1. business and industrial
2. agriculture and forestry
3. livestock

2014
ANNUAL REPORT
We make it possible
for people to achieve better
CONTENTS
SNELLMAN GROUP
CEO review........................................ 4
Snellman in brief................................ 6
Group organisation
Snellman management group
Events during 2014............................ 8
MEAT PROCESSING
READY MEALS
Managing director review................ 11
Managing director review................ 17
Key figures....................................... 12
Key figures....................................... 18
Case................................................ 13
Case................................................ 19
Primary Production......................... 14
Cooperation partners:
Viestintäsalot Oy
Solid Media
Forsberg Oy
Photos:
Studio Petteri Kitti Oy
Cover photo: Jaakko Vähämäki
Vastavalo.fi
FINANCIAL
STATEMENTS
Group key figures............................ 50
Consolidated financial
statements, IFRS.............................. 51
Notes to consolidated financial
statements....................................... 54
Parent company’s balance sheet
and income statement (FAS)........... 70
Auditor’s report............................... 72
Corporate Governance
of the Snellman Group.................... 74
Contact information....................... 82
FOOD SERVICE
PET FOOD
Managing director review................ 20
Managing director review................ 29
Key figures....................................... 22
Key figures....................................... 30
Case................................................ 23
Case................................................ 31
ADMINISTRATION
Personnel........................................ 33
Personnel case................................. 35
Responsibility.................................. 37
Responsibility case........................... 39
Key figures....................................... 40
Board of directors’ report................ 44
PANINI
Managing director review................ 24
Key figures....................................... 27
Case................................................ 26

We make it possible
for people to achieve better
4
CEO REVIEW
CEO REVIEW
GROWTH IN A
CHALLENGING MARKET
SITUATION
In 2014, Snellman focused on developing its basic operations and seeking growth.
We improved our cost efficiency and the systemisation of our operations, and we
strengthened internal collaboration within the Group. We enhanced our competitiveness by increasing the utilisation of the competence reserve of the Group.
The year 2014 started in a stiff market situation: the general
LONG-TERM SYSTEMATIC WORK
economic development was weak and consumers’ confidence
Surveys show that Snellman is considered a responsible com-
in the economy low. Despite the existing circumstances, we
pany and that Snellman brands are highly valued. Our good
sought growth. This was made possible by our increased pro-
reputation is the result of long-term systematic work com-
duction capacity, especially in Meat Processing. We also in-
bined with the courage to be a forerunner in the industry. This
vested in product development and closer collaboration with
also bore fruit in the unpredictable circumstances in 2014,
our customers in all the Group’s business areas.
when the operating environment was extremely challenging
for the producers, food industry and retailers.
Investments remained at a clearly lower level than in the previous few years – we concentrated on utilising the factory and
We cannot expect the market to provide boost for us in 2015.
IT investments that we had already made. In addition, we im-
However, we are better equipped to focus more accurately on
proved the cost efficiency of the processes at Meat Processing
factors that we can influence and respond to the challenges
by developing the process management and lean-thinking
that we will face in 2015. We have several projects in progress
compliant operations.
to improve our competitiveness. The most important of them
are the procurement-enhancing project that continues in 2015
The last few months of 2013 and the first quarter of 2014 were
and the project aiming at the full utilisation of our ERP sys-
economically challenging. We were not able to react rapidly
tem, including further development of Group accounting. We
enough to the changed market situation (decline in exports,
will also update our product strategy during the current year.
oversupply in the domestic market and declining price level),
which affected our main business area Meat Processing. The
We will continue to improve our cost and operating efficiency,
result of the Group was also weakened by the investments
for example by adopting a new production planning system.
that MUSH and Panini made in international operations.
We will enhance collaboration in production and product development as well as sales and marketing. In this work, our
We, however, managed to turn the course of the financial
customers will play a key role. We will also continue the pro-
result development from the second quarter onwards. We
grammes that enhance the wellbeing and competencies of our
took corrective measures to ensure profitability. We succeed-
personnel.
ed in several campaigns, reduced our inventories, developed
Group-level procurement processes and improved our profit
GENUINELY BETTER
margin. Ready Meals and Food Service Finland succeeded par-
We at Snellman are happy to see that our products are increas-
ticularly well.
ingly sought after and popular among consumers. We are
grateful for being considered a reliable partner by our produc-
At the end of the year, we could state that we had increased
ers and customers. We want to be open and easily approach-
our sales and strengthened our market position in all our
able and thereby convey the culture that reflects our values.
business areas. We fell behind our result target, but improved
slightly from 2013.
CEO REVIEW
In about 60 years, Snellman has
grown from a small sausage factory in Pietarsaari into a diversified
international company. Relying
on our value base and corporate
culture, we strive to increase and
foster collaboration between our
business areas. The business areas make the Snellman Group, and
their knowledge and competence
resources are what we can harness
for the common good.
At the beginning of 2015, we started planning a new strategy period
extending to 2018. At the same
time, we will also consider our
objectives beyond 2018. We will
maintain a curious mind and we
will continuously innovate and
develop our operations. We will
increase our flexibility and agility
without compromising efficiency.
We believe in the values that have
guided us throughout our history.
We strive to do things genuinely
better, and we believe that this
will show and taste in our products.
I have been CEO of the Snellman
Group for one year now. It has
been a great year in a great company. I would like to take this opportunity to thank the Snellman
personnel for the good work they
have done in 2014, the producers
for their commitment to collaboration with us, and our customers,
owners and partners for the confidence they have shown in us.
Leena Laitinen
CEO, Oy Snellman Ab
Our success is based on our ability to offer consumers better products.
“Our strategic focuses are profitable growth and strong customer orientation in all our business areas”, Leena Laitinen, CEO of the Snellman
Group, says.
5
6
SNELLMAN IN BRIEF
SNELLMAN IN BRIEF
SECTOR
COMPANY
BRANDS
PERSONNEL
31.12.2014
TURNOVER
milj. €
Total
Total
1275
301,3 milj. €
943
224,0 milj. €
191
47,0 milj. €
25
38,8 milj. €
41
6,5 milj. €
46
6,4 milj. €
SNELLMAN GROUP
Snellman Group comprises the parent
company of Oy Snellman Ab, and five
business areas: meat processing, ready
meals, food service, panini, and pet food.
MEAT PROCESSING
Snellman Meat Processing produces
high-quality meat and cold cut products.
The operations cover primary production,
slaughtering and production of meat and
processed meat products.
READY MEALS
Food factory with a mission to give people
an opportunity to have better ready meals.
Oy Snellman Ab
Snellmanin
Lihanjalostus Oy
S-Frost Oy
Figen Oy
Snellmanin
Kokkikartano Oy
Carolines Kök AB
FOOD SERVICE
Food Service offers high-quality product
and service solutions to professional kitchens.
Icecool Oy
Snellman Trading AB
PANINI
Conceptualised fast food product made
of fresh local bread.
Mr. Panini Oy
Mr. Panini NUF
PET FOOD
One hundred percent natural, highquality raw food for dogs and cats.
Oy MUSH Ltd
MUSH GmbH
GROUP ORGANISATION
SNELLMAN
MEAT PROCESSING
READY MEALS
FOOD SERVICE
PANINI
PET FOOD
SNELLMAN MANAGEMENT GROUP
Back row from the left John Aspnäs, Tommy Snellman,
Henrik Snellman, Magnus Pettersson, Stefan Snellman. In front from the left secretary Johanna Skytte,
CEO Leena Laitinen, Timo Ylilauri, Kati Rajala, Jussi
Salmi.
OUR MISSION
We make it possible
for people to achieve better
OUR BUSINESS MODEL
Success is earned by doing good
OUR VALUES
Treat others as you would like
to be treated yourself
Treat your subordinate as you would
like to be treated as a subordinate
yourself.
Treat your colleague as you would
like to be treated as a colleague
yourself.
Manufacture as good products for
other people as you would for yourself and the people close to you.



Treat your supervisor as you would
like to be treated as a supervisor
yourself.
Do your job as if you were doing it
for yourself.
Treat yourself well and demand that
you are treated well.
8
EVENTS
EVENTS DURING 2014
ICECOOL SWITCHES TO
THE “KUNNON LENKKI”
QUALITY RESPONSIBILITY
SUSTAINABLE FISH STOCKS
SAUSAGE GOES FROM
LABEL FOR FRESH MEAT
STRENGTH TO STRENGTH
PRODUCTS
The “Kunnon lenkki” sausage receives two significant recognitions for
its launches. It is awarded a prize in
the “AdProfit 2013” competition,
which measures the profitability of
advertising. The “Kunnon lenkki”
campaign also takes the first prize
in the “Grand One” competition,
which is the largest digital marketing media competition in Finland.
The Finnish Food Safety Authority
(Evira) grants the pig health classification register (Sikava) maintained
by the Association for Animal Disease Prevention (ETT) the status of a
national quality system.
Some of Icecool’s fish products are
granted the MSC Ecolabel. The label is granted to fish products that
originate from a healthy fish stock
and are caught in a sustainable
manner that ensures the continuity
of the fish stock and guarantees its
traceability.
WINTER AND EARLY SPRING 2014
The quality system will be communicated to the public through package
labelling.
SPRING
NEW FREEZING SPACE IN
MUSH ENTERS THE NORWE-
CATS GO
KUUSISAARI
GIAN PET FOOD MARKET
"BARFING”
The Kuusisaari's freezing space
is extended by 600 square metres. The new spiral freezer with
a freezing capacity of 3 500 kg
per hour allows a fast freezing
process. The freezing plant starts
operations in July.
MUSH starts sales in Norway. Interest in BARF (bones and raw food)
feeding is growing in the whole of
Europe.
MUSH launches BARF food for cats
in Finland and Sweden. So far, the
offering of BARF food for cats has
been scarce.
COMMUNICATION ON GMO-FREE
PRODUCTS STARTS
In February 2014, the unseasoned fresh meat products of Snellman Meat Processing are labelled as
“GMO-free”. The launching is made possible by Snellman’s GMO-free primary production, which means
that the animals are not fed with genetically modified
fodder.
PANINI IS NOW DOMESTIC
Panini replaces the frozen bread imported from Belgium with fresh bread. Panini’s local partner Porin
Leipä makes the loaves now.
EVENTS
OIL IS REPLACED
BY BIOGAS
In August 2014, the Kuusisaari meat
processing plant switches to completely oil-free heating and steam
production. The energy required by
the plant is produced by the Jepua
biogas plant from the sludge supplied by Meat Processing. Snellman
Meat Processing is the only food
factory in Finland that uses biogas.
FIRST SUPPLIER SEMINAR IN
PANINI PILOTS IN THE
SNELLMAN’S HISTORY
RETAIL MARKET
In October 2014, Snellman organises a seminar that is attended by more
than 90 of Snellman’s largest suppliers of goods and services in Finland.
The event is part of a development
project to combine the procurement
volumes of the business areas and to
optimise purchases.
Panini introduces the first ready-foroven paninis to consumers in the
retail market.
SNACKS FOR DOGS
MUSH introduces a new “Snacks”
product range to the retail market.
The range contains nine different
products for dogs.
WINTER 2014
SUMMER
AUTUMN
ACCURACY IN PRODUCTION
KOKKIKARTANO LAUNCHES
FINNISH PORK RAISES
PLANNING
A NEW PRODUCT FAMILY
INTEREST
The new production-planning programme is ready for testing in Meat
Processing. Apart from Meat Processing, also Kokkikartano adopts
the new programme, followed by
MUSH and Panini.
The new sauce range launched in
September 2014 includes sausage
sauce, minced meat sauce and meat
balls in cream sauce. The sauces
and mashed potatoes that go with
them are received extremely well.
Snellman’s Christmas ham campaign exceeds all expectations: the
sales triple from the previous year.
The core of the campaign is Snellman’s “Kunnon maatiaispossu” ham
from a native pig breed with more
than a hundred years of Finnish
breeding tradition.
9
10
MEAT PROCESSING
The Kuusisaari test kitchen that started operations in March 2014 is
like a miniature model of our production. The new test kitchen brings
efficiency and flexibility to product development. Roger, Ove and Tore
Snellman are making barbecue sausages.
MEAT PROCESSING
SNELLMANIN LIHANJALOSTUS
MEAT PROCESSING
NATURALLY
Meat processing has been the main business of the Snellman Group since the
original company was established over 60 years ago. Snellman Meat Processing
is the third largest operator in its sector in Finland and we also export our products. In 2014, we continued to strengthen our market position and reached a positive result. The factory extension completed in Pietarsaari in 2013 exceeded the
set production targets in 2014.
The Finnish meat-processing sector
is undergoing exceptional times. The
situation in Russia has affected the
meat market in the whole of Europe.
The sanctions have caused oversupply in both domestic and international markets. In 2014, stiff price competition in the retail sector, increase in
the share of private label products
and imported meat as well as intensified competition in the meat industry
"We are grateful for the
Despite the decrease in prices, the value
confidence that consumers
market remained at the 2013 level. For
have shown in the “Herra
Snellman” brand.”
Henrik Snellman
Managing Director of
Snellmanin Lihanjalostus Oy
brought further challenges.
of our sales increased in 2014. The whole
us it meant growth in the market share
and a strengthened market position in
certain product segments, such as sausages.
Our strategy is based on choices derived from our values. We want to make
improvements in the production of
everyday products. In our products, this
means better taste, high quality and nat-
Retail operators reduced the number of branded product
uralness. High meat content as well as GMO-free and addi-
ranges to facilitate consumers’ decision-making. This means
tive-free production are choices that we have made and to
that our products have to gain the confidence of the con-
which we abide. We will implement our strategy in close col-
sumers every single day. We therefore continue to expand
laboration with progressive and ethically operating Finnish
our distribution channels and carry on daily dialogue with
producers. These are matters that are valued by our custom-
both retailers and consumers.
ers and an increasing number of consumers whom we openly tell about our operations.
“HERRA SNELLMAN” IS A WELL-ESTABLISHED
BRAND
SUCCESSES AT KUUSISAARI
The “Herra Snellman” (Mr. Snellman) brand is the corner-
The biggest investment in our history, the extension of the
stone of Snellman Meat Processing. It has a proven good
Kuusisaari meat processing plant, got into full swing in
reputation and the highest consumer preference in the meat
2014. The plant is the only one of its kind in Finland: all the
industry. Even if consumers’ purchasing power has weak-
meat-processing phases from slaughtering to warehousing
ened, demand for “Herra Snellman” products has increased.
and logistics were brought under one roof.
11
12
MEAT PROCESSING
In 2014, we made heavy investments in the development of products and processes, and the
whole personnel participated in the effort. We
introduced numerous new products into the
market, for example, “Herra Snellman” cold
cuts made of full fillets and joints. We also strive
to continually improve the quality and taste of
our existing products.
We were successful in many of our campaigns,
even if we slightly reduced our marketing owing
to the challenging market situation. Last summer’s sales campaign of pork barbecue products
was a great success, and so was our Christmas
ham campaign, in which we tripled our sales
The First of May and
New Year
are peak seasons for sausage
sales in Finland. In 2014,
Snellman’s “Kunnon nakki”
had the most buyers in Finland.
from the previous year. Apart from the domestic
market, our products are exported to 16 countries, the most recent destination being Canada.
MORE WITH LESS
The year 2015 will continue to be challenging,
but there are already positive signs in the market. We look into the future with confidence.
We have several good projects going on in both
sales and product development.
Our organisational structure is light and we
implement the principles of lean thinking by
complying with uniform operating models and
A record number of Christmas
hams were produced in 2014,
about
800 tonnes.
The sales of “Herra Snellman”
Christmas hams tripled from the
previous year.
helping each other. We believe that efficient processes are created through teamwork. We also
believe in people’s desire to do good things. If
we fail, we will take the opportunity to learn
from the mistakes and continue our work.
KEY FIGURES MEAT PROCESSING
224,0
M I L L I O N
E U R O S
T U R N O V E R
C H A N G E
7,6%
943
PERSONNEL
MEAT PROCESSING
The package marking tells the consumer that Snellman has
opted for natural production.
CASE
GMO-FREE FOOD INTERESTS
CONSUMERS
GMO-free production is seamlessly in
itive feedback from consumers on
– The animals are fed throughout
line with our value basis.
the labelling as it facilitates decision
their life cycles with fodder that does
– The goals of natural production
making. Thanks to the good sales, the
not contain genetically manipulated
are based on the idea of operating as if
retailers are increasingly interested in
raw materials. The producers that are
you were producing food for yourself
these products, Tommi Fors contin-
committed to GMO-free production
or your own family. Natural products
ues.
play the key role.
are in increasing demand, Tommi
What, then, does genetic modifi-
At the end of 2014, we had a total
Fors, the Marketing Manager of Meat
cation, which has occasionally caused
of 2100 cattle farms and 265 pig farms
Processing, says.
heated discussion, actually mean?
that had committed to GMO-free pro-
We have also wanted to commu-
– In genetic modification, a proper-
nicate to consumers on GMO-free
ty that a plant does not have naturally
The mental commitment of the
production. In February 2014, we
is transferred into its genes. A typical
producers is the most important as-
launched a special campaign and in-
aim of genetic modification is better
pect, but monitoring is also needed to
troduced our fresh meat products
tolerance of pesticides and thereby a
avoid mistakes. A farm-specific audit
marked with a “GMO-free” label. The
better yield. The underlying goal is in-
of the fodder records is an important
cold cut packages have been marked
tensive production in a massive scale,
part of the in-house control of the
in the same way since early 2015. The
which is against our values, Kirsi Par-
farms. In the farms, the GMO-freeness
fresh meat campaign raised a lot of
tanen, Fodder Manager of Meat Pro-
of the fodder is checked at the order
interest and a lively discussion in the
cessing, states.
stage and again before it is fed to the
social media.
– We have received a lot of pos-
What does GMO-free production
mean in practice?
duction.
animals, Kirsi Partanen continues.
13
14
MEAT PROCESSING
PRIMARY PRODUCTION
GENUINELY FINNISH
Snellman’s 100-percent domestic beef and pork products come from 2 365 Finnish family farms. In line with our values, we promote natural foods and care for the
wellbeing of people, animals and the environment. Our strategy is to develop the
meat production chain in close cooperation with family farms that are committed to
the “Farmhouse Best” quality programme.
The European and global trend in agriculture is towards mass production in large
units in which the main value is efficiency. Cheap imports are on the increase in
Finland, too, and imported raw materials
are used widely in the Finnish food industry.
