dec 31, 2004)
FASIFRS
Equity ratio, %
Debt-to-equity ratio, %
1.49
31.1
142.7
1.58
32.0
136.6
3. SEGMENT INFORMATION
Footnotes
1.According to IFRS, goodwill is not amortized but impairment tested. Goodwill was tested for
impairment according to IAS 36, and one minor impairment loss was recognized.
2.Based on IAS 32 and 39, all derivatives are measured at fair value and changes recorded in the income
statement. Derivatives related to off-balance sheet items are recorded in financial items.
The Group is lead as a whole and not
organized or managed in segments. For
IFRS purposes, segments have though
been established for financial reporting
in accordance with IAS 14.
Geographical segments (by unit
location) provide products or services
within a particular economic environment that is subject to risks and returns
3.Foreign exchange rate differences (capitalized according to FAS) are recorded in the income
statement based on the rate at the end of the period in accordance with IAS 21.
that are different from those of segments in other economic environments.
B usiness segments provide products
or services that are subject to risks and
returns that are different from those of
other business segments.
Rapala’s primary reporting segments are geographical segments,
namely Europe, North America and
Rest of the World. Secondary reporting
segments are based on product lines,
which are Lures, Fishing Hooks, Fishing
Accessories and Other Products and
Distribution. Other Products and Distribution consists of non-Group branded
(third party) products for sport fishing,
hunting, outdoor and winter sports
and Group products for winter sports
and some other businesses. Pricing of
inter-segment transactions is based on
market prices.
4.The fair value of the Group’s stock option programs are calculated based on option pricing model
and are expensed during the vesting periods based on IFRS 2.
5. Deferred taxes are recognized for all taxable IFRS adjustments based on IAS 12.
Geographical segments
6.According to IAS 2, a portion of fixed general production costs are added to the purchase price of
raw materials.
2005
EUR million
7.Certain lease agreements have been recorded as financial leases. According to IAS 17, financial lease
agreements are entered in the balance sheet and amortized during the asset’s economic life.
External net sales
66.4
112.6
17.1
0.0
Internal net sales
0.0
22.6
10.8
-33.4
Net sales
66.4
135.2
27.9
-33.4
External net sales by destination
70.2
113.1
12.7
0.0
Operating profit
3.9
16.1
2.2
-0.1
Income taxes
Allocated assets
72.3
126.7
23.4
-19.0
Unallocated assets 1)
Total assets
Allocated liabilities
35.3
22.0
7.5
-31.1
Unallocated liabilities 1)
Total liabilities
-1.0
-2.5
-1.3
0.0
Capital expenditure
13.0
2.4
6.6
0.0
Non-recurring income and expenses
0.0
0.8
0.0
0.0
8.Certain pension arrangements in the Group have been classified as defined benefit plans and
accounted for according to IAS 19.
9.Based on IAS 1, minority interest is included in equity in IFRS balance sheet. Minority interest is not
included in the equity according to FAS.
10.As a result of the impairment test for goodwill at the date of transition, an impairment loss was recognized on goodwill related to Ensambles Deportivos S.A., a Mexican subsidiary. The remaining goodwill
for this business was written off as a result of the decision to close the operations and liquidate the
subsidiary.
11.Some previously reported accruals that do not qualify under IFRS have been reversed. In addition,
some reclassifications have been made between account groups in the income statement and
balance sheet.
12.The reconciliation of extraordinary items to operating income and expenses changed the structure of
the income statement but not the equity and net profit for the period.
13.This summarizes the minor IFRS adjustments related to inventory, lease agreements and defined
benefit plans presented above.
North Rest of the
America
EuropeWorld
EliminationsTotal
34
35
196.1
0.0
196.1
196.1
22.1
-2.9
-4.5
14.7
203.4
25.6
228.9
33.7
117.9
151.6
-4.8
22.0
0.8
3. SEGMENT INFORMATION
Footnotes
1.According to IFRS, goodwill is not amortized but impairment tested. Goodwill was tested for
impairment according to IAS 36, and one minor impairment loss was recognized.
2.Based on IAS 32 and 39, all derivatives are measured at fair value and changes recorded in the income
statement. Derivatives related to off-balance sheet items are recorded in financial items.
The Group is lead as a whole and not
organized or managed in segments. For
IFRS purposes, segments have though
been established for financial reporting
in accordance with IAS 14.
Geographical segments (by unit
location) provide products or services
within a particular economic environment that is subject to risks and returns
3.Foreign exchange rate differences (capitalized according to FAS) are recorded in the income
statement based on the rate at the end of the period in accordance with IAS 21.
that are different from those of segments in other economic environments.
B usiness segments provide products
or services that are subject to risks and
returns that are different from those of
other business segments.
Rapala’s primary reporting segments are geographical segments,
namely Europe, North America and
Rest of the World. Secondary reporting
segments are based on product lines,
which are Lures, Fishing Hooks, Fishing
Accessories and Other Products and
Distribution. Other Products and Distribution consists of non-Group branded
(third party) products for sport fishing,
hunting, outdoor and winter sports
and Group products for winter sports
and some other businesses. Pricing of
inter-segment transactions is based on
market prices.
4.The fair value of the Group’s stock option programs are calculated based on option pricing model
and are expensed during the vesting periods based on IFRS 2.
5. Deferred taxes are recognized for all taxable IFRS adjustments based on IAS 12.
Geographical segments
6.According to IAS 2, a portion of fixed general production costs are added to the purchase price of
raw materials.
2005
EUR million
7.Certain lease agreements have been recorded as financial leases. According to IAS 17, financial lease
agreements are entered in the balance sheet and amortized during the asset’s economic life.
External net sales
66.4
112.6
17.1
0.0
Internal net sales
0.0
22.6
10.8
-33.4
Net sales
66.4
135.2
27.9
-33.4
70.2
113.1
12.7
0.0
Operating profit
3.9
16.1
2.2
-0.1
Income taxes
Allocated assets
72.3
126.7
23.4
-19.0
Total assets
35.3
22.0
7.5
-31.1
Total liabilities
-1.0
-2.5
-1.3
0.0
Capital expenditure
13.0
2.4
6.6
0.0
0.0
0.8
0.0
0.0
8.Certain pension arrangements in the Group have been classified as defined benefit plans and
accounted for according to IAS 19.
9.Based on IAS 1, minority interest is included in equity in IFRS balance sheet. Minority interest is not
included in the equity according to FAS.
10.As a result of the impairment test for goodwill at the date of transition, an impairment loss was recognized on goodwill related to Ensambles Deportivos S.A., a Mexican subsidiary. The remaining goodwill
for this business was written off as a result of the decision to close the operations and liquidate the
subsidiary.
11.Some previously reported accruals that do not qualify under IFRS have been reversed. In addition,
some reclassifications have been made between account groups in the income statement and
balance sheet.
12.The reconciliation of extraordinary items to operating income and expenses changed the structure of
the income statement but not the equity and net profit for the period.
13.This summarizes the minor IFRS adjustments related to inventory, lease agreements and defined
benefit plans presented above.
North Rest of the
America
EuropeWorld
EliminationsTotal
34
35
196.1
0.0
196.1
196.1
22.1
-2.9
-4.5
14.7
203.4
25.6
228.9
33.7
117.9
151.6
-4.8
22.0
0.8
2004
EUR million
4. Acquisitions
North Rest of the
America
EuropeWorld
EliminationsTotal
External net sales
61.8
101.2
10.5
0.0
Internal net sales
0.1
24.1
9.3
-33.5
Net sales
61.9
125.3
19.8
-33.5
59.1
106.7
7.8
0.0
Operating profit
2.4
17.6
2.6
-2.7
Income taxes
Allocated assets
61.0
147.7
15.3
-54.4
Total assets
77.0
29.9
2.4
-80.5
Total liabilities
-0.9
-3.3
-1.1
0.3
Capital expenditure
1.3
3.2
4.7
0.0
Non-recurring income and expenses -1.4
0.0
0.0
0.0
Acquisitions in 2004
173.5
0.0
173.5
In 2004, the Group closed the acquisition of the business of Guigo Marine
in France. This secured the Group
the services of Constant and Philippe
Guigo, two world-renowned big game
fishermen. The Group also acquired the
Williamson Lures, an internationally
recognized saltwater lure brand from
South Africa. The combined Guigo and
Williamson team, including the former
Managing Director of Williamson Lures,
Andrew Jones, are instrumental in developing a range of saltwater and big game
lures and accessories for the Group.
These acquisitions had only an
immaterial effect on the Group net sales
and net profit for 2004. An accurate
financial effect of these acquisitions is
impossible to record since they where
merged to other ongoing operations in
the Group and have not been followed
up separately.
173.5
19.9
-3.8
-3.9
12.1
169.7
17.5
187.2
28.8
98.6
127.4
-5.0
9.2
-1.4
Business segments
2005
EUR million
Lures
Fishing
Hooks
Fishing
Accessories
Other Products
and Distribution
EliminationsTotal
Net sales
67.7
17.4
37.7
77.8
-4.6
196.1
Allocated assets
115.4
10.0
58.6
45.5
-0.7
228.9
Capital expenditure
8.3
1.0
3.9
8.8
0.0
22.0
2004
Fishing
Fishing
Other Products
EUR million
Lures
Hooks
Accessories
and Distribution
EliminationsTotal
Net sales
56.2
17.8
30.9
73.9
-5.2
Allocated assets
97.4
7.9
40.7
41.9
-0.7
Capital expenditure
5.6
0.3
0.8
2.5
0.0
The business and assets of FunFish, a
Swiss reseller and retailer of fishing
tackle products, was acquired in May.
FunFish will strengthen the Group’s
already existing distribution operations
and give access to department store sales
channel in Switzerland.
In July, the Group strengthened
its access and presence in Oceania by
acquiring 100% of the shares of Free-
EUR million
173.5
187.2
9.2
36
Lauri Marttiini, his son Ilkka Marttiini
and Ilkka Marttiini’s family members.
The deal includes the Finnish knife
factory in Rovaniemi, the knife sheaths
factory in Estonia and the 49% share
in the Chinese knife joint-venture with
Rapala. The consideration of the deal
comprises of cash and newly issued
shares of Rapala.
Also in November, the Group
closed the acquisition of 61% of the
shares of the Finnish ski manufacturer
Peltonen Ski Oy. Rapala already owned
the brand and 19% of Peltonen Ski
before the acquisition.
These acquisitions contributed
EUR 6 million to the 2005 net sales
and EUR 0.3 million to the net profit
of the Group. If the acquisitions would
have taken place at the beginning of
the year, they would have contributed
EUR 18 million to the 2005 net sales and
EUR 0.3 million to the net profit of the
Group.
In January 2006, Rapala acquired
the French fishing line supplier Tortue.
In the beginning of February 2006,
Rapala VMC South-Africa Distributors Pty Ltd (“Rapala South-Africa”)
acquired 100% of the shares of Tatlow
and Pledger Pty Ltd (“T&P”). Rapala’s
ownership of Rapala South-Africa is now
70% while the former managers of T&P,
Grant and Mark Pledger, together own
30%. T&P is the leading fishing tackle
distributor in South Africa with exports
to several other African countries.
2005
2004
Cash and cash equivalents and interest-bearing assets
0.2
0.0
Working capital
6.6
0.0
Intangible assets
4.8
1.7
Tangible assets
3.1
0.3
Deferred tax asset
0.1
0.0
Interest-bearing liabilities
-1.1
0.0
Deferred tax liability
-1.3
0.0
Minority interest
0.6
0.0
Fair value of acquired net assets
12.9
2.0
Shares issued
0.9
0.0
Cash paid
10.1
2.8
To be paid 2006 or later
3.9
0.0
Cost associated with the acquisitions
0.5
0.0
Total purchase consideration
15.4
2.8
Negative goodwill
-0.8
0.0
Goodwill
3.3
0.8
Net
2.5
0.8
Cash paid
10.6
2.8
Cash and cash equivalents acquired
-0.2
0.0
Net cash flow
10.4
2.8
1) U
nallocated assets and liabilities include interest-bearing assets and liabilities, and deferred tax assets and
liabilities.
time Pty Ltd, a major Australian fishing
tackle distributor.
In August, the Group purchased
the remaining 33% minority stake of
Rapala’s Danish distribution company.
A Hungarian distribution company
Rapala Eurohold Ltd (“Rapala Eurohold”) was established together with
the former management of Eurohold
Trade Ltd (“Eurohold”), Mr Agh Senior
and Mr Agh Junior. Rapala Eurohold
acquired the fishing tackle distribution
and retail business of Eurohold in the
beginning of October 2005. Rapala’s
ownership of Rapala Eurohold is 70%
and Mr Agh Senior and Mr Agh Junior
together own 30%.
In mid-October 2005 the Group
closed the acquisition of lure and other
(Oregon, USA) based manufacturer
of fishing lures and accessories. Luhr
Jensen manufactures a wide range of
lures for freshwater and saltwater species.
The production of Luhr Jensen products
will be transferred to the Rapala factories, primarily Rapala’s factory located
in China, during a 12-month transition
period. The consideration of the deal
shares of Rapala. The part of payment
that will be made in shares will take
place after one year.
In November, the Group closed
the acquisition of Finnish knife manufacturer Marttiini Oy (100%) from
37
2004
EUR million
4. Acquisitions
North Rest of the
America
EuropeWorld
EliminationsTotal
External net sales
61.8
101.2
10.5
0.0
Internal net sales
0.1
24.1
9.3
-33.5
Net sales
61.9
125.3
19.8
-33.5
59.1
106.7
7.8
0.0
Operating profit
2.4
17.6
2.6
-2.7
Income taxes
Allocated assets
61.0
147.7
15.3
-54.4
Total assets
77.0
29.9
2.4
-80.5
Total liabilities
-0.9
-3.3
-1.1
0.3
Capital expenditure
1.3
3.2
4.7
0.0
Non-recurring income and expenses -1.4
0.0
0.0
0.0
173.5
0.0
173.5
In 2004, the Group closed the acquisition of the business of Guigo Marine
in France. This secured the Group
the services of Constant and Philippe
Guigo, two world-renowned big game
fishermen. The Group also acquired the
Williamson Lures, an internationally
recognized saltwater lure brand from
South Africa. The combined Guigo and
Williamson team, including the former
Managing Director of Williamson Lures,
Andrew Jones, are instrumental in developing a range of saltwater and big game
lures and accessories for the Group.
These acquisitions had only an
immaterial effect on the Group net sales
and net profit for 2004. An accurate
financial effect of these acquisitions is
impossible to record since they where
merged to other ongoing operations in
the Group and have not been followed
up separately.
173.5
19.9
-3.8
-3.9
12.1
169.7
17.5
187.2
28.8
98.6
127.4
-5.0
9.2
-1.4
Business segments
2005
EUR million
Lures
Fishing
Hooks
Fishing
Accessories
Other Products
and Distribution
EliminationsTotal
Net sales
67.7
17.4
37.7
77.8
-4.6
196.1
Allocated assets
115.4
10.0
58.6
45.5
-0.7
228.9
Capital expenditure
8.3
1.0
3.9
8.8
0.0
22.0
2004
Fishing
Fishing
Other Products
EUR million
Lures
Hooks
Accessories
and Distribution
EliminationsTotal
Net sales
56.2
17.8
30.9
73.9
-5.2
Allocated assets
97.4
7.9
40.7
41.9
-0.7
Capital expenditure
5.6
0.3
0.8
2.5
0.0
The business and assets of FunFish, a
Swiss reseller and retailer of fishing
tackle products, was acquired in May.
FunFish will strengthen the Group’s
already existing distribution operations
and give access to department store sales
channel in Switzerland.
In July, the Group strengthened
its access and presence in Oceania by
acquiring 100% of the shares of Free-
EUR million
173.5
187.2
9.2
36
Lauri Marttiini, his son Ilkka Marttiini
and Ilkka Marttiini’s family members.
The deal includes the Finnish knife
factory in Rovaniemi, the knife sheaths
factory in Estonia and the 49% share
in the Chinese knife joint-venture with
Rapala. The consideration of the deal
shares of Rapala.
Also in November, the Group
closed the acquisition of 61% of the
shares of the Finnish ski manufacturer
Peltonen Ski Oy. Rapala already owned
the brand and 19% of Peltonen Ski
before the acquisition.
These acquisitions contributed
EUR 6 million to the 2005 net sales
and EUR 0.3 million to the net profit
of the Group. If the acquisitions would
have taken place at the beginning of
the year, they would have contributed
EUR 18 million to the 2005 net sales and
EUR 0.3 million to the net profit of the
Group.
In January 2006, Rapala acquired
the French fishing line supplier Tortue.
