FINANCIAL STATEMENTS 2020
FINANCIAL STATEMENT 2020
1
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
RAPALA VMC CORPORATION
FINANCIAL STATEMENTS 2020
Report of the Board of Directors
Key Financial Figures
Scope of Activity and Profitability
Share Related Key Figures
Consolidated Financial Statements, IFRS
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Definitions of Key Figures
Parent Company Financial Statements, FAS
Parent Company Income Statement
Parent Company Balance Sheet
Parent Company Statement of Cash Flows
Notes to the Parent Company Financial Statements
Risk Management
Shares and Shareholders
Board of Directors and Management
Signatures for the Report of the Board of Directors
and Financial Statements
Auditor’s Report
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Cover photo: Shutterstock
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ REPORT OF THE BOARD OF DIRECTORS
REPORT OF THE BOARD OF DIRECTORS
MARKET ENVIRONMENT
2020 was an exceptional and two-folded year for the Group due to
the COVID19 pandemic. During the first half of the year, trading
conditions were significantly weakened by the pandemic and the
restrictions that followed. In the ramp-up period starting in June,
however, trading conditions recovered quickly and the demand for
fishing tackle products, as for many other outdoor products, was
particularly high.
KEY FIGURES
EUR MILLION
2020 2019 2018
Net sales
261.3 275.4 262.4
Operating profit before depreciation and
impairments (EBITDA) 26.2 26.0 22.4
Operating profit
10.7 13.4 14.8
as a percentage of net sales, %
4.1 4.9 5.6
Comparable operating profit
21.5 17.8 16.7
as a percentage of net sales, %
8.2 6.5 6.4
Profit before taxes
6.6 9.8 12.7
Net profit (loss) for the period
3.4 4.1 6.5
Earnings per share
0.04 0.10 0.13
Employee benefit expenses
69.4 71.6 68.8
Average number of personnel, persons
2 105 2 604 2 772
Research and development expenses
1.1 1.7 1.6
as a percentage of net sales, %
0.4 0.6 0.6
Net cash generated from operating activities
42.5 25.9 6.7
Total net cash used in investing activities
3.8 14.6 4.7
Net interest-bearing debt at the end of the period 45.2 74.6 70.3
Equity-to-assets ratio at the end of the period, % 52.5 52.4 53.2
Debt-to-equity ratio (gearing)
at the end of the period, %
31.6 49.2 47.8
Return on equity, %
2.3 2.7 4.5
BUSINESS REVIEW
The Group’s net sales for the year were 5.1% below last year with
reported translation exchange rates. With comparable translation
exchange rates, net sales were organically down by 2.5% from
the comparison period. As expected, sales were decreased by the
termination of Shimano and certain other Third Party distribution
agreements. On the other hand, Group Products sales grew from
2019 despite the dicult first half of the year impacted by the
COVID19 pandemic.
North America
Sales in North America increased by 5.7% from the comparison
period with reported translation exchange rates and by 8.1% with
comparable translation exchange rates.
In the first half of the year, the North American market was
severely hit by the pandemic and the governmental lockdowns
that followed. Sales decreased heavily as the Group’s distribution
operations and retail customers were closed for several weeks
during the spring. However, as the restrictions gradually eased,
the consumer demand in the North American market was high.
Following a rapid ramp-up of the operations, the Group was able to
meet the high demand, and consequently the sales witnessed solid
growth from the comparison period also on the full year level.
Nordic
Sales in the Nordic market decreased by 26.5% from the
comparison period. With comparable translation exchange rates
sales were down by 26.1%.
The termination of Shimano and certain other Third Party
distribution agreements had a significant negative impact on the
sales volumes in the Nordic market. In addition, the poor winter
conditions in the beginning of 2020 reduced winter sports sales.
Despite the overall sales decrease, the sales of Group fishing
products grew from the comparison period.
Rest of Europe
Sales in the Rest of Europe market decreased by 1.9% from the
comparison period. However, with comparable translation exchange
rates sales were up by 0.7% from the previous year.
During the first half of the year, the Rest of Europe market
was also heavily impacted by the COVID19 pandemic and the
restrictions that followed. In the second half of the year, the
demand for Group’s products was very high, which converted to
strong second half sales. Overall, Group Product sales in the Rest
of Europe market grew, but the termination of Shimano distribution
kept the sales figures on 2019 level.
Rest of the World
With comparable translation exchange rates, sales in the Rest
of the World market decreased by 2.6% from the comparison
period. However, with reported translation exchange rates, sales
decreased by 10.8% as especially South African rand lost its value
against the euro compared to the previous year.
As the other markets, Rest of the World market was hit by the
COVID19 pandemic during the first half of the year, and as the
restrictions were gradually eased, sales began to recover in the
second half of 2020. The sales recovery was somewhat slower than
in the other markets, and consequently the market did not reach
the full year sales figures of the comparison period. The termination
of Shimano distribution also had a negative impact on the sales.