”We want to show that
proach and continuous development
commitment to responsi-
in research and product development. In
ble production and shared
search and breeding. It is the only project
development of the whole
work. Therefore, we make investments
primary production, we carry out pig reof its kind in Finland. GMO-free production requires long-term feeding-related
meat production chain is
research in both cattle and pig breeding.
profitable.”
The producers have been highly com-
at competitive prices. Natural domestic
Tomas Gäddnäs
ation with us since the beginning of
production is efficient and quality high
Director of Primary Production
the 2000s. We promise to listen to the
when we carry on goal-oriented and long-
Snellmanin Lihanjalostus Oy
wishes and needs of our producers in
We want to offer consumers a possibility
to buy high-quality meat produced with
natural production methods in Finland
term cooperation with producers.
mitted to and satisfied with cooper-
the future as well.
Cooperation means an integrated production chain from
GOOD BREEDING RESULTS
farms to meat processing and sales. We have worked with
In Finland, pork production decreased by about 9 million ki-
producers towards this goal for a long time – The “Farm-
los in 2014. Beef production remained on the previous year’s
house Best” programme was already launched in the 1990s.
level. At the same time, our pig slaughter volumes increased
We have also made clear choices for natural production. For
by 11% amounting to 31.3 million kilos. Our cattle slaughter
example, all the family farms that we cooperate with have
volumes increased by 18% amounting to 13.2 million kilos.
signed a written commitment to GMO-free production.
Our production team has managed to double our pork proTogether with our family farm partners, we have set a goal
duction in eight years and beef production in twelve years.
of being the forerunners in natural production. We believe
Thanks to our producers, we have established a strong mar-
that our know-how and responsible working methods will
ket position in a comparatively short time.
help us succeed in the competition with European intensive
production. Being a forerunner requires a goal-oriented ap-
MEAT PROCESSING
16,5% 2 365
Snellman’s share of the
total meat production
in Finland
amount of Snellman’s
family farms
In the future, our focus will be on the improvement of the
processing level and on the enhancement of the processes
in the whole production chain. In 2014, the production figures of pig farms improved significantly, which means better profitability and competitiveness. In 2014, the average
carcass weight of pigs was 96 kilos and meat content 60.5%.
Compared with 2013, the producers’ breeding results improved in terms of all the important criteria, such as growth,
fodder-meat ratio and mortality rate. Accurate planning and
monitoring of feeding are the factors that contribute most to
a good pig breeding result.
115
milj. euro
slaughter
and
tradeanimal pays
+ 21 %
Calf trade
+ 22 %
Piglet trade
FINNISH PIG’S
SURVIVAL STORY
For the past hundred years, Finnish family farms have
developed a breed of pigs that would be healthy, manage well in the Nordic conditions and have high meat
efficiency. In the 1990s, the Finnish meat industry initiated a project to enhance the breeding efforts. As the
project failed, the first few years of the 2000’s were critical times for the Finnish pig.
We develop cooperation with both milk farms and specialised
beef producers through our “Farmhouse Best Milk Farm” and
“Bull Plus” programmes. The cattle breeding
results also improved in 2014.
We maintain regular contacts with our
contract breeding farms and actively participate in various agricultural events, such as shows,
fairs and seminars. In autumn
2014, we organised the “Proper
Producer” Fair for the third time.
The number of visitors was well
over one thousand. At the Fair, we
launched the native-breed pig fodder
that we had developed in cooperation
with our partners.
However, Snellman Meat Processing, producers and
a breeding company, Faba Sika Oy, decided to continue the breeding efforts. The set goal was to save the
Finnish native breed of pig and maintain the breed
genetically pure. In 2010, Snellman Meat Processing
purchased the share capital of Faba Sika Oy and established Figen Oy. Figen has a modern test and breeding
station in Längelmäki.
Under the ownership of Snellman Meat Processing,
breeding activities have developed swiftly. This has
been made possible by our producers, who are highly
committed to the breeding programme.
The native breed of pig, which is fully Finnish in terms
of its roots and genetics and has a traceable pedigree,
is bred in accordance with the production principles of
Snellman Meat Processing. The breeding output is not
maximised at the cost of the pigs’ health.
15
16
READY MEALS
At Kokkikartano, we meet every morning to taste products and assess their
taste and quality. Participants in the tasting session this time: (Front from left)
Product developer Päivi Lepomäki, production worker Mika Asikainen, product development assistant Veronica Koverola, production worker Jenna Pensas
(Back from left), Product Manager Janne Sorjonen and production assistant
Iivo Rouhiainen.
READY MEALS
SNELLMANIN KOKKIKARTANO
YEAR OF READY MEALS
Snellman Ready Meals has developed into one of the cornerstones of the Group.
We want to restore consumers’ confidence in ready meals by improving both
the taste and the quality. Our most important customers are big retail chains.
Snellman’s companies in this business area are Snellmanin Kokkikartano Oy in
Finland and Carolines Kök AB in Sweden.
Our sales continued to grow in 2014. We
also increased our market share in the
Finnish ready meal market. The growth
”We believe in openness,
WE WORK AS IF FOR OURSELVES
quality and traditional
meals and improve the reputation of
in sales was due to successful marketing
and the strengthening of the brand, and
especially to high quality products and
long-term systematic product development.
We want to offer consumers better ready
Finnish tastes.”
Finnish ready meals. We openly tell con-
Kati Rajala
each portion is prepared. Our message
Managing Director of
Snellmanin Kokkikartano Oy
sumers how and of what ingredients
to the consumer is the following: We
prepare the meals as if we were preparing them for ourselves at home. We just
In spring 2014, we launched ready meals
use larger saucepans. We believe in the
packed in new transparent packages in
traditional Finnish tastes that are famil-
Finland. In the autumn, we introduced
iar and dear to consumers.
a completely new sauce range after a long and demanding
development process. Brisk demand indicates that both of
For just under one third of the consumers, the price is the
these novelties have potential to become new volume prod-
primary criterion for choosing a ready meal. We at Kokkikar-
ucts. In 2015, our range of ready meals will be expanded with
tano believe in quality. In 2014, the cheapest ready meal
tasty traditional Finnish soups.
products lost the most sales in the Finnish ready meal market, whereas high quality and well-marketed ready meals did
We at Kokkikartano are grateful for the confidence that our
well. Despite the challenging market situation, we managed
customers and consumers have shown in us. Our brand
to increase our sales.
awareness has continued to improve, and we are the primary choice for an increasing number of consumers when they
The year 2015 will still be a challenging year in the industry.
make decisions in front of the ready meal shelves.
Our expectations are, however, positive. We will continue
our work and product development without compromising
Collaboration with retail operators has been fluent, one rea-
taste or quality. Our committed and highly professional staff
son being that our delivery reliability has always been high.
will make this possible.
Our visibility in the product ranges of Finnish retail chains
has increased.
17
18
READY MEALS
GROWTH OPPORTUNITIES
IN SWEDEN
Sweden has traditionally been a country where
frozen food is in high demand. Demand for
fresh ready meals has increased in the past few
years, and therefore our possibilities to increase
Carolines Kök’s sales in Sweden are good. At the
moment, however, the market is competitively
saturated. In 2014, we fell behind our net turnover target, but our profitability remained stable.
Especially the premium private label products
were received well in the market.
We will continue the implementation of our
growth strategy in spring 2015. We will strengthen our sales organisation and collaboration
with the retailing groups.
Kokkikartano’s ready meals
are made of high-quality genuine raw materials. For example, the meat content of ”Real
Meatballs” is
91%
KEY FIGURES READY MEALS
4 7, 0
M I L L I O N
E U R O S
T U R N O V E R
C H A N G E
4,6%
191
PERSONNEL
READY MEALS
This is how Kokkikartano’s new ready meals in transparent packages are prepared. Rahman MD. Mahmudur and MD Saiful Topu.
CASE
IT IS WHAT IT
LOOKS LIKE
One of our values is honesty. We want to tell and show our customers and consumers openly everything that we do. This thinking is one of the ideas behind
the new ready meals. Why wouldn’t we show a ready meal just as it really is
instead of covering it with a picture on a cardboard lid?
“In Finland, transparent packages are a novelty. In Sweden, they are part of
everyday life. The new packing technique had its challenges, though. It was a
kind of battle against gravity. For instance, the composition of mashed potatoes
had to be developed to prevent the contents from running down when the package is placed in an upright position on the shelf”, Kati Häyhä, Kokkikartano’s
Product Development and Quality Manager, says.
The ready meals are prepared in Kokkikartano’s Pietarsaari unit. The whole
personnel participated in the product development work.
In spring 2015, the product family will have new members when lasagne and
stuffed cabbage rolls with mashed potatoes are introduced to consumers.
19
20
FOOD SERVICE
FOOD SERVICE
PROFESSIONAL
KITCHENS AS CUSTOMERS
Food Service is a business area in the Snellman Group that focuses on restaurant
and industrial sales. Our aim is to offer high-quality product and service solutions
to professional kitchens. Our major customers are restaurant chains and HoReCa
wholesalers. Snellman’s companies in the Food Service business area are Icecool
Oy in Finland and Snellman Trading AB in Sweden.
For Food Service, 2014 was a year of developing internal operations. We sharpened
our business strategy by reviewing our
processes and organisation as well as
procurement and sales logistics.
We paid special attention to assortment
management by defining clear key product categories and focus areas, and by
”In the future, the Snell-
At its best, this means that we cooper-
man story will be told
the identification of their needs to the
through our products in
an increasing number of
Finnish restaurants.”
ate with our customers, starting from
development of the product range, concepts and recipes, and finally to product
training.
OUR RECIPE FOR SUCCESS
The past two years have been extremely
dropping unprofitable products – the
Jussi Salmi
difficult in the HoReCa sector, which has
motto was “From quantity to quality”.
Managing Director of
been burdened by consumers’ weakened
Meat was a natural choice for a key prod-
Icecool Oy
purchasing power, taxation solutions
uct category. In addition, fish, frozen veg-
and rising costs. The sales in the HoReCa
etables and berries as well as fruit played
an important role.
sector have decreased for two consecutive years. In these conditions, we have succeeded comparatively well. In 2014, Icecool’s sales margin was slightly posi-
Our organisation now consists of three departments: pur-
tive, and the result improved clearly from the previous year.
chases, logistics and quality control; marketing and product
management; sales and customer service.
In the HoReCa sector, 2015 will be at least as challenging as
the previous year. However, we should look further into the
All the innovations and changes that we made during 2014
future. We believe that the popularity of eating in restau-
aimed at increased customer orientation and improved ser-
rants will increase significantly in Finland and reach the Eu-
vice quality. Today, being successful requires that we under-
ropean level.
stand our customers’ business ideas, processes and business logics as well as possible. We have to be able to work
We will succeed, if we operate in a flexible and agile manner,
with our customers and develop products that are desirable
react promptly to new trends, ensure that we have the best
and bring them added value.
staff in the industry, invest in high quality and act in a responsible manner in everything we do. A significant part of
FOOD SERVICE
“Icecool’s product development is based on customers’ needs and wishes. We
listen, help if necessary and make suggestions. When our customer is successful, we also succeed”, Icecool’s Marketing Manager Pia Vähäkangas and Executive Chef Atte Kuuskoski state.
21
22
FOOD SERVICE
our strategy is to strengthen the integration of
Icecool with the Snellman Group. At the same
time, we are working hard to create our own
identity and develop strong products for the
HoReCa sector.
CHANGES AHEAD IN SWEDEN
In Sweden, the sales of Snellman Trading AB
have developed positively, but there are still
challenges concerning the result. However, our
possibilities to increase sales and develop the
operations are good, one of the reasons being
that the HoReCa sector is doing better in Sweden than in Finland.
In the development of sales, the products
of Snellman Meat Processing will play a key
role. We have already found good distribution
channels, and we are in the process of taking
measures to enhance our cooperation with the
customers. Reaching profitability in Sweden
Food Service increased its sales of
Snellman’s processed meat products to restaurant customers with
22 %
compared to last year.
requires that we make changes to the business
model of the company. An important measure
is to enhance logistics with new supply chain
solutions.
KEY FIGURES FOOD SERVICE
38,8
M I L L I O N
E U R O S
T U R N O V E R
C H A N G E
7, 9 %
25
PERSONNEL
FOOD SERVICE
Atte Kuuskoski from Icecool and Kai Meyer from Snellman Meat Processing believe in the strength of collaboration.
Icecool knows the HoReCa market thoroughly, and Snellman Meat Processing is able to provide Icecool with exactly the right
high quality products.
CASE
ONE PLUS ONE IS MORE
THAN TWO
An important feature in our business
ing, Product Development Manager
trends that already go strong in the
culture is that we learn from each oth-
Kai Meyer from Meat Processing and
world of gastronomy? This is some-
er and help each other. Collaboration
Executive Chef Atte Kuuskoski from
thing that we are considering in both
between Food Service and Snellman
Icecool state.
Food Service and with our customers.
Meat Processing is being strength-
The gem of our shared product
Our intention is to develop an increas-
ened systematically now. The aim is to
development has been pulled pork,
ing number of mainstream products
increase the share of Snellman’s meat
which rapidly became a great hit.
in the future, products that suit many
products in Icecool’s net turnover. At
Pulled pork hamburgers continue to
different purposes, purchasing envi-
the moment, it is about 40 percent.
sell well in restaurants, and demand
ronments and as many of our custom-
– Icecool wants to strengthen its
for tender seasoned meat products
ers as possible, Mayer and Kuuskoski
role as a significant meat provider to
continues to grow. In 2014, sales re-
continue.
restaurant chains, which naturally
cords were also recorded in the "sous
also supports the set targets for sales
vide” product category.
Innovativeness is a competitive advantage in the HoReCa sector, which
increase. The key is shared product de-
What will the next hit product?
develops at a fast pace and in which
velopment, and the corner stone is the
– Street food? Casual dining? Au-
trends change rapidly.
production of Snellman Meat Process-
thentic food? Will it be one of these
23
24
PANINI
“Panini and Porin Leipä worked in cooperation with each other for a long time,
conducting product development to create the best bread for paninis. Now
we have an end product that is worth tasting and enjoying: Finnish bread at its
best”, Panini’s Chef Janne Ikonen and Master Baker Olli Sarpila say.
PANINI
PANINI
BETTER AND
DOMESTIC
Panini is a conceptualised fast food product that Mr. Panini Oy, which belongs
to the Snellman Group, makes in Ulvila. We also have a production plant in
Sweden, from where we sell paninis to the Norwegian market. In Finland, our
major customers are service station stores, cafés and kiosks. At the moment,
we are piloting sales to retail stores.
The year 2014 was a year of numerous
changes for us. In the “Ulvila Up!” project, we made innovations to both our
products and our production.
The most important innovation was to
”Piloting in Finnish retail
The changes made in 2014 contributed to
stores has succeeded well.”
of the raw materials that we use in our
Tommy Snellman
Managing Director of Mr. Panini Oy
replace the frozen bread imported from
our improved sales margin. The quality
products is improved continuously. Our
result has also developed positively, although the sales volumes remained on
the previous year’s level.
Belgium with newly baked local bread
baked by Porin Leipä. We completed a two-year development
BRAND IS OUR MOST IMPORTANT CAPITAL
project that had included more than 30 product experiments.
One sign of consumers’ weakened purchasing power is that
people do not eat outside the home as frequently as before.
There are more than 10 taste alternatives in our paninis now.
Even the fast food market has declined in the past few years.
We transferred the production of mayonnaise from Kerava
On the other hand, competition in the industry is intensi-
to Ulvila, and instead of using cut meat products supplied
fying as demand for street food and on-site made food (e.g.
by Snellman Meat Processing, we now cut the meat in our
stuffed baguettes made on site) is expected to grow when
own production plant, which adds to freshness and reduces
the economy revives.
waste. We also made innovations to the image and packages
of the brand.
Our competitive asset and most valuable capital is the Mr.
Panini brand. We have built it systematically since 2008,
In production, we aim at flexibility, freshness, increased
when the Snellman Group purchases the brand and produc-
domestic content and, before all, genuinely good taste. In
tion plant. Mr. Panini’s brand awareness rate has improved
spring 2014, we adopted a new production line, which allows
continuously, being 57 percent in 2014. An improvement of
larger production volumes than before. The improvements
5 percent on the previous year is a great achievement. Our
made to the Ulvila plant in terms of facility utilisation, im-
future strategy is to increase Mr. Panini’s brand awareness
proved hygiene and systematisation of working methods
rate further and expand our distribution channels.
have enhanced our operations. Our special thanks are due to
the managers and personnel, who played an important role
In 2014, a total of 70 percent of our sales came from service
in the change.
station stores. As the number of these stores will probably
not increase in the future, we will have to enhance sales with-
25
26
PANINI
in the units. A significant future opportunity is
retail sales. We have piloted our products in ten
stores and supermarkets of different sizes, and
they have been received well. Consumers can
heat the paninis at home in an oven or a grill.
PANINI IN THE SWEDISH
AND NORWEGIAN MARKETS
In 2014, our sales grew clearly in Sweden, but we
still have challenges concerning the result. In
Spring 2015, we will also replace imported bread
with locally baked bread. The sauces will be supplied by the Ulvila plant. In this way, our fairly
small production plant in Sweden can concentrate on assembling paninis.
In Norway, our progress has been slower than
in Sweden. To speed up sales, we will start collaboration with a local sales company in 2015.
We have already managed to have our products
included in wholesalers’ product ranges. In the
future, we will strive to increase the frequency
of deliveries from Sweden.
The Danish operating environment proved to
be extremely challenging. As we did not reach
Mr. Panini makes an
average of
55 000
paninis per week in
Ulvila. This means
3,5million
paninis per year
the set sales and result targets, we discontinued
our operations in Denmark in spring 2014.
KEY FIGURES PANINI
6,5
M I L L I O N
E U R O S
T U R N O V E R
C H A N G E
-9,9%
41
PERSONNEL
PANINI
Work on the new production line goes smoothly. Making paninis is
partly manual work. In the picture from the left Heli Virtanen and
Riikka Huhtala are filling the paninis with kebab meat produced by
Snellman Meat Processing.
CASE
NEW PRODUCTION LINE
ENHANCED PRODUCTION
The principle of continuous improvement is a central part of our corporate culture and operating principles.
– This was the goal in Panini’s ”Ulvila Up!” project. It meant comprehensive development of the operating environment. Our personnel
made a valuable contribution to the project, Panini’s Chef Janne Ikonen
says.