In the beginning of February 2006,
Rapala VMC South-Africa Distributors Pty Ltd (“Rapala South-Africa”)
acquired 100% of the shares of Tatlow
and Pledger Pty Ltd (“T&P”). Rapala’s
ownership of Rapala South-Africa is now
70% while the former managers of T&P,
Grant and Mark Pledger, together own
30%. T&P is the leading fishing tackle
distributor in South Africa with exports
to several other African countries.
2005
2004
Cash and cash equivalents and interest-bearing assets
0.2
0.0
Working capital
6.6
0.0
Intangible assets
4.8
1.7
Tangible assets
3.1
0.3
Deferred tax asset
0.1
0.0
Interest-bearing liabilities
-1.1
0.0
Deferred tax liability
-1.3
0.0
Minority interest
0.6
0.0
Fair value of acquired net assets
12.9
2.0
Shares issued
0.9
0.0
Cash paid
10.1
2.8
To be paid 2006 or later
3.9
0.0
Cost associated with the acquisitions
0.5
0.0
Total purchase consideration
15.4
2.8
Negative goodwill
-0.8
0.0
Goodwill
3.3
0.8
Net
2.5
0.8
Cash paid
10.6
2.8
Cash and cash equivalents acquired
-0.2
0.0
Net cash flow
10.4
2.8
1) U
nallocated assets and liabilities include interest-bearing assets and liabilities, and deferred tax assets and
liabilities.
time Pty Ltd, a major Australian fishing
tackle distributor.
In August, the Group purchased
the remaining 33% minority stake of
Rapala’s Danish distribution company.
A Hungarian distribution company
Rapala Eurohold Ltd (“Rapala Eurohold”) was established together with
the former management of Eurohold
Trade Ltd (“Eurohold”), Mr Agh Senior
and Mr Agh Junior. Rapala Eurohold
acquired the fishing tackle distribution
and retail business of Eurohold in the
beginning of October 2005. Rapala’s
ownership of Rapala Eurohold is 70%
and Mr Agh Senior and Mr Agh Junior
together own 30%.
In mid-October 2005 the Group
closed the acquisition of lure and other
(Oregon, USA) based manufacturer
of fishing lures and accessories. Luhr
Jensen manufactures a wide range of
lures for freshwater and saltwater species.
The production of Luhr Jensen products
will be transferred to the Rapala factories, primarily Rapala’s factory located
in China, during a 12-month transition
period. The consideration of the deal
shares of Rapala. The part of payment
that will be made in shares will take
place after one year.
In November, the Group closed
the acquisition of Finnish knife manufacturer Marttiini Oy (100%) from
37
8. EMPLOYEE BENEFIT EXPENSES
5. Other operating income
Other operating income, EUR 0.8 million (2004: 0.8 EUR
million) is a combination of several smaller income items,
of which none is individually significant.
6. OTHER OPERATING EXPENSES
EUR million
2005
2004
Rents paid
Selling expenses
Sales commissions
Freight
Doubtful debts
Research and development expenses
Losses on disposals of
intangible and tangible assets
Other expenses
Total
-2.9
-10.7
-3.5
-4.1
-0.4
-0.7
-2.5
-10.1
-3.0
-3.5
-0.4
-0.6
0.0
-18.4
-40.9
-1.4
-15.8
-37.3
Auditors fees and services
EUR million
2005
Audit fees
0.4
Audit-related fees
0.1
Fees for tax services
0.2
Total
0.7
included in operating profit
EUR million
Excess of Group’s interest in the net fair
value of acquired net assets over cost
Total
2005
2004
0.0
-1.4
0.8
0.8
0.0
-1.4
7. USE OF MATERIALS AND SUPPLIES
Wages and salaries
-36.2
Pension costs - defined contribution plans -2.9
Pension costs - defined benefit plans
-0.1
Expense on share-based option programs -1.5
Other personnel expenses
-6.2
Total
-47.0
2005
2004
Purchases during the financial year
Change in inventory
External services
Total
-82.4
2.6
-2.1
-81.9
-76.4
1.3
-1.6
-76.7
2004
EUR million
-32.5
-2.0
-0.1
-1.4
-6.2
-42.2
Foreign exchange gains and losses
Derivatives
Other
Persons
2005
2004
North-America
Europe
Rest of the World
Total
216
1 157
2 407
3 780
122
991
1 954
3 067
2004
0.0
1.3
-0.6
-0.3
Interest and other financial income
Interest income
Other financial income
0.5
0.2
0.3
0.2
Interest and other finacial expenses
Interest expense
Finance leases
Other financial expenses
-4.2
-0.1
-0.5
-2.9
-0.1
-0.4
-2.9
-3.8
Compensation of the top management
EUR million
Wages, salaries and other
short-term employee benefits
Benefits after termination of employment
Equity-related benefits
Total
2005
2004
-0.9
0.0
-0.5
-1.4
-1.0
0.0
-0.5
-1.4
Top management consists of members of the Board
of Directors, CEO and other members of the Executive
Committee.
The option scheme principles are the same for top
management as for other employees. For more details on
top management’s options, see page 46. For more details
on the option programs, see page 58 and 59.
Pension arrangements have been made, on a
defined contribution basis, for some members of the
top management. The arrangements will enable them
to retire at the age of 55 years at the earliest.
Translation differences recognized
in the income statement
EUR million
recognized in net sales
Translation differences included
in purchases and other expenses
Foreign exchange gains
and losses in financial income
and expenses
Total
2004
2.4
-1.0
0.0
0.2
1.3
3.6
-0.8
-1.7
11. INCOME TAXES
Income taxes in the income statement
EUR million
2005
2005
2004
-0.3
-0.1
-0.4
-0.1
0.8
0.0
Depreciation of tangible assets
Buildings
-1.0
-3.4
-0.8
-1.0
-2.9
-0.6
Total
-4.8
-5.0
Deferred tax
Change in deferred taxes
Income taxes at Finnish corporate
tax rate (2005: 26%, 2004: 29%)
Effect of different tax rates
in foreign subsidiaries
Non-deductible expenses
and tax exempt income
Losses for which no deferred
tax benefit is recognized
Taxes for prior years
Changes in the carrying amounts
of deferred tax assets from prior years
Impact of the changes in the tax rates
on deferred tax balances
Effect of consolidation and eliminations
Other items
2005
2004
-5.0
-4.6
0.9
0.6
0.1
0.8
0.1
-0.2
0.5
-0.2
-1.0
0.0
0.0
0.7
-0.2
-4.5
0.1
-0.2
-1.0
-3.9
Deferred taxes in the balance sheet
2005
Current income tax
Income taxes for the current year
-5.4
Taxes from previous financial years
-0.2
9. DEPRECIATION AND IMPAIRMENTS
Depreciation of intangible assets
Intangible assets
Excess of Group’s interest in the
net fair value of acquired net assets
over cost
Total
Income tax reconciliation
EUR million
2005
Average personnel
EUR million
EUR million
2005
EUR million
10. FINANCIAL INCOME AND EXPENSES
2005
EUR million
Tax losses carried foward
1.0
0.6
Provisions
0.2
0.1
Pension obligations
0.2
0.2
3.5
2.9
Other temporary differences
0.6
0.8
Total deferred tax assets
5.4
4.6
Depreciation difference
and other untaxed reserves
0.6
1.4
Fair value adjustments for acquired assets 1.1
0.0
0.3
0.1
2.0
1.5
Net deferred tax asset
3.4
3.1
Gross movement of deferred taxes
2004
EUR million
-4.4
-0.2
1.1
0.7
Total
-4.5
-3.9
Deferred taxes on Jan 1.
Income statement
Acquisitions (see note 4)
Net deferred tax asset Dec 31.
2005
2004
3.1
1.1
-1.2
0.4
3.4
2.4
0.7
0.0
0.0
3.1
No deferred taxes have been recognized in equity.
At December 31, 2005 the Group had tax losses
carried forward of EUR 4.4 million (2004: EUR 2.0 million),
for which deferred tax assets have not been recognized in
the consolidated financial statements because the realization of the tax benefit is not probable. EUR 2.9 million of
these tax losses will expire in years 2006 through 2011.
Deferred tax liability on undistributed earnings of
subsidiaries has not been recognized in the consolidated
balance sheet because distribution of the earnings is in
the control of the Group and such distribution is not probable within the foreseeable future.
38
39
2004
8. EMPLOYEE BENEFIT EXPENSES
5. Other operating income
Other operating income, EUR 0.8 million (2004: 0.8 EUR
EUR million
2005
2004
Rents paid
Selling expenses
Sales commissions
Freight
Doubtful debts
Other expenses
Total
-2.9
-10.7
-3.5
-4.1
-0.4
-0.7
-2.5
-10.1
-3.0
-3.5
-0.4
-0.6
0.0
-18.4
-40.9
-1.4
-15.8
-37.3
Auditors fees and services
EUR million
2005
Audit fees
0.4
Audit-related fees
0.1
Fees for tax services
0.2
Total
0.7
included in operating profit
EUR million
Excess of Group’s interest in the net fair
value of acquired net assets over cost
Total
2005
2004
0.0
-1.4
0.8
0.8
0.0
-1.4
7. USE OF MATERIALS AND SUPPLIES
Wages and salaries
-36.2
Pension costs - defined contribution plans -2.9
Pension costs - defined benefit plans
-0.1
Expense on share-based option programs -1.5
-6.2
Total
-47.0
2005
2004
Change in inventory
External services
Total
-82.4
2.6
-2.1
-81.9
-76.4
1.3
-1.6
-76.7
2004
EUR million
-32.5
-2.0
-0.1
-1.4
-6.2
-42.2
Derivatives
Other
Persons
2005
2004
North-America
Europe
Rest of the World
Total
216
1 157
2 407
3 780
122
991
1 954
3 067
2004
0.0
1.3
-0.6
-0.3
Interest income
Other financial income
0.5
0.2
0.3
0.2
Interest expense
Finance leases
-4.2
-0.1
-0.5
-2.9
-0.1
-0.4
-2.9
-3.8
Compensation of the top management
EUR million
Wages, salaries and other
short-term employee benefits
Benefits after termination of employment
Equity-related benefits
Total
2005
2004
-0.9
0.0
-0.5
-1.4
-1.0
0.0
-0.5
-1.4
Top management consists of members of the Board
of Directors, CEO and other members of the Executive
Committee.
The option scheme principles are the same for top
management as for other employees. For more details on
top management’s options, see page 46. For more details
on the option programs, see page 58 and 59.
top management. The arrangements will enable them
EUR million
recognized in net sales
Foreign exchange gains
and losses in financial income
and expenses
Total
2004
2.4
-1.0
0.0
0.2
1.3
3.6
-0.8
-1.7
11. INCOME TAXES
EUR million
2005
2005
2004
-0.3
-0.1
-0.4
-0.1
0.8
0.0
Buildings
-1.0
-3.4
-0.8
-1.0
-2.9
-0.6
Total
-4.8
-5.0
Deferred tax
Change in deferred taxes
Income taxes at Finnish corporate
tax rate (2005: 26%, 2004: 29%)
Effect of different tax rates
in foreign subsidiaries
Non-deductible expenses
and tax exempt income
Losses for which no deferred
tax benefit is recognized
Taxes for prior years
Changes in the carrying amounts
of deferred tax assets from prior years
Impact of the changes in the tax rates
on deferred tax balances
Other items
2005
2004
-5.0
-4.6
0.9
0.6
0.1
0.8
0.1
-0.2
0.5
-0.2
-1.0
0.0
0.0
0.7
-0.2
-4.5
0.1
-0.2
-1.0
-3.9
Deferred taxes in the balance sheet
2005
Current income tax
-5.4
-0.2
9. DEPRECIATION AND IMPAIRMENTS
Intangible assets
Excess of Group’s interest in the
net fair value of acquired net assets
over cost
Total
Income tax reconciliation
EUR million
2005
Average personnel
EUR million
EUR million
2005
EUR million
2005
EUR million
Tax losses carried foward
1.0
0.6
Provisions
0.2
0.1
Pension obligations
0.2
0.2
3.5
2.9
0.6
0.8
Total deferred tax assets
5.4
4.6
Depreciation difference
and other untaxed reserves
0.6
1.4
Fair value adjustments for acquired assets 1.1
0.0
0.3
0.1
2.0
1.5
Net deferred tax asset
3.4
3.1
Gross movement of deferred taxes
2004
EUR million
-4.4
-0.2
1.1
0.7
Total
-4.5
-3.9
Deferred taxes on Jan 1.
Income statement
Net deferred tax asset Dec 31.
2005
2004
3.1
1.1
-1.2
0.4
3.4
2.4
0.7
0.0
0.0
3.1
No deferred taxes have been recognized in equity.
At December 31, 2005 the Group had tax losses
carried forward of EUR 4.4 million (2004: EUR 2.0 million),
for which deferred tax assets have not been recognized in
the consolidated financial statements because the realization of the tax benefit is not probable. EUR 2.9 million of
these tax losses will expire in years 2006 through 2011.
Deferred tax liability on undistributed earnings of
subsidiaries has not been recognized in the consolidated
balance sheet because distribution of the earnings is in
the control of the Group and such distribution is not probable within the foreseeable future.
38
39
2004
12. TANGIBLE ASSETS
EUR Million
2005
Assets leased by finance
lease agreements
2004
Land
Book value Jan. 1
1.9
Additions
0.1
Disposals
-0.1
0.2
Book value Dec. 31
2.0
Acquisition cost Dec. 31
2.0
1.9
0.0
-0.1
0.0
1.9
1.9
Buildings
Book value Jan. 1
Additions
Disposals
Depreciation during the financial year
Book value Dec. 31
Accumulated depreciation Dec. 31
9.4
1.4
0.4
-0.2
-1.0
0.5
10.5
-7.9
18.4
9.0
1.8
0.0
0.0
-1.0
-0.4
9.4
-7.2
16.6
10.2
3.4
0.3
-0.2
-2.9
-0.2
10.6
-24.2
34.8
Book value Jan. 1
2.9
Additions
1.6
0.1
Disposals
-0.8
Depreciation during the financial year -0.8
0.3
Book value Dec. 31
3.3
-3.2
6.5
3.0
1.6
0.0
-1.2
-0.6
0.1
2.9
-2.0
4.9
Advance payments and
construction in progress
Book value Jan. 1
0.1
Additions
0.2
Disposals
0.0
0.0
Book value Dec. 31
0.3
0.3
Total tangible assets
29.8
2005
2004
1.5
-0.1
0.0
1.4
-0.4
1.8
1.6
-0.1
0.0
1.5
-0.1
1.6
Book value Jan. 1
Book value Dec. 31
13. INTANGIBLE ASSETS
Book value Jan. 1
10.6
Additions
3.0
2.6
Disposals
-0.1
1.0
Book value Dec. 31
13.6
-29.2
42.9
EUR Million
0.2
0.0
-0.1
0.0
0.1
0.1
24.8
2005
2004
Book value Jan. 1
41.3
3.3
2.9
Book value Dec. 31
47.5
-50.2
97.8
41.7
0.8
-1.2
41.3
-50.0
91.3
EUR million
Impairment testing of goodwill
The Group is led as a whole and not organized nor managed
in segments. Most of the units are also strongly interlinked
i.e. some units do not have a sales or a production organization or some other functions or operations needed to
operate on a stand-alone basis. Therefore, in most cases
the lowest cash-generating unit (CGU) is the Group. As a
consequence, goodwill is tested on the Group level.
The recoverable amount of the CGU is determined
based on value-in-use calculations. These calculations are
based on the cash flow projections in the long-term plans.
The estimated sales and production volumes are derived
from the utilization of existing property, plant and equipment. The most important assumptions are the production
volumes and gross margins. Discount rate is the weighted
average pre-tax cost of capital (WACC), which was 7% in
2005. As a result of the performed impairment tests, no
impairment losses have been recognized in 2005 or in 2004.
Goodwill
Book value Jan. 1
2.8
Additions
0.1
4.7
Disposals
0.0
Reclassifications
0.0
-0.3
0.3
Book value Dec. 31
7.6
-2.5
10.2
1.5
0.0
1.7
0.0
0.0
-0.4
0.0
2.8
-1.5
4.3
Book value Jan. 1
0.3
Additions
0.4
0.1
Disposals
0.0
-0.1
0.0
Book value Dec. 31
0.6
-1.2
1.8
Total intangible assets
55.8
0.3
0.1
0.0
0.0
-0.1
0.0
0.3
-1.0
1.3
14. AVAILABLE-FOR-SALE INVESTMENTS
EUR million
40
2004
0.2
0.4
0.6
0.1
0.2
0.2
Book value Jan. 1
Additions
Book value Dec. 31
Available-for-sale investments, comprising principally
of unlisted securities, are valued at fair value. Principal
available-for-sale investments comprise of Kanavagolf
Vääksy Oy, Asikkalan Matkailu Oy, As Oy Tahkon Eagle,
and BRF Morkullan.