FINANCIAL RESULTS AND PROFITABILITY
Comparable (excluding mark-to-market valuations of operative
currency derivatives and other items aecting comparability)
operating profit increased by 3.7 MEUR from the comparison period.
The change in translation exchange rates was negative and with
comparable translation exchange rates comparative operating
profit increased by 4.3 MEUR. Reported operating profit decreased
by 2.7 MEUR from the previous year and the items aecting
comparability had a negative impact of 10.8 MEUR (4.4) on reported
operating profit.
Comparable operating profit margin was 8.2% (6.5) for the
year. The increased profitability was driven by improved gross
margin as the share of higher margin Group Products sales of
total sales increased. Furthermore, decreased operating expenses
had a significant impact on the profitability improvement from the
previous year. During the first half of the year, the Group quickly
reacted to the COVID19 pandemic by implementing a forceful
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ REPORT OF THE BOARD OF DIRECTORS
Reported operating profit margin was 4.1% (4.9) for the year.
Reported operating profit included impact of mark-to-market
valuation of operative currency derivatives of -0.1 MEUR (-0.4).
Net expenses of other items aecting comparability included in
the reported operating profit were -10.7 MEUR (-4.0). Other items
aecting comparability consisted mainly of expenses related
to the restructuring of European business and ramp down of
Asian lure manufacturing operations in Batam. In Europe, several
distribution sites were closed or downsized as the centralized
Pärnu distribution centre was set up. Furthermore, cost structure
was streamlined in Europe following the Shimano exit for non-JV
countries and exit of hunting business.
Total financial (net) expenses were 4.2 MEUR (3.6) for the year.
Net interest and other financing expenses were 3.2 MEUR (2.5) and
(net) foreign exchange expenses were 1.0 MEUR (1.1).
Net profit for the year decreased by 0.7 MEUR and was 3.4
MEUR (4.1) and earnings per share were 0.04 EUR (0.10). The share
of non-controlling interest in net profit increased compared to
previous year and totalled 1.0 MEUR (-0.4).
BRIDGE CALCULATION OF COMPARABLE OPERATING PROFIT
EUR MILLION 2020 2019 CHANGE %
Operating profit 10.7 13.4 -20%
Items aecting comparability
Mark-to-market valuations of operative
currency derivatives 0.1 0.4
Other items aecting comparability
Restructurings
Management restructuring 0.6 1.1
Indonesia manufacturing restructuring 4.2 1.1
European restructurings 4.6 -
Other restructurings 1.2 2.1
Acquisition costs of DQC International
- 0.8
Other items - -1.0
COMPARABLE OPERATING PROFIT 21.5 17.8 +21%
EXTERNAL NET SALES BY AREA
EUR MILLION 2020 2019 CHANGE %
COMPARABLE
CHANGE %
North America
110.2 104.2 6% +8%
Nordic
41.6 56.6 -27% -26%
Rest of Europe
79.8 81.3 -2% +1%
Rest of the World
29.7 33.3 -11% -3%
TOTAL
261.3 275.4 -5% -2%
North America 42%
Nordic 16%
Rest of Europe 31%
Rest of the World 11%
SEGMENT REVIEW
Group Products
With comparable translation exchange rates, Group Products sales
increased by 6.7 MEUR from the comparison period. As a result of
an exceptionally strong second half of the year, Group Products
sales grew substantially in the North American market, Rapala
lures being the key growth category. Followed by the increased
sales, the comparable operating profit for Group Products also
improved from the comparison period.
Third Party Products
With comparable translation exchange rates, Third Party Products
sales were 13.5 MEUR below the comparison period. As expected,
the termination of Shimano distribution agreement and certain
other Third Party distribution agreements had negative impacts
on sales, particularly on the Nordic and Rest of Europe markets.
Followed by the decreased sales, the comparable operating profit
for Third Party Products was below the comparison period.
NET SALES BY OPERATING SEGMENT
EUR MILLION 2020 2019 CHANGE %
COMPARABLE
CHANGE %
Group Products 187.5 185.2 1% +4%
Third Party Products 73.8 90.2 -18% -15%
TOTAL 261.3 275.4 -5% -2%
Group Products 72%
Third Party Products 28%
COMPARABLE OPERATING PROFIT BY OPERATING SEGMENT
EUR MILLION
2020 2019 CHANGE %
Group Products 23.4
19.5
20%
Third Party Products -1.9
-1.6
16%
TOTAL COMPARABLE OPERATING PROFIT 21.5
17.8
21%
Items aecting comparability -10.8 -4.4 144%
TOTAL OPERATING PROFIT 10.7
13.4
-20%
COVID19 mitigation plan. The Group continued the tight cost
control during the second half of the year even though the demand
and sales increased to higher levels. As a result of the successful
implementation and execution of the mitigation plan, operating
expenses substantially decreased from the comparison period.