– One way of enhancing our operations was the implementation of a
new production line. It is more practical and hygienic, and its throughput rate is higher than before, he continues.
An important renovation that facilitates daily work is that the workstations are fixed. The workers can also adjust the working height to improve work ergonomics.
The process of making Finnish paninis starts when the delivery from
Porin Leipä arrives in Ulvila in the evening. The loaves are stored overnight in our new bread cold room, and in the morning, they arrive at the
production line, where they are sliced and stuffing is inserted between
the slices. Before being packed in despatch boxes, each Panini package
is checked to ensure that it is intact.
From the despatch room, the paninis travel to Kerava, where they are
picked for transport to various customers.
During the busiest seasons, we make as many as 20 000 paninis a day.
27
28
MUSH
Brand and Marketing Director Petri Tapio’s 11-year-old dog Molly is a good
example of how BARF feeding promotes a dog’s wellbeing. Molly is still in good
condition and an active hunting companion. This has also been ascertained by
veterinary surgeon Anna Hielm-Björkman, who has studied the benefits of raw
food feeding at the University of Helsinki.
MUSH
MUSH
NUTRITIOUS
RAW FOOD
The growing pet food market is a future opportunity for Snellman. There is
considerable potential in both Finland and abroad. Oy MUSH Ltd is a forerunner
in the production of natural BARF (bones and raw food)products for dogs and cats.
BARF products are food that dogs and
cats would eat in natural conditions. The
products mainly consist of raw meat,
bones and organs. BARF feeding is gaining popularity worldwide, and we expect
”Naturalness and raw
health and improves their wellbeing.
food interest an increas-
social media in Finland and globally, and
ing number of pet owners
a final breakthrough in Finland, too.
globally.”
For the past few years, we have been preparing for growing demand. In 2013, we
made heavy investments in production
Magnus Pettersson
Managing Director of Oy MUSH Ltd
This information will spread through the
the share of raw food in dog food sales
will grow.
DIFFERENTIATION AS STRATEGY
The Finnish dog food market is dominated by international operators, whose
products are mainly dry food. Their share
equipment. In 2014, the focus in the de-
of the sales of approximately 55 million
velopment work was on streamlining
kilos of dog food is 45 million kilos. The
and documentation of the processes and
share of Finnish dog food manufacturers
on staff training. By now, the production
is about 10 million kilos, of which our
efficiency has improved and wastage decreased. Training has
share is about 40 percent.
motivated our staff to work for our strategic goals.
Competition in the domestic market is intensifying, and
In Finland, our total sales in 2014 did not reach the set growth
new raw food products are entering into the market. In the
rate owing to market changes in the private label range. On
Finnish market, there have been two clearly different trends
the other hand, the sales of MUSH BARF brand products ex-
in the development of prices. Speciality stores compete in
ceeded the budgeted growth rate. The result of the year was
quality and professional service, whereas supermarkets
burdened by investments made in Germany.
compete fiercely in price. Our strength is differentiation
from our competitors by means of a strong brand. We are
We believe in growing sales. This is supported by the stud-
100% committed to our promise of natural and high-quality
ies conducted in e.g. the University of Helsinki on raw food
pet food. We have also openly described the recipes and pro-
feeding. We have also participated in these studies. Research
duction methods of all our products.
shows that feeding dogs with raw food is good for their
29
30
MUSH
GERMANY IS AN IMPORTANT
OPPORTUNITY
In 2014, we gained a foothold in the German
market by signing a supply agreement with a
retail chain of more than 800 stores. Sales will
start as soon as suitable refrigeration appliances have been installed. Our expectations for
2015 are extremely positive.
In Sweden, our sales have grown steadily, and
we have established a strong foothold there by
now. At the moment, our products are on sale in
340 stores. In 2015, which is our third year in the
Swedish market, our aim is to reach a positive
result.
The MUSH brand has already
92 000 fans
on Facebook. More than 90% of
MUSH
products
are
marketed
through the Internet and social media.
KEY FIGURES PET FOOD
6,4
M I L L I O N
E U R O S
T U R N O V E R
C H A N G E
4,8%
46
PERSONNEL
MUSH
CASE
OUR CUSTOMER PROMISE
IS NATURALNESS
– We believe that raw food is not a short-term bubble but
a growing long-term trend. We strive to develop a Finnish
success brand for the market, says Brand and Marketing
Director Petri Tapio.
Although we are a comparatively small company, we
are the largest raw pet food manufacturer in the Nordic
countries and one of the largest in the whole of Europe.
We have subsidiaries in Sweden and Germany and a
representative in Norway.
– We believe that our customer promise: ”Yes to naturalness, openness and raw frozen meat, no to additives,
preservatives and corn”, is universal and touches a cord
with an increasing number of pet owners. Our marketing
strategy is the same in Finland and in other countries.
We mainly market on the Internet and social media, Petri
Tapio continues. We use the Internet and Internet videos
to tell our customers where the raw materials come from
and how the products are made.
31
32
PERSONNEL
PERSONNEL
FOCUS ON
STAFF WELLBEING
Snellman is managed in compliance with value-based management principles. This
means that values guide all our activities. At Snellman, the workplace and working
community is supported by four cornerstones: coherent personnel policy; caring for
work wellbeing and maintenance of working capacity; development of competencies; good and fair leadership and management.
The Snellman set of values and operating
principles have been well tried and tested
during the past decades. The cultivation
of our values requires regular dialogue
on matters that are important to us. In
2013–2014, all our staff members participated in value discussions conducted in
”It is humanity and caring
to maintain the strengths of our corpo-
for others that really test
edness for continuous improvement,
the quality of leadership
and management.”
more than 40 different events. The subject
is also included in our annual personal development reviews.
Timo Ylilauri
HR Director of Oy Snellman Ab
rate culture, commitment to and preparworking together, appreciation of everybody’s ideas and contribution, low organisational structure and ability to react to
changes fast.
We are pleased to be able to state that the
Snellman employees are satisfied with
their workplace. This is shown in the work
The most important thing is how our values are shown and
satisfaction survey that we have implemented annually for 16
how they materialise when we work with our employees and
years. In 2014, we reached the best result in Snellman’s history.
partners. We believe that success is earned by doing good
The average score was 3.66 (scale 1-5).
things. We act in accordance with our values when we treat
each other in a friendly and humane manner, care for each
The annual staff turnover at Snellman is 4.4 percent. On the
other, and always help each other when necessary.
other hand, the number of good applicants is always high
when we have job openings. Snellman is also a sought-after
CORPORATE CULTURE IS OUR STRENGTH
summer workplace. In 2014, we received applications from
The most important goal in our personnel policy is the equal
more than 700 young summer job seekers, and we were able to
treatment of all employees. The personnel policy brings co-
hire about 200 of them.
herency and transparency to the activities of the whole Group.
FORERUNNER IN WORK WELLBEING
Shared policies are important now that our Group has grown
Work in the food industry is physically loading, and the work-
and expanded to new business areas. Even if the number of
ing environment is prone to accidents. At Snellman, we pay
our personnel grows and our operations are diversified, we
special attention to work safety and work wellbeing. Our aim
will not create inflexible structures and bureaucracy. We want
is to be a forerunner in these matters in the industry.
“We, all together, make the Snellman Group.”
Pictures from the Kokkikartano strategy days.
PERSONNEL
33
34
PERSONNEL
Sports vouchers, gym and collection of fitness points, exer-
find variety in work and share their competencies with their
cise breaks, adjustable desks, physical therapy, ergonomics
co-workers.
training and several campaigns that encourage the employees to do exercise are examples of our measures to improve
A traditional training model in the food industry is appren-
work wellbeing in practice. All new employees take a fit-
tice training, which Snellman has implemented since 1996.
ness test, and also those who have worked for Snellman for
Our apprenticeship training programmes offer a possibility
a longer time may take the test when they want. The total
to complete the vocational qualification in food production
number of fitness and musculoskeletal fitness tests taken
or the further qualification in meat processing. A total of
by Snellman Meat Processing employees alone was almost
about 30 employees participate in these programmes annu-
four hundred.
ally. In 2014, 26 employees received a vocational qualification
certificate and 9 employees a further qualification certificate.
Meat Processing was also the first business area to adopt
the Wellness Clock, which contains activities that support
MANAGERIAL WORK UNDER REVIEW
working capacity and motivation. The wellness team in the
Our management and leadership culture is characterised by
Pietarsaari unit has planned and developed the activities, for
the following words: justice, fairness and encouragement.
example, fitness boxing, outdoor aerobics, kettlebell, water
Like all skills, also management and leadership skills can be
aerobics, gym, back care exercises and skiing school. The vo-
developed. In spring 2014, we launched a project to assess
cationally oriented medical rehabilitation (ASLAK) group of
and develop the work of the Group Management Team. The
the office personnel started its second rehabilitation period
project will continue in 2015.
in September.
Managerial work in the whole Group is developed by means
We have worked systematically to reduce the number of ac-
of the 360-degree analysis. The method was piloted in 2014,
cidents and sick leaves. In the occupational health care, the
and all the managerial staff will participate in it. The 360-de-
focus continues to be on preventive measures.
gree analysis is implemented in such a way that a manager’s
management skills are assessed by his/her immediate supe-
COMPETITIVE ADVANTAGE THROUGH
rior, colleagues and subordinates. The results of the analysis
COMPETENCE DEVELOPMENT
are compared with the manager’s self-assessment. Based on
Lean thinking, which is an essential part of our corporate
the analysis, a personal management development plan is
culture, aims at continuous improvements in the operations
prepared for the managers. Our aim is to implement man-
and learning by doing. The competence development creates
agement training that meets the needs of each unit and in-
competitive advantages for us. We want to ensure that our
dividual better than before.
staff can, if they want, change tasks and learn new things,
KEY FIGURES PERSONNEL
GR O U P PE R SO N N E L
PE RS O N N E L I N AVE R AG E
i n t he ye ars 2010–2014
890
31. 12 . 2 014
1235
1185
1027 1120
191
LS
EA
E
Y M RVIC
D
A
SE
RE
D
O
FO INI
5
N
2
PA
41
OOD
PET F
46
29 PARENT
COMPANY
943
2 010
2 011
2 012
2 013
2 014
MEAT PROCESSING
PERSONNEL
CASE
BICYCLE WHEELS ROLLED
AND FITNESS SOARED
We encourage our staff members to care for themselves. Regular exercise helps us maintain our health and working capability and cope with stress. The “Cycle for Fitness” campaign,
organised for the second time in 2014, encouraged more than
300 Snellman employees purchase a bicycle. Quite a few decided to cycle to work instead of driving a car or taking a bus.
One of them is Kokkikartano’s foreman Micael Saranpää,
who now cycles his 30-kilometre journey to and from work in
sunshine and in rain. Micael admits he is hooked on cycling.
– I cycle about 12 000 kilometres a year. I have started cycle
racing, and I actively participate in the activities of the Järvenpää cycling club.
Physical exercise has become an important part of Micael’s
free time activities again. Micael, who is 36 years old now,
engaged in combat sports and bodybuilding when he was
younger. When he discontinued doing exercise, he started to
gain weight. Since he was stung by the sports bug again, he
has lost a total of 30 kilos.
– Not all my friends recognise me when they see me now,
Micael says smiling.
– Physical exercise helps me control stress, and it acts as
a good counterbalance to daily work. It has been great to see
that the number of bicycles in Kokkikartano’s yard has increased.
We will continue the exercise campaigns. In the winter, the
staff members can buy skis and winter sports equipment and
clothing at campaign prices.
Thanks to the "Cycle for Fitness” campaign, Micael Saranpää
rediscovered the joy of physical exercise.
AG E D I S T R I BU T IO N
te mpo ra r y in cluded
GE N D E R D I STR I B U TI O N
>60 y
50–59 y
10%
40–49 y
3%
<20 y
tem p o rar y i n cl ud ed
12%
17%
20–29 y
35%
24%
30–39 y
WOMEN
37%
MEN
63%
35
36
RESPONSIBILITY
Image: vastavalo.fi
RESPONSIBILITY
OUR CHOICE
IS RESPONSIBILITY
We at Snellman think that success is deserved by doing good things.
In this way, responsibility becomes part of our operations.
We report on our operations openly, honestly and comply
RESPONSIBLE PROCUREMENT
with good governance principles. We report to our owners
In procurement, we comply with our values, ethical principles
on our operations, financial development and outlook four
and strategic policies. We also expect our partners to commit
times per year. We also publish an annual report for our own-
to ethical operating principles. We treat our suppliers equally
ers, personnel, production partners and other important
and with respect, and we comply with good business prac-
stakeholders.
tice. We set the same high requirements for our suppliers and
their possible subcontractors as we set for ourselves.
The high quality, naturalness and good taste of our products
are the cornerstones of our operations. For us, they are not
In procurement, an important requirement is the safety and
transient trends or marketing gimmicks but long-term in-
traceability of the raw materials. In the collaboration with our
vestments.
suppliers, we strive to avoid loading the environment, for example, by enhancing the efficiency of logistics and the use of
We have systematically developed collaboration with our
packing materials. We regularly assess the operations of the
2000 plus producer partners. In our “Farmhouse Best” quali-
suppliers we have chosen and ensure the quality of new sup-
ty programme, the emphasis is on animals’ wellbeing as part
pliers with audits.
of an efficient and ethically sustainable production chain. In
Meat Processing, all raw materials in the primary production
WE SAVE THE ENVIRONMENT
are 100 percent domestic and mainly come from family farms
In production, we ensure that our methods are environmen-
in Ostrobothnia and Central Finland. We always make sure
tally friendly and our solutions energy efficient. These mat-
that the whole supply chain is transparent and traceable.
ters are already considered in the investment planning stage
by utilising the latest and best technology. Since 2007, our
In early 2014, Snellman Meat Processing received the FSSC
energy consumption has decreased by 25 percent, while our
22 000 Certificate, which is awarded to companies that meet
production area has more than quadrupled.
international food safety standards. Part of Icecool’s fish
products received the MSC Ecolabel in 2014. The label is grant-
We have made investments that enhance energy efficiency
ed to fish products that originate from a healthy fish stock
and save the environment in air and water purification, heat
and are caught in a sustainable manner that ensures the con-
recovery, recycling and solid waste recovery. We have also tak-
tinuity of the fish stock. In the future, we will only use Eco-la-
en measures to reduce noise and odour nuisances.
belled fish.
37
38
RESPONSIBILITY
Since 2014, we have only used wood-fired smoke ovens. All
In logistics and transportation, we always look for solutions
outgoing smoke is purified to prevent hazardous particles
that are as efficient and carbon footprint reducing as possi-
from being released into the air. We also protect the soil and
ble. Our production plants are centralised production units
waterways by preventing chemical spillages. One way of do-
in which the aim is to run production with efficient processes
ing this was asphalting the whole yard area of the Kuusisaari
without unnecessary phases and interim warehousing. The
plant in 2014.
number of transportations decreased significantly, after the
Kuusisaari factory extension was completed. When opera-
In August 2014, we switched, as the first food company in Fin-
tions ranging from slaughtering to distribution take place
land, to biogas for heating and steam production in Kuusi-
under one roof, we are able to eliminate one transportation
saari. The biogas generated by the Jepua biogas plant replac-
phase altogether.
es about one million kilos of oil that has been used annually
by Snellman Meat Processing. At the same time, the annual
WE MAKE SAFE PRODUCTS
carbon dioxide emissions of the plant are reduced by 3000
Each Snellman employee is responsible for safety and qual-
tonnes. Thanks to biogas, sludge treatment in the Kuusisaari
ity. Our hygiene requirements are extremely high, and the
plant has been improved as we can send the sludge to the bi-
hygiene level is monitored continuously. Our safety control
ogas plant for recycling.
starts in primary production. All our production farms have
veterinary inspections carried out at least four times a year,
and even more frequently in the largest farms.
SNELLMAN’S WORK
WAS RECOGNISED
IN MANY WAYS
In spring 2014, we adopted a new quality control system,
IMS, in meat processing. The whole Group will gradually be
covered by the system. We also have a quality control organisation of our own as part of the production process. In meat
processing, we carry out about 20 000 nutrient content and
microbiological analyses and inspect hundreds of thousands
Snellman’s corporate responsibility was recognised in
of raw material samples in our own laboratory. In addition,
2014. Snellman was ranked fifth in the annual “Corpo-
we have statutory samples analysed by an external impartial
rate Reputation and Responsibility” survey of TNS Gal-
laboratory.
lup.
OCCUPATIONAL SAFETY IN FOCUS
In the “Brändien arvostus 2014” survey conducted by
Four fifths of our personnel work in working environments
Taloustutkimus Oy and Markkinointi & Mainonta Mag-
that are prone to accidents. We continually strive to improve
azine, Snellman was ranked among the top 100 most
occupational safety by developing the working environment,
valuable brands in Finland for the first time. The survey
work phases and working methods. We have made significant
examined the value of more than one thousand brands
advances: the number of serious industrial accidents and
in Finland. In the same survey, Kokkikartano ranked
long sick leaves has decreased. As we have zero tolerance to
the third most valuable ready meal brand. Another in-
industrial accidents, there is still space for further develop-
dication of consumers’ confidence in the Kokkikartano
ment.
brand is that Kokkikartano ranked third in the annual
“Most Valued Brand” survey conducted by Reader’s Di-
We prepare for crisis situations by providing our personnel
gest Finland.
with crisis training, for instance evacuation and rescue drills,
as well as first aid training and training in first aid fire extin-
In late autumn 2014, the Ostrobothnia Branch of the
guishing. We have regular cooperation with the emergency
Finnish Association of Nature Conservation granted
service authorities. Prevention is the key word in all safety
Snellman an environmental award for the adoption of
enhancing operations.
biogas.
RESPONSIBILITY
CASE
CLEANLY WITH BIOGAS
Biogas replaces
In August 2014, Snellman Meat Process-
“It is certainly a great improvement
one million kilos
ing switched to completely oil-free heat
that sludge, manure and many other
and steam production as the first food
types of waste can be used to generate
company in Finland. The required heat
clean environmentally friendly energy.
and steam is produced by the Jepua bi-
This is the path that we want to fol-
time, the annual carbon diox-
ogas plant. At an annual level, the esti-
low in the future”, Markus Snellman,
ide emissions of the plant are
mated savings amount to about 200 000
Technical Manager of Meat Processing,
euro.
states.
Biogas is also an environmentally
The annual biogas generating capacity
friendly fuel as it is a completely carbon
of the Jepua biogas plant equals two
dioxide neutral energy source. Our an-
million kilos of oil.