2005
2004
0.0
0.4
Non Interest-bearing
Trade receivables
Prepaid expenses and accrued income
Other receivables
Doubtful debts
40.9
2.9
3.4
-1.7
31.3
3.9
1.2
-1.5
Total
45.9
35.4
EUR million
Interest-bearing
Loan receivables
Prepaid expenses and accrued income consists of VAT
and other tax receivables and other accrued income, of
which none is individually significant.
The weighted average interest rate of current
loan receivables at December 31, 2004 was 2.25%. The
weighted average interest rate of non-current loan
receivables at December 31, 2005 was 3.95%.
17. CASH AND CASH EQUIVALENTS
EUR million
2005
2004
Cash at bank and in hand
Short-term bank deposits
Total
18.2
1.0
19.2
14.0
0.8
14.8
Fair value of cash and cash equivalents does not differ
significantly from the carrying value.
15. INVENTORIES
EUR million
2005
2004
Raw material
Work in progress
Finished products
Total
12.5
5.7
54.0
72.2
5.5
2.0
55.4
63.0
In 2005 and 2004 the book value of inventories did not
differ significantly from its net realizable value.
16. RECEIVABLES
44.4
Intangible assets are stated at cost, amortized on a straight
line method over expected useful lives which vary from 3
to 10 years and adjusted for any impairment charges. The
expected useful life for most trademarks is decades and
therefore these intangibles are measured at cost less any
accumulated impairment loss and not amortized. Goodwill
is measured at cost less any accumulated impairment loss,
and not amortized.
2005
Current receivables
Non current receivables
EUR million
Interest-bearing
Loan receivables
Other receivables
41
2005
2004
0.3
0.0
18. SHAREHOLDERS’ EQUITY
2005
2004
Share capital Jan. 1
3.4
Shares subscribed with options
0.1
Share capital Dec. 31
3.5
Reserve fund Jan 1.
11.2
Private offering
3.2
1.9
Reserve fund Dec. 31
16.3
Retained earnings Jan. 1
44.7
Translation difference
0.6
Dividends paid
-3.4
1.4
Other changes
-0.6
14.7
Retained earnings Dec. 31
57.4
3.4
0.0
3.4
EUR million
11.2
0.0
0.0
11.2
38.7
-2.3
-4.5
1.4
-0.6
12.0
44.7
The Company has no fair value reserves or other reserves
beside reserve fund.
0.1
0.1
12. TANGIBLE ASSETS
EUR Million
2005
Assets leased by finance
lease agreements
2004
Land
Book value Jan. 1
1.9
Additions
0.1
Disposals
-0.1
0.2
Book value Dec. 31
2.0
2.0
1.9
0.0
-0.1
0.0
1.9
1.9
Buildings
Book value Jan. 1
Additions
Disposals
Book value Dec. 31
9.4
1.4
0.4
-0.2
-1.0
0.5
10.5
-7.9
18.4
9.0
1.8
0.0
0.0
-1.0
-0.4
9.4
-7.2
16.6
10.2
3.4
0.3
-0.2
-2.9
-0.2
10.6
-24.2
34.8
Book value Jan. 1
2.9
Additions
1.6
0.1
Disposals
-0.8
0.3
Book value Dec. 31
3.3
-3.2
6.5
3.0
1.6
0.0
-1.2
-0.6
0.1
2.9
-2.0
4.9
Advance payments and
construction in progress
Book value Jan. 1
0.1
Additions
0.2
Disposals
0.0
0.0
Book value Dec. 31
0.3
0.3
29.8
2005
2004
1.5
-0.1
0.0
1.4
-0.4
1.8
1.6
-0.1
0.0
1.5
-0.1
1.6
Book value Jan. 1
Book value Dec. 31
Book value Jan. 1
10.6
Additions
3.0
2.6
Disposals
-0.1
1.0
Book value Dec. 31
13.6
-29.2
42.9
EUR Million
0.2
0.0
-0.1
0.0
0.1
0.1
24.8
2005
2004
Book value Jan. 1
41.3
3.3
2.9
Book value Dec. 31
47.5
-50.2
97.8
41.7
0.8
-1.2
41.3
-50.0
91.3
EUR million
Impairment testing of goodwill
The Group is led as a whole and not organized nor managed
in segments. Most of the units are also strongly interlinked
i.e. some units do not have a sales or a production organization or some other functions or operations needed to
operate on a stand-alone basis. Therefore, in most cases
the lowest cash-generating unit (CGU) is the Group. As a
consequence, goodwill is tested on the Group level.
The recoverable amount of the CGU is determined
based on value-in-use calculations. These calculations are
based on the cash flow projections in the long-term plans.
The estimated sales and production volumes are derived
from the utilization of existing property, plant and equipment. The most important assumptions are the production
volumes and gross margins. Discount rate is the weighted
average pre-tax cost of capital (WACC), which was 7% in
2005. As a result of the performed impairment tests, no
impairment losses have been recognized in 2005 or in 2004.
Goodwill
Book value Jan. 1
2.8
Additions
0.1
4.7
Disposals
0.0
Reclassifications
0.0
-0.3
0.3
Book value Dec. 31
7.6
-2.5
10.2
1.5
0.0
1.7
0.0
0.0
-0.4
0.0
2.8
-1.5
4.3
Book value Jan. 1
0.3
Additions
0.4
0.1
Disposals
0.0
-0.1
0.0
Book value Dec. 31
0.6
-1.2
1.8
55.8
0.3
0.1
0.0
0.0
-0.1
0.0
0.3
-1.0
1.3
14. AVAILABLE-FOR-SALE INVESTMENTS
EUR million
40
2004
0.2
0.4
0.6
0.1
0.2
0.2
Book value Jan. 1
Additions
Book value Dec. 31
Available-for-sale investments, comprising principally
of unlisted securities, are valued at fair value. Principal
available-for-sale investments comprise of Kanavagolf
Vääksy Oy, Asikkalan Matkailu Oy, As Oy Tahkon Eagle,
and BRF Morkullan.
2005
2004
0.0
0.4
Trade receivables
Prepaid expenses and accrued income
Other receivables
Doubtful debts
40.9
2.9
3.4
-1.7
31.3
3.9
1.2
-1.5
Total
45.9
35.4
EUR million
Interest-bearing
Loan receivables
Prepaid expenses and accrued income consists of VAT
and other tax receivables and other accrued income, of
The weighted average interest rate of current
loan receivables at December 31, 2004 was 2.25%. The
weighted average interest rate of non-current loan
receivables at December 31, 2005 was 3.95%.
17. CASH AND CASH EQUIVALENTS
EUR million
2005
2004
Cash at bank and in hand
Short-term bank deposits
Total
18.2
1.0
19.2
14.0
0.8
14.8
Fair value of cash and cash equivalents does not differ
significantly from the carrying value.
15. INVENTORIES
EUR million
2005
2004
Raw material
Work in progress
Finished products
Total
12.5
5.7
54.0
72.2
5.5
2.0
55.4
63.0
In 2005 and 2004 the book value of inventories did not
differ significantly from its net realizable value.
16. RECEIVABLES
44.4
Intangible assets are stated at cost, amortized on a straight
line method over expected useful lives which vary from 3
to 10 years and adjusted for any impairment charges. The
expected useful life for most trademarks is decades and
therefore these intangibles are measured at cost less any
accumulated impairment loss and not amortized. Goodwill
is measured at cost less any accumulated impairment loss,
and not amortized.
2005
Current receivables
Non current receivables
EUR million
Interest-bearing
Loan receivables
Other receivables
41
2005
2004
0.3
0.0
2005
2004
3.4
0.1
3.5
Reserve fund Jan 1.
11.2
Private offering
3.2
1.9
16.3
44.7
0.6
Dividends paid
-3.4
1.4
Other changes
-0.6
14.7
57.4
3.4
0.0
3.4
EUR million
11.2
0.0
0.0
11.2
38.7
-2.3
-4.5
1.4
-0.6
12.0
44.7
The Company has no fair value reserves or other reserves
beside reserve fund.
0.1
0.1
Dividends
Reconciliation
For more details on dividends, see note 29.
EUR million
Distributable equity
EUR million
2005
Retained earnings
Dividends paid
Other changes
Profit for the financial period
Portion of untaxed reserves
Distributable equity Dec. 31
44.7
0.6
-3.4
-0.6
14.7
-0.3
55.7
Distributable earnings are calculated based on IFRS and
Finnish legislation.
2005
2004
Obligations Jan 1.
0.7
Expenses recognized
0.1
Contributions paid
0.0
Obligations Dec 31.
0.7
0.6
0.1
0.0
0.7
Assumptions
%
Discount rate
Future salary increase
Annual inflation rate
2005
2004
4.1
0.8
2.0
4.5
0.8
2.0
Share and share capital
20. PROVISIONS
For more details on shares and share capital, see pages
58 and 59.
Other provisions
Authorization of the Board of Directors
EUR million
For more details on authorizations of the Board of
Directors, see page 58.
Share based payments
For more details on share based payments see note 27.
19. EMPLOYEE BENEFIT OBLIGATIONS
The Group has defined benefit pensions only in France.
These obligations are not funded. The Group has no other
post-employment benefit obligations.
21. FINANCIAL RISK
MANAGEMENT AND
DERIVATIVE FINANCIAL
CONTRACTS
Financial risk management
The main objective of the Group’s
financial risk management is to reduce
the impacts of price fluctuations in
financial markets and other factors of
uncertainty on earnings, cash flows
and balance sheet, as well as to ensure
sufficient liquidity. The Board has
approved the Group’s risk management principles and CEO, together
with the Group’s finance management,
is responsible for development and
implementation of financial risk management procedures.
Financial risks consist of market,
default and liquidity risks.
Market risk
2005
2004
Provisions Jan. 1
0.9
0.6
Additions
1.4
0.9
Utilized provisions
-0.8
-0.5
Acquisitions
0.1
0.0
0.1
0.0
Provisions Dec. 31
1.7
0.9
Current
1.7
0.9
Total provisions
1.7
0.9
There are no restructuring provisions in the Group. Other
provisions include distinct provisions, but no amounts,
which are individually significant.
In Rapala, market risks are mainly
caused by changes in foreign exchange
and interest rates. These changes may
have a significant impact on the Group’s
earnings, cash flows and balance sheet.
In order to mitigate adverse impacts of
market price changes the Group uses,
from time to time, derivative contracts.
Currency forwards made to fix exchange
rates of sales and purchase orders cause
timing differences between exchange
gains/losses and sales/purchases.
IAS 39 hedge accounting is not
applied but the derivatives used are for
the purpose of reducing adverse impacts
and financial investments have a shortterm interest rate as a reference rate.
Group borrowings are mainly in
euros and US dollar, which have a substantial contribution to overall interest
rate risk. All of the Group’s interest-bearing liabilities have an interest period of
less than one year.
Since the value of raw-materials, for
which prices are determined in regulated
markets, used by the Group is quite low,
no commodity hedging is carried out.
Default risk
The Group’s accounts receivables are generated by a large number of customers
worldwide. Credit risk related to business
operations is reduced for example with
credit insurances and letters of credit.
The Group’s finance management
manages a major part of the credit risk
related to financial instruments. It seeks
to reduce these risks by limiting the
counterparties to banks, which have a
good credit standing. All investments
related to liquidity management are
made in liquid instruments with low
credit risk.
Liquidity risk
The Group finance management raises
most of the Group’s interest-bearing
debt centrally. The Group seeks to reduce
liquidity and refinancing risks with balanced maturity profile of loans as well as
by keeping sufficient amount of credit lines
available. Efficient cash and liquidity management is also reducing liquidity risk.
Currency derivatives
Expenses recognized
2005
2004
Contract amount
0.6
2.1
Negative fair values
Net fair values
0.0
0.0
0.1
-0.1
EUR million
2005
2004
Current service cost
-0.1
Interest cost
0.0
Net actuarial losses recognized
during the financial year
0.0
Total
-0.1
0.0
0.0
EUR million
of market price changes on earnings and
cash flows related to business and financing activities.
Major part of the Group’s sales is
in euros and US dollars. Also a significant part of expenses arise in euros, US
dollars as well as HK dollar and Chinese
yuan (renminbi), which both follow
quite closely US dollar. There is quite a
good balance between the income and
expenses in different currencies, which
provide quite an effective hedge in it self.
This has also affected the Group principle not to hedge all transactions nor all
open positions.
The effect of 10% change in the US
dollar on the Group’s operating profit
is some EUR 0.8 million. The effect of
Canadian dollar, Danish krona and
Swedish krona is clearly smaller. These
figures are estimates and the effect of
hedging has not been taken into account.
HK dollar and Chinese yuan have been
included in the USD basket in this sensitivity analysis.
Forecasted cash flows and firm
commitments are hedged selectively.
The Group does not currently hedge its
income statement translation risk and
translation of equity. The total non-eurodenominated equity of the Group’s foreign subsidiaries was EUR 33.6 million
on December 31, 2005 (2004: EUR 19.0
million).
The Group’s interest rate risk is
monitored as cash flow and fair value risks.
In order to manage the balance between
risk and cost efficiently, most of the loans
-0.1
-0.1
Forward contracts are used for hedging. They are current and do not meet the hedge accounting criteria.
Derivative financial instruments are used, from time to time, to hedge financial risk.
Amounts recognized in the balance sheet
2005
2004
Present value of obligations 0.8
Unrecognized actuarial losses
-0.1
Total
0.7
0.8
-0.1
0.7
EUR million
42
43
Dividends
Reconciliation
For more details on dividends, see note 29.
EUR million
EUR million
2005
Retained earnings
Dividends paid
Other changes
Profit for the financial period
Portion of untaxed reserves
Distributable equity Dec. 31
44.7
0.6
-3.4
-0.6
14.7
-0.3
55.7
Distributable earnings are calculated based on IFRS and
Finnish legislation.
2005
2004
Obligations Jan 1.
0.7
Expenses recognized
0.1
Contributions paid
0.0
Obligations Dec 31.
0.7
0.6
0.1
0.0
0.7
Assumptions
%
Discount rate
Future salary increase
Annual inflation rate
2005
2004
4.1
0.8
2.0
4.5
0.8
2.0
Share and share capital
20. PROVISIONS
For more details on shares and share capital, see pages
58 and 59.
Other provisions
Authorization of the Board of Directors
EUR million
For more details on authorizations of the Board of
Directors, see page 58.
Share based payments
For more details on share based payments see note 27.
19. EMPLOYEE BENEFIT OBLIGATIONS
The Group has defined benefit pensions only in France.
These obligations are not funded. The Group has no other
post-employment benefit obligations.
21. FINANCIAL RISK
MANAGEMENT AND
DERIVATIVE FINANCIAL
CONTRACTS
Financial risk management
The main objective of the Group’s
financial risk management is to reduce
the impacts of price fluctuations in
financial markets and other factors of
uncertainty on earnings, cash flows
and balance sheet, as well as to ensure
sufficient liquidity. The Board has
approved the Group’s risk management principles and CEO, together
with the Group’s finance management,
is responsible for development and
implementation of financial risk management procedures.
Financial risks consist of market,
default and liquidity risks.
Market risk
2005
2004
Provisions Jan. 1
0.9
0.6
Additions
1.4
0.9
Utilized provisions
-0.8
-0.5
Acquisitions
0.1
0.0
0.1
0.0
Provisions Dec. 31
1.7
0.9
Current
1.7
0.9
Total provisions
1.7
0.9
There are no restructuring provisions in the Group. Other
provisions include distinct provisions, but no amounts,
which are individually significant.
In Rapala, market risks are mainly
caused by changes in foreign exchange
and interest rates. These changes may
have a significant impact on the Group’s
earnings, cash flows and balance sheet.
In order to mitigate adverse impacts of
market price changes the Group uses,
from time to time, derivative contracts.
Currency forwards made to fix exchange
rates of sales and purchase orders cause
timing differences between exchange
gains/losses and sales/purchases.
IAS 39 hedge accounting is not
applied but the derivatives used are for
the purpose of reducing adverse impacts
and financial investments have a shortterm interest rate as a reference rate.
Group borrowings are mainly in
euros and US dollar, which have a substantial contribution to overall interest
rate risk. All of the Group’s interest-bearing liabilities have an interest period of
less than one year.
Since the value of raw-materials, for
which prices are determined in regulated
markets, used by the Group is quite low,
no commodity hedging is carried out.
Default risk
The Group’s accounts receivables are generated by a large number of customers
worldwide. Credit risk related to business
operations is reduced for example with
credit insurances and letters of credit.
The Group’s finance management
manages a major part of the credit risk
related to financial instruments. It seeks
to reduce these risks by limiting the
counterparties to banks, which have a
good credit standing. All investments
related to liquidity management are
made in liquid instruments with low
credit risk.