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ REPORT OF THE BOARD OF DIRECTORS
FINANCIAL POSITION
Following a successful implementation and execution of the
COVID19 mitigation plan and stricter inventory control, cash flow
from operations increased by 16.6 MEUR from the comparison
period ending to a record level of 42.5 MEUR (25.9). A key driver
for the record cash flow was the positive development of working
capital. The impact of net change of working capital to cash flow
from operations improved by 9.0 MEUR from the previous year and
was 20.4 MEUR (11.4).
End of the year 2020 inventory was on record low levels at
68.8 MEUR (92.6). The impact of change in allowance on inventory
was negative (1.5 MEUR) but changes in translation exchange
rates on inventory were positive (4.0 MEUR). The record low year-
end inventory value was driven by tight control in inventory and
centralized purchase quota allocations.
The Group’s COVID19 response and mitigation plan on supply
chain management was overall successful. After the quick ramp-
down of operations, the Group rapidly ramped up the operations
and the direct impacts of the pandemic to the Group’s sourcing
and own factories ended up being somewhat limited. As a result of
tight control in inventories and central purchase quota allocations,
finished goods purchases decreased significantly from the
previous year.
Net cash used in investing activities decreased from the
comparison period amounting to 3.8 MEUR (14.6). Capital
expenditure was 5.0 MEUR (5.6) and disposals 1.2 MEUR (3.2).
Disposals were for the most part related to sales of some
manufacturing equipment and facilities.
Liquidity position of the Group was good. Undrawn committed
long-term credit facilities amounted to 10.0 MEUR at the end of the
year. Gearing ratio decreased significantly and equity-to-assets
ratio improved slightly from last year. The Group has agreed with
its lenders to temporarily change financial covenants used in its
loan agreements for the periods from Q2/2020 to Q1/2021. These
financial covenants include limits on the amount of indebtedness,
available liquidity, EBITDA as well as gearing ratio. The Group is
currently compliant with all financial covenants and expects to
comply with all requirements set in the financing agreements also
in the future.
Group equity includes a hybrid loan of 25.0 MEUR issued in
November 2019. The accrued non-recognized interest on hybrid
bond on December 31, 2020 was 1.1 MEUR (0.7). The accrued
interest of EUR 1.1 million, resulting from the decision of the Board
of Directors, was paid out in November 2020 and was recognized
as a deduction from Group’s equity.
KEY FIGURES
EUR MILLION 2020 2019
CHANGE %
Net cash generated from operating activities
42.5 25.9 64%
Net interest-bearing debt at the end of the period
45.2 74.6 -39%
Debt-to-equity ratio (gearing) at the end of the
period, %
31.6 49.2
Equity-to-assets ratio at the end of the period, %
52.5 52.4
STRATEGY IMPLEMENTATION
The strategic target of the group is to become a solid global
fishing tackle powerhouse. Current strategic actions and future
capabilities aim to release all the growth potential within the
company and to improve the Group’s profitability. In the longer
term, the goal is to become the world’s largest fishing tackle
company by harnessing a united company mindset; ONE RAPALA
VMC culture.
The core of the Group’s strategy is based on five key building
blocks that are all interconnected and shared around the Group
in all business units. Future strategies are built upon utilizing
and capitalizing the brand portfolio, manufacturing and sourcing
platform, research and development knowledge, as well as the
broad sales network and strong local presence around the world.
Focus and speed are in the center of the strategic decision-
making process in order to enable focusing and agile actions in the
competitive landscape.
Team/Culture – The first strategic building block is associated
with the foundation that all business units and functions strive
for togetherness as a one strong winning entity. This enables the
entire Group culture to become more united, collaborative, dynamic
and growth oriented. The group has restructured its central
marketing and product development and innovations functions
along with a new management structure to enhance decision
making power in the organization, which will improve significantly
eectiveness in day-to-day management.
Consumer – Focus on end-users is a critical part of the
strategy. The aim is to lead the market and bring newest trends
to the the fishing industry by oering innovative and exciting
products. The centralized marketing function is well connected
with the continuously growing and digitally aware consumer base.
As a result of strong strategy execution, direct-to-consumer sales
via digital channels witnessed double digit growth in 2020.
Customer – Relationships with key customers and winning
position in local markets are emphasized with deep customer and
market know-how as well as continuously investing in all sales
channels. Several organizational and management changes were
made in 2020 to increase customer focus in all functions in the
company.
Product development/Innovation – R&D and PD&I functions
are becoming even stronger competitive advantages for the entire
Group at the same as fishermen around the world demand new
innovations to catch more fish. The group launched several new
products during 2020 to showcase its ability to create new ideas
on top of an already vast product assortment. In addition, the
Group launched a new sustainability program to demonstrate its
willingness to become more environmentally aware. As an example,
completely led-free wobblers are planned to introduce in 2023.
Operations/Finance – The Group continues to invest in its
operations to make a step-change in operational excellence,
to improve working capital eciency and profitability. The
restructuring program, originally initiated in October 2019,
has been carried out as planned and is close to completion.