The financial savings amount
nual carbon dioxide emissions have de-
“Biogas can also be used as a transport
to about
creased by about 3 000 tonnes. Thanks
fuel. It is quite possible that part of our
to the biogas plant, we have also been
transportation vehicles will run on bi-
able to utilise the sludge produced
ogas in the future”, Markus Snellman
by the Kuusisaari plant. Apart from
visualises.
of oil per year. At the same
reduced by
3000 tonnes.
200 000
euro per year.
sludge, the biogas plant also utilises
solid raw material, for instance manure
from the local production farms.
The Technical Manager of Snellman
Meat Processing is presenting the biogas plant in Jepua.
39
40
FIGURES
SNELLMAN GROUP IN
FIGURES 2014
NET TURNOVER, MEUR
232,6
264,1
282,8 301,3
191,1
M€
2 010
2 011
2 012
2 013
2 014
OPERATING RESULT, MEUR
14,8
13,8
11,9
M€
2 010
2 011
2 012
6,6
6,7
2 013
2 014
FIGURES
OPERATING
RESULT, %
2,2
2 014
2,3
2 013
5,2
2 012
5,1
RESULT BEFORE TAXES, MEUR
2 011
7,7
12,9
12,5
10,5
%
2 010
M€
2 010
2 011
2 012
4,4
4,0
2 013
2 014
41
42
FIGURES
SNELLMAN GROUP IN
FIGURES 2014
INVESTMENTS IN PRODUCTION, MEUR
25,2
19,8
17,2
10,0
M€
7,6
2 010
2 011
2 012
2 013
2 014
PERSONNEL
AT CLOSI NG DATE
930
2 010
1087 1104
2 011
2 012
1231 1275
2 013
2 014
FIGURES
EQUITY RATIO, %
31,6
2 014
31,8
2 013
35,0
2 012
RETURN ON INVESTMENT, ROI %
36,5
18,4
2 011
14,1
40,3
%
2 010
14,1
6,3
%
2 010
2 011
2 012
2 013
5,5
2 014
43
44
BOARD OF DIRECTORS
SNELLMAN BOARD OF DIRECTORS IN 2014
Front from left: Group CEO Leena Laitinen, Chairman
of the Board Martti Vähäkangas, Johanna Tidström and
Erkki Järvinen. Back from left: Secretary of the Board Stefan Snellman, Ole Snellman, Krister Snellman and Peter
Fagerholm.
BOARD OF DIRECTORS’
REPORT
BOARD OF DIRECTORS
GROUP REVIEW
situation started to unwind in March, and the balance was
The Snellman Group consists of five business areas: Meat
reached towards the end of the year. From the third quarter
Processing, Ready Meals, Food Service, Panini and Pet Food.
onwards, our operations were clearly profitable.
The parent company, Oy Snellman Ab, provides all the business areas with administrative support functions.
For Meat Processing, 2014 was a year of deploying significant
investments, and everything went as planned. The invest-
During the financial period, only minor changes took place.
ments and the development of processes enhanced pro-
MUSH GmbH, the sales company established in the pet food
duction efficiency. The R&D also continued its development
sector in Germany towards the end of 2013, started opera-
work in the new production environment, and several new
tions. Panini ceased operations in Denmark.
products were launched in 2014.
In 2014, the net turnover of the Group was EUR 301 million.
READY MEALS
The net turnover increased by EUR 17 million (6%) from the
In 2014, the net turnover of Ready Meals was EUR 47 million,
previous year. The operating profit of the Snellman Group
an increase of 5% from the previous year. We strengthened
was EUR 6.7 (6.6) million, i.e. the result was slightly better
our position in the Finnish ready meal market both in terms
than in 2013.
of the consumer image and market share.
OPERATING ENVIRONMENT
Ready Meals also actively developed its products. Examples
The Russian crisis and African swine fever, followed by a ban
of well-received product launches include a ready meal range
on exports to Russia, changed the situation in the European
packed in transparent packages and a new sauce range.
meat market rapidly and caused difficulties to all the operators in the industry in Finland. The oversupply led to a low-
Carolines Kök, our production plant in Sweden, also reached
er price level, which was reflected in the whole production
a good result. The position of the brand strengthened, and
chain.
the capacity of the plant allows increased production.
The Finnish retail sector is undergoing a drastic structural
FOOD SERVICE
change: consumers’ purchasing power is weakening and
In 2014, the net turnover of Food Service in Finland was EUR
at the same time online retail is changing consumers’ pur-
37 million, an increase of 7% from the previous year. We clear-
chasing behaviour. The significance of price as a purchas-
ly improved the result despite the fact that demand in the
ing criterion has increased. The major retailers are reducing
HoReCa sector had decreased for two years. Closer coopera-
their product ranges with the aim of simplifying them and
tion with Meat Processing will open possibilities to enhance
cutting down the number of co-products. In future, only the
product development and increase sales in the restaurant
best brands will be included in their product ranges, and the
and institutional kitchen sectors.
share of private labels will grow.
Snellman Trading AB, Snellman’s subsidiary in Sweden,
Consumers’ interest in Snellman’s products continues to
clearly increased its sales after securing a share in the prod-
grow. Our sales growth has been clearly faster than the de-
uct ranges of the largest HoReCa wholesaler in Sweden.
velopment of the market and resulted in an improved market share. According to a survey conducted by TNS Gallup in
PANINI
autumn 2014, both “Herra Snellman” and “Kokkikartano”
Panini’s net turnover in Finland in 2014 was EUR 6 (6) mil-
brands have continued to strengthen.
lion. The profitability was good. On the other hand, we have
not managed to reach a break-even level, i.e. zero result, in
DEVELOPMENT OF OPERATIONS
Sweden.
MEAT PROCESSING
For Panini, 2014 was a year of innovations in both production
In 2014, the net turnover of Meat Processing was EUR 224
and product offering. The distribution channels were also ex-
million, an increase of 8% from the previous year. In the first
panded. Apart from service station stores, paninis are also
few months of the year, competition in the sector was fierce,
sold in kiosks and cafés now, and pilot projects in retail have
and the imbalance between the slaughter and sales vol-
already started.
umes resulted in an increase in our frozen stock. The stock
45
46
BOARD OF DIRECTORS
PET FOOD
The prolonged recession and difficulties in exports to Russia
In Pet Food, the production volumes of private label prod-
added to the risks for both Snellman and the other food sec-
ucts did not develop as expected. On the other hand, the
tor operators in Finland.
MUSH brand products sold extremely well. In 2014, the net
turnover of Pet Food was EUR 6 million, an increase of 5%
At Snellman, the major risks of the business areas are
from the previous year.
mapped and operating plans for various scenarios prepared
annually.
International operations will open good prospects for Pet
Food. In Sweden, the sales grow steadily, and in Germany
ENVIRONMENT
sales will start as soon as suitable freezers have been in-
In its production, Snellman strives to operate in a manner
stalled in stores.
that is not harmful to the environment and complies with
sustainable development. Energy efficiency and sustaina-
INVESTMENTS
bility are important considerations in all Snellman’s invest-
After major investments, 2014 was a year for turning the fo-
ments. The most significant environmental achievement
cus on the development of internal operations. A significant
in 2014 was the replacement of oil with biogas in steam and
new investment was the extension of the Kuusisaari meat
heat production in the Kuusisaari plant. Oil was replaced
freezing space. The space was equipped with a spiral freezer,
with biogas supplied by Jepuan Biokaasu Oy, of which Oy
which speeds up the freezing process.
Snellman Ab owns 22.5 percent.
In Ulvila, Panini’s production facilities were renovated, in-
Snellman’s responsible approach to economic, social and
cluding a completely new production line.
environmental challenges was recognised in many ways in
2014. In 2014, Snellman was ranked fifth in the annual “Cor-
The total investments in the financial period amounted to
porate Reputation and Responsibility” survey conducted by
EUR 10 million.
TNS Gallup.
DEVELOPMENT PROJECTS
FINANCES AND FUTURE OUTLOOK
The most important development projects concerning the
The financial statements of the Snellman Group comply
whole Group that were launched in 2014 were the enhance-
with IFRS reporting requirements. The net turnover was EUR
ment of procurement and the new production planning sys-
301 (285) million. The operating profit was EUR 6.7 (6.6) mil-
tem.
lion. The equity ratio decreased to 31.6 (31.8) percent.
The development of the procurement practices will sup-
The result is satisfactory, considering the difficult operating
port the long-term strategic goals of the Group’s business
environment in the financial period. The market positions
areas and their operating conditions. The aims include the
of our main business areas strengthened in 2014. We are in a
improvement of cost efficiency, creation of uniform action
good position to implement our strategy and achieve the set
models and synergies between the business areas, devel-
goals. The long-term outlook is good as well. In the future,
opment of supplier collaboration and utilisation of the pro-
we will continue enhancing our operations, increasing the
curement volume of the whole Group.
capacity utilisation rate and improving profitability.
Meat Processing and Kokkikartano were the first to adopt
It is probable that the recession and economic uncertainty
the new production planning system. The system will im-
will continue in Finland. This will weaken companies’ gen-
prove the optimisation of the meat balance and the produc-
eral operating conditions and impede financing. Despite the
tion of semi-finished and finished products.
outlook, we believe that Snellman’s possibilities to improve
its result in 2015 are better than the year before. We are now
RISKS
better prepared to anticipate future changes and adjust our
Snellman’s most significant risks are related to the food sec-
operations to the market situation.
tor, which is highly susceptible to the effects of changes in
the global food safety and sudden market disturbances. The
The Snellman Board of Directors has outlined long-term
food sector is also susceptible to the risks related to consum-
goals for the operations until 2020.
ers’ purchasing power and competition in the retail sector.
reviewed every three years and the new strategy round will
start in 2015.
The strategy will be
BOARD OF DIRECTORS
PERSONNEL, BOARD OF DIRECTORS
The Board of Directors proposes that the distributable funds
AND AUDITORS
will be distributed as follows:
47
At the end of 2014, the number of personnel in the Snellman
Group was 1275 (1231). The wages, salaries and fees of the
EUR 4.0 per share is paid in dividends, i.e.
Group amounted to EUR 41.7 (39.2) million. Since 1 January
2014, the CEO of the Snellman Group has been Leena Laiti-
Reserved in shareholders' equity
EUR 31 944 194.64
nen.
Total
EUR 33 419 314.64
EUR 1 475 120.00 in total
In 2014 the composition of the Board of Directors was the following: Chairman Felix Björklund from 1 January to 14 March
NUMBER OF COMPANY SHARES BY SHARE
and Martti Vähäkangas since 15 March; Deputy Chairman
CLASS, AND MAIN PROVISIONS OF THE ARTI-
Erkki Järvinen, and other members Peter Fagerholm, Krister
CLES OF ASSOCIATION CONCERNING SHARE
Snellman, Ole Snellman and Johanna Tidström. The Compa-
CLASSES
ny’s Auditor was Authorised Public Accountant Firm Ernst &
Young Ltd. with Kjell Berts, CGR as the principal auditor.
31Dec. 2014
31 Dec. 2013
240 000.
240 000.
129 000.
129 000.
Number of A Shares
PROPOSAL OF THE BOARD OF DIRECTORS ON
(10 votes/share)
THE DISTRIBUTION OF PROFITS AND POSSI-
Number of B Shares
BLE DISTRIBUTION OF UNRESTRICTED SHARE-
(1 vote/share)
HOLDERS’ EQUITY.
The distributable funds in the financial statements of the
parent company amounted to EUR 33 419 314.64, of which the
profit for the financial period is EUR 1 550 429.92. There have
been no significant changes in the company’s financial position after the financial period, and the solvency test in compliance with Chapter 13, Section 2 of the Finnish Limited Liability Companies Act does not affect the distributable funds.
KEY FIGURES
Group
IFRS -14
Group
IFRS -13
Parent company Parent company
FAS -14
FAS -13
Net turnover, EUR million
301
284,8
5,0
4,3
Change in net turnover,%
6%
+8 %
+16 %
+19 %
Operating profit, EUR million
6,7
6,6
-0,4
-0,2
Operating Profit %
2,2 %
2,3 %
-7,7 %
-4,4 %
Profit before taxes, EUR million
4,0
4,4
2,2
1,0
Result for the financial period, EUR million
3,7
3,8
1,6
0,2
Return on equity (ROE), %
6,8 %
7,1 %
3,7 %
-3,2 %
Return on investment (ROI), %
5,5 %
6,3 %
4,3 %
1,8 %
Equity ratio (%)
31,6 %
31,8 %
24,7 %
25,2 %
Net gearing
134,1 %
136,8 %
205,4 %
205,8 %
Net gearing / EBITDA
4,1
4,3
188
169
FINANCIAL STATEMENTS
2014
50
FINANCIAL STATEMENTS
GROUP KEY FIGURES
IFRS
31.12.2014
IFRS
31.12.2013
IFRS
31.12.2012
IFRS
31.12.2011
IFRS
31.12.2010
Net turnover, EUR million
301
285
264
233
191
Change in net turnover,%
6%
8 %
14 %
22 %
10 %
Operating profit, EUR million
6,7
6,6
13,8
11,9
14,8
2,2 %
2,3 %
5,2 %
5,1 %
7,7 %
4,0
4,4
12,5
10,5
12,9
1,3 %
1,6 %
4,7 %
4,5 %
6,8 %
3,7
3,8
9,4
7,9
9,6
1,2 %
1,3 %
3,6 %
3,4 %
5,0 %
Return on investment (ROI), %
5,5 %
6,3 %
14,1 %
14,1 %
18,4 %
Return on equity (ROE), %
6,8 %
7,1 %
18,9 %
17,2 %
23,9 %
31,6 %
31,8 %
35,0 %
36,5 %
40,3 %
134,1 %
136,8 %
108,4 %
95,6 %
67,0 %
4,1
4,3
2,5
2,2
1,3
Investments in machinery and plant, EUR million
10,0
19,8
25,2
17,2
7,6
Interest-bearing liabilities, EUR million
82,2
77,6
61,5
47,6
39,3
Man-years (FTE)
894
869
807
742
645
Number of personnel at the end of the year*
1275
1231
1104
1087
930
22
25
32
35
18
% of net turnover
Profit before taxes, EUR million
% of net turnover
Result for the financial period, EUR million
% of net turnover
Equity ratio (%)
Net gearing
Net gearing / EBITDA
* of whom lease employees
Net result
Return on equity (ROE), %
CALCULATION FORMULA
Operating result - Financial income and expenses - Taxes
Net result * 100
Shareholders’ equity (average during the financial period)
Return on investment (ROI), %
(Net result + Financial expenses + Taxes) * 100
Average invested capital
Equity ratio (%)
Shareholders’ equity
Balance sheet total - Received advances
Net gearing (%)
(Interest-bearing liabilities - Cash and bank deposits - Financial securities)* 100
Shareholders’ equity
Net gearing / EBITDA
(Interest-bearing liabilities - Cash and bank deposits - Financial securities)
EBITDA
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
CONSOLIDATED BALANCE SHEET
EUR 1000
ASSETS
Non-current asset
Property, plant and equipment
Goodwill
Other intangible assets
Investments in associates
Other financial assets
Loans and other receivables
Deferred tax assets
Note
31 Dec. 2014
31 Dec. 2013
1
2
2
3
4
5
6
79 446
23 331
7 860
399
157
4 060
1 642
116 895
81 772
23 331
7 857
390
229
3 376
799
117 754
7
8
21 100
27 107
1 831
0
8 191
58 229
21 795
22 488
2 271
0
4 407
50 961
175 123
168 714
627
-3 486
-13
52 169
3 242
52 538
627
−3 675
257
51 454
3 720
52 384
2 669
1 159
55 208
53 543
12
13
6
48 609
3 871
3 606
56 086
55 888
4 189
2 888
62 964
14
29 239
489
488
33 613
63 830
29 665
354
442
21 745
52 207
119 915
115 171
175 123
168 714
Current assets
Inventories
Trade and other receivables
Current income tax liabilities
Financial securities
Cash and cash equivalents
9
10
ASSETS, TOTAL
16
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
Fair value reserve
Currency translation differences
Retained earnings
Profit for the financial period
11
Non-controlling interest
Shareholders’ equity, total
Non-current liabilities
Interest-bearing liabilities
Other financial liabilities
Deferred tax liabilities
Current liabilities
Trade and other payables
Current income tax liabilities
Other current financial liabilities
Interest-bearing liabilities
15
12
Liabilities, total
SHAREHOLDERS’ EQUITY AND LIABILITIES, TOTAL
16
51
52
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
EUR 1000
Note
2014
2013
Net turnover
17
301 290
284 756
Other operating income
18
1 600
1 297
-2 554
4 033
33
125
-176 554
-51 896
-11 463
−169 556
−48 534
−10 415
-53 797
−55 131
6 658
6 577
707
-3 339
9
1 213
−3 337
−4
4 035
4 449
169
-522
−25
−651
3 682
3 774
3 242
440
3 682
3 720
54
3 774
Change in inventories of finished and unfinished goods
Production for own use
Use of materials and supplies
Personnel expenses
Depreciation/Amortisation
Impairment of goodwill
Other operating expenses
19
20
21
21
22
Operating profit
Financial income
Financial expenses
Share in associate’s profit
24
24
3
Profit before appropriations and taxes
Deferred taxes
Income taxes
Profit for the financial period
25
25
Distribution of profit for the financial year
To parent company shareholders
To non-controlling interest holders
Total
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR 1000
2014
2013
Profit for the financial period
3 682
3 774
-358
188
-270
647
-108
3 242
4 313
2 802
440
3 242
4 259
54
4 313
Other comprehensive income
Revaluation of property, plant & equipment
Cash flow hedges
Currency translation differences
Comprehensive income for the financial period, total
Distribution of the comprehensive income:
To parent company shareholders
To non-controlling interest holders
Total
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN EQUITY, IFRS
EUR 1000
Equity attributable to the shareholders of the parent company
Share
Fair value
Currency
Retained
Total
capital
reserve
translation earnings
differences
Shareholders’ equity, 1 Jan. 2013
Corporate acquisition
Change in non-controlling interest
Other changes
Dividend distribution
Comprehensive income for the financial
period
Shareholders’ equity, 31 Dec. 2012
627
627
-4 322
365
Shareholders’ equity, 31 Dec. 2014
627
51 481
-286
-120
-286
-120
1 202
52 683
-383
286
-383
-120
647
-108
3 720
4 259
54
4 313
-3 675
257
55 174
52 384
1 159
53 543
-1 070
-102
-1 475
-1 070
-102
-1 475
1 070
Corporate acquisitions
Change in non-controlling interest
Other changes
Dividend distribution
Comprehensive income for the financial
period
54 811
Non-control- Shareholders’
ling interest equity, total
-102
-1 475
188
-270
2 884
2 802
440
3 242
-3 486
-13
55 411
52 538
2 669
55 208
CONSOLIDATED CASH FLOW STATEMENT
EUR 1000
Cash flow from operating activities
Operating profit
Adjustments to operating profit
Changes in working capital
Interests paid
Interests received
Dividends received
Other financial items
Taxes paid
Cash flow from investment activities
Investments in tangible and intangible assets
Capital gains from tangible and intangible assets
Loans granted
Non-current receivables, IFRS
Repayments of loan receivables
Other investments
Capital gains from other investments
Purchased shares of subsidiaries
Cash flow from financing activities
Purchases of treasury shares
Changes in current loans
Proceeds from non-current loans
Repayment of non-current loans
Non-current liabilities, IFRS
Donations
Dividend payments
Change in cash and cash equivalents
Cash and cash equivalents, 1 Jan.