Liquidity risk
The Group finance management raises
most of the Group’s interest-bearing
debt centrally. The Group seeks to reduce
liquidity and refinancing risks with balanced maturity profile of loans as well as
by keeping sufficient amount of credit lines
available. Efficient cash and liquidity management is also reducing liquidity risk.
Currency derivatives
Expenses recognized
2005
2004
Contract amount
0.6
2.1
Negative fair values
Net fair values
0.0
0.0
0.1
-0.1
EUR million
2005
2004
Current service cost
-0.1
Interest cost
0.0
Net actuarial losses recognized
during the financial year
0.0
Total
-0.1
0.0
0.0
EUR million
of market price changes on earnings and
cash flows related to business and financing activities.
Major part of the Group’s sales is
in euros and US dollars. Also a significant part of expenses arise in euros, US
dollars as well as HK dollar and Chinese
yuan (renminbi), which both follow
quite closely US dollar. There is quite a
good balance between the income and
expenses in different currencies, which
provide quite an effective hedge in it self.
This has also affected the Group principle not to hedge all transactions nor all
open positions.
The effect of 10% change in the US
dollar on the Group’s operating profit
is some EUR 0.8 million. The effect of
Canadian dollar, Danish krona and
Swedish krona is clearly smaller. These
figures are estimates and the effect of
hedging has not been taken into account.
HK dollar and Chinese yuan have been
included in the USD basket in this sensitivity analysis.
Forecasted cash flows and firm
commitments are hedged selectively.
The Group does not currently hedge its
income statement translation risk and
translation of equity. The total non-eurodenominated equity of the Group’s foreign subsidiaries was EUR 33.6 million
on December 31, 2005 (2004: EUR 19.0
million).
The Group’s interest rate risk is
monitored as cash flow and fair value risks.
In order to manage the balance between
risk and cost efficiently, most of the loans
-0.1
-0.1
Forward contracts are used for hedging. They are current and do not meet the hedge accounting criteria.
Derivative financial instruments are used, from time to time, to hedge financial risk.
Amounts recognized in the balance sheet
2005
2004
Present value of obligations 0.8
Unrecognized actuarial losses
-0.1
Total
0.7
0.8
-0.1
0.7
EUR million
42
43
22. INTEREST-BEARING LIABILITIES
23. NON INTEREST-BEARING LIABILITIES
EUR million
2005
2004
Non-current interest-bearing liabilities
Loans from financial institutions
Finance lease
58.8
1.6
28.6
1.7
Current interest-bearing liabilities
Derivatives
Other current liabilities
55.5
0.0
0.0
66.6
0.1
0.0
116.0
97.1
Total
2007
2008
2009
2010
EUR
USD
DEN
9.4
2.4
0.3
9.4
2.4
0.3
9.3
2.4
0.3
9.2
2.4
0.3
0.0
1.1
0.3
2.0
0.0
0.7
39.3
10.7
2.0
Finance lease
DEN
0.1
0.1
0.1
0.1
0.1
1.4
1.8
12.2
12.1
12.0
11.9
1.5
4.1
53.8
Total
2005
2006
2007
2008
2009
3.2
0.3
2.3
3.2
0.3
2.3
3.2
0.3
2.3
3.2
0.3
2.3
3.1
1.2
2.2
19.1
2.6
13.5
Finance lease
DEN
0.1
0.1
0.1
0.1
0.1
1.4
1.8
Total
5.8
5.8
5.8
5.8
5.8
7.9
36.9
Within one year
0.2
1–3 years
0.3
3–5 years
0.3
Later than 5 years
1.9
Total minimum lease payments
2.8
Less future finance charges
-1.2
Present value of minimum lease payments
1.6
0.2
0.1
0.2
1.2
1.6
0.0
1.6
Minimum lease payments
0.2
0.4
0.3
2.1
3.0
-1.3
1.7
2004
2.0
2.3
0.8
0.6
5.6
2.0
2.8
1.5
0.9
7.2
The Group leases offices, warehouses and manufacturing facilities under serveral non-cancellable
operating leases.
Commitments
EUR million
2005
2004
Mortages and pledges
To secure borrowings of parent company and Group companies
41.8
28.2
Guarantees
0.5
On behalf of other parties
0.1
0.9
0.2
42.4
29.2
Total
Disputes and litigations
The Group’s management does not have knowledge of any open disputes or litigations, which would
have a significant impact on the Company’s financial position.
Finance lease
Minimum Present
lease value of
payments
payments
2005
LaterTotal
3.2
0.3
2.3
0.0
8.4
9.5
9.2
27.1
Within one year
1–3 years
3–5 years
Later than 5 years
Total
LaterTotal
EUR
USD
DEN
2005
0.1
13.8
14.7
2.6
31.2
EUR million
Current non interest-bearing liabilities
Advances received
Trade payables
Accrued liabilities and deferred income
Total
Repayment schedule of non-cancellable operating lease commitments
Repayment schedule of non-current interest-bearing liabilities at Dec 31, 2004
EUR million
2004
24. COMMITMENTS AND CONTINGENCIES
2006
2005
Accrued liabilities and deferred income consists of VAT, other taxes, personnel costs and prepaid
income, of which none is individually significant.
The Company has no bonds or debentures. The weighted average interest rate of current loans at
December 31, 2005 was 3.92% (2004 3.39%). The weighted average interest rate of non-current loans at
December 31, 2005 was 4.25% (2004 3.26%).
EUR million
EUR million
25. RELATED PARTY TRANSACTIONS
2004
Subsidiaries owned directly or indirectly by the parent company have been listed in note 30. Related
party transactions between Group companies have been eliminated. The Group has no transactions
or outstanding balances with top management or close members of their family. The Group has no
associate companies or joint ventures.
Present
value of
payments
0.1
0.2
0.1
1.4
1.7
0.0
1.7
26. EVENTS AFTER THE BALANCE SHEET DATE
The Group has no knowledge of any significant events after the balance sheet date that would have a
material impact on the financial statements for 2005. Material events after the balance sheet date have
been discussed in the Review of the Board of Directors.
44
45
22. INTEREST-BEARING LIABILITIES
23. NON INTEREST-BEARING LIABILITIES
EUR million
2005
2004
Finance lease
58.8
1.6
28.6
1.7
Derivatives
55.5
0.0
0.0
66.6
0.1
0.0
116.0
97.1
Total
2007
2008
2009
2010
EUR
USD
DEN
9.4
2.4
0.3
9.4
2.4
0.3
9.3
2.4
0.3
9.2
2.4
0.3
0.0
1.1
0.3
2.0
0.0
0.7
39.3
10.7
2.0
Finance lease
DEN
0.1
0.1
0.1
0.1
0.1
1.4
1.8
12.2
12.1
12.0
11.9
1.5
4.1
53.8
Total
2005
2006
2007
2008
2009
3.2
0.3
2.3
3.2
0.3
2.3
3.2
0.3
2.3
3.2
0.3
2.3
3.1
1.2
2.2
19.1
2.6
13.5
Finance lease
DEN
0.1
0.1
0.1
0.1
0.1
1.4
1.8
Total
5.8
5.8
5.8
5.8
5.8
7.9
36.9
Within one year
0.2
1–3 years
0.3
3–5 years
0.3
Later than 5 years
1.9
Total minimum lease payments
2.8
Less future finance charges
-1.2
Present value of minimum lease payments
1.6
0.2
0.1
0.2
1.2
1.6
0.0
1.6
Minimum lease payments
0.2
0.4
0.3
2.1
3.0
-1.3
1.7
2004
2.0
2.3
0.8
0.6
5.6
2.0
2.8
1.5
0.9
7.2
The Group leases offices, warehouses and manufacturing facilities under serveral non-cancellable
operating leases.
Commitments
EUR million
2005
2004
41.8
28.2
Guarantees
0.5
On behalf of other parties
0.1
0.9
0.2
42.4
29.2
Total
Disputes and litigations
The Group’s management does not have knowledge of any open disputes or litigations, which would
have a significant impact on the Company’s financial position.
Finance lease
Minimum Present
lease value of
payments
payments
2005
LaterTotal
3.2
0.3
2.3
0.0
8.4
9.5
9.2
27.1
Within one year
1–3 years
3–5 years
Later than 5 years
Total
LaterTotal
EUR
USD
DEN
2005
0.1
13.8
14.7
2.6
31.2
EUR million
Advances received
Trade payables
Total
Repayment schedule of non-cancellable operating lease commitments
EUR million
2004
2006
2005
Accrued liabilities and deferred income consists of VAT, other taxes, personnel costs and prepaid
income, of which none is individually significant.
The Company has no bonds or debentures. The weighted average interest rate of current loans at
December 31, 2005 was 3.92% (2004 3.39%). The weighted average interest rate of non-current loans at
December 31, 2005 was 4.25% (2004 3.26%).
EUR million
EUR million
25. RELATED PARTY TRANSACTIONS
2004
Subsidiaries owned directly or indirectly by the parent company have been listed in note 30. Related
party transactions between Group companies have been eliminated. The Group has no transactions
or outstanding balances with top management or close members of their family. The Group has no
associate companies or joint ventures.
Present
value of
payments
0.1
0.2
0.1
1.4
1.7
0.0
1.7
26. EVENTS AFTER THE BALANCE SHEET DATE
The Group has no knowledge of any significant events after the balance sheet date that would have a
material impact on the financial statements for 2005. Material events after the balance sheet date have
been discussed in the Review of the Board of Directors.
44
45
27. SHARE-BASED PAYMENTS
30. Group Companies
For more details on the option programs, see page 58 and 59.
2005
Subsidiaries by geographical area
Country
2004
Weighted average Weighted average
exercise price
exercise price
Pcs.EUR/share
Pcs.
EUR/share
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
2 900 500
0
-139 832
-419 534
2 341 134
6.12
0.00
6.01
4.59
6.74
991 000
1 909 500
0
0
2 900 500
6.88
5.73
0.00
0.00
6.12
Outstanding options at the beginning of 2004 consists of 2000 Share Option Program that has not been
recognized in accordance with IFRS 2 as the options where granted on or before November 7, 2002.
Weighted average share price at the date of exercise for the options exercised in 2005 was EUR 6.45.
The weighted average remaining contractual life for the share options outstanding as at December 31,
2005 is 1.83 years (2004: 2.81 years). The weighted average fair value for options granted during the year
2004 was EUR 2.29. The range of exercise prices for options outstanding at the end of the years 2004 and
2005 was EUR 4.6–7.0. The fair value of equity-settled share options granted is estimated at the grant
date using the Black-Scholes-Merton option pricing model, taking into account the terms and conditions
upon which the options were granted. The following table lists the inputs to the model used in the valuation of options granted in 2004. No new options were granted in 2005.
2004
Dividend yield, %
Expected volatility, %
Risk-free interest rate, %
Expected life of option
Weighted average share price, EUR
Weighted average exercise price, EUR
0.00
35.00
3.36
4.72
6.15
5.75
The expected life of the option is based on historical data. No other features of option grants were
incorporated into the measurement of fair value. Option expenses are recognized as personnel expense
in the income statement with a corresponding increase to equity (see note 8).
28. EARNINGS PER SHARE
2005
2004
For more details on the calculations of earnings per share, see page 32.
29. DIVIDEND PER SHARE
The dividend paid for 2004 was EUR 0.09 per share. A dividend of EUR 0.11 per share is proposed for
the Annual General Meeting of Shareholders to be held on April 5th, 2006. This dividend payable is not
reflected in the financial statements for 2005.
46
47
Nature
of activity
Europe
Normark S.r.o.
Czech Republic
100
Normark Denmark A/S
* 3)
Denmark
100
Normark Sport Ltd.
England
100
Martiini Oü
1)
Estonia
100
Normark Eesti Oü
Estonia
100
Rapala Eesti As
*
Estonia
100
KL Teho Oy
*
Finland
100
Martiini Oy
* 1)
Finland
100
Normark Sport Finland Oy
*
Finland
100
Normark Suomi Oy
Finland
100
Peltonen Ski Oy
3)
Finland
80
Cannelle SA
France
100
Nautisme SA
France
100
Rapala France SAS
*
France
100
RNF Diffusion SARL
France
100
VMC Péche SA
*
France
100
Rapala Eurohold Ltd.
* 2)
Hungary
70
Rapire Teo
*
Ireland
100
SIA Normark Latvia
Latvia
100
Normark UAB Lithuania
82
Rapala B.V.
*
Netherlands
100
Elbe Normark A/S
*
Norway
100
Normark Polska Sp.z.o.o.
*
Poland
100
Normark Portugal SA
Portugal
100
ZAO Normark
Russia
100
Normark Spain SA
*
Spain
100
Normark Scandinavia AB
*
Sweden
100
Normark Trading AB
Sweden
100
Rapala-Fishco AG
*
Switzerland
100
VMC Waterqueen Ukrainia
Ukraine
100
Distribution
Distribution
Distribution
Manufacturing
Distribution
Manufacturing
Manufacturing
Manufacturing
Distribution
Distribution
Manufacturing
Distribution
Distribution
Distribution
Distribution
Manufacturing
Distribution
Manufacturing
Distribution
Distribution
Administration
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
North-America
Normark Inc.
Canada
100
NC Holdings Inc.
*
USA
100
Normark Corporation
USA
100
Normark Innovations, Inc.
USA
80
V.M.C. Inc. USA
USA
100
Distribution
Administration
Distribution
Sourcing/design
Distribution
Rest of the World
Freetime Pty Ltd.
* 1)
Australia
100
Rapala V.M.C. Do Brazil
*
Brazil
100
Rapala VMC China Co., Ltd.
2)
China
100
Willtech Industrial Ltd.
Hong Kong
100
Starcut Ltd
3)
Hong Kong
100
Willtech (PRC) Ltd.
*
Hong Kong
100
Rapala Japan K.K.
*
Japan
100
Rapala Asia Pacific Pte Ltd.
*
Malaysia
100
Rapala VMC South-Africa Distributors Pty Ltd. * 2)
South Africa
100
Rapala VMC (Thailand) Co.,Ltd.
* 2)Thailand
80
1) Acquired in 2005
2) Established in 2005
3) Ownership changed in 2005
* Shares owned by the parent company
Profit attributable to the equity holders of the Company, EUR million
14.7
12.0
37 871
37 543
Effect of dilution
18
16
37 889
37 560
0.39
0.32
0.39
0.32
Group
holding %
Distribution
Distribution
Distribution
Administration and
sourcing/design
Manufacturing
Manufacturing
Distribution
Distribution
Distribution
Distribution
27. SHARE-BASED PAYMENTS
30. Group Companies
For more details on the option programs, see page 58 and 59.
2005
Subsidiaries by geographical area
Country
2004
Weighted average Weighted average
exercise price
exercise price
Pcs.EUR/share
Pcs.
EUR/share
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
2 900 500
0
-139 832
-419 534
2 341 134
6.12
0.00
6.01
4.59
6.74
991 000
1 909 500
0
0
2 900 500
6.88
5.73
0.00
0.00
6.12
Outstanding options at the beginning of 2004 consists of 2000 Share Option Program that has not been
recognized in accordance with IFRS 2 as the options where granted on or before November 7, 2002.
Weighted average share price at the date of exercise for the options exercised in 2005 was EUR 6.45.
The weighted average remaining contractual life for the share options outstanding as at December 31,
2005 is 1.83 years (2004: 2.81 years). The weighted average fair value for options granted during the year
2004 was EUR 2.29. The range of exercise prices for options outstanding at the end of the years 2004 and
2005 was EUR 4.6–7.0. The fair value of equity-settled share options granted is estimated at the grant
date using the Black-Scholes-Merton option pricing model, taking into account the terms and conditions
upon which the options were granted. The following table lists the inputs to the model used in the valuation of options granted in 2004. No new options were granted in 2005.
2004
Dividend yield, %
Expected volatility, %
Risk-free interest rate, %
Expected life of option
Weighted average share price, EUR
Weighted average exercise price, EUR
0.00
35.00
3.36
4.72
6.15
5.75
The expected life of the option is based on historical data. No other features of option grants were
incorporated into the measurement of fair value. Option expenses are recognized as personnel expense
in the income statement with a corresponding increase to equity (see note 8).
28. EARNINGS PER SHARE
2005
2004
For more details on the calculations of earnings per share, see page 32.
29. DIVIDEND PER SHARE
The dividend paid for 2004 was EUR 0.09 per share. A dividend of EUR 0.11 per share is proposed for
the Annual General Meeting of Shareholders to be held on April 5th, 2006. This dividend payable is not
reflected in the financial statements for 2005.
46
47
Nature
of activity
Europe
Normark S.r.o.
Czech Republic
100
Normark Denmark A/S
* 3)
Denmark
100
Normark Sport Ltd.