The targeted cost savings consist mainly of savings related
to European business as well as the Asian lure manufacturing
operations, which has been ramped down. The Group has also
transferred the Nordic distribution from Malung, Sweden into
one centralized warehouse in Pärnu, Estonia in November 2020.
Additionally, transfer of knife manufacturing from Rovaniemi in
Finland to existing manufacturing location in Vääksy, Finland, was
finalized in 2020.
PRODUCT DEVELOPMENT
Continuous product development and consistent innovation are
core competences for the Group and major contributors to the
value and commercial success of the brands.
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ REPORT OF THE BOARD OF DIRECTORS
5
Due to the COVID19 pandemic, several fishing tackle
consumer shows and Europe’s most important fishing tackle trade
show, EFTTEX, were cancelled. However, during the first half of
the year that didn’t have a significant impact on the new product
launches, which were carried out on schedule and as planned. The
most important launches during the first six months of the year
were the introduction of XRap Haku –a bait designed for large
predator fishing – in Europe, the release of CountDown Elite – a
hard bait designed for trout fishing – in Japan and elsewhere in
Asia as well as the launch of Rap-V Blade – an all-round blade
bait – in North America. All new lures were well received in the
regions and were introduced to all market areas globally in the
right seasons.
In the second half of the year, a few key product launches were
carried out in Europe starting from September. Rapala Twitchin’
Rap 12 – a wooden twitchbait designed for predator fishing and
Rapala Super Shadow Rap 11, a size extension to Super Shadow
Rap 16 were launched just in time for the European autumn fishing
season. Additionally, a new innovative lightweight softbait Storm
VSlab 08 was launched in the Nordic markets for the autumn
pike season. Asia-Pacific markets focused on launching a small
but feisty crankbait Rapala Shadow Rap Fat Jack 04. This lure’s
development was spearheaded by the Australian and Southeast
Asian markets and is already proving to be a very successful and
fish-catching addition in the Rapala product range. Preparations
for the 2021 new item launches were well under way and 2022
range was coming together in the year’s end, too.
ORGANIZATION AND PERSONNEL
Average number of personnel was 2 105 (2 604) for the full year and
2 034 (2 501) for the last six months. At the end of December, the
number of personnel was 1 971 (2 304), decrease coming mainly from
the ramp-down of the lure manufacturing operations in Indonesia.
Nicolas Warchalowski was appointed as President and Chief
Executive Ocer from March 1, 2020 onwards. Furthermore, David
Neill was appointed as a member of the Executive Committee and
Executive Vice President, Product Development & Innovation as of
September 9, 2020 and Enrico Ravenni was appointed as a member
to the Executive Committee and Executive Vice President, Head of
Distribution in APAC countries and global Rods, Reels and Lines
Product Development & Innovation as of October 30, 2020.
PERSONNEL AT THE END OF THE PERIOD
3 000
2 500
2 000
1 500
1 000
500
0
16 17 18 19 20
1 971
2 751
2 626
2 304
2 751
2 626
2 651
ENVIRONMENTAL AND CORPORATE RESPONSIBILITY
The Group’s operations are continuously developed into an
even more sustainable direction to promote clean environment.
Products, manufacturing processes and operating methods
are developed to reduce the environmental impact throughout
the products’ lifecycle. The Group seeks to replace current raw
materials with more environmentally friendly substances – yet
maintaining the products’ desirability. The Group develops the
reporting and follow-up on environmental matters.
Environmental, economical and social responsibility issues are
described in more detail in the Corporate Responsibility section of
the corporate website (www.rapalavmc.com).
RISK MANAGEMENT
The objective of the Group’s risk management is to support the
implementation of the Group’s strategy and execution of business
targets. The Board evaluates the Group’s financial, operational and
strategic risk position on a regular basis and establishes related
policies and instructions to be implemented and coordinated by the
Group management. The principles of the Group’s risk management
are described in detail in the section Risk Management included in
the consolidated financial statements.
GOVERNANCE AND SHARE INFORMATION
The Board updated and approved the Corporate Governance
Statement that is available on corporate website.
For information on shares, shareholders, share-based payment
programs and Board’s authorizations, see the section Shares and
Shareholders. Related party transactions and top management
remuneration are disclosed in the note 28.
SHORTTERM OUTLOOK
General market outlook for fishing products in North America and
Europe is positive and end-consumer demand for recreational
fishing products is currently on a good level in the Group’s key
markets. In Europe, exit of Shimano business and termination of
certain other Third Party Products businesses decreases net
sales and aects consequently market visibility for 2021 for
the region. Net sales for these businesses, which the Group will
exit, were in the range of 30 MEUR in 2020. Additionally, the
ongoing negotiations with Shimano to end the joint ownership
of distribution companies in Russia, Kazakhstan, Czech,
Belarus, Hungary, Romania and Croatia might have impacts on
the business performance for these countries also in the Group
Products segment.
The Group’s supply chain, including own factories and
subcontractors, is currently working robustly and fulfilling
customer orders. However, uncertainties caused by the COVID19
pandemic continue to impact and increase risks for the Group.