Change in currency exchange rates
Cash and cash equivalents, 31 Dec.
Changes in current receivables
Changes in inventories
Changes in current liabilities
2014
2013
6 658
11 091
-4 482
-1 341
515
2
-1 808
-738
9 897
6 319
10 692
−5 727
−1 015
349
1
−1 460
−463
8 697
-9 972
1 001
-1
123
8
-8 802
−19 759
264
−807
−340
4
−228
0
−383
−21 249
278
32 912
-28 601
68
-120
-1 475
3 063
0
1 198
26 055
−11 145
−370
−120
−2 950
12 667
4 158
4 407
-374
8 191
115
4 437
−146
4 407
-4 849
695
-328
-4 482
−2 825
−5 601
2 699
-5 727
39
53
54
FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIC INFORMATION ON THE GROUP
The parent company of the Snellman Group, Oy Snellman Ab, is a
Finnish family-owned limited liability company whose domicile is
Pietarsaari, Finland. The company’s shares are not listed. A copy of
the consolidated financial statements is available on the Internet at
www.snellmangroup.fi, or at the parent company’s head office, address Kuusisaarentie 1, PL 113, 68600 PIETARSAARI, Finland as from
1 April 2015. The subsidiaries of the Group produce and market foodstuffs, especially meat and processed meat products, ready meals,
various food products for the institutional kitchen sector as well as
pet food for speciality stores and breeders. The Group’s market area
consists of Finland and Sweden. Some of the products are exported
outside Scandinavia. During the financial period, the Group also had
operations in Denmark, Norway and Germany. The Group consists
of five business areas: Meat Processing, Ready Meals, Food Service,
Panini and Pet Food. The Financial statements to be published were
confirmed in the Board of Directors meeting held 19 March 2015.
Accounting principles
Basis of preparation
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards approved
by the European Union. The IAS and IFRS standard valid on 31 December 2014, as well as SIC and IFRIC interpretations, have been applied to the preparation of the consolidated financial statements.
The consolidated financial statements are presented in thousand
euro unless otherwise stated.
The preparation of the financial statements in accordance with the
IFRS standards requires that the management makes certain assessments and judgement-based solutions. Information on the
judgement applied by the management concerning the financial
statements are presented in section “Accounting principles requiring
management’s judgement”.
Subsidiaries
The consolidated financial statements cover the parent company
Oy Snellman Ab and all its subsidiaries. Acquired subsidiaries are
consolidated in the financial statements as from the date they are
acquired.
Mutual holdings in the Group have been eliminated using the acquisition cost method. All Intra-group transactions, receivables, liabilities etc., have been eliminated from the consolidated financial statements. The profit for the financial period has been distributed to the
parent company shareholders and non-controlling interest holders
in the income statement, and the share of the shareholders’ equity
attributable to the non-controlling interest holders is presented as
a separate item in the shareholders’ equity in the balance sheet. In
subsidiary’s acquisitions, the difference between the acquisition cost
and acquired shareholders’ equity is recognised as goodwill.
Associate
An associate is a company over which the Group exercises significant influence. Significant influence is created when the Group holds
more than 20% of the shares in the company. Associates are consolidated by using the equity method.
Translation of foreign currency items
The consolidated financial statements are presented in euro, which
is the functional currency of the parent company.
Translation of the financial statements of foreign subsidiaries
The income statements of foreign subsidiaries are translated into
euro by using the average exchange rate of the financial period and
the balance sheets by using the closing date rates. The translation of
the result for the financial period in the income statement and balance sheet by using different exchange rates causes a currency translation difference, which is recognised in shareholders’ equity. The
translation differences arisen from the elimination of the acquisition
cost of foreign subsidiaries and the translation of equity items accrued after the acquisition are recognised in the shareholders’ equity.
The goodwill created by the acquisition of foreign entities and the
fair value adjustments made to the carrying amounts of the assets
and liabilities of foreign entities concerned in connection with the
acquisition are translated into euro at closing date exchange rates.
Property, plant and equipment
Property, plant and equipment are recognised at historical cost less
accumulated depreciation and possible impairment. If an item of
property, plant and equipment consists of several components with
economic lives of different lengths, the components are recognised
as separate assets.
Depreciation is calculated on a straight line basis over the estimated
useful life as follows:
• Buildings
20 years
• Building technical equipment
15 years
• IT hardware
4 years
• Vehicles
5 years
• Light structures, machinery and equipment 4-15 years
• Other tangible assets
20 years
• Land areas
No depreciation
FINANCIAL STATEMENTS
Intangible assets
Impairments
Goodwill
The Group has taken into consideration the regulations of the IFRS
3 Standard concerning the recognition of the acquisition cost in subsidiary acquisitions that have taken place after 1 January 2007. The
difference between the acquisition cost and received net assets is
recognised as goodwill. Goodwill is tested annually for possible impairment. For this purpose, goodwill is allocated to the cash generating units that mainly correspond to the Company’s business areas in
the country concerned. Goodwill is measured at historical cost less
impairment.
Tangible and intangible assets
The Group assesses at each closing date whether there is an indication that an asset may be impaired. If any such indication exists, the
recoverable amount of the asset is estimated and impairment is recognised. The recoverable amount is calculated annually on goodwill.
The need for impairment is assessed at the level of cash-generating
units.
Research and development costs
Research and development costs are recognised as expenses in the
income statement. The recognised costs related to the development
project started during the financial period amount to EUR 220 thousand (cumulatively EUR 1208 thousand).
Other intangible assets
Intangible assets with limited useful lives are recognised as expenses
in the income statement and amortised on a straight line basis over
their estimated useful lives.
The amortisation periods are the following:
• Know-how
• ERP system • Other IT software 10 years
10 years
4 years
Capitalised wages and salaries
Direct wages and salaries related to the construction of the building
have been capitalised and are amortised over the useful life of the
building. Indirect wages and salaries have been transferred to income statement.
Borrowing costs
Borrowing costs are recognised as expenses in the financial statement, with the exception of acquisitions whose implementation
lasts more than one year, in which case they are capitalised for the
acquisition concerned.
Government grants
Inventories
Inventories are measured at cost or net realisable value, whichever
is lower. Acquisition cost is defined by applying the FIFO method.
The acquisition cost of finished an unfinished goods consists of raw
materials, variable costs and fixed costs.
Biological assets
The live animals owned by the Group are measured at a value that is
close to the market price. Fattening animals with a useful life of 1-2
years and low sales value are recognised as annual costs.
Financial assets and liabilities
Financial assets
The Group classifies its financial assets as follows: financial assets
recognised at fair value in profit or loss, loans and other receivables,
available-for-sale financial assets. The classification of financial assets takes place at initial recognition and depends on the purpose for
which the financial asset are acquired.
Financial assets recognised at fair value in profit or loss
This category includes a basis swaps (non-hedging derivative), foreign currency derivatives and quoted shares.
Financial assets recognised in other comprehensive income
This category includes interest rate swaps for the purpose of hedging
the loan portfolio.
Loans and other receivables
The financial assets included in this category are divided into current
and non-current financial assets, non-current if they fall due after
more than twelve months.
Grants received as compensation for costs are recognised in the income statement at the same times as the expenses related to the target of the grant are recognised as expenses. These grants are presented in other operating income. The Group has not received investment
subsidies during the financial period.
Cash and cash equivalents
Leases
Financial liabilities include current and non-current liabilities, which
may be interest-bearing or interest-free.
Leases related to tangible assets in which a significant portion of the
risks and rewards inherent to ownership are transferred to the Group
are classified as finance leases. Assets acquired through finance
leasing are amortised/depreciated over the their useful lives. Lease
payments are apportioned between finance charges and reduction
of liability during the lease period. Lease liabilities are included in
interest-bearing liabilities.
Leases where the lessor retains the risks of ownership are treated as
operating leases. The lease payments made on the basis of these leases are recognised as expenses in the income statement.
Cash and cash equivalents consist of cash and bank deposits. Used
credit facility at closing date is recognised in interest-bearing liabilities.
Financial liabilities
Impairment of financial assets
The Group assesses at each closing date whether there is an indication that financial assets may be impaired.
Impairment loss on trade receivables is recognised if the estimate
is that a trade receivable is lost. If the amount of impairment loss
decreases during a future financial period and the decrease can be
objectively considered to be related to an event that occurred after
the recognition of the impairment loss, the loss is reversed in profit
or loss.
55
56
FINANCIAL STATEMENTS
Derivative instruments
Derivative instruments are recognised at fair value. Profit or loss arising from measurement at fair value is recognised in accordance with
purpose of use of the derivative instrument. When applicable, the
Group has applied IAS 39 compliant hedge accounting and utilised
a basis swap.
Revenue recognition principles
The net turnover includes revenue from the sale of products and
services, raw materials and supplies, adjusted for indirect taxes, discounts given and exchange differences from foreign currency sales.
Goods and services
Revenue from the sale of goods is recognised as income when the
risks and rewards inherent to the ownership of the sold goods have
transferred to the buyer. Revenue from services is recognised when
the service has been rendered.
Interests and dividends
Interest income and expenses are recognised in profit or loss over
the current loan period. Received dividends are recognised as income
when they are paid.
Income taxes
Tax expense in the income statement comprises taxes on taxable income for the financial period and deferred taxes. Tax expense is recognised in the income statement, except for items recognised direct
in shareholders’ equity consisting mainly of derivative instruments
in hedge accounting. Tax is adjusted for possible taxes related to previous financial periods.
Deferred taxes are calculated on all temporary differences between
the carrying amount and the taxable value. The largest temporary
differences arise from the depreciation of property, plant & equipment and measurements at fair value made in connection with acquisitions. Deferred taxes are calculated using statutory tax rates
enacted by the closing date. Deferred tax assets are recognised to the
extent that it is probable that future taxable profit will be available
against which the temporary difference can be utilised.
Operating profit
IAS Standard 1 presentation of financial statements does not define
the concept of operating profit. The Group has defined the concept as
follows: Operating profit is the net amount obtained by adding other operating income to the net turnover, deducting purchase costs
adjusted for change in inventories of finished and unfinished goods
and costs of production for own use, and deducting employee benefits, depreciations & amortisations and possible impairment losses
and other operating expenses. All other income statement items are
presented below the operating profit.
Accounting principles requiring management’s
judgement
The preparation of financial statements requires estimates and assumptions concerning the future. The end results may deviate from
these estimates and assumptions. Critical judgements are also required in applying accounting principles. The estimates are based
on the management’s best view at closing date. Possible changes in
the estimates and assumptions are recognised in the financial period
during which the estimate or assumption is adjusted and in the subsequent financial periods.
In the Group, the key assumptions concerning the future and such
key sources of uncertainty related to estimates at closing date as
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the next financial year are
the following:
Determination of the fair value of assets acquired
through business combinations
In significant business combinations, the Group has used an external advisor in the determination of the fair values of tangible and
intangible assets. The determination of the fair value of intangible
assets is based on estimates of expected cash flows from the assets.
The Group management believes that the used estimates and assumptions are sufficiently exact for determining the fair value.
Impairment testing
The Group carries out annual impairment tests on goodwill and intangible assets with an indefinite useful life and estimates indications of impairment in accordance with the accounting principles
described above. The recoverable amounts of the cash-generating
units have been calculated on the basis of the value in use. These calculations require the use of estimates.
Application of new or amended IFRS standards
and IFRIC interpretations
The application of the below standards and interpretations published by IASB will be obligatory in 2015. The Group has decided not
to apply these standards to the financial period of 2014 and will adopt
them in future financial periods.
In 2015, the Group will adopt the following standards published by
IASB:
• IAS 19 Employee benefits. Annual improvements to IFRS standards
2010-2012 and 2011-2013. The Group interprets that the amendments
will not have a significant impact on the future consolidated financial statements.
FINANCIAL STATEMENTS
1. TANGIBLE ASSETS
EUR 1000
Land
areas
Buildings
Acquisition cost, 1 Jan.
Increases
Transfer between categories
Exchange differences
Decreases
Acquisition cost, 31 Dec.
1 332
160
79 226
2 543
2 581
-84
2 009
82 257
71 532
5 844
560
-119
1 285
76 531
31 482
-18
1 895
3 860
33 429
43 179
-50
774
6 392
48 748
3
66
719
48 828
40 022
27 783
25 225
757
761
38
1 454
Accumulated depreciation and impairment, 1 Jan.
Exchange differences
Decreases
Depreciation for the financial period
Accumulated depreciation and impairment, 31 Dec.
Revaluations, 31 Dec.
Carrying amount, 31 Dec. 2014
Carrying amount, 31 Dec. 2013
1 454
1 332
Machinery Other tangible Acquisitions
and equipassets
in progress
ment
1 416
65
6
1 475
3 247
518
-3 141
624
655
Total
156 753
9 129
-203
3 337
162 341
75 317
-68
2 671
10 318
82 896
624
14 432
79 446
81 772
Assets acquired through financial leasing are included in the “Machinery and equipment” category. The carrying amount of the assets amounted
to EUR 5.9 million.
2. INTANGIBLE ASSETS
EUR 1000
Acquisition cost, 1 Jan.
Increases
Transfer between categories
Exchange differences
Decreases
Acquisition cost, 31 Dec.
Intellectualproperty rights
Group
goodwill
Advance
payments
Total
11 153
840
12
-20
33
11 952
23 419
1 000
220
-12
35 573
1 059
23 419
Accumulated amortisation and impairment, 1 Jan.
Exchange differences
Decreases
Amortisation for the financial period
Accumulated amortisation and impairment, 31 Dec.
4 297
-5
83
1 091
5 300
88
Carrying amount, 31 Dec. 2014
Carrying amount, 31 Dec. 2013
6 652
6 857
23 331
23 331
1 208
88
4 385
-5
83
1 091
5 388
1 208
1 000
3. INVESTMENTS IN ASSOCIATES
Investments in associates, EUR 1000
At the beginning of financial period
Share of the result for the financial period
Increase
At the end of financial period
Associate
Domicile
Assets
Liabilities
Net turnover
Result for the financial period
Holding
2014
390
9
-20
33
36 579
399
2013
166
-4
228
390
Jeppo Biogas Ab
Uusikaarlepyy
2014
8 099
6 584
1 166
41
22,5 %
2013
9 074
7 603
117
-17
22,5 %
31 191
31 188
57
58
FINANCIAL STATEMENTS
4. OTHER FINANCIAL ASSETS
EUR 1000
Loans and other receivables (unquoted shares and holdings), EUR
Total
2014
2013
157
157
229
229
5. LOANS AND OTHER RECEIVABLES
EUR 1000
2014
2013
Financial assets recognised at fair value in profit or loss
Non-current derivative instruments, not in hedge accounting
Derivative instruments in hedge accounting
Loan receivables from customers, EUR
Other loan receivables, EUR
Total
21
1
3 232
806
4 060
0
2 562
814
3 376
Recognised in Recognised in other
income statecomprehensive
ment
income
31 Dec. 2014
6. DEFERRED TAX ASSETS AND LIABILITIES
Changes in deferred taxes in 2014, EUR 1000
Deferred tax assets:
Changes in fair value
Other items
Total
Deferred tax liabilities:
Changes in fair value
Depreciation/amortisation differences
Other items
Total
Changes in deferred taxes in 2013, EUR 1000
Deferred tax assets:
Changes in fair value
Other items
Total
Deferred tax liabilities:
Changes in fair value
Depreciation/amortisation differences
Other items
Total
1 Jan. 2014
770
29
799
142
-2 678
-352
-2 888
1 Jan. 2013
1 396
-314
1 083
0
-2 548
-116
-2 665
-15
871
-13
742
901
1 642
-34
-34
108
-3 208
-505
-3 606
Recognised in Recognised in other
income statecomprehensive
ment
income
31 Dec. 2013
-530
-153
-684
0
343
-130
-236
-366
-626
770
29
799
143
143
142
-2 678
-352
-2 888
2014
2013
13 799
1 217
6 084
21 100
11 965
1 648
8 183
21 795
7. INVENTORIES
EUR 1000
Materials and supplies
Unfinished goods
Finished goods
Total
FINANCIAL STATEMENTS
8. TRADE AND OTHER RECEIVABLES
EUR 1000
Trade receivables
Loan receivables
Other receivables
Prepaid expenses and accrued income
Total
2014
25 448
195
353
1 021
27 018
2013
20 395
105
838
1 079
22 416
89
71
Total
27 107
22 488
Current receivables were distributed by currency as follows:
EUR
SEK
DKK
NOK
NZD
Total
2014
23 907
2 809
0
14
376
27 107
2013
19 267
2 824
30
12
354
22 488
2013
18 894
Credit losses
Derivative instruments – in hedge accounting
Financial assets recognised at fair value in profit or loss
Derivative instruments – not in hedge accounting
Age distribution of sales receivables and items recognised as credit losses:
As per 31 Dec 2012
Not past due
Past due
Less than 7 days
7-14 days
15-21 days
22-45 days
More than 45 days
As per 31 Dec 2013
Not past due
Past due
Less than 7 days
7-14 days
15-21 days
22-45 days
More than 45 days
403
216
215
296
371
20 395
2013
23 713
817
314
140
130
334
25 448
141
141
Credit losses
252
252
Net 2013
18 894
403
216
215
296
512
20 535
Net 2013
23 713
817
314
140
130
559
25 672
9. SECURITIES
EUR 1000
Loans and other receivables
Total
2014
2013
0
0
0
0
59
60
FINANCIAL STATEMENTS
10. CASH AND CASH EQUIVALENTS
EUR 1000
2014
2013
Cash and bank deposits
Total
8 191
8 191
4 407
4 407
11. SHAREHOLDERS’ EQUITY
Outstanding shares
A Shares
B Shares
20142013
239 780
239 780
129 000
129 000
The number of parent company’s treasury shares on 31 December 2014 was 220. The acquisition of shares has no significant impact on the distribution of ownership and voting rights.