England
100
Martiini Oü
1)
Estonia
100
Normark Eesti Oü
Estonia
100
Rapala Eesti As
*
Estonia
100
KL Teho Oy
*
Finland
100
Martiini Oy
* 1)
Finland
100
Normark Sport Finland Oy
*
Finland
100
Normark Suomi Oy
Finland
100
Peltonen Ski Oy
3)
Finland
80
Cannelle SA
France
100
Nautisme SA
France
100
Rapala France SAS
*
France
100
RNF Diffusion SARL
France
100
VMC Péche SA
*
France
100
Rapala Eurohold Ltd.
* 2)
Hungary
70
Rapire Teo
*
Ireland
100
SIA Normark Latvia
Latvia
100
Normark UAB Lithuania
82
Rapala B.V.
*
Netherlands
100
Elbe Normark A/S
*
Norway
100
Normark Polska Sp.z.o.o.
*
Poland
100
Normark Portugal SA
Portugal
100
ZAO Normark
Russia
100
Normark Spain SA
*
Spain
100
Normark Scandinavia AB
*
Sweden
100
Normark Trading AB
Sweden
100
Rapala-Fishco AG
*
Switzerland
100
VMC Waterqueen Ukrainia
Ukraine
100
Distribution
Distribution
Distribution
Manufacturing
Distribution
Manufacturing
Manufacturing
Manufacturing
Distribution
Distribution
Manufacturing
Distribution
Distribution
Distribution
Distribution
Manufacturing
Distribution
Manufacturing
Distribution
Distribution
Administration
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
North-America
Normark Inc.
Canada
100
NC Holdings Inc.
*
USA
100
Normark Corporation
USA
100
Normark Innovations, Inc.
USA
80
V.M.C. Inc. USA
USA
100
Distribution
Administration
Distribution
Sourcing/design
Distribution
Rest of the World
Freetime Pty Ltd.
* 1)
Australia
100
Rapala V.M.C. Do Brazil
*
Brazil
100
Rapala VMC China Co., Ltd.
2)
China
100
Willtech Industrial Ltd.
Hong Kong
100
Starcut Ltd
3)
Hong Kong
100
Willtech (PRC) Ltd.
*
Hong Kong
100
Rapala Japan K.K.
*
Japan
100
Rapala Asia Pacific Pte Ltd.
*
Malaysia
100
Rapala VMC South-Africa Distributors Pty Ltd. * 2)
South Africa
100
Rapala VMC (Thailand) Co.,Ltd.
* 2)Thailand
80
1) Acquired in 2005
2) Established in 2005
3) Ownership changed in 2005
* Shares owned by the parent company
Profit attributable to the equity holders of the Company, EUR million
14.7
12.0
37 871
37 543
Effect of dilution
18
16
37 889
37 560
0.39
0.32
0.39
0.32
Group
holding %
Distribution
Distribution
Distribution
Administration and
sourcing/design
Manufacturing
Manufacturing
Distribution
Distribution
Distribution
Distribution
Key Figures
Key Figures by Quarter
0.6
0.3
0.7
0.4
Net interest-bearing debt at end of period
Capital employed at end of period
EUR million
EUR million
136.1
174.1
102.8
150.4
84.8
139.0
81.7
141.6
95.9
173.1
Return on capital employed (ROCE)
Return on equity (ROE)
Equity-to-assets ratio at end of period
Debt-to-equity ratio (gearing) at end of period
%
%
%
%
13.2
17.3
17.3
358.0
14.1
38.4
23.9
215.7
13.1
26.8
31.7
156.1
14.1
21.3
32.0
136.6
14.1
21.4
33.8
124.1
Share related key figures
Earnings per share
Fully diluted earnings per share
Equity per share
Dividend per share
Dividend/earnings ratio
Effective dividend yield
EUR
EUR
EUR
EUR
%
%
0.16
0.16
1.01
0.02
12.5
0.47
26.9
0.43
0.43
1.26
0.05
11.6
1.30
9.2
0.36
0.36
1.43
0.12
33.5
2.20
15.1
0.32
0.32
1.58
0.09
28.2
1.55
18.2
0.39
0.39
2.00
0.11
28.9
1.80
15.7
Share price at the end of period
Lowest share price
Highest share price
Average share price
Number of shares traded
Number of shares traded of all shares
EUR
EUR
EUR
EUR
Shares
%
4.30
3.90
5.80
4.72
4 136 865
11.85
3.95
2.55
4.83
3.79
9 048 064
24.10
5.45
3.60
5.75
4.36
9 164 995
24.41
Share capital
Year end market capitalization
Dividend
EUR million
EUR million
EUR million
3.4
161.4
0.8
3.4
148.3
1.9
3.4
204.6
4.5
3.4
218.5
3.4
3.5
234.8
4.2
Average number of shares outstanding
Fully diluted average number of shares
Number of shares outstanding at end of period
Fully diluted number of shares outstanding
at end of period
1000 shares
1000 shares
1000 shares
37 543
37 543
37 543
37 543
37 543
37 543
37 543
37 543
37 543
37 543
37 560
37 543
37 871
37 889
38 498
1000 shares
37 543
37 543
37 543
37 560
38 516
Average personnel for the period
Personnel at the end of the period
Persons
Persons
1 248
2 807
2 879
3 129
3 095
3 235
3 067
3 361
3 780
3 986
1) Minority interest has been deducted from 2001-2003 net profit for the period.
Key Figures
1.5
94.8
160.7
1.5
90.0
165.3
3.1
84.1
156.6
15.9
95.9
173.1
Debt-to-equity ratio (gearing) at end of period, %
27.5
50.3
30.9
142.7
29.6
49.8
30.6
136.7
-2.4
-8.4
34.3
124.6
0.3
-8.2
32.0
136.6
19.3
32.3
31.7
143.6
30.4
51.3
33.7
119.5
-0.5
-3.4
34.0
116.1
8.5
8.2
33.8
124.1
2 999
3 026
2 950
2 827
2 983
3 043
3 067
3 361
3 457
3 811
3 374
3 330
3 402
3 569
3 780
3 986
NET SALES
5.82
6.10
5.24
5.50
6.85
6.88
5.87
5.91
5 090 048 23 027 428
13.56
60.81
Q1
04
Q2
04
OPERATION PROFIT BEFORE
DEPRECIATION AND IMPAIRMENTS
Q3
04
Q4
04
Q1
05
Q2
05
Q3
05
Q4
05
Q1
04
EUR million
OPERATING PROFIT
Q1
04
Q2
04
Q2
04
Q3
04
Q4
04
Q1
05
Q3
04
Q4
04
Q1
05
Q2
05
Q3
05
Q2
05
Q3
05
3.9
2.2
1.0
3.3
81.7
141.6
Q4
05
PROFIT BEFORE TAXES
Q4
05
Q1
04
Q2
04
Q3
04
Q4
04
Q1
05
Q2
05
1.1
3.3
1.9
1.9
77.8
140.3
1.3
2.5
1.7
2.2
85.6
148.2
-0.5
EUR million
%
1.8
87.9
149.5
13.1
as a percentage of net sales
Capital expenditure
11.7
22.0
11.2
1.4
0.1
8.7
9.2
5.3
-0.5
-0.1
6.9
9.9
4.5
8.6
0.1
1.4
7.6
4.4
5.1
0.0
-0.7
18.0
11.8
-1.3
0.1
0.5
EUR million
%
-1.2
0.0
-1.9
Capital expenditure
7.2
0.0
11.9
14.7
0.0
7.2
0.0
9.2
12.0
0.1
44.8
3.9
8.7
3.4
7.5
1.1
2.5
1.5
3.3
11.1
0.0
0.0
39.0
1.3
3.3
-0.2
-0.5
-0.5
-1.3
-0.6
-1.5
EUR million
0.0
0.0
60.6
13.1
21.6
11.7
19.3
11.7
19.3
8.7
14.4
9.4
0.0
0.0
51.6
8.7
16.9
7.3
14.1
6.9
13.4
5.1
9.9
EUR million
EUR million
EUR million
34.5
1.4
4.1
0.1
0.3
-0.7
-2.0
-1.2
-3.4
44.8
26.9
13.7
22.1
11.3
0.0
0.0
19.2
9.8
14.7
7.5
32.1
0.5
1.5
-0.8
-2.6
-1.9
-6.0
-1.2
-3.8
3.4
24.9
14.3
19.9
11.4
0.0
0.0
16.0
9.2
12.1
7.0
55.8
11.9
21.3
10.7
19.1
9.2
16.6
7.2
13.0
39.0
31.4
14.3
19.0
8.6
17.4
7.9
15.2
6.9
11.4
5.2
51.1
11.1
21.8
9.9
19.5
9.4
18.4
7.2
14.2
Net sales
as a percentage of net sales, %
Operating profit
Profit before taxes
Attributable to
Minority interest
-0.2
32.0
18.6
22.9
13.3
20.6
12.0
19.1
11.1
14.8
8.6
Q4/05
60.6
EUR million
%
EUR million
%
27.1
17.8
19.9
13.0
6.0
3.9
6.0
3.9
5.4
3.5
Q3/05
11.7
EUR million
%
EUR million
%
Q2/05
51.6
196.1
Q1/05
7.3
173.5
Q4/04
34.5
219.4
Q3/04
0.1
172.0
Q2/04
32.1
152.5
Q1/04
-0.8
EUR million
Scope of activity and profitability
Net sales
Operating profit before depreciation
and impairments
Operating profit
Profit before extraordinary items and taxes
Profit before taxes
Net profit for the period 1)
Attributable to
Equity holders of the Company 1)
Minority interest 1)
EUR million
55.8
IFRS
2005
10.7
IFRS
2004
51.1
FAS
2003*
EUR million
FAS
2002
9.9
FAS
2001
Q3
05
Q4
05
* Financial year 17 months
48
49
Key Figures
Key Figures by Quarter
0.6
0.3
0.7
0.4
EUR million
EUR million
136.1
174.1
102.8
150.4
84.8
139.0
81.7
141.6
95.9
173.1
Return on capital employed (ROCE)
Return on equity (ROE)
Equity-to-assets ratio at end of period
Debt-to-equity ratio (gearing) at end of period
%
%
%
%
13.2
17.3
17.3
358.0
14.1
38.4
23.9
215.7
13.1
26.8
31.7
156.1
14.1
21.3
32.0
136.6
14.1
21.4
33.8
124.1
Share related key figures
Earnings per share
Fully diluted earnings per share
Equity per share
Dividend per share
Dividend/earnings ratio
Effective dividend yield
EUR
EUR
EUR
EUR
%
%
0.16
0.16
1.01
0.02
12.5
0.47
26.9
0.43
0.43
1.26
0.05
11.6
1.30
9.2
0.36
0.36
1.43
0.12
33.5
2.20
15.1
0.32
0.32
1.58
0.09
28.2
1.55
18.2
0.39
0.39
2.00
0.11
28.9
1.80
15.7
Share price at the end of period
Lowest share price
Highest share price
Average share price
Number of shares traded
Number of shares traded of all shares
EUR
EUR
EUR
EUR
Shares
%
4.30
3.90
5.80
4.72
4 136 865
11.85
3.95
2.55
4.83
3.79
9 048 064
24.10
5.45
3.60
5.75
4.36
9 164 995
24.41
Share capital
Year end market capitalization
Dividend
EUR million
EUR million
EUR million
3.4
161.4
0.8
3.4
148.3
1.9
3.4
204.6
4.5
3.4
218.5
3.4
3.5
234.8
4.2
Average number of shares outstanding
Fully diluted average number of shares
Number of shares outstanding at end of period
Fully diluted number of shares outstanding
at end of period
1000 shares
1000 shares
1000 shares
37 543
37 543
37 543
37 543
37 543
37 543
37 543
37 543
37 543
37 543
37 560
37 543
37 871
37 889
38 498
1000 shares
37 543
37 543
37 543
37 560
38 516
Persons
Persons
1 248
2 807
2 879
3 129
3 095
3 235
3 067
3 361
3 780
3 986
1) Minority interest has been deducted from 2001-2003 net profit for the period.