The pandemic can impact the operating environment of the Group
in various ways, including lockdowns, store closures, social
distancing rules and overall change in consumer confidence.
In addition, weather changes may aect the sales of the Group.
The Group expects 2021 full year comparable operating profit
(excluding mark-to-market valuations of operative currency
derivatives and other items aecting comparability) to be in line or
above the previous year.
Short term risks and uncertainties and seasonality of the
business are described in more detail in the end of this report.
PROPOSAL FOR PROFIT DISTRIBUTION
The Board of Directors proposes to the Annual General Meeting
that no dividend will be paid for 2020.
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ KEY FINANCIAL FIGURES
KEY FINANCIAL FIGURES
2020 2019 2018 2017 2016
Scope of activity and profitability
Net sales EUR million 261.3 275.4 262.4 253.3 260.6
Operating profit before depreciation and impairments EUR million 26.2 26.0 22.4 15.7 14.1
as a percentage of net sales % 10.0 9.4 8.5 6.2 5.4
Operating profit EUR million 10.7 13.4 14.8 8.9 7.2
as a percentage of net sales % 4.1 4.9 5.6 3.5 2.8
Profit before taxes EUR million 6.6 9.8 12.7 5.6 2.2
as a percentage of net sales % 2.5 3.6 4.8 2.2 0.8
Net profit for the period EUR million 3.4 4.1 6.5 2.3 -2.0
as a percentage of net sales % 1.3 1.5 2.5 0.9 -0.8
Attributable to
Equity holders of the Company EUR million 2.5 4.4 6.1 2.4 -3.0
Non-controlling interest EUR million 1.0 -0.4 0.4 0.0 1.0
Capital expenditure EUR million 5.0 5.6 6.4 6.0 8.4
as a percentage of net sales % 1.9 2.0 2.4 2.4 3.2
Research and development expenses EUR million 1,1 1.7 1.6 1.9 2.5
as a percentage of net sales % 0.4 0.6 0.6 0.7 0.9
Net interest-bearing debt at the end of the period EUR million 45.2 74.6 70.3 67.8 96.1
Capital employed at the end of the period EUR million 188.2 226.2 217.4 210.5 232.2
Return on capital employed (ROCE) % 5.2 6.0 6.9 4.0 3.0
Return on equity (ROE) % 2.3 2.7 4.5 1.7 -1.5
Equity-to-assets ratio at the end of the period % 52.5 52.4 53.2 53.9 43.1
Debt-to-equity ratio (gearing) at the end of the period % 31.6 49.2 47.8 47.5 70.6
Average personnel for the period Persons 2 105 2 604 2 772 2 736 2 829
Personnel at the end of the period Persons 1 971 2 304 2 651 2 626 2 751
NET SALES, EUR MILLION NET PROFIT LOSS FOR THE PERIOD, EUR MILLION
20
15
10
5
0
-5
OPERATING PROFIT EUR MILLION, % OF NET SALES
Operating profit
Operating profit as a percentage of net sales
EQUITYTOASSETS RATIO, %
25
20
15
10
5
0
16 17 18 19 20
16 17 18 19 20
16 17 18 19 20
16 17 18 19 20
43.1
53.9
53.2
52.552.4
2.8
3.5
5.6
7.2
8.9
14.8
13.4
4.9
253.3
260.6
262.4
275.4
261.3
10.7
4.1
-2.0
2.3
6.5
4.1
3.4
7
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ KEY FINANCIAL FIGURES
2020 2019 2018 2017 2016
Share related key figures
Earnings per share EUR 0.04 0.10 0.13 0.05 -0.08
Fully diluted earnings per share EUR 0.04 0.10 0.13 0.05 -0.08
Equity per share EUR 2.93 3.16 3.05 2.89 3.33
Dividend per share
1)
EUR 0.0 0.0 0.06 0.04 0.10
Dividend/earnings ratio
1)
% 0.0 0.0 45.8 64.2 -128.9
Eective dividend yield
1)
% 0.0 0.0 1.97 1.20 2.42
Price/earnings ratio 118.4 27.8 23.3 53.5 -53.2
Share price at the end of the period EUR 4.36 2.77 3.05 3.33 4.13
Lowest share price EUR 2.15 2.56 2.89 3.29 3.90
Highest share price EUR 4.58 3.43 4.07 4.68 4.90
Average share price EUR 3.04 2.88 3.43 3.72 4.30
Number of shares traded Shares 6 044 245 4 804 467 1 511 411 4 096 349 2 782 154
Number of shares traded of average number of shares % 15.68 12.52 3.94 10.69 7.26
Share capital EUR million 3.6 3.6 3.6 3.6 3.6
Dividend for the period
1)
EUR million - - 2.3 1.5 3.8
Year end market capitalization
2)
EUR million 168.1 106.8 116.9 127.6 158.3
Number of shares at the end of the period excluding own shares
2)
1 000 shares 38 548 38 548 38 323 38 323 38 323
Number of own shares at the end of period 1 000 shares 452 452 677 677 677
Weighted average number of shares
2)
1 000 shares 38 548 38 387 38 323 38 323 38 329
Fully diluted number of shares at the end of the period
2)
1 000 shares 38 548 38 548 38 323 38 323 38 323
Fully diluted weighted average number of shares
2)
1 000 shares 38 548 38 387 38 323 38 323 38 329
1)
Year 2020 board proposal.