Parent company’s distributable shareholders’ equity, EUR 1 000.
2014
2013
31 869
1 550
33 419
33 225
239
33 464
Dividend per share distributed for the financial period
2014
2013
Dividend/share, EUR
Dividend distributed by parent company, EUR 1000
4,00
1 475
8,00
2 950
Retained earnings
Profit for the financial period
Total
The Board of Directors has proposed to the Annual General Meeting to be held on 27 March 2015 that the dividend to be distributed is EUR 4 per share, total EUR 1 475 120.
12. INTEREST-BEARING LIABILITIES
Non-current financial liabilities measured at amortised cost, EUR 1000
Loans from financial institutions
Pension loans
Financial lease liabilities
Total
Current financial liabilities measured at amortised cost, EUR 1000
2014
2013
45 965
53 116
2 644
48 609
2 772
55 888
2014
2013
Loans from financial institutions
Pension loans
Other liabilities
Financial lease liabilities
Total
30 340
14 385
2 021
1 252
33 613
5 805
1 555
21 745
Interest-bearing liabilities, total
82 223
77 633
Fixed-rate
Floating-rate
Average rate at the end of financial period
0%
100 %
1,41 %
0%
100 %
1,58 %
FINANCIAL STATEMENTS
61
13. OTHER FINANCIAL LIABILITIES
EUR 1000
2014
2013
Derivative instruments in hedge accounting
3 871
4 189
Trade payables
Advances received
Other liabilities
Accrued expenses and deferred income
Total
2014
17 915
581
1 911
8 832
29 239
2013
18 393
396
2 307
8 570
29 665
Current liabilities are distributed by currency as follows:
EUR
SEK
GBP
USD
NOK
DKK
Total
2014
26 649
2 505
18
4
60
4
29 239
2013
26 855
2 552
17
2
165
74
29 665
14. TRADE AND OTHER PAYABLES
Current financial liabilities measured at amortised cost, EUR 1000
The most significant items in accrued expenses and deferred income are personnel expenses and amortisation of debt interests.
15. OTHER CURRENT FINANCIAL LIABILITIES
EUR 1000
2014
2013
Derivative instruments in hedge accounting
488
405
Financial liabilities recognised at fair value in profit or loss
Derivative instruments – not in hedge accounting
Total
488
37
442
16. BUSINESS ACQUISITIONS
Financial period 2014
The Group has not made business acquisitions.
Financial period 2013
The Group increased its holdings in the following companies:
Acquisition of non-controlling interests Acquisition %
Holding %
Oy MUSH Ltd
16,0
97,3
Suomen Sianjalostus Oy
2,6
100,0
17. NET TURNOVER
EUR 1000
Net turnover, goods
Net turnover, services
Total
2014
301 107
184
301 290
2013
284 640
116
284 756
62
FINANCIAL STATEMENTS
18. OTHER OPERATING INCOME
EUR 1000
Rental income
Gains from sale of fixed assets
Income from completed work
Profit from the staff restaurant (net)
Other
Total
2014
60
534
207
215
584
1 600
2013
46
90
144
507
510
1 297
2014
175 251
-1 902
3 204
176 554
2013
171 265
-4 668
2 959
169 556
2014
41 688
7 151
3 057
51 896
2013
39 188
6 443
2 903
48 534
2014
894
1 275
22
2013
19. USE OF MATERIALS AND SUPPLIES
EUR 1000
Raw materials and supplies
Change in inventories
Purchased services
Total
20. PERSONNEL EXPENSES
Employee benefit expenses
Wages and salaries
Pension expenses
Other indirect personnel expenses
Total
Man-years (FTE)
Number of personnel at the end of the year*
* of whom lease employees
21. DEPRECIATION, AMORTISATION AND IMPAIRMENT
Depreciation/amortisation, EUR 1000
Property, plant and equipment
Buildings
Machinery and equipment
Other tangible assets
Total
Intangible assets
Intellectual property rights
Total
Depreciation/amortisation, total
2014
2013
3 929
6 433
66
10 428
3 376
6 156
66
9 597
1 035
1 035
817
817
11 463
10 415
2014
59
48
107
2013
53
83
135
22. OTHER OPERATING EXPENSES
Remuneration of auditors, EUR 1000
Auditing fee
Other fees
Total
FINANCIAL STATEMENTS
23. RESEARCH AND DEVELOPMENT COSTS
EUR 1000
The income statement includes research and development costs recognised as expenses
Total
2014
826
826
2013
732
732
2014
2013
92
76
283
541
2
515
12
10
707
2014
1
396
10
-19
1 213
2013
-1 341
-354
-1 480
-1 015
-656
-1 292
-99
-65
-3 339
-243
-54
-77
-3 337
Taxes in income statement, EUR 1000
Tax on taxable income for current financial period
Tax from previous financial periods
Deferred taxes
Total
2014
-521
-1
169
353
2013
-657
6
-25
675
Reconciliation of taxes in the income statement with profit before taxes
Profit before taxes
4 035
4 449
-807
-1 090
666
30
12
-39
-260
FINANCIAL INCOME AND EXPENSES
Financial income, EUR 1000
Financial assets recognised at fair value in profit or loss
Exchange rate gains
Changes in fair value, increase
Loans and other receivables
Dividend income
Interest income
Derivative instruments in hedge accounting, income
Exchange rate differences, gain
Total
Financial expenses, EUR 1000
Financial liabilities measured at amortised cost
Interest expenses
Other financial expenses
Derivative instruments in hedge accounting, costs
Financial assets recognised at fair value in profit or loss
Losses from foreign currency translation
Changes in fair value, decreases
Exchange rate differences, loss
Total
25. INCOME TAXES
Taxes calculated using parent company’s tax rate of 20% (2013: 24.5 %)
Impact of deferred taxes on the change in parent company’s tax rate from 24.5% to 20%.
Different tax rates of foreign subsidiaries
Impact of tax-free income
Impact of non-deductible expenses
Unrecognised deferred tax assets
Use of previously unrecognised deferred tax assets
Tax from previous financial periods
Total
67
10
20
0
359
-2
353
6
675
63
64
FINANCIAL STATEMENTS
FINANCIAL RISK MANAGEMENT
T
he Group’s financial department is in charge of financial risk management. The Business Area Directors and the financial department agree on the Group’s internal risk hedging.
The aim of the Group’s financial risk management is to decrease the
impacts of price fluctuations and other uncertainty factors on the
result, balance sheet and cash flows and ensure sufficient liquidity.
The main risks that affect financing are risks related to interest and
exchange rates, credit and availability of raw materials. The Board of
Directors maintains a sufficient hedging level against financial risks.
Interest rate risk
Interest rate risks are hedged through interest rate derivatives. At closing date, the Group’s derivative instruments against financial risks
amounted to EUR 84.4 million (31 December 2013: EUR 70.0 million).
The Group’s interest-bearing liabilities on 31 December 2014 stood at
EUR 82.2 million (31 December 2013: EUR 77.6 million), of which the
share of fixed-rate liabilities was EUR 0.2 million (31 December 2013:
EUR 0.2 million), i.e. 0% (31 December 2013: 0%). The Group has also
used a derivative instrument for temporary interest rate adjustment
(basis swap). The value of the instrument at 31 December 2013 was
EUR 3.1 million, but the contract expired in the financial period. This
instrument is recognised in profit or loss, whereas other interest rate
derivatives are recognised in other comprehensive income.
IFRS 7 compliant sensitivity analysis of the
interest rate risks of financial instruments
The interest rate risk analysis is based on the following assumptions: A moderate and possible change of 1% in the interest rate level
is used in the sensitivity test. It is calculated on the interest-bearing
floating-rate net debt at closing date. Floating-rate net debt at 31 Dec.
2014 was EUR 82.0 million (31 December 2013: EUR 77.3 million). At the
end of 2014, an increase of one percentage unit in the interest rate level would mean a decrease of EUR 0.0 million in the Group’s annual
interest rate costs (2013: increase of EUR 0.3 million).
Currency risk
The Group’s operations are subject to transaction risks, on one hand,
and to translation risks related to the foreign subsidiaries, on the other. Most of the Group’s transaction risks are related to foreign operations, exports of meat products and raw material purchases. These
risks are hedged through currency derivatives. The hedging strategy
requires that temporary, essential transaction risks are hedged,
whereas long-run transaction risks and translation risks, except for
Group’s internal loans, are not hedged.
IFRS 7 compliant sensitivity analysis of the
currency risks of financial instruments
With the exception of each group company’s own functional currency,
the sensitivity analysis of currencies is based on the financial instruments in the balance sheet at closing date and risks related to them.
The foreign currency items that are not financial instruments, e.g. forecasted probable purchases or sales, are not included in the sensitivity analysis.
31 Dec. 2014
31 Dec. 2013
EUR 1000
SEK
SEK
Net position
5000
40
Impact of 5% rise in the currency
rate on result before taxes
-230
0
The moderate possible change in the currency rate anticipated in the
sensitivity analysis is 5%.
Liquidity and refinancing risk
At the end of the financial period, the unused credit facilities amounted to EUR 9.4 million (31 Dec. 2013: EUR 4.8 million). At closing date,
the average maturity of the Group’s loans was approximately 4.1 years.
The maturity analysis (figures undiscounted) of financial liabilities
and derivative instruments is shown in the below table.
FINANCIAL STATEMENTS
Maturity date analysis of financial liabilities
EUR 1000
Loans
Lease liability
Derivative liabilities and assets
Other liabilities
Trade payables
Total
EUR 1000
Loans
Lease liability
Derivative liabilities and assets
Other liabilities
Trade payables
Total
Repayments
Repayments
Capital charges
Repayments/charges
Payments
Payments
< 1 year
30 340
1 250
1 770
12 385
17 915
63 659
Repayments
Repayments
Capital charges
Repayments/charges
Payments
Payments
< 1 year
14 385
1 243
1 681
12 009
18 393
47 711
Maturity date, 31 Dec. 2014
1-5 years
> 5 years
38 333
9 082
2 647
2 589
0
43 569
9 082
Maturity date, 31 Dec. 2013
1-5 years
> 5 years
43 054
15 483
2 674
410
2 949
1
48 678
15 894
Total
77 755
3 897
4 359
12 385
17 915
116 310
Total
72 923
4 327
4 631
12 009
18 393
112 283
Credit risk
Raw material risk
The credit risk is comparatively low as most of the products are sold
to large retail chains. The financial department monitors the other
credits, and collection measures are taken in cooperation with a collection agency.
At the turn of the year, the Group hedged the price of electricity and oil
for the next few years. Changes in the prices of meat raw materials are
transferred to sales prices as efficiently as possible.
Management of capital structure
The long-term solvency ratio goal is 40%, but it may decrease temporarily when the Company makes large-scale investments and strategic
acquisitions.
65
66
FINANCIAL STATEMENTS
Carrying amounts of financial assets and
liabilities by category
EUR 1000
2014
Non-current assets
Other financial assets
Derivative instruments
Non-current trade receivables
Current assets
Trade receivables
Loan receivables
Other receivables
Prepaid expenses and accrued income
Securities
Derivative instruments
Cash and cash equivalents
Financial assets, total
Non-current liabilities
Interest-bearing liabilities
Derivative instruments
Current liabilities
Interest-bearing liabilities
Trade payables
Other liabilities
Prepaid expenses and accrued income
Derivative instruments
Financial liabilities, total
EUR 1000
2013
Non-current assets
Other financial assets
Derivative instruments
Non-current trade receivables
Current assets
Trade receivables
Loan receivables
Other receivables
Prepaid expenses and accrued income
Securities
Derivative instruments
Cash and cash equivalents
Financial assets, total
Non-current liabilities
Interest-bearing liabilities
Derivative instruments
Other liabilities
Current liabilities
Interest-bearing liabilities
Trade payables
Other liabilities
Prepaid expenses and accrued income
Derivative instruments
Financial liabilities, total
Financial assets
and liabilities
recognised at fair
value in profit
Note
or loss
4
5
5
8
8
8
8
9
8
10
Loans and
other recei- Financial liabivables
lities
157
4 039
157
21
4 039
25 448
195
353
1 021
25 448
195
353
1 021
31 213
89
8 191
39 514
21
1
89
110
12
13
48 609
12
14
14
14
15
33 613
17 915
2 491
8 832
111 461
Financial assets
and liabilities
recognised at fair
value in profit
Note
or loss
4
5
5
8
8
8
8
9
8
10
Derivative
instruments
Balance
in hedge sheet value,
accounting
total
Loans and
other recei- Financial liabivables
lities
3 871
48 609
3 871
488
4 359
33 613
17 915
2 491
8 832
488
115 820
Derivative
instruments
Balance
in hedge sheet value,
accounting
total
229
229
3 376
3 376
20 395
105
838
1 079
20 395
105
838
1 079
26 022
71
4 407
30 500
71
71
12
13
13
55 888
12
14
14
14
15
21 745
18 393
2 702
8 570
37
37
107 299
4 189
55 888
4 189
405
4 593
21 745
18 393
2 702
8 570
442
111 929
FINANCIAL STATEMENTS
Derivative instruments
EUR 1000
Derivative instruments, nominal values
Currency derivatives
- Currency forwards
Interest rate derivatives
- Interest rate swaps
- Interest rate options
Commodity derivatives
- Oil forward contracts
- Electricity forward contracts
Derivative financial instruments, fair values
Currency derivatives
- Currency swaps
- Currency forwards
Interest rate derivatives
- Interest rate swaps
Commodity derivatives
- Oil forward contracts
- Electricity forward contracts
Derivative instruments in hedge accounting
Interest rate derivatives
- Interest rate swaps
Commodity derivatives
- Oil forward contracts
- Electricity forward contracts
2014
2013
5 151
3 960
83 575
69 991
3 094
1 200
3 285
1 600
3 699
2014
2014
2013
2013
Positive fair
values
Negative fair
values
Positive fair
values
Negative fair
values
49
22
-14
-18
110
1
-3 818
-3 888
-9
-531
-44
-668
2014
2014
2013
2013
Nominal value
Effective portion
of fair values
Nominal value
Effective portion
of fair values
83 575
-3 818
66 897
-3 882
1 200
3 285
-9
-530
1 600
3 699
-44
-668
The Group has entered into a contract on two interest rate currency swaps that accurately translate the value of the loan from a foreign
currency to euro and interest rate to euribor rates. On 31 December 2014, the market value of these interest rate currency swaps was EUR
713 thousand (31 Dec. 2013: EUR 660 thousand). It is not included in the balance sheet as it will never be realised and the loan is recognised
in euro.
67
68
FINANCIAL STATEMENTS
CONTINGENT LIABILITIES
EUR 1000
Contingent liabilities with lodged securities
Debts to financial institutions (no securities)
Debts to financial institutions (mortgages)
Debts to financial institutions (pledges)
Debts to financial institutions (mortgages and pledges)
Pension loans (mortgages)
Debts to suppliers (mortgages)
Other debts (mortgages)
Prepaid expenses and accrued income (mortgages and pledges)
Contingent liabilities, other than debts (mortgages)
Contingent liabilities with lodged securities, total
Collateral given
Property mortgages
Enterprise mortgages
Pledges
Collateral given, total
Contingent liabilities not presented in the balance sheet
VAT obligation on property investments*
Collateral for others
Operational leasing
Due in one year
Due in 1-5 years
Due in 5 years
Operational leasing, total
Contingent liabilities not presented in the balance sheet, total
2014
2013
310
76 493
2 179
239
70 740
3 094
21
23
12 824
91 516
13 324
87 180
50 003
33 589
6 742
90 334
50 003
33 989
7 666
91 657
6 918
7 332
316
1 231
1 444
802
1 055
2 675
1 856
9 593
9 504
*The Group may become subject to repayment obligation due to VAT deductions made previously on property investments if there is a change
during the obligation period in the VAT taxability of the portion of the property utilisation that is subject to VAT.
FINANCIAL STATEMENTS
RELATED PARTY TRANSACTIONS
Group companies
Domicile
Holding %
Share of voting rights (%)
Oy Snellman Ab, parent company
Pietarsaari , Finland
Snellmanin Lihanjalostus Oy
Pietarsaari , Finland
100
100
Figen Oy
Ilmajoki , Finland
100
100
S-Frost Oy
Pietarsaari , Finland
100 100
Snellmanin Kokkikartano Oy
Kerava, Finland
100 100
Carolines Kök AB
Stockholm, Sweden
75
75
Icecool Oy
Helsinki , Finland
75
75
Snellman Trading AB
Stockholm, Sweden
75
75
Mr. Panini Oy
Pori, Finland
100
100
Mr.Panini ApS
Herlev, Denmark
100
100
Oy MUSH Ltd
Pedersöre, Finland
97
97
MUSH Gmbh
Hamburg, Germany
97
97
At closing date, the interest rate of the Group company loan stood at 3.4%.
Associates
Jeppo Biogas Ab
Domicile
Uusikaarlepyy, Finland
Management remuneration, EUR 1000
Salaries and other short-term employee benefits
Board of Directors’ fees
Holding %
23
Share of voting rights (%)
23
2014
1294
90
2013
1 327
135
EVENTS AFTER CLOSING DATE
The management of Group is not aware of any significant events after the closing date that would have an impact on the financial statements
to be presented.