Key Figures
1.5
94.8
160.7
1.5
90.0
165.3
3.1
84.1
156.6
15.9
95.9
173.1
Debt-to-equity ratio (gearing) at end of period, %
27.5
50.3
30.9
142.7
29.6
49.8
30.6
136.7
-2.4
-8.4
34.3
124.6
0.3
-8.2
32.0
136.6
19.3
32.3
31.7
143.6
30.4
51.3
33.7
119.5
-0.5
-3.4
34.0
116.1
8.5
8.2
33.8
124.1
2 999
3 026
2 950
2 827
2 983
3 043
3 067
3 361
3 457
3 811
3 374
3 330
3 402
3 569
3 780
3 986
NET SALES
5.82
6.10
5.24
5.50
6.85
6.88
5.87
5.91
5 090 048 23 027 428
13.56
60.81
Q1
04
Q2
04
OPERATION PROFIT BEFORE
DEPRECIATION AND IMPAIRMENTS
Q3
04
Q4
04
Q1
05
Q2
05
Q3
05
Q4
05
Q1
04
EUR million
OPERATING PROFIT
Q1
04
Q2
04
Q2
04
Q3
04
Q4
04
Q1
05
Q3
04
Q4
04
Q1
05
Q2
05
Q3
05
Q2
05
Q3
05
3.9
2.2
1.0
3.3
81.7
141.6
Q4
05
PROFIT BEFORE TAXES
Q4
05
Q1
04
Q2
04
Q3
04
Q4
04
Q1
05
Q2
05
1.1
3.3
1.9
1.9
77.8
140.3
1.3
2.5
1.7
2.2
85.6
148.2
-0.5
EUR million
%
1.8
87.9
149.5
13.1
Capital expenditure
11.7
22.0
11.2
1.4
0.1
8.7
9.2
5.3
-0.5
-0.1
6.9
9.9
4.5
8.6
0.1
1.4
7.6
4.4
5.1
0.0
-0.7
18.0
11.8
-1.3
0.1
0.5
EUR million
%
-1.2
0.0
-1.9
Capital expenditure
7.2
0.0
11.9
14.7
0.0
7.2
0.0
9.2
12.0
0.1
44.8
3.9
8.7
3.4
7.5
1.1
2.5
1.5
3.3
11.1
0.0
0.0
39.0
1.3
3.3
-0.2
-0.5
-0.5
-1.3
-0.6
-1.5
EUR million
0.0
0.0
60.6
13.1
21.6
11.7
19.3
11.7
19.3
8.7
14.4
9.4
0.0
0.0
51.6
8.7
16.9
7.3
14.1
6.9
13.4
5.1
9.9
EUR million
EUR million
EUR million
34.5
1.4
4.1
0.1
0.3
-0.7
-2.0
-1.2
-3.4
44.8
26.9
13.7
22.1
11.3
0.0
0.0
19.2
9.8
14.7
7.5
32.1
0.5
1.5
-0.8
-2.6
-1.9
-6.0
-1.2
-3.8
3.4
24.9
14.3
19.9
11.4
0.0
0.0
16.0
9.2
12.1
7.0
55.8
11.9
21.3
10.7
19.1
9.2
16.6
7.2
13.0
39.0
31.4
14.3
19.0
8.6
17.4
7.9
15.2
6.9
11.4
5.2
51.1
11.1
21.8
9.9
19.5
9.4
18.4
7.2
14.2
Net sales
Operating profit
Profit before taxes
Attributable to
Minority interest
-0.2
32.0
18.6
22.9
13.3
20.6
12.0
19.1
11.1
14.8
8.6
Q4/05
60.6
EUR million
%
EUR million
%
27.1
17.8
19.9
13.0
6.0
3.9
6.0
3.9
5.4
3.5
Q3/05
11.7
EUR million
%
EUR million
%
Q2/05
51.6
196.1
Q1/05
7.3
173.5
Q4/04
34.5
219.4
Q3/04
0.1
172.0
Q2/04
32.1
152.5
Q1/04
-0.8
EUR million
Scope of activity and profitability
Net sales
Operating profit before depreciation
and impairments
Operating profit
Profit before extraordinary items and taxes
Profit before taxes
Net profit for the period 1)
Attributable to
Equity holders of the Company 1)
Minority interest 1)
EUR million
55.8
IFRS
2005
10.7
IFRS
2004
51.1
FAS
2003*
EUR million
FAS
2002
9.9
FAS
2001
Q3
05
Q4
05
* Financial year 17 months
48
49
Parent Company
Financial Statements, FAS
PARENT COMPANY INCOME STATEMENT
EUR million
Note
2005
2004
Net sales
1
29.3
25.1
2
0.6
1.4
Cost of sales
3
-18.9
-15.9
Other costs and expenses
4
-4.1
-3.6
Operating profit before
depreciation and impairments
6.9
7.0
Depreciation
5
-1.1
-1.1
Operating profit
5.8
5.9
6
4.5
2.7
Profit before extraordinary items
10.3
8.6
Extraordinary items
7
1.3
1.5
Profit before appropriations
and taxes
11.6
10.1
Appropriations
8
0.1
-0.1
Income taxes
9
-2.2
-2.1
9.4
7.9
Note
2005
2004
Non-current assets
Intangible assets
10
Tangible assets
11
Investments
12
14
2.1
4.1
65.3
51.4
123.0
2.4
3.8
56.5
40.7
103.4
EUR million
3.5
16.3
45.0
9.4
74.2
3.4
11.2
40.5
7.9
63.0
0.3
0.4
Current liabilities
Interest-bearing
37.4
Non interest-bearing
4.8
16
42.2
Total shareholder’s equity
and liabilities 159.0
2004
9.4
7.9
Current assets
Inventories
13
4.5
4.8
Current financial assets
0.0
0.0
Interest-bearing
14
14
26.9
19.7
4.6
6.0
36.0
30.6
Total assets 159.0 133.9
42.3
0.0
42.3
2005
Adjustments
2.3
Income taxes
9
6
-4.5
5
1.1
Other items
-0.4
Interest paid
-2.8
Interest received
2.4
Income taxes paid
-2.3
Dividends received
3.9
1.0
Total adjustments
10.1
ASSETS
Interest-bearing
16
Note:
EUR million
PARENT COMPANY BALANCE SHEET
Share capital
Reserve fund
Retained earnings
15
Appropriations
PARENT COMPANY CASH FLOW STATEMENT
-13.1
0.3
-4.7
-17.5
-2.8
-0.5
6.6
3.3
-7.4
12.2
-0.1
10
11
0.0
11
-0.9
12
0.0
Acquisiton of subsidiary companies
12
-5.6
-6.6
0.0
0.9
-0.9
-0.1
-0.7
-0.8
Dividends paid
Borrowings of debt
Repayments of debt
Cash and cash equivalents at the beginning of financial year
Cash and cash equivalents at the end of financial year
22.0
0.0
22.0
2.1
-2.8
1.1
-0.1
-1.8
1.8
-2.1
2.9
-0.1
8.9
-3.4
24.0
-9.9
1.9
12.6
-4.5
24.3
-26.2
0.0
-6.4
-1.4
6.0
4.6
5.0
1.0
6.0
43.6
5.0
48.6
133.9
50
51
Parent Company
Financial Statements, FAS
PARENT COMPANY INCOME STATEMENT
EUR million
Note
2005
2004
Net sales
1
29.3
25.1
2
0.6
1.4
Cost of sales
3
-18.9
-15.9
Other costs and expenses
4
-4.1
-3.6
Operating profit before
depreciation and impairments
6.9
7.0
Depreciation
5
-1.1
-1.1
Operating profit
5.8
5.9
6
4.5
2.7
Profit before extraordinary items
10.3
8.6
Extraordinary items
7
1.3
1.5
Profit before appropriations
and taxes
11.6
10.1
Appropriations
8
0.1
-0.1
Income taxes
9
-2.2
-2.1
9.4
7.9
Note
2005
2004
Non-current assets
Intangible assets
10
Tangible assets
11
Investments
12
14
2.1
4.1
65.3
51.4
123.0
2.4
3.8
56.5
40.7
103.4
EUR million
3.5
16.3
45.0
9.4
74.2
3.4
11.2
40.5
7.9
63.0
0.3
0.4
Current liabilities
Interest-bearing
37.4
4.8
16
42.2
Total shareholder’s equity
and liabilities 159.0
2004
9.4
7.9
Current assets
Inventories
13
4.5
4.8
Current financial assets
0.0
0.0
Interest-bearing
14
14
26.9
19.7
4.6
6.0
36.0
30.6
Total assets 159.0 133.9
42.3
0.0
42.3
2005
Adjustments
2.3
Income taxes
9
6
-4.5
5
1.1
Other items
-0.4
Interest paid
-2.8
Interest received
2.4
Income taxes paid
-2.3
Dividends received
3.9
1.0
Total adjustments
10.1
ASSETS
Interest-bearing
16
Note:
EUR million
PARENT COMPANY BALANCE SHEET
Share capital
Reserve fund
Retained earnings
15
Appropriations
PARENT COMPANY CASH FLOW STATEMENT
-13.1
0.3
-4.7
-17.5
-2.8
-0.5
6.6
3.3
-7.4
12.2
-0.1
10
11
0.0
11
-0.9
12
0.0
Acquisiton of subsidiary companies
12
-5.6
-6.6
0.0
0.9
-0.9
-0.1
-0.7
-0.8
Dividends paid
Borrowings of debt
Repayments of debt
Cash and cash equivalents at the beginning of financial year
Cash and cash equivalents at the end of financial year
22.0
0.0
22.0
2.1
-2.8
1.1
-0.1
-1.8
1.8
-2.1
2.9
-0.1
8.9
-3.4
24.0
-9.9
1.9
12.6
-4.5
24.3
-26.2
0.0
-6.4
-1.4
6.0
4.6
5.0
1.0
6.0
43.6
5.0
48.6
133.9
50
51
Parent Company Notes
1. NET SALES
2004
By destination
North America
13.9
Europe
10.7
Rest of the World
4.7
Total
29.3
12.4
8.4
4.3
25.1
For business segment purposes, parent company’s net
sales belong to Lure Business.
Other operating income, EUR 0.6 million (2004: EUR 1.4
3. COST OF SALES
Change in inventory
External services
EUR million
2005
2004
-0.5
-0.4
-0.2
-0.4
-0.2
-0.5
Total
-1.1
-1.1
2005
2004
0.3
0.1
0.5
0.0
-11.3
-0.6
-0.1
-9.1
0.0
0.0
2004
Dividend income from group companies
Dividend income from third parties
3.9
0.0
2.9
0.0
Other 1.2
0.1
Interest income Other financial income
2.4
0.0
1.8
0.1
Interest expense
-2.8
-0.2
-1.8
-0.3
4.5
Total
Wages and salaries
Pension costs
Total
-5.6
-1.0
-0.6
-5.9
-0.7
-0.6
-18.9
-15.9
182
192
The remuneration of the Board of Directors amounted to
EUR 0.2 million (2004: EUR 0.2 million).
Board of Directors. The arrangements will enable them
EUR million
Rents paid
Selling expenses
Sales commissions
Freight
Other expenses
Total
Change in accelerated depreciation
Buildings
Total
2005
2004
-0.3
-0.4
0.0
-0.2
-0.1
-3.2
-4.1
-0.1
-0.5
0.0
-0.2
0.0
-2.7
-3.6
1.5
1.5
2005
2004
0.0
0.1
0.1
0.0
-0.1
-0.1
EUR million
2004
3.9
2.9
Interest income 2.3
1.8
Total
6.2
4.6
2005
2004
-2.1
-0.1
-2.2
-2.1
0.0
-2.1
Current income tax
Total
Deferred tax assets and liabilities of the parent company
are not presented in the Company’s balance sheet.
2005
2004
Book value Jan. 1
0.1
Additions
0.0
Disposals
0.0
Book value Dec. 31
0.1
0.1
0.2
0.0
-0.1
0.1
0.1
EUR Million
Land
Buildings
Book value Jan. 1
1.3
Additions
0.1
Disposals
0.0
-0.2
Book value Dec. 31
1.2
-2.9
4.1
Book value Jan. 1
2.2
Additions
0.7
Disposals
0.0
-0.4
Book value Dec. 31
2.5
-8.2
10.7
2005
2004
Book value Jan. 1
2.4
Additions
0.1
-0.5
Book value Dec. 31
2.1
-4.7
6.8
2.1
2.8
0.1
-0.4
2.4
-4.7
7.1
2.4
Book value Jan. 1
0.0
Book value Dec. 31
0.0
0.0
Translation differences recongnized
in net sales
in financial income and expenses
Total
2004
2.2
-1.0
0.0
0.0
1.2
3.4
0.1
-0.9
52
53
2.7
0.6
-0.7
-0.4
2.2
-7.8
10.0
0.0
0.0
0.0
Advance payments and construction
in progress
Book value Jan. 1
Additions
Disposals
Book value Dec. 31
0.1
0.2
0.0
0.3
0.3
0.2
0.0
0.0
0.1
0.1
4.1
3.8
2005
1.2
0.3
0.0
-0.2
1.3
-2.8
4.0
EUR million
2005
EUR million
2.7
from and to subsidiaries
EUR million
1.3
1.3
9. INCOME TAXES
2005
EUR million
2004
8. APPROPRIATIONS
EUR million
Buildings
11. TANGIBLE ASSETS
2005
Group contributions received
Total
2. OTHER OPERATING INCOME
Change in inventory of finished products
and work in progress
EUR million
5. DEPRECIATION AND IMPAIRMENT LOSSES
EUR million
2005
EUR million
7. EXTRAORDINARY ITEMS
1. NET SALES
2004
By destination
North America
13.9
Europe
10.7
Rest of the World
4.7
Total
29.3
12.4
8.4
4.3
25.1
For business segment purposes, parent company’s net
sales belong to Lure Business.
Other operating income, EUR 0.6 million (2004: EUR 1.4
3. COST OF SALES
Change in inventory
External services
EUR million
2005
2004
-0.5
-0.4
-0.2
-0.4
-0.2
-0.5
Total
-1.1
-1.1
2005
2004
0.3
0.1
0.5
0.0
-11.3
-0.6
-0.1
-9.1
0.0
0.0
2004
Dividend income from third parties
3.9
0.0
2.9
0.0
Other 1.2
0.1
Interest income Other financial income
2.4
0.0
1.8
0.1
Interest expense
-2.8
-0.2
-1.8
-0.3
4.5
Total
Wages and salaries
Pension costs
Total
-5.6
-1.0
-0.6
-5.9
-0.7
-0.6
-18.9
-15.9
182
192
The remuneration of the Board of Directors amounted to
EUR 0.2 million (2004: EUR 0.2 million).
Board of Directors. The arrangements will enable them
EUR million
Rents paid
Selling expenses
Sales commissions
Freight
Other expenses
Total
Change in accelerated depreciation
Buildings
Total
2005
2004
-0.3
-0.4
0.0
-0.2
-0.1
-3.2
-4.1
-0.1
-0.5
0.0
-0.2
0.0
-2.7
-3.6
1.5
1.5
2005
2004
0.0
0.1
0.1
0.0
-0.1
-0.1
EUR million
2004
3.9
2.9
Interest income 2.3
1.8
Total
6.2
4.6
2005
2004
-2.1
-0.1
-2.2
-2.1
0.0
-2.1
Current income tax
Total
Deferred tax assets and liabilities of the parent company
are not presented in the Company’s balance sheet.
2005
2004
Book value Jan. 1
0.1
Additions
0.0
Disposals
0.0
Book value Dec. 31
0.1
0.1
0.2
0.0
-0.1
0.1
0.1
EUR Million
Land
Buildings
Book value Jan. 1
1.3
Additions
0.1
Disposals
0.0
-0.2
Book value Dec. 31
1.2
-2.9
4.1
Book value Jan. 1
2.2
Additions
0.7
Disposals
0.0
-0.4
Book value Dec. 31
2.5
-8.2
10.7
2005
2004
Book value Jan. 1
2.4
Additions
0.1
-0.5
Book value Dec. 31
2.1
-4.7
6.8
2.1
2.8
0.1
-0.4
2.4
-4.7
7.1
2.4
Book value Jan. 1
0.0
Book value Dec. 31
0.0
0.0
Translation differences recongnized
in net sales
in financial income and expenses
Total
2004
2.2
-1.0
0.0
0.0
1.2
3.4
0.1
-0.9
52
53
2.7
0.6
-0.7
-0.4
2.2
-7.8
10.0
0.0
0.0
0.0
Advance payments and construction
in progress
Book value Jan. 1
Additions
Disposals
Book value Dec. 31
0.1
0.2
0.0
0.3
0.3
0.2
0.0
0.0
0.1
0.1
4.1
3.8
2005
1.2
0.3
0.0
-0.2
1.3
-2.8
4.0
EUR million
2005
EUR million
2.7
from and to subsidiaries
EUR million
1.3
1.3
9. INCOME TAXES
2005
EUR million
2004
8. APPROPRIATIONS
EUR million
Buildings
11. TANGIBLE ASSETS
2005
Group contributions received
Total
2. OTHER OPERATING INCOME
Change in inventory of finished products
and work in progress
EUR million
5. DEPRECIATION AND IMPAIRMENT LOSSES
EUR million
2005
EUR million
7. EXTRAORDINARY ITEMS
12. INVESTMENTS
2005
EUR million
2004
Shareholdings in subsidiaries
Book value Jan. 1
56.3
Acquisitions of subsidiaries
8.9
Book value Dec. 31
65.1
55.6
0.7
56.3
Book value Jan. 1
Book value Dec. 31
0.2
0.2
0.2
0.2
Raw material
Work in progress
Finished products
Total
2005
2004
1.2
2.4
1.0
4.5
1.8
1.9
1.1
4.8
2005
2004
Long-term receivables
Interest-bearing
Loan receivables
51.4
40.7
Short-term receivables
Interest-bearing
Loan receivables
0.0
Trade receivables
17.8
Prepaid expenses and accrued income 9.1
Other receivables
0.0
15.8
3.8
0.1
78.3
60.4
Total
2004
Interest-bearing
Loan receivables
51.4
40.7
0.0
2005
2004
Advances received
Trade payables
0.0
1.8
3.0
0.1
0.8
4.1
EUR million
Trade receivables
17.2
15.3
3.3
42.3
22.0
76.1
59.3
37.4
0.0
39.2
4.4
Total
84.5
70.6
Total
2005
EUR million
EUR million
2004
Reserve fund Jan. 1
11.2
11.2
Private offering
3.2
0.0
1.9
0.0
16.3
11.2
48.4
-3.4
9.4
54.4
Dividends paid
Advances received
Trade payables
Total
Repayment schedule of non-cancellable
operating lease commitments
EUR million
Within one year
1–3 years
3–5 years
Total
2005
2004
0.0
1.3
0.0
1.3
0.0
0.4
0.0
0.4
Accrued liabilities and deferred income consists of VAT,
other taxes, personnel costs and prepaid income, of
2004
0.2
0.5
0.2
0.9
0.1
0.5
0.1
0.7
2005
2004
To secure borrowings of parent company
and Group companies
37.9
22.0
Guarantees
and Group companies
0.5
0.0
38.4
22.0
EUR million
Total
Commitments are to secure loans from financial institutions.
Contingent liabilities
EUR million
Open positions under forward
currency contracts
Fair value
Contract amount
45.0
-4.5
7.9
48.4
2005
Commitments
Liabilities to subsidiaries
3.4
3.4
0.1
0.0
3.5
3.4
14. RECEIVABLES
EUR million
2005
EUR million
In addition to receivables from subsidiaries, prepaid
expenses and accrued income consists of VAT and other tax
receivables and other accrued income, but of which none is
individually significant.
13. INVENTORIES
EUR million
16. LIABILITIES
Receivables from subsidiaries
2005
2004
0.0
0.0
-0.1
2.1
Retained earnings
48.4
45.0
Dividends paid
-3.4
-4.5
9.4
7.9
Total distributable equity
54.4
48.4
Parent company share capital
by share type
SharesEUR
Shares
EUR
One vote
per share 38 498 303 3 464 847 37 543 458 3 378 911
54
55
12. INVESTMENTS
2005
EUR million
2004
Shareholdings in subsidiaries
Book value Jan. 1
56.3
Acquisitions of subsidiaries
8.9
Book value Dec. 31
65.1
55.6
0.7
56.3
Book value Jan. 1
Book value Dec. 31
0.2
0.2
0.2
0.2
Raw material
Work in progress
Finished products
Total
2005
2004
1.2
2.4
1.0
4.5
1.8
1.9
1.1
4.8
2005
2004
Interest-bearing
Loan receivables
51.4
40.7
Interest-bearing
Loan receivables
0.0
Trade receivables
17.8
Other receivables
0.0
15.8
3.8
0.1
78.3
60.4
Total
2004
Interest-bearing
Loan receivables
51.4
40.7
0.0
2005
2004
Advances received
Trade payables
0.0
1.8
3.0
0.1
0.8
4.1
EUR million
Trade receivables
17.2
15.3
3.3
42.3
22.0
76.1
59.3
37.4
0.0
39.2
4.4
Total
84.5
70.6
Total
2005
EUR million
EUR million
2004
Reserve fund Jan. 1
11.2
11.2
Private offering
3.2
0.0
1.9
0.0
16.3
11.2
48.4
-3.4
9.4
54.4
Dividends paid
Advances received
Trade payables
Total
Repayment schedule of non-cancellable
operating lease commitments
EUR million
Within one year
1–3 years
3–5 years
Total
2005
2004
0.0
1.3
0.0
1.3
0.0
0.4
0.0
0.4
Accrued liabilities and deferred income consists of VAT,
other taxes, personnel costs and prepaid income, of
2004
0.2
0.5
0.2
0.9
0.1
0.5
0.1
0.7
2005
2004
and Group companies
37.9
22.0
Guarantees
and Group companies
0.5
0.0
38.4
22.0
EUR million
Total
Commitments are to secure loans from financial institutions.