2)
Excluding own shares.
DIVIDEND PER SHARE, EUR
EARNINGS PER SHARE, EUR DIVIDEND/EARNINGS RATIO, %
0.25
0.20
0.15
0.10
0.05
0
*Board proposal
*Board proposal
DEBTTOEQUITY RATIO GEARING, %
100
80
60
40
20
0
-20
-40
16 17 18 19 20 16 17 18 19 20
16 17 18 19 20 16 17 18 19 20
0.3
0.2
0.1
0
-0.1
0.04
47.8
70.6
47.5
0.10
0.04
0.06
-128.9
64.2
45.8
0.00* 0.00
0.00*
49.2
31.6
0.05
-0.08
0.13
0.10
0.00
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
8
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
CONSOLIDATED INCOME STATEMENT
EUR MILLION NOTE
2020 2019
Net sales 2
Other operating income 4
Change in inventory of finished products and work in progress
-17.6 -10.7
Production for own use
Materials and services 6
-108.0 -120.6
Employee benefit expenses 7
-69.4 -71.6
Other operating expenses 5
-41.0 -48.6
Share of results in associates and joint ventures 13
-0.8 -0.2
Operating profit before depreciation, amortization and impairments
Depreciation, amortization and impairments 11. 12. 27
-15.5 -12.6
Operating profit
Financial income and expenses 9
-4.2 -3.6
Profit before taxes
Income taxes 10
-3.2 -5.8
NET PROFIT LOSS FOR THE PERIOD
Attributable to
Equity holders of the parent company
Non-controlling interests 14
Earnings per share for profit attributable to
the equity holders of the parent company 30
Earnings per share, EUR
Diluted earnings per share, EUR
Weighted average number of shares, 1 000 shares
Diluted weighted average number of shares, 1 000 shares
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR MILLION 2020 2019
Net profit (loss) for the period 3.4 4.1
Other comprehensive income, net of tax
1)
Items that will not be reclassified to income statement
Remeasurements of defined benefit liabilities 0.1 -0.1
Total items that will not be reclassified to income statement 0.1 -0.1
Items that may be reclassified subsequently to income statement
Change in translation dierences -10.7 2.4
Cashflow hedges
2)
Net investment hedges -1.1 1.2
Total items that may be reclassified susequently to income statement -11.8 3.6
Other comprehensive income for the period, net of tax -11.7 3.5
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -8.3 7.5
Attributable to
Equity holders of the parent company -8.8 7.8
Non-controlling interests 0.5 -0.2
1)
The income tax relating to each of the component of the other comprehensive income is disclosed in the note 10.
2)
Specification on cash flow hedges, see note 19.
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
9
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
EUR MILLION NOTE 2020 2019
ASSETS
Non-current assets
Goodwill 11 47.0 49.1
Other intangible assets 11 24.2 26.4
Tangible assets 12 22.6 26.9
Right-of-use-assets 27 10.4 13.3
Investments in associates and joint ventures 13 3.4 4.2
Other shares 15 0.2 0.2
Interest-bearing receivables 16 7.2 7.8
Non-interest-bearing receivables 16 0.2 0.2
Deferred tax assets 10 7.8 4.6
Total non-current assets 123.1 132.8
Current assets
Inventories 17 68.8 92.6
Trade and other non-interest-bearing receivables 16 51.9 49.9
Income tax receivables 10 1.1 1.9
Cash and cash equivalents 18 27.9 12.3
Total current assets 149.8 156.7
TOTAL ASSETS 272.9 289.5
SHAREHOLDERS’ EQUITY AND LIABILITIES
Equity
Share capital 3.6 3.6
Share premium fund 16.7 16.7
Hedging fund 0.0 0.0
Fund for invested non-restricted equity 4.9 4.9
Own shares -4.9 -4.9
Translation dierences -18.9 -7.6
Retained earnings 111.4 109.2
Equity attributable to equity holders of the parent company 19 112.8 121.9
Non-controlling interests
14 5.2 4.6
Hybrid bond
19 25.0 25.0
Total equity 143.0 151.6
Non-current liabilities
Interest-bearing liabilities 24 52.7 46.0
Non-interest-bearing liabilities 25 0.1 0.1
Right-of-use liabilities 22, 24 8.0 9.0
Employee benefit obligations 20 3.5 2.9
Deferred tax liabilities 10 5.0 5.4
Provisions 21 0.1 0.1
Total non-current liabilities 69.4 63.5
Current liabilities
Interest-bearing liabilities 24 15.1 35.3
Trade and other non-interest-bearing payables 25 37.8 33.8
Right-of-use liabilities 22, 24 4.5 4.4
Income tax payables 10 1.9 0.4
Provisions 21 1.3 0.6
Total current liabilities 60.5 74.4
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 272.9 289.5