69
70
FINANCIAL STATEMENTS
PARENT COMPANY’S BALANCE SHEET
AND INCOME STATEMENT (FAS)
BALANCE SHEET
€
31 Dec. 2014
31 Dec. 2013
5 094 339,63
652 445,17
5 145 373,73
794 450,70
44 612 540,20
422 066,92
45 034 607,12
44 612 540,20
422 066,92
45 034 607,12
50 781 391,92
50 974 431,55
CURRENT ASSETS
Non-current receivables
Current receivables
Cash and bank deposits
2 461829,20
83 623178,54
5 317 115,34
1 246 112,10
82 222 728,10
2 729 834,54
CURRENT ASSETS, TOTAL
91 402 123,08
86 198 674,74
142 183 515,00
137 173 106,29
SHAREHOLDERS’ EQUITY
Share capital
Retained earnings
Profit for the financial period
627 300,00
31 868 884,72
1 550 429,92
627 300,00
33 224 957,98
239 046,74
SHAREHOLDERS’ EQUITY, TOTAL
34 046 614,64
34 091 304,72
ACCUMULATED FINANCIAL STATEMENT ITEMS
1 302 978,93
675 821,10
LIABILITIES
Non-current liabilities
Current liabilities
45 661 819,47
61 172 101,96
53 111 452,83
49 294 527,64
106 833 921,43
102 405 980,47
142 183 515,00
137 173 106,29
Assets
NON-CURRENT ASSETS
Intangible assets
Tangible assets
Investments
Holdings in Group companies
Other investments
NON-CURRENT ASSETS, TOTAL
Assets, total
Shareholders’ equity and liabilities
LIABILITIES, TOTAL
Shareholders’ equity and liabilities, total
FINANCIAL STATEMENTS
INCOME STATEMENT
1 Jan. − 31 Dec. 2014
1 Jan. − 31 Dec. 2013
4 965 099,24
139 404,92
0,00
-2 507 849,61
-763 720,71
-2 213 972,14
4 271 347,85
246 327,68
0,00
-2 295 069,70
-607 426,51
-1 801 896,73
OPERATING RESULT
-381 038,30
-186 717,41
Financial income and expenses
1 655 592,85
-847 603,25
RESULT BEFORE EXTRAORDINARY ITEMS
1 274 554,55
-1 034 320,66
900 000,00
2 076 016,16
2 174 554,55
1 041 695,50
-627 157,83
3 033,20
-675 821,10
-126 827,66
1 550 429,92
239 046,74
€
NET TURNOVER
Other operating income
Materials and services
Personnel expenses
Depreciation, amortisation and impairment
Other operating expenses
Extraordinary items
RESULT BEFORE APPROPRIATIONS AND TAXES
Appropriations
Income taxes
RESULT FOR THE FINANCIAL PERIOD
71
72
FINANCIAL STATEMENTS
AUDITOR’S REPORT
TO THE ANNUAL GENERAL MEETING
statements and the report of the Board of Directors. The pro-
OF OY SNELLMAN AB
cedures selected depend on the auditor’s judgment, includ-
We have audited the accounting records, the financial state-
ing the assessment of the risks of material misstatement,
ments, the report of the Board of Directors, and the adminis-
whether due to fraud or error. In making those risk assess-
tration of Oy Snellman Ab for the period 1.1.2014 – 31.12.2014.
ments, the auditor considers internal control relevant to the
The financial statements comprise the consolidated state-
entity’s preparation of financial statements and report of the
ment of financial position, income statement, statement of
Board of Directors that give a true and fair view in order to
comprehensive income, statement of changes in equity and
design audit procedures that are appropriate in the circum-
statement of cash flows, and notes to the consolidated fi-
stances, but not for the purpose of expressing an opinion on
nancial statements, as well as the parent company’s balance
the effectiveness of the company’s internal control. An audit
sheet, income statement, cash flow statement and notes to
also includes evaluating the appropriateness of accounting
the financial statements.
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the over-
RESPONSIBILITY OF THE BOARD OF DIRECTORS
all presentation of the financial statements and the report of
AND THE MANAGING DIRECTOR
the Board of Directors.
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial state-
We believe that the audit evidence we have obtained is suf-
ments that give a true and fair view in accordance with In-
ficient and appropriate to provide a basis for our audit opin-
ternational Financial Reporting Standards (IFRS) as adopted
ion.
by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a
OPINION ON THE CONSOLIDATED FINANCIAL
true and fair view in accordance with the laws and regula-
STATEMENTS
tions governing the preparation of the financial statements
In our opinion, the consolidated financial statements give a
and the report of the Board of Directors in Finland. The Board
true and fair view of the financial position, financial perfor-
of Directors is responsible for the appropriate arrangement
mance, and cash flows of the group in accordance with In-
of the control of the company’s accounts and finances, and
ternational Financial Reporting Standards (IFRS) as adopted
the Managing Director shall see to it that the accounts of the
by the EU.
company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
OPINION ON THE COMPANY’S FINANCIAL
STATEMENTS AND THE REPORT OF THE BOARD
AUDITOR’S RESPONSIBILITY
OF DIRECTORS
Our responsibility is to express an opinion on the financial
statements, on the consolidated financial statements and
In our opinion, the financial statements and the report of the
on the report of the Board of Directors based on our audit.
Board of Directors give a true and fair view of both the con-
The Auditing Act requires that we comply with the require-
solidated and the parent company’s financial performance
ments of professional ethics. We conducted our audit in
and financial position in accordance with the laws and reg-
accordance with good auditing practice in Finland. Good au-
ulations governing the preparation of the financial state-
diting practice requires that we plan and perform the audit
ments and the report of the Board of Directors in Finland.
to obtain reasonable assurance about whether the financial
The information in the report of the Board of Directors is
statements and the report of the Board of Directors are free
consistent with the information in the financial statements.
from material misstatement, and whether the members of
the Board of Directors of the parent company and the Man-
Pietarsaari, 19.3.2015
aging Director are guilty of an act or negligence which may
Ernst & Young Oy
result in liability in damages towards the company or have
KHT auditor
violated the Limited Liability Companies Act or the articles
of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
Kjell Berts
Authorized Public Accountant
FINANCIAL STATEMENTS
SIGNATURES OF THE BOARD
OF DIRECTORS AND CEO
BOARD OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS
Pietarsaari 19.3.2015
Martti VähäkangasPeter Fagerholm
Chairman of the Board
Erkki Järvinen Johanna Tidström
Krister SnellmanOle Snellman
Leena Laitinen
CEO of the Snellman Group
A report concerning the audit of the financial statements has been given today.
Pietarsaari 19.3.2015
Kjell Berts
Ernst & Young Oy
KHT auditor
73
74
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
OF THE SNELLMAN GROUP
1. BACKGROUND AND APPLICABLE
ing if required due to significant matters concerning the
REGULATIONS
Company. The notice and other practices are the same as in
Oy Snellman Ab is a Finnish unlisted limited liability compa-
the Annual General Meeting.
ny. Its responsibilities and obligations are based on Finnish
legislation. The Company’s domicile is Pietarsaari. The Snell-
The agenda of Annual General Meeting contains matters pre-
man Group consists of the parent company, Oy Snellman
scribed in the Articles of Association and matters that the
Ab, and its subsidiaries. In decision making, the Company
Board of Directors submits to the meeting for decisions. The
primarily complies with the Finnish Limited Liability Com-
most significant matters that the Annual General Meeting
panies Act and the Company’s Articles of Association. The
shall deal with are the following:
operations of the Company are also managed in accordance
- Amendment of the Articles of Association
with the statement issued by the Central Chamber of Com-
- Decision on share issue
merce of Finland in January 2006 (“Improving of Corporate
- Approval of the Financial Statements
Governance of Unlisted Companies”) and, where applicable,
- Decision on increasing the share capital
Corporate Governance Recommendation for Listed Compa-
- Decision on the distribution of the Company’s assets,
nies issued by HEX Plc, the Central Chamber of Commerce
e.g. distribution of profit and decision on decreasing the
of Finland and the Confederation of Finnish Industry and
share capital
Employers in December 2003. In the foreign subsidiaries, the
- Decision on the number of Board members and their
exceptions that the legislation and other rules and regula-
remuneration
tions in the country concerned require are taken into consid-
- Election of the Board members
eration in the Corporate Governance.
- Election of the auditor
2. SHAREHOLDERS’ MEETING
Minutes shall be prepared of each Shareholders’ Meeting.
The highest power of decision is exercised by the sharehold-
The decisions of the Annual General Meeting concerning
ers of the Company in Shareholders’ Meetings. The highest
nominations and the distribution of profit are published
power of decision in operating activities lies with the Board
in the next extensive Quarterly Report to be delivered to
of Directors, under which the Group CEO (parent company’s
the shareholders after the meeting. The decisions of Share-
CEO) manages the operating activities of the Group compa-
holder’s Meetings are reported in full in the minutes of the
nies through the company organisation.
meeting, a copy of which is delivered to the shareholders if
requested.
The Snellman Board of Directors convenes the Annual General Meeting. The notice of meeting shall be delivered to each
Apart from the Group CEO, at least the Chairperson of the
shareholder personally by email or by letter a minimum of
Board of Directors shall attend a Shareholders’ Meeting. The
seven (7) days before the meeting. Apart from the place and
new Board candidates shall be invited to participate in the
date, the notice shall list the matters to be dealt with in the
Shareholders’ Meeting in which decisions are made on the
meeting. A shareholder may authorise a proxy to participate
election of Board members.
in the meeting. A shareholder or his/her proxy has the right
to have one aide with him/her in the meeting if necessary. In
The Company’s auditors do not attend Shareholders’ Meet-
principle, the Annual General Meeting takes place in March.
ings, unless the agenda includes matters that require the at-
In addition to the Annual General Meeting, the Board of Di-
tendance of the auditors, or a minimum of two shareholders
rectors may convene an Extraordinary Shareholders’ Meet-
have requested that the auditors be present in the meeting.
CORPORATE GOVERNANCE
3. BOARD OF DIRECTORS
with the Limited Liability Companies Act. The duties of the
The Snellman Board of Directors comprises a minimum of
Board of Directors are also stated in the Standing Orders of
four (4) and a maximum of seven (7) members. According to
the parent company’s Board of Directors.
the Articles of Association, the term of a Board member is
one (1) year, starting at the end of the Shareholders’ Meet-
According to the Standing Orders, the Board of Directors
ing at which the election is conducted and terminating at
shall always decide on matters that are important in terms
the end of the following Annual General Meeting. The Board
of finances and business operations or have significant long-
of Directors submits a proposal for the composition of the
term effects on the Company.
Board of Directors to the Annual General Meeting, based on
the preparation conducted by the Nomination Committee.
The most important decisions of the Board of Directors in-
The Annual General Meeting decides on the composition of
clude the following:
the Board of Directors.
- Group and business area specific strategies
- Corporate restructuring
According to the Corporate Government Recommendation,
- Company’s organisation
the majority of the Board members shall be independent of
- Investment decisions, financial and other contingent
the Company. Independence of the Company is divided in
liabilities
full and partial independence. Fully independent members
- Nominations of the CEO’s /Managing Directors of the
do not hold shares in the Company and have no other rela-
parent company and the subsidiaries
tionship with the Company except Board membership. Ac-
- Remuneration and incentive schemes concerning the
cording to the Corporate Governance Recommendation, two
senior management and the whole personnel
of the Board members shall be fully independent. The Board
- Changes in the brands of the Group and the business
members who own shares in the Company but have no oth-
areas, and decisions on new brands
er relationship with the Company except Board membership
are considered partially independent of the Company.
The Board of Directors also deals with and approves the following:
The Group CEO is not a Board member but prepares the mat-
- Financial Statements
ters to be submitted to the Board of Directors for decisions
- Budgets
and acts as the presenter in the Board meetings.
- Annual reports
- Operative organisation structures
The Board of Directors elects Chairman and Deputy Chair-
- Nomination and remuneration of the senior manage-
man in the Board meeting following the Annual General
ment
Meeting. In electing the members of the Board, attention is
- Nominations of the Group Management Team mem-
paid to the independence requirements in such a way that
bers
the Chairperson of the Board of Directors is, in principle,
partially independent of the Company as describe above
The Board of Directors is also responsible for confirming the
(no significant relationship with the Company except share-
most important guidelines and policies defining the opera-
holding). This goal is more significant if the Group CEO does
tions of the Company, e.g.
not hold shares in the Company. A person who holds an op-
- Financing
eratively responsible position in the Company may not be
- Insurance
elected Chairperson of the Board of Directors. A solution in
- Risk management
which both the Chairperson of the Board of Directors and the
- Company values and related action plans
Group CEO hold shares in the Company is not considered
recommendable, either. No recommendations are set on the
The Standing Orders of the Board of Directors include a de-
election of the Deputy Chairperson.
tailed description of the approval procedures as well as the
duties of the Board of Directors and their implementation.
The Board of Directors elects a secretary, who may be but is
not required to be a Board member.
The Board of Directors meets 6-8 times annually in accordance with a meeting schedule. In addition, the Board of
The Board of Directors is responsible for the appropriate or-
Directors holds an annual strategy meeting, in which it
ganisation of the Company’s management, operations, ac-
discusses the future plans and long-term strategies of the
counting and the supervision of the finances in accordance
Group.
75
76
CORPORATE GOVERNANCE
The Chairperson of the Board is responsible for convening
• Nominations of the personnel that reports direct to the
the Board meetings and for the work in the meetings.
Group CEO
•
Decisions in the Board meetings are always made by a sim-
tion to the basic salary to the Group CEO and other exec-
ple majority of votes. In the event of a tie, the decision of the
Board of Directors shall be based on the vote of the Chairper-
Incentive bonuses and other remuneration paid in addiutives
•
Statement on the remuneration systems concerning the
son. This principle is also applied to the election of members
whole personnel or part of the personnel that are being
for the governing bodies.
prepared in the Company before the Board of Directors
makes a decision on them
4. COMMITTEES
•
Snellman has two committees. The committees meet when
Statement to the Board of Directors on payable incentive
bonuses
necessary, convened by the Chairman of the committee concerned.
5. OWNERS’ COUNCIL
In addition to the committees, the Board of Directors is sup-
4.1 NOMINATION COMMITTEE
ported by the owner family through the following governing
The Nomination Committee prepares proposals for Board
body: The owners appoint members for the Owners’ Council
member candidates, informs the Board of Directors of the
from among themselves.
candidates before the Annual General Meeting, and submits
the proposal to the Annual General Meeting. The Commit-
The Chairperson of the Board of Directors and the Group
tee has no independent decision powers. The Committee
CEO conduct informative and advisory discussions with the
consists of a maximum of four (4) members. The Owners’
Council. The discussion may be related to the following sub-
Council submits proposals for the members of the Nomina-
jects:
tion Committee, and the Annual General Meeting elects the
•
Tasks of the committees of the Company
members and appoints Chairperson from among the mem-
•
Owner family’s long-term strategic intent
bers.
• Plans for significant changes that affect the Company’s
structure
The Nomination Committee assesses the independence of
• Plans for significant corporate restructuring, acquisi-
the Board members annually in accordance with the Corporate Governance Recommendation.
tions or sales
• Capitalisation of the Company or other measures that
have a significant impact on the financial structure of the
4.2. NOMINATION AND REMUNERATION
COMMITTEE
Company
•
The Nomination and Remuneration Committee consists of
three (3) Board members. The recommendation is that a minimum of two (2) of the members are fully independent of the
Other significant changes in the operative or administrative activities that affect the ownership risk
•
Proposals for decisions submitted by the Board of Directors to Shareholders’ Meetings
Company in accordance with the Corporate Governance Recommendation (See Section 3 Board of Directors). The Group
CEO acts as presenter in the Nomination and Remuneration
6. MANAGEMENT OF SUBSIDIARIES
Committee and prepares the minutes of its meetings but
The Board of Directors of the parent company appoints the
is not a member of the Committee. The Board of Directors
Boards of Directors of the subsidiaries. The main policy is
elects the members of the Nomination and Remuneration
that the CEO of the subsidiary’s parent company is appoint-
Committee from among its members for one year at a time.
ed Chairperson of the subsidiary’s Board of Directors, and
The Committee has no independent decision powers.
that the Group CFO or another member of the operative
management with close connection with the operations of
The Nomination and Remuneration Committee prepares
the subsidiary is appointed as a member of the subsidiary’s
and submits the following matters to the Board of Directors
Board of Directors. The Managing Director of a subsidiary is
for decisions:
not a Board member of the subsidiary unless he/she is a mi-
•
Nomination and dismissal of the Group CEO
nority shareholder in the subsidiary.
•
Salary and other remuneration of the Group CEO and the
personnel that reports direct to the Group CEO
One of the most important tasks of the Boards of Directors
of the subsidiaries is to ensure that the management, ac-
CORPORATE GOVERNANCE
counting and finances are organised appropriately within
7. PARTICIPATION IN THE OPERATIONS OF ASSO-
the framework of the Group organisation and in compliance
CIATES
with the Limited Liability Companies Act.
It may be in Snellman’s interests to hold minority shares
in companies that support the operating activities of the
The decisions of the subsidiaries concerning their strategies,
Group. Snellman’s operative management represents the
operating plans, investment, contingent liabilities and other
Group on the Boards of Directors, Shareholders’ Meetings or
decisions with long-term effects are submitted to the Board
other governing bodies of the associates. The Group Manage-
of Directors of the parent company as part of decisions that
ment Team decides on the representation and the persons.
affect the Group. Otherwise, the subsidiaries are managed by
The representative to be elected from among the operative
their Managing Directors and Management Teams, and the
management shall be a person whose tasks are most related
Group Management Team.
to the operations of the associate.
In the fully owned subsidiaries, the responsibilities of the
Snellman’s representative in the associate informs Snell-
Managing Directors are operative and they report to the
man’s operative governing bodies or, if necessary, the Board
Group CEO. Board level matters are dealt with by the Board
of Directors on the developments in the associate.
of Directors of the Group. The Board of a fully owned subsidiary is essentially subordinate to the Group Board of Di-
If Snellman holds minority interest in an associate whose
rectors.
operations are not directly related to Snellman’s operating
activities, Snellman’s Board of Directors decides on the level
The responsibilities of the Managing Directors of subsidiar-
of the Group’s representation in the associate concerned.
ies with less than 100% Group ownership are operatively the
same as those of the fully owned subsidiaries but include
8. GROUP CEO
more work with the Board of Directors of the subsidiary
The CEO of the Group’s parent company Oy Snellman Ab
concerned. Board level decisions are first dealt with by the
is also Group CEO, in which capacity he/she manages the
Board of Directors of the subsidiary instead of submitting
Group’s operation under the supervision of the parent com-
them directly to the Board of Directors of the Group’s par-
pany’s Board of Directors. The Board of Directors makes the
ent company through the Group Management Team. The
decision on the appointment or dismissal of the Group CEO
Group’s Board of Directors decides on the decision making
on the basis of the proposal prepared by the Nomination and
processes of these subsidiaries annually. The Managing Di-
Remuneration Committee.
rectors of the subsidiaries prepare matters for decisions. In
these Boards of Directors, the Group CEO is Chairperson or
The main task of the Group CEO is to organise the Compa-
a member. Minority shareholders are also represented in
ny’s operating activities, management and finances in an
these Boards. The Boards may also have external members
efficient and reliable manner in accordance with the instruc-
in a consultative role.
tions and guidelines of the Board of Directors. The Group
CEO reports to the Board of Directors and is responsible
The Managing Director of a subsidiary reports to the Manag-
for the business operations and the result, presentation of
ing Director of the parent company that owns the subsidiary
matters to the Board for decisions, implementation of the
on the operations, result and implementation of the deci-
Board’s decisions and ensuring the legality of the business
sions in the subsidiary concerned. The Board of Directors of
operations.
the subsidiary in which the Managing Director of its parent
company is Chairman of the Board or a member, is primarily
The Business Area Directors and persons with managerial
responsible for the legality of the business operations of the
responsibilities in the parent company report to the Group
subsidiary concerned. The main task of the Managing Direc-
CEO. The Group CEO is assisted by the Group Management
tor of a subsidiary is to organise the company’s operating
Team. The Group CEO elects the members of the Manage-
activities and management.
ment Team and submits its composition to the parent company’s Board of Directors for approval.