Contingent liabilities
EUR million
Open positions under forward
currency contracts
Fair value
Contract amount
45.0
-4.5
7.9
48.4
2005
Commitments
Liabilities to subsidiaries
3.4
3.4
0.1
0.0
3.5
3.4
14. RECEIVABLES
EUR million
2005
EUR million
In addition to receivables from subsidiaries, prepaid
expenses and accrued income consists of VAT and other tax
receivables and other accrued income, but of which none is
individually significant.
13. INVENTORIES
EUR million
16. LIABILITIES
Receivables from subsidiaries
2005
2004
0.0
0.0
-0.1
2.1
Retained earnings
48.4
45.0
Dividends paid
-3.4
-4.5
9.4
7.9
Total distributable equity
54.4
48.4
Parent company share capital
by share type
SharesEUR
Shares
EUR
One vote
per share 38 498 303 3 464 847 37 543 458 3 378 911
54
55
Rapala complies with the Corporate Governance recommendation for listed companies
issued by HEX Plc, the Central Chamber of Commerce of Finland and the Confederation
of Finnish Industry and Employers, which entered into effect on 1 July 2004. The Company’s
Corporate Governance statement is available at the website www.rapala.com.
The duties and
responsibilities of the
Board of Directors
The Board of Directors’ (Board) 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 by
the Board. 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 Board consists of no less than five
and no more than ten members. The
current Board comprises seven members: the Group’s President and CEO, the
President of Willtech Industrial Ltd. and
five non-executive expert members not
primarily employed by the Group.
Board members are elected by the
Annual General Meeting (AGM). The
term of a Board member is until the date
of the next AGM. The Board of Directors
elects a Chairman to serve until the date
of the next AGM. During the financial
year, the Board met 13 times.
Remuneration Committee
The Board has appointed a Remuneration
Committee that is chaired by Mr.
Emmanuel Viellard. Its members are
drawn from the Company’s non-execu-
King Ming (William) Ng
B.Sc. Eng.
Year of birth: 1962
Head of Rapala’s Chinese Manufacturing, Operations and Hong Kong Office
Shareholding: 2 574 883
Options: 49 533
Board members from left to right: William Ng, Manjit Dale, Jorma Kasslin,
Eero Makkonen, Christophe Viellard, Hardy McLain, Jan-Henrik Schauman and
Emmanuel Viellard. Marc Speeckaert is not in the picture.
Members of the Board
of Directors
Emmanuel Viellard
Member until December 13, 2005
and Chairman thereafter
B.A. CPA
Year of birth: 1963
Vice Chairman and Executive Vice
President of Lisi Industries
Shareholding*: - Options*: 37 331
Jorma Kasslin
Group President and Chief Executive
Officer
M.Sc. (Eng.)
Year of birth: 1953
Eero Makkonen
Chairman until December 13, 2005
and member thereafter
B.Sc. Eng.
Year of birth: 1946
Jan-Henrik Schauman
M. Sc. (Econ.) MBA
Year of birth: 1945
Christophe Viellard
Diploma ESCP
Year of birth: 1942
tive directors and currently consist
of Mr. Eero Makkonen and Mr. JanHenrik Schauman.
Committee members’ appointments run concurrently with a director’s
term as a member of the Board. 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.
Hardy McLain
Member until November 24, 2005
B.A., MBA
Year of birth: 1953
Managing Director and Partner of CVC
Capital Partners Europe Ltd
Shareholding and options*: -
The President is appointed by the Board.
Since 1998, Mr. Jorma Kasslin has acted
as the President and Chief Executive
Officer and as a member of the Board.
The Executive Committee assists the
President in managing and planning
Members of the
Executive Committee
Other Group
Key Managers
President and
Executive Committee
Jorma Kasslin
Officer (CEO). See information above
(Board of Directors)
Head of Chinese Manufacturing
Operations and Hong Kong Office
See information above (Board of
Directors)
Olli Aho
Company Counsel, Investor Relations,
Secretary of the Board
Juhani Pehkonen
Head of Lure Business
Manjit Dale
M.A. (Econ.)
Year of birth: 1965
Founding Partner TDR Capital
Stanislas de Castelnau
Head of fishing Hook Business
* Shareholdings and options on February 1, 2006.
56
Business organization
and responsibilities
The Group comprises the Company
and it’s manufacturing and distribution
subsidiaries all of which report to the
Company. Responsibility for the management and direction of these subsidiaries rests with each company’s Board
of Directors, which typically comprises
the Group President, Group Chief
Financial Officer, Company Counsel
and the subsidiary’s President. In addition, each Group company has its own
management team. The Group’s business organization can be divided into
manufacturing and distribution and, on
the other hand, into four different businesses, which are: Lures, Fishing Hooks,
Fishing Accessories, Other Products
as well as Distribution of third party
products.
Jouni Grönroos
Chief Financial Officer (CFO)
Marc Speeckaert
Member since
December 13, 2005
MBA
Year of birth: 1951
the operations of the Group. The members of the Executive Committee report
to the President.
57
Lure Business
Aku Valta, Sales and Marketing
Jari Kokkonen, Research & Development – Storm and Blue Fox
Jukka Sairanen,
Research & Development – Rapala
Philippe Guigo, Research & Development – Williamson
Arto Nygren, Vääksy Factory
Rauno Rantanen, Pärnu Factory
Martyn Lydon, Inverin Factory
LF Yung, Willtech Factory
DQ Yung, Willtech Factory
Kevin Au, Willtech Lures
Norbert Heyer, Sales and Marketing
Lars Ollberg, Sales and Marketing
Päivi Ohvo, Marttiini
Louis Law, Willtech Fishing Accessories
Other Products
Juhani Eskelinen, Peltonen
Cynthia Foong, Willtech Gift Products
Tapio Nirkkonen, KL-Teho
Insider register
In February 2000, the Company
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 current 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 the
Parent Company, Ernst & Young Oy, are
responsible for instructing and coordinating the audit in all Group companies.
The auditor in charge is Juha Nenonen,
CPA. The fact that the Group has no
separate internal audit function of its
own is reflected in the scope and content of the audit.
Administration
Esko Jäntti, Treasury and
Risk Management
Mikko Häikiö, Financial Planning and
Business Control
Anu Natunen, Group Reporting and
Financial Control
Distribution
Tom Mackin, USA
Gregg Wollner, USA
Nancy Adelmann, USA
Roger Cannon, Canada
Jean Claude Bel, France
Jean-Philippe Nicolle, France
Janne Paukkunen, Spain
Saku Kulmala, Finland
Mats Baum, Sweden
Nils Larsen, Denmark
Hasse Coucheron-Aamot, Norway
Håkan Rekstad, Norway
Thomas Brumann, Switzerland
Hannu Murtonen, Eastern Europe
Karoly Agh, Hungary
Manabu Kimoto, Japan
Leong Loke, Malaysia
Frank Chi, China and Thailand
Brian Hale, Australia
Grant Pledger, South Africa
Mark Pledger, South Africa
Mika Mahlamäki, Brasil
Rapala complies with the Corporate Governance recommendation for listed companies
issued by HEX Plc, the Central Chamber of Commerce of Finland and the Confederation
of Finnish Industry and Employers, which entered into effect on 1 July 2004. The Company’s
Corporate Governance statement is available at the website www.rapala.com.
The duties and
responsibilities of the
Board of Directors
The Board of Directors’ (Board) 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 by
the Board. 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 Board consists of no less than five
and no more than ten members. The
current Board comprises seven members: the Group’s President and CEO, the
President of Willtech Industrial Ltd. and
five non-executive expert members not
primarily employed by the Group.
Board members are elected by the
Annual General Meeting (AGM). The
term of a Board member is until the date
of the next AGM. The Board of Directors
elects a Chairman to serve until the date
of the next AGM. During the financial
year, the Board met 13 times.
Remuneration Committee
The Board has appointed a Remuneration
Committee that is chaired by Mr.
Emmanuel Viellard. Its members are
drawn from the Company’s non-execu-
B.Sc. Eng.
Year of birth: 1962
Head of Rapala’s Chinese Manufacturing, Operations and Hong Kong Office
Shareholding: 2 574 883
Options: 49 533
Board members from left to right: William Ng, Manjit Dale, Jorma Kasslin,
Eero Makkonen, Christophe Viellard, Hardy McLain, Jan-Henrik Schauman and
Emmanuel Viellard. Marc Speeckaert is not in the picture.
Members of the Board
of Directors
Emmanuel Viellard
Member until December 13, 2005
and Chairman thereafter
B.A. CPA
Year of birth: 1963
Vice Chairman and Executive Vice
President of Lisi Industries
Jorma Kasslin
Officer
M.Sc. (Eng.)
Year of birth: 1953
Eero Makkonen
Chairman until December 13, 2005
and member thereafter
B.Sc. Eng.
Year of birth: 1946
Jan-Henrik Schauman
M. Sc. (Econ.) MBA
Year of birth: 1945
Christophe Viellard
Diploma ESCP
Year of birth: 1942
tive directors and currently consist
of Mr. Eero Makkonen and Mr. JanHenrik Schauman.
Committee members’ appointments run concurrently with a director’s
term as a member of the Board. 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.
Hardy McLain
B.A., MBA
Year of birth: 1953
Managing Director and Partner of CVC
Capital Partners Europe Ltd
The President is appointed by the Board.
Since 1998, Mr. Jorma Kasslin has acted
as the President and Chief Executive
Officer and as a member of the Board.
The Executive Committee assists the
President in managing and planning
Members of the
Executive Committee
Other Group
Key Managers
President and
Executive Committee
Jorma Kasslin
Officer (CEO). See information above
(Board of Directors)
Head of Chinese Manufacturing
Operations and Hong Kong Office
See information above (Board of
Directors)
Olli Aho
Company Counsel, Investor Relations,
Secretary of the Board
Juhani Pehkonen
Head of Lure Business
Manjit Dale
M.A. (Econ.)
Year of birth: 1965
Founding Partner TDR Capital
Stanislas de Castelnau
Head of fishing Hook Business
* Shareholdings and options on February 1, 2006.
56
Business organization
and responsibilities
The Group comprises the Company
and it’s manufacturing and distribution
subsidiaries all of which report to the
Company. Responsibility for the management and direction of these subsidiaries rests with each company’s Board
of Directors, which typically comprises
the Group President, Group Chief
Financial Officer, Company Counsel
and the subsidiary’s President. In addition, each Group company has its own
management team. The Group’s business organization can be divided into
manufacturing and distribution and, on
the other hand, into four different businesses, which are: Lures, Fishing Hooks,
Fishing Accessories, Other Products
as well as Distribution of third party
products.
Jouni Grönroos
Chief Financial Officer (CFO)
Marc Speeckaert
Member since
December 13, 2005
MBA
Year of birth: 1951
the operations of the Group. The members of the Executive Committee report
to the President.
57
Lure Business
Aku Valta, Sales and Marketing
Jari Kokkonen, Research & Development – Storm and Blue Fox
Jukka Sairanen,
Research & Development – Rapala
Philippe Guigo, Research & Development – Williamson
Arto Nygren, Vääksy Factory
Rauno Rantanen, Pärnu Factory
Martyn Lydon, Inverin Factory
LF Yung, Willtech Factory
DQ Yung, Willtech Factory
Kevin Au, Willtech Lures
Norbert Heyer, Sales and Marketing
Lars Ollberg, Sales and Marketing
Päivi Ohvo, Marttiini
Louis Law, Willtech Fishing Accessories
Other Products
Juhani Eskelinen, Peltonen
Cynthia Foong, Willtech Gift Products
Tapio Nirkkonen, KL-Teho
Insider register
In February 2000, the Company
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 current 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 the
Parent Company, Ernst & Young Oy, are
responsible for instructing and coordinating the audit in all Group companies.
The auditor in charge is Juha Nenonen,
CPA. The fact that the Group has no
separate internal audit function of its
own is reflected in the scope and content of the audit.
Administration
Esko Jäntti, Treasury and
Risk Management
Mikko Häikiö, Financial Planning and
Business Control
Anu Natunen, Group Reporting and
Financial Control
Distribution
Tom Mackin, USA
Gregg Wollner, USA
Nancy Adelmann, USA
Roger Cannon, Canada
Jean Claude Bel, France
Jean-Philippe Nicolle, France
Janne Paukkunen, Spain
Saku Kulmala, Finland
Mats Baum, Sweden
Nils Larsen, Denmark
Hasse Coucheron-Aamot, Norway
Håkan Rekstad, Norway
Thomas Brumann, Switzerland
Hannu Murtonen, Eastern Europe
Karoly Agh, Hungary
Manabu Kimoto, Japan
Leong Loke, Malaysia
Frank Chi, China and Thailand
Brian Hale, Australia
Grant Pledger, South Africa
Mark Pledger, South Africa
Mika Mahlamäki, Brasil
Principal shareholders on December 31, 2005
Shareholder Number of shares
%
Viellard Migeon & Cie
10 414 071
27.1
De Pruines Industries SAS
1 700 000
4.4
Odin Norden
1 545 822
4.0
Odin forvaltnings AS
944 800
2.5
OP-Suomi Kasvu investment fund
887 800
2.3
NG King Ming
738 350
1.9
Eläke-Fennia pension insurance company
620 082
1.6
Nordea Nordic Small Cap investment fund
550 400
1.4
Nordea Life Insurance Suomi Oy
522 700
1.4
Administrative registrations
14 553 616
37.8
Other shareholders total
6 020 662
15.6
Total number of shares
38 498 303
100%
Rapala’s shares have been traded on the Helsinki Exchanges since 1998.
In 2005, the shares traded between EUR 5.50 and 6.88 with an average price of EUR 5.91.
Shares and
Voting Rights
Rapala VMC Corporation’s (“Rapala”
or “Company”) 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 (“Articles”). On December
31, 2005, the share capital fully paid and
reported in the Trade Register was EUR
3 465 million. The book value of a share
is EUR 0.09. On December 31, 2005, the
number of shares was 38 498 303. Each
share is entitled to one vote.
Redemption Obligation
According to Articles, a shareholder
whose shareholding or voting rights,
either alone or jointly with other shareholders as specified in the Articles, equals
or exceeds 33 per cent of all outstanding
shares of the company or of the voting
rights afforded by such shares, shall upon
requests by other shareholders purchase
these shares and other securities affording
the holder thereof under the Companies
Act the right to these shares in the manner provided for in the Articles.
Board’s Authorizations
Based on the authorization given by the
Annual General Meeting in April 2005,
the Board can decide on an increase of
the share capital by a maximum of 675 000
euros in one or more issues of new shares
within one year from the Annual General
Meeting. A maximum of 7 500 000 new
shares each with a counter book value
of 0.09 euro may be offered for subscription.
Changes in Share Capital
In May, 375 311 new shares were issued
and the share capital of the company was
increased by 33 777.99 EUR. The new
shares were offered to be subscribed by
Ng King Ming William in deviation from
the shareholders pre-emptive subscription right set forth in Chapter 4 Section
2 of the Companies Act. This was part of
the purchase price of Willtech Industries
Ltd acquired in 2001. This share capital
increase was registered and subject to
trade as of May 24, 2005.
On November 8, 160 000 new shares
were issued and the share capital of the
company was increased by 14 400 EUR.
The new shares were offered to be subscribed by Lauri Marttiini, Ilkka Marttiini
and the family members of Ilkka Marttiini in deviation from the shareholders
pre-emptive subscription right set forth
in Chapter 4 Section 2 of the Companies
Act. This was part of the purchase price of
Marttiini Oy. This share capital increase
was registered on November 10 and subject
to trade as of November 11.
A total of 419 534 new shares were
share price 2001–2005, €
6.50
6.00
5.50
5.00
4.50
4.00
3.50
3.00
2.50
7/01 1/02
7/02
1/03 7/03 1/04
■ Rapala VMC (LP)
7/04
1/05 7/05
subscribed with 2003A option rights in
October. The share capital increased by
37 758.06 EUR. The new shares were
listed on the main list of the Helsinki
Exchange on October 24, 2005. The
shares grant its holders the same rights
as the already listed shares. A further
80 466 shares may still be subscribed
with 2003A option rights by March 31,
2007 at the latest.
Shareholders by category on December 31, 2005
Shareholder category Number of shares
%
Private companies
663 275 1.7
Financial institutions
4 123 900
10.7
Public institutions
1 593 083
4.1
Non-profit organizations
618 700
1.6
Individuals
1 067 421
2.7
International shareholders
15 877 088 41.2
Total
38 498 303
100%
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.