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
10
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR MILLION
NOTE 2020 2019
Net profit for the period
Adjustments
Income taxes
10 3.2 5.8
Financial income and expenses
9 4.2 3.6
Reversal of non-cash items
Depreciation and impairments
11, 12, 27 15.5 12.6
Share based payments
7, 29 0.8 0.0
Exchange rate dierences
Share of results in associated companies and joint ventures
13 0.8 0.2
Gains/losses on disposals of intangible, tangible assets and subsidiaries
-0.1 -0.5
Other items
Total adjustments
Financial items
Interest paid
-3.0 -2.8
Interest received
Income taxes paid
-4.3 -5.5
Other financial items. net
-0.5 -0.5
Total Financial items
-7.6 -7.9
Change in working capital
Change in receivables
-6.1 3.9
Change in inventories
Change in liabilities
Total change in working capital
Net cash generated from operating activities
Net cash used in investing activities
Acquisition of intangible assets
11 -0.4 -0.5
Proceeds from sale of tangible assets
12 1.2 3.2
Acquisition of tangible assets
12 -4.6 -5.1
Acquisition of DQC International
13 - -4.4
Change in interest-bearing receivables
Total net cash used in investing activities
-3.8 -14.6
Net cash generated from financing activities
Dividends paid to parent company shareholders
Dividends paid to non-controlling interest
Directed issue of own shares
Non-current loan withdrawals
Current loan withdrawals
Non-current loan repayments
Current loan repayments
-71.1 -110.5
Payments of right-of-use liabilities
-5.5 -6.1
Hybrid bond
-1.3 -1.6
Total net cash generated from financing activities
-20.0 -13.2
Change in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Foreign exchange rate eect
-3.1 0.8
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
18 27.9 12.3
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
11
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
CHANGES IN LIABILITIES INCLUDED CASH FLOW FROM FINANCING ACTIVITIES
Liabilities Jan 1, 2020 81.2
Drawdowns 57.9
Repayments -71.0
Other changes -0.4
Liabilities Dec 31, 2020 67.8
Drawdowns and repayments of loans in statement of cash flows, net
Drawdowns and repayments of loans -13.1
Derivatives and other realized foreign exchange on financial activities -0.1
Drawdowns and repayments of loans, net -13.2
*Unrealized foreign exchange dierences from loans are not included in cash flow statement.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
EUR MILLION
SHARE
CAPITAL
SHARE
PREMIUM
FUND
HEDGING
FUND
FUND FOR
INVESTED NON
RESTRICTED
EQUITY
OWN
SHARES
TRANSLATION
DIFFERENCES
RETAINED
EARNINGS
NON
CONTROLLING
INTEREST
HYBRID
BOND
TOTAL
EQUITY
EQUITY ON JAN 1, 2019 3.6 16.7 0.0 4.9 -5.6 -11.2 108.6 5.1 25.0 147.1
Net profit for the period 4.4 -0.4 4.1
Other comprehensive income
*)
Translation dierences 2.3 0.1 2.4
Defined benefit plans -0.1 -0.1
Cash flow hedging 0.0 0.0
Net investment hedges 1.2 1.2
Total comprehensive income 0.0 3.5 4.3 -0.2 7.5
Directed issue of own shares 0.7 0.7
Dividends paid -2.3 -1.0 -3.3
Issuance of hybrid bond 25.0 25.0
Repayment of hybrid bond -25.0 -25.0
Hybrid bond expenses -1.3 -1.3
Sale of subsidiary 0.2 0.7 0.9
Share based payments 0.0 0.0
EQUITY ON DEC 31, 2019 3.6 16.7 0.0 4.9 -4.9 -7.6 109.2 4.6 25.0 151.6
Net profit for the period 2.5 1.0 3.4
Other comprehensive income
*)
Translation dierences -10.2 -0.4 -10.7
Defined benefit plans 0.1 0.1
Net investment hedges -1.1 -1.1
Total comprehensive income -11.3 2.5 0.5 -8.3
Hybrid bond expenses -1.1 -1.1
Share based payments 0.7 0.0 0.8
EQUITY ON DEC 31, 2020 3.6 16.7 0.0 4.9 -4.9 -18.9 111.4 5.2 25.0 143.0
*)
Net of tax.
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
12
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
1
FOR THE CONSOLIDATED ACCOUNTS
COMPANY’S BACKGROUND
Rapala VMC Corporation (“company”) is a Finnish public limited
liability company organized under the laws of Finland, domiciled
in Asikkala and listed on the Nasdaq Helsinki stock exchange
since 1998. The parent company Rapala VMC Corporation and its
subsidiaries (“the Group”) operate in some 40 countries and the
company is one of the leading fishing tackle companies in the world.