The finances of the subsidiary are managed by the parent
company.
The Board of Directors appoints a deputy for the Group CEO.
77
78
CORPORATE GOVERNANCE
9. GROUP MANAGEMENT TEAM
11.1. REMUNERATION AND INCENTIVE
The Snellman Group has a Group Management Team. The
SCHEMES
Group CEO is Chairperson of the Team, and the parent com-
The Company does not have an option scheme or an incen-
pany’s Board of Directors appoints the members of the Team
tive scheme in which the management is given treasury
on the basis of the Group CEO’s proposal. The Group Man-
shares. Instead, the Nomination and Remuneration Com-
agement Team does not have powers that are based on law
mittee of the Company prepares annually a suggestion on
or the Articles of Association. The main task of the Group
the remuneration of the executives as part of the remuner-
Management Team is to deal with Group level development
ation and incentive scheme of the whole personnel for deci-
projects, principles and procedures. The Group Management
sion to the Board of Directors. For the purpose of remunera-
Team also deals with the long-terms strategies, business
tion, the personnel is divided into appropriate groups. Each
plans and result development of the Group and its business
group has separate remuneration criteria. The maximum
area based companies, as well as matters to be dealt with
amounts paid may also vary between the groups.
by the Snellman Board of Directors. The Team also participates in the preparation of the matters to be dealt with by
Remuneration is always based on the remuneration prin-
the Board of Directors. The Group Management Team holds
ciples determined by the Group’s Board of Directors. The
meeting monthly and when needed.
payments are made after the end of the current remuneration period at the time when the Financial Statements are
The members of the Group Management Team are not auto-
completed. The Nomination and Remuneration Committee
matically elected from among the organisation that reports
deals with and the Board of Directors decides on all the pay-
direct to the Group CEO. The size of the Group Management
ment to be made.
Team is kept small and each member of the Team has a clear
area of responsibility that is significant for the strategic de-
11.2. BOARD MEMBERS’ FEES
velopment of the Group.
The Nomination Committee prepares and the Annual General Meeting decides annually on the fees of the Board mem-
10. BUSINESS AREAS
bers. The Board of Directors is notified of the proposal before
The operations of the Group take place through one or more
the Annual General Meeting. All the fees are paid in cash. The
business areas. Each business area is managed by a Business
Company’s distributable shares are not given as payment for
Area Director. When the juridical format of the business area
work on the Board of Directors. The Board members are also
is limited liability Company, the Business Area Director is
compensated for travel and other similar costs. The day al-
the Managing Director of the company, authorised by a Man-
lowance payable for the Board meetings is based on the unit
aging Director Contract.
prices of the Finnish government travelling regulations.
The responsibilities of the Managing Director are defined in
11.3. REMUNERATION OF THE GROUP CEO
detail in Section 6, “Management of subsidiaries”.
The Board of Directors confirms annually the salary and possible incentive bonus of the Group CEO, based on the pro-
The decision powers and obligations of the business areas
posal of the Nomination and Remuneration Committee. The
are also defined in several instructions and guidelines con-
Group CEO’s pension plan complies with the employment
cerning Snellman’s operating activities.
pension scheme.
The Business Area Directors report to the Group CEO.
11.4. REMUNERATION OF THE OTHER
EXECUTIVES
11. REMUNERATION
The Managing Directors of the Group’s subsidiaries have
The Group CEO and the Managing Directors of the subsidi-
Management Director Contracts for an indefinite term. The
aries have valid CEO/Managing Director Contracts. The other
other executives have executive contracts or employment
executives have executive contracts or employment con-
contracts in compliance with the Employment Contract Act.
tracts in compliance with the Employment Contract Act. The
All the salaries and other remuneration of the personnel
salaries and other remuneration of the Group CEO and the
that reports direct to the Group CEO are dealt with by the
personnel that reports direct to the Group CEO are submit-
Nomination and Remuneration Committee and decided on
ted to the Nomination and Remuneration Committee for
by the Board of Directors.
discussion and to the Board of Directors for decisions.
CORPORATE GOVERNANCE
11.5. PENSION POLICY
Due to the family company operating model, entrepreneur-
The Group’s pension policy is mainly in compliance with the
ship-oriented family and a wide insider group, the Company
terms of the Employees Pensions Act. However, the Compa-
has exceptional possibilities to carry on business operations
ny has a few voluntary pension insurance agreements based
within the insider group. This operating model provides
on earlier decisions. The payment of these pension insur-
clear advantages but may also pose risks concerning sensi-
ance contributions are dealt with as part of the total salary of
tive information about the Company.
the person concerned. The voluntary pension contributions
that the Company has paid shall, if necessary, be used for
The Snellman Board of Directors has discussed the policy
lowering the retirement age. The capital accrued in the fund
concerning the employees’ participation in the operations
cannot be withdrawn as additional salary.
and work on the Boards of other companies and prepared relevant policy guidelines. If they wish, Snellman’s employees
Any new pension insurance contributions payable by the
may, with certain restrictions, carry on private business op-
Company shall be approved by the Remuneration Commit-
erations or hold positions of trust in other companies. Being
tee.
a member in another company’s Board of Directors requires
permission from Snellman and it may not be in conflict or
12. INTERNAL CONTROL, RISK MANAGEMENT
competition with Snellman’s interests. The work outside
AND INTERNAL SUPERVISION
Snellman may not interfere or affect the employee’s duties
The Company does not have an internal control function that
at Snellman. The above restrictions also apply to outside em-
supervises the company’s financial operations. The Compa-
ployment or activities as an independent entrepreneur.
ny has an internal control programme that is reviewed by
the Group’s Board of Directors annually, based on the pro-
14. AUDIT
posal of the Group CEO. The Board of Directors decides on
The auditor of the Company shall be an audit firm author-
the contents of the programme and defines the services to
ised by the Central Chamber of Commerce. The auditor is ap-
be outsourced. These services also include the service out-
pointed annually by the Annual General Meeting. The term
sourced to an audit firm or another party that provides au-
of the auditor ends at the closing of the first Annual General
diting services.
Meeting following his/her appointment.
The Company has a risk management policy that the Board
The main task of the auditor is to ascertain that the Financial
of Directors approves on an annual basis. Internal control
Statements give a true and fair view of the financial perfor-
and supervision are mainly based on quality system com-
mance of the Group and Group companies. The auditor sub-
pliant activities. Each subsidiary has an appointed Quality
mits an auditor’s report to the Annual General Meeting. The
Manager, who has appropriate personnel reporting to him/
auditor also inspects the validity and legality of the Compa-
her.
ny’s management and operations. The auditor reports to the
Board of Directors on his/her observations once a year.
13. INSIDER ADMINISTRATION
Due to its unlisted nature, Snellman does not have an in-
The Annual Report of the Company contains a statement on
sider register or related guidelines. Instead, the Snellman
the fees paid to the auditor during the financial period.
Board of Directors and the Group Management Team are
considered to be included in the permanent insider group
15. DIVIDEND DISTRIBUTION POLICY
of the Company. At Snellman, being an insider is related to
When the Board of Directors prepares a proposal for the dis-
the confidential treatment of information concerning the
tribution of dividends, it assesses the financial standing of
preparation of projects in which publicity or the spreading of
the Company primarily in view of the solidity and the result
the information is detrimental or harmful for Snellman or its
for the financial period as well as the future outlook and de-
partner in the project.
velopment of the solidity.
In many cases, Snellman concludes a non-disclosure agree-
The Company has a technical calculation formula for the de-
ment with an external partner for the time the project in
termination of the dividend. The distribution quota of the
question is dealt with. These non-disclosure agreements
shares is determined by means of the calculation formula on
always bind the Snellman insiders without a separate agree-
the basis of the interest item and the Company’s financial
ment.
position. The interest item is calculated from the mathematical value of the shares. The Board of Directors decides on the
79
80
CORPORATE GOVERNANCE
interest item rate. The mathematical value of the shares is
to a new holder. The Board of Directors shall decide with-
based on the latest calculation performed by the Tax Author-
in fourteen days of being notified of the transfer whether
ity, adjusted for the situation in the financial period.
the Company intends to redeem the share. The current
shareholders shall be notified in writing of the transfer
Based on its estimate and the technical calculation result,
of the share to a new holder and whether the Company
the Board of Directors prepares a proposal for the dividend
intends to exercise its redemption right. If the Company
distribution to be submitted to the Annual General Meeting.
does not exercise its redemption right, the current shareholders who intend to exercise their redemption rights
Before submitting the proposal for the distribution of divi-
shall submit their redemption claims to the Board of Di-
dends to the Annual General Meeting, the Chairperson of the
rectors or the Group CEO. The claims shall be submitted
Board of Directors informs the Owners’ Council of the factors
within one month from receiving the notification of the
that have influenced the proposal.
share transfer. The Board of Directors shall issue a notification within one week from the above date, stating who
16. SHARE SERIES
the share has been transferred to as well as what redemp-
The Company has A and B Series shares, which only differ
tion claims have been submitted and by whom.
from each other as regards to the number of votes they give
• If more than one shareholder submit a redemption
to the holders. An A Series share gives the right to ten (10)
claim, the shares shall be divided between them in pro-
votes and a B Series share to one (1) vote at a Shareholders’
portion to their shareholding at the time of the transfer,
Meeting. In accordance with the Limited Liability Companies
and if the division is uneven, the remaining shares shall
Act, the proposal that has been supported by more than half
be distributed by lot. The redemption price shall be paid
the votes cast shall constitute the decision of the meeting.
within fourteen days from submitting the redemption
According to the Limited Liability Companies Act, certain
claim.
matters, e.g. amendment of the Articles of Association and
• Any disagreements concerning the redemption right or
decision on a directed share issue, require a qualified ma-
price shall be settled on the basis of a statement given on
jority decision in relation to the number of shares and votes
the matter by the auditor of the company. Any disputes
carried by the shares. The Articles of Association contain a
shall be solved through arbitration by an arbitrator ap-
restriction concerning the redemption of shares transferred
pointed by the auditor of the Company. The arbitration
to direct line family descendants.
costs are paid by the Company.
• The Company may use distributable funds to purchase
The Articles of Association contain a redemption clause,
treasury shares. In this case, the redemption price is cal-
according to which the Board of Directors submits a proposal for the redemption price of the shares to the Annual
culated in the manner described above in Subsection 1.
•
The Articles of Association contain a restriction concern-
General Meeting for a decision. The Articles of Association
ing the redemption of A and B Series shares transferred
do not contain a clause that restricts the share of a single
to direct line family descendants.
shareholder’s votes of the total number of cast votes. The
parent company, Oy Snellman Ab, does not have shareholder
The above clause shall be included in the share certificate or
agreements, either.
a provisional certificate.
17. DUTY OF REDEMPTION AND ACQUISITION
18. COMMUNICATIONS
OF TREASURY SHARES
Snellman issues a report on its result, operations and near
When a share is transferred to a new holder, the Company
future outlook every three months. This extensive Quarter-
has a primary and the current shareholders a secondary re-
ly Report is delivered by email or, at request, by mail to the
demption right as follows:
shareholders. A shorter version of the Quarterly Report is
• When a share is redeemed, the price of the share is con-
distributed internally to the personnel of the Company. The
firmed at the weighted average of the net asset and yield
Quarterly Report is not published on the Company’s Website
value calculated by the auditors in the latest audit and
or in public media.
approved by the Board of Directors. The interest rate
•
used in calculating the yield value is the internal rate
The Company publishes Financial Statements and Annual
confirmed by the Board of Directors.
Report for each financial period. The Financial Statements
The Board of Directors of the Company or the Group CEO
are distributed to the shareholders with the notice of the
shall be notified immediately of the transfer of the share
Annual General Meeting. The Annual Report is mailed to the
CORPORATE GOVERNANCE
shareholders within approximately one month after the An-
cial Department and HR Department. The Company has is-
nual General Meeting. The Annual Report is freely available,
sued separate instructions on internal communications.
and it can be ordered from the Company or accessed on the
Company’s Website.
19. OWNERS’ GOVERNING BODIES
In order to manage their interests in the Company, the own-
The Company also publishes various publications meant
ers have formed two governing bodies that are not subject
for the personnel, customers, producers and shareholders.
to the Limited Liability Companies Act: Family Council and
These publications provide information on the Company’s
Owners’ Council.
financial position in view of the past and the present.
19.1. FAMILY COUNCIL
The result and the development of the operations are mon-
The Family Council promotes active ownership. The task of
itored through various financial and operational reports.
the Family Council is to commit the shareholders to their
Monthly reports are only available to the operative organi-
ownership. The Family Council has no rights of decision or
sation and the Board of Directors. The organisation also pre-
management concerning the operations of the Company.
pares a brief monthly review that is distributed to the opera-
The Family Council is convened by its Chairperson a few
tive organisation and the Board of Directors.
times per year. The Annual General Meeting may, based on
the proposal of the Board of Directors, place funds from the
Apart from operative information provided through organ-
profit of the Company at the Family Council’s disposal to be
isational channels, information on internal matters is dis-
distributed as donations for charitable purposes or for ac-
tributed at briefings conducted by the Group CEO or Busi-
tivities that support the Company’s value base. The Family
ness Area Directors / Managing Directors. Communications
Council reports on the use of the funds to the Board of Direc-
are based on the trustworthiness of the Snellman personnel,
tors of the Company.
and the personnel is always informed first of any major decisions and matters of importance.
If necessary, the Family Council appoints committees that
take care of donations, matters related to family ownership,
The Group CEO is primarily responsible for external com-
etc.
munications. In external communications, the Group CEO
is assisted by the Company’s Head of Communications. The
19.2. OWNERS’ COUNCIL
Business Area Directors /Managing Directors are responsible
The Owners’ Council monitors the operations of the Com-
for external communications in their units. Information on
pany and may, if necessary, express the general opinion of
special issues, e.g., information related to marketing or pri-
the owners when the Board of Directors wishes to base its
mary production, is distributed through special professional
decisions on the views of the owners of the Company. Sec-
channels. The Company has issued separate instructions on
tion 5 contains a description of the activities of the Owners’
external communications.
Council.
The Company has a Crisis Management Team. The Team is
The Annual General Meeting decides on the principles ac-
convened in crisis situations that are beyond the control of
cording to which the members of the Owners’ council are
the Company’s regular organisation. In crisis situations, the
elected or elects them in the meeting.
Crisis Management Team is responsible for both external
and internal communications. The Team is chaired by the
20. EFFECTIVE DATE
Group CEO. In crisis situations, the only person who has
This “Corporate Governance of the Snellman Group” shall
the right to give external communications, statements or
enter into force, approved by the Board of Directors, on 1 Sep-
interviews is the person appointed by the Chairperson of the
tember 2008. After this date, the Board of Directors confirms
Crisis Management Team. The Company has issued separate
and approves amendments possibly made to it annually at
instructions on crisis communications.
the beginning of its term of office.
The Group’s Head of Communications is responsible for
planning and implementing internal communications in
the Company. Information on the Financial Statements as
well as matters related to the finances and the personnel of
the Company is distributed in cooperation with the Finan-
81
GROUP
FOOD SERVICE
Oy Snellman Ab
Kuusisaarentie 1
68600 Pietarsaari, Finland
Tel.
Fax
Icecool Oy
+3586 786 6111
+358 6 786 6104
[email protected]
MEAT PROCESSING
Jäspilänkatu 27
04250 Kerava, Finland
Tel.
Fax
+358 9 5657 680
+358 9 5657 6868
www.icecool.fi [email protected]
Snellmanin Lihanjalostus Oy
Snellman Trading AB
Kuusisaarentie 1
68600 Pietarsaari, Finland
Tel.
Fax
+358 (0) 6 786 6111
+358 (0) 6 786 6104
Svärdvägen 11 C
Tel.
+ 46 8 446 57 40
182 33 Danderyd, Sweden
Myyntikonttori
Jäspilänkatu 27
04250 Kerava, Finland
Tel.
Fax
+358 9 77495 620
+358 9 2715 209
www.snellman.fi
[email protected]
[email protected]
PANINI
Mr. Panini Oy
Figen Oy
PL 319
60101 Seinäjoki, Finland
Tel.
Fax
+358 6 424 1000
+358 6 424 1041
www.figen.fi
[email protected]
READY MEALS
Snellmanin Kokkikartano Oy
Jäspilänkatu 27
04250 Kerava, Finland
Tel.
Fax
+358 9 77495 620
+358 9 2715 209
Jäspilänkatu 27
Tel.
04250 Kerava, Finland
www.panini.fi
www.mrpanini.se
www.mrpanini.no
+358 9 7749 5730
[email protected]
[email protected]
[email protected]
PET FOOD
Oy MUSH Ltd
Meijeritie 4
68600 Pietarsaari, Finland
Tel.
+358 6 786 6111
[email protected]
[email protected]
Carolines Kök AB
MUSH GmbH
Svarvarvägen 4 B
132 38 Saltsjö-Boo
Sweden
Tel.
Fax
+ 46 8 747 14 40
+ 46 8 747 15 50
[email protected]
Oberstrasse 88
DE-20149 Hamburg
Germany
[email protected]
Pietarsaari
Tuomikylä
Ulvila
Längelmäki
Kerava
Stockholm
Hamburg