Distribution of shareholding on December 31, 2005
Option Programs
Number of shares
On January 31, 2006, the exercise period
for the 1 000 000 options issued under
the 2000 Share Option Program expired.
The following option schemes are currently in place for senior and middle
management and for the Board:
• T he 2003 Share Option Program:
1 000 000 options were issued to 90
managers, 500 000 exercisable between
March 31, 2005 and March 31, 2007
at an exercise price of EUR 4.80 per
share (2003A) and 500 000 exercisable
between March 31, 2006 and March 31,
2008 at an exercise price of EUR 6.23
per share (2003B). A total of 419 534
options out of the 2003A program was
exercised during 2005.
March 31, 2007 and March 31, 2009
share (2004A), and 500 000 exercisable between March 31, 2008 and
March 31, 2010 at the trade weighted
average price of the Rapala share on
the Helsinki Exchanges in March 2006
(2004B).
58
Number of shareholders
%Total shares
%
1 - 100
449
27.0
37 836
0.01
101 -500
709
42.6
215 012
0.6
501 - 1 000
242
14.5
209 353
0.5
1 001 - 10 000
212
12.7
662 366
1.7
10 001 - 1 000 000
28
1.7
1 012 044
2.6
1 000 001 -
-24
-1.4
36 361 692 94.5
Total
100%
38 498 303
100%
The subscription price shall be reduced
by the amount of dividends distributed
after the subscription period for option
rights has ended and before the commencement of the share subscription
period.
The outstanding options under
2003 and 2004 Option Programs represented a 6.1% interest in the company’s
outstanding shares on December 31,
2005 and 3.5% on February 1, 2006
Management
Shareholding
On December 31, 2005, members of
the Board and the Group Executive
Committee held a total of 2 694 883
59
Company shares, corresponding to 70% of
all shares and voting rights. If the option
programs 2003 and 2004 were exercised in
their entirety, shareholdings and aggregate
voting rights held by the members of the
Board and Group Executive Committee
would increase by 4.1 percentage points.
Details of management shareholdings are
given on pages 56 and 57.
Trading and
Performance of the
Company’s Shares
The Company share (RAP1V) is quoted
on OMX Exchanges in Helsinki (previously HEX Ltd). The 2005 closing price
on December 30 was EUR 6.10. The
highest price in 2005 was EUR 6.88, the
lowest price EUR 5.50 and the average
price EUR 5.91. The share price rose
4.8% in 2005. The Helsinki OMX index
for all shares rose 30.7% during the same
period. A total of 23 027 428 Rapala
shares were traded during 2005. This
represents 59.8% of all shares.
At the end of the year, the market
capitalization of the outstanding shares
was EUR 234.8 million. Earnings per share
(basic) were EUR 0.39 (EUR 0.32 in 2004).
Dividend
The Board proposes to the AGM that a
dividend of EUR 0.11 per share will be
paid.
Principal shareholders on December 31, 2005
Shareholder Number of shares
%
Viellard Migeon & Cie
10 414 071
27.1
De Pruines Industries SAS
1 700 000
4.4
Odin Norden
1 545 822
4.0
Odin forvaltnings AS
944 800
2.5
OP-Suomi Kasvu investment fund
887 800
2.3
NG King Ming
738 350
1.9
Eläke-Fennia pension insurance company
620 082
1.6
Nordea Nordic Small Cap investment fund
550 400
1.4
Nordea Life Insurance Suomi Oy
522 700
1.4
Administrative registrations
14 553 616
37.8
Other shareholders total
6 020 662
15.6
Total number of shares
38 498 303
100%
Rapala’s shares have been traded on the Helsinki Exchanges since 1998.
In 2005, the shares traded between EUR 5.50 and 6.88 with an average price of EUR 5.91.
Shares and
Voting Rights
Rapala VMC Corporation’s (“Rapala”
or “Company”) 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 (“Articles”). On December
31, 2005, the share capital fully paid and
reported in the Trade Register was EUR
3 465 million. The book value of a share
is EUR 0.09. On December 31, 2005, the
number of shares was 38 498 303. Each
share is entitled to one vote.
Redemption Obligation
According to Articles, a shareholder
whose shareholding or voting rights,
either alone or jointly with other shareholders as specified in the Articles, equals
or exceeds 33 per cent of all outstanding
shares of the company or of the voting
rights afforded by such shares, shall upon
requests by other shareholders purchase
these shares and other securities affording
the holder thereof under the Companies
Act the right to these shares in the manner provided for in the Articles.
Board’s Authorizations
Based on the authorization given by the
Annual General Meeting in April 2005,
the Board can decide on an increase of
the share capital by a maximum of 675 000
euros in one or more issues of new shares
within one year from the Annual General
Meeting. A maximum of 7 500 000 new
shares each with a counter book value
of 0.09 euro may be offered for subscription.
Changes in Share Capital
In May, 375 311 new shares were issued
and the share capital of the company was
increased by 33 777.99 EUR. The new
shares were offered to be subscribed by
Ng King Ming William in deviation from
the shareholders pre-emptive subscription right set forth in Chapter 4 Section
2 of the Companies Act. This was part of
the purchase price of Willtech Industries
Ltd acquired in 2001. This share capital
increase was registered and subject to
trade as of May 24, 2005.
On November 8, 160 000 new shares
were issued and the share capital of the
company was increased by 14 400 EUR.
The new shares were offered to be subscribed by Lauri Marttiini, Ilkka Marttiini
and the family members of Ilkka Marttiini in deviation from the shareholders
pre-emptive subscription right set forth
in Chapter 4 Section 2 of the Companies
Act. This was part of the purchase price of
Marttiini Oy. This share capital increase
was registered on November 10 and subject
to trade as of November 11.
A total of 419 534 new shares were
share price 2001–2005, €
6.50
6.00
5.50
5.00
4.50
4.00
3.50
3.00
2.50
7/01 1/02
7/02
1/03 7/03 1/04
■ Rapala VMC (LP)
7/04
1/05 7/05
subscribed with 2003A option rights in
October. The share capital increased by
37 758.06 EUR. The new shares were
listed on the main list of the Helsinki
Exchange on October 24, 2005. The
shares grant its holders the same rights
as the already listed shares. A further
80 466 shares may still be subscribed
with 2003A option rights by March 31,
2007 at the latest.
Shareholders by category on December 31, 2005
Shareholder category Number of shares
%
Private companies
663 275 1.7
Financial institutions
4 123 900
10.7
Public institutions
1 593 083
4.1
Non-profit organizations
618 700
1.6
Individuals
1 067 421
2.7
International shareholders
15 877 088 41.2
Total
38 498 303
100%
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.
Distribution of shareholding on December 31, 2005
Option Programs
Number of shares
On January 31, 2006, the exercise period
for the 1 000 000 options issued under
the 2000 Share Option Program expired.
The following option schemes are currently in place for senior and middle
management and for the Board:
March 31, 2005 and March 31, 2007
share (2003A) and 500 000 exercisable
between March 31, 2006 and March 31,
2008 at an exercise price of EUR 6.23
per share (2003B). A total of 419 534
options out of the 2003A program was
exercised during 2005.
March 31, 2007 and March 31, 2009
share (2004A), and 500 000 exercisable between March 31, 2008 and
March 31, 2010 at the trade weighted
average price of the Rapala share on
the Helsinki Exchanges in March 2006
(2004B).
58
Number of shareholders
%Total shares
%
1 - 100
449
27.0
37 836
0.01
101 -500
709
42.6
215 012
0.6
501 - 1 000
242
14.5
209 353
0.5
1 001 - 10 000
212
12.7
662 366
1.7
10 001 - 1 000 000
28
1.7
1 012 044
2.6
1 000 001 -
-24
-1.4
36 361 692 94.5
Total
100%
38 498 303
100%
The subscription price shall be reduced
by the amount of dividends distributed
after the subscription period for option
rights has ended and before the commencement of the share subscription
period.
The outstanding options under
2003 and 2004 Option Programs represented a 6.1% interest in the company’s
outstanding shares on December 31,
2005 and 3.5% on February 1, 2006
Management
Shareholding
On December 31, 2005, members of
the Board and the Group Executive
Committee held a total of 2 694 883
59
Company shares, corresponding to 70% of
all shares and voting rights. If the option
programs 2003 and 2004 were exercised in
their entirety, shareholdings and aggregate
voting rights held by the members of the
Board and Group Executive Committee
would increase by 4.1 percentage points.
Details of management shareholdings are
given on pages 56 and 57.
Trading and
Performance of the
Company’s Shares
The Company share (RAP1V) is quoted
on OMX Exchanges in Helsinki (previously HEX Ltd). The 2005 closing price
on December 30 was EUR 6.10. The
highest price in 2005 was EUR 6.88, the
lowest price EUR 5.50 and the average
price EUR 5.91. The share price rose
4.8% in 2005. The Helsinki OMX index
for all shares rose 30.7% during the same
period. A total of 23 027 428 Rapala
shares were traded during 2005. This
represents 59.8% of all shares.
At the end of the year, the market
capitalization of the outstanding shares
was EUR 234.8 million. Earnings per share
(basic) were EUR 0.39 (EUR 0.32 in 2004).
Dividend
The Board proposes to the AGM that a
dividend of EUR 0.11 per share will be
paid.
Shareholder Information
Annual
General Meeting
Financial Reporting
Schedule in 2006
The Annual General Meeting (AGM) of
Rapala VMC Corporation will be held at
14.00 on April 5, 2006 at Rapala Offices,
Arabianranta 6, Helsinki, Finland.
In order to attend the AGM shareholders must register in the Company’s
shareholder register maintained by the
Finnish Central Securities Depository
Ltd (Suomen Arvopaperikeskus Oy) by
March 24, 2006. Nominee-registered
shareholders who wish to attend the,
AGM should temporarily re-register the
shares under their own name. Such reregistration must be made no later than
March 24, 2006.
Instructions for submitting notice
of attendance to the AGM, as well as
additional information on the AGM are
available at www.rapala.com.
In 2006 Rapala, will publish financial
information as follows:
•1st Quarter 2006
Interim Report on May 4, 2006
•2nd Quarter 2006
Interim Report on August 3, 2006
•3rd Quarter 2006
Interim Report on November 2, 2006
Analysts Covering
Rapala
The following analysts follow Rapala
and prepare investment analysis on the
Company. These persons cover Rapala
on their own initiative.
•Alfred Berg ABN AMBRO
Rauli Juva
•eQ Bank
Tomi Tiilola
• Evli Bank
Derek Silva
• FIM Securities Jussi Hyöty
• Kaupthing Bank
Jutta Rahikainen
• SEB Enskilda
Tommi Ilmoni
Contacts
Should you require more information about
Rapala VMC Corporation, please do not hesitate
to contact one of the following persons:
Jouni Grönroos
Chief Financial Officer
Tel: +358 9 7562 5417
Fax: +358 9 7562 5440
E-mail:
jouni.gronroos@rapala.fi
Olli Aho
Company Councel and
Investor Relations
Tel: +32 2 6260 430
Fax: +32 2 6260 439
E-mail: olli.aho@rapala.fi
locations of business operations
Press and Stock
Exchange Releases
in 2005
Dec 28Acquisition of Tatlow &
Pledger
Dec 13Emmanuel Viellard elected
as Chairman of the Board
Dec 13Marc Speeckaert elected
as a member of the Board
Nov 24Notice to convene the
Extraordinary General
Meeting
Nov 18Notification of William
Ng’s ownership
Nov 15Notification of Sofina
S.A.’s ownership
Nov 15Notification of Viellard
Migeon & Cie’s ownership
Nov 9 Interim Report Q3
Oct 21Subscription of new shares
with 2003A option rights
Oct 18Acquisitions of Luhr
Jensen
Oct 4Acquisition of Eurohold
and signing of worldwide
exclusive distribution
agreement for Ultrabite
Oct 3 Acquisition of Marttiini
Sept 30 Acquisition of Peltonen
Sept 12Notification of Odin’s
ownership
Aug 8 Interim Report Q2
June 13Comment on market
rumors on Luhr Jensen
acquisition
May 23Registration of share
capital increase
May 11 Interim Report Q1
May 10Preliminary IFRS information on 2004
May 4Notification of Henderson
Global Investors’ ownership
Apr 19Eero Makkonen elected as
Chairman of the Board
Apr 19Decisions of Annual
General Meeting
Apr 4Jouni Grönroos appointed
as CFO
Mar 31Notice to convene the
Annual General Meeting
Mar 11Notification of Grantham,
Mayo, Van Otterloo & Co’s
ownership
Feb 17 Report for financial year
2004
60
61
l
Group manufacturing and sourcing units
l
Group administration units
l
Group distribution companies
l
Shimano distribution companies
Shareholder Information
Annual
General Meeting
Financial Reporting
Schedule in 2006
The Annual General Meeting (AGM) of
Rapala VMC Corporation will be held at
14.00 on April 5, 2006 at Rapala Offices,
Arabianranta 6, Helsinki, Finland.
In order to attend the AGM shareholders must register in the Company’s
shareholder register maintained by the
Finnish Central Securities Depository
Ltd (Suomen Arvopaperikeskus Oy) by
March 24, 2006. Nominee-registered
shareholders who wish to attend the,
AGM should temporarily re-register the
shares under their own name. Such reregistration must be made no later than
March 24, 2006.
Instructions for submitting notice
of attendance to the AGM, as well as
additional information on the AGM are
available at www.rapala.com.
In 2006 Rapala, will publish financial
information as follows:
•1st Quarter 2006
Interim Report on May 4, 2006
•2nd Quarter 2006
Interim Report on August 3, 2006
•3rd Quarter 2006
Interim Report on November 2, 2006
Analysts Covering
Rapala
The following analysts follow Rapala
and prepare investment analysis on the
Company. These persons cover Rapala
on their own initiative.
•Alfred Berg ABN AMBRO
Rauli Juva
•eQ Bank
Tomi Tiilola
• Evli Bank
Derek Silva
• FIM Securities Jussi Hyöty
• Kaupthing Bank
Jutta Rahikainen
• SEB Enskilda
Tommi Ilmoni
Contacts
Should you require more information about
Rapala VMC Corporation, please do not hesitate
to contact one of the following persons:
Jouni Grönroos
Chief Financial Officer
Tel: +358 9 7562 5417
Fax: +358 9 7562 5440
E-mail:
jouni.gronroos@rapala.fi
Olli Aho
Company Councel and
Investor Relations
Tel: +32 2 6260 430
Fax: +32 2 6260 439
E-mail: olli.aho@rapala.fi
locations of business operations
Press and Stock
Exchange Releases
in 2005
Dec 28Acquisition of Tatlow &
Pledger
Dec 13Emmanuel Viellard elected
as Chairman of the Board
Dec 13Marc Speeckaert elected
as a member of the Board
Nov 24Notice to convene the
Extraordinary General
Meeting
Nov 18Notification of William
Ng’s ownership
Nov 15Notification of Sofina
S.A.’s ownership
Nov 15Notification of Viellard
Migeon & Cie’s ownership
Nov 9 Interim Report Q3
Oct 21Subscription of new shares
with 2003A option rights
Oct 18Acquisitions of Luhr
Jensen
Oct 4Acquisition of Eurohold
and signing of worldwide
exclusive distribution
agreement for Ultrabite
Oct 3 Acquisition of Marttiini
Sept 30 Acquisition of Peltonen
Sept 12Notification of Odin’s
ownership
Aug 8 Interim Report Q2
June 13Comment on market
rumors on Luhr Jensen
acquisition
May 23Registration of share
capital increase
May 11 Interim Report Q1
May 10Preliminary IFRS information on 2004
May 4Notification of Henderson
Global Investors’ ownership
Apr 19Eero Makkonen elected as
Chairman of the Board
Apr 19Decisions of Annual
General Meeting
Apr 4Jouni Grönroos appointed
as CFO
Mar 31Notice to convene the
Annual General Meeting
Mar 11Notification of Grantham,
Mayo, Van Otterloo & Co’s
ownership
Feb 17 Report for financial year
2004
60
61
l
Group manufacturing and sourcing units
l
Group administration units
l
Group distribution companies
l
Shimano distribution companies
Printed in Finland by Markprint on recycled paper.
Paper: Cyclus offset 115 g
Cover: Rives Reflection 250 g
Design and layout by Please
www.please.fi
62
Printed in Finland by Markprint on recycled paper.
Paper: Cyclus offset 115 g
Cover: Rives Reflection 250 g
Design and layout by Please
www.please.fi
62
Rapala VMC Corporation | Annual Report 2005
RAPALA.COM
Rapala VMC Corporation (RAPIV) is a public company
listed on the Helsinki Stock Exchange
© 2005 Rapala VMC Corporation
Rapala VMC Corporation
Annual Report 2005

Rapala VMC Corporation Annual Report 2005

Transcription

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