The consolidated financial statements have been prepared for
the accounting period of 12 months from January 1 to December
31, 2020. The Board of Directors of the company has approved
these financial statements for publication at its meeting on
February 9, 2021. Under Finland’s Companies Act, shareholders
have the option to accept or reject the financial statements in a
meeting of shareholders, which will be held after the publication
of the financial statements. The meeting has also the option of
changing the financial statements.
A copy of the consolidated financial statements is available at
the Group’s website www.rapalavmc.com or from Mäkelänkatu 91,
00610 Helsinki, Finland.
BASIS FOR PREPARING THE CONSOLIDATED
FINANCIAL STATEMENTS
The consolidated financial statements have been prepared in
accordance with the International Financial Reporting Standards
(IFRS), including IAS and IFRS standards as well as the SIC and
IFRIC interpretations in eect on December 31, 2020. The term
‘IFRS standards’ refers to standards and interpretations which
are approved and adopted by the European Union (regulation
EY 1606/2002) and thus are in force in the Finnish legislation.
The Group has not early adopted any new, revised or amended
standards or interpretations.
The consolidated financial statements have been prepared on a
historical cost basis, unless otherwise stated.
APPLIED NEW AND AMENDED STANDARDS
AND INTERPRETATIONS
In 2020, the Group has adopted the following amended standards
issued by the IASB.
Amendments to IFRS 3 Business Combinations (eective for
financial periods beginning on or after 1 January 2020). The
amendments are intended to assist entities to determine whether
a transaction should be accounted for as a business combination
or as an asset acquisition. The amendments clarify the minimum
requirements for a business, remove the assessment of whether
market participants are capable of replacing any missing elements,
add guidance to help entities assess whether an acquired process
is substantive, narrow the definitions of the consolidated financial
statements.
Amendments to IAS 1 Presentation of Financial Statements and
IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors (eective for financial periods beginning on or after
1 January 2020). The purpose of the amendments is to align the
definition of ‘material’ across the standards and to clarify certain
aspects of the definition. The amendments clarify that materiality
will depend on the nature or magnitude of information, or both.
The amendments have no impact on the consolidated financial
statements.
Amendments to IFRS 9 Financial Instruments, IAS 39 Financial
Instruments: Recognition and Measurement, and IFRS 7
Financial Instruments: Disclosures (eective for financial
periods beginning on or after 1 January 2020). These amendments
provide certain reliefs in connection with interest rate benchmark
reform. The reliefs relate to hedge accounting and have the eect
that IBOR reform should not generally cause hedge accounting
to terminate. Any hedge ineectiveness should continue to be
recorded in the statement of income. The amendments do not have
a significant impact on the consolidated financial statements.
Amendment to IFRS 16 Leases Covid-19Related Rent
Concessions (eective for financial periods beginning on or
after 1 June 2020). The amendment introduces an optional
practical expedient that simplifies how a lessee accounts for
rent concessions that are a direct consequence of the COVID19
pandemic. A lessee that applies the practical expedient is not
required to assess whether eligible rent concessions are lease
modifications when the criteria presented in the amendment are
met. The amendment does not have a significant impact on the
consolidated financial statements.
In 2021 or later, the Group will adopt the following new or amended
standards issued by the IASB.
Amendments to IAS 1 Presentation of Financial Statements*
(eective for financial periods beginning on or after 1 January
2022). The amendments clarify that liabilities are classified as
either current or non-current, depending on the rights that exist
at the end of the reporting period. Classification is unaected by
the expectations of the entity or events after the reporting date.
The amendments will have no impact on the consolidated financial
statements.
Amendments to IAS 37: Provisions, Contingent Liabilities and
Contingent Assets* (eective for financial periods beginning on
or after 1 January 2022). The amendments specify which costs
an entity needs to include when assessing whether a contract is
onerous or loss-making. The amendments are intended to provide
clarity and help to ensure consistent application of the standard.
The amendments apply a directly related cost approach. The costs
that relate directly to a contract to provide goods or services
include both incremental costs and an allocation of costs directly
related to contract activities. Judgement will be required in
determining which costs are directly related to contract activities.
The amendments are not expected to have a significant impact on
the consolidated financial statements.
Amendments to IAS 16: Property, Plant and Equipment*(eective
for financial periods beginning on or after 1 January 2022). The
amendments prohibit entities from deducting from the cost of an
item of property, plant and equipment, any proceeds of the sale
1
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
13
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
1
of items produced while bringing that asset to the location and
condition necessary for it to be capable of operating in the manner
intended by the management. The proceeds from selling such items
and the costs of producing those items are recognised in the
statement of income. The amendments will have no impact on the
consolidated financial statements.
IFRS 17 Insurance Contracts* (eective for financial periods
beginning on or after 1 January 2023). IFRS 17 applies to all
types of insurance contracts (direct insurance and re-insurance)
regardless of the type of entities that issue them, as well as to
certain guarantees and financial instruments with discretionary
participation features. The overall objective is to provide a
consistent accounting model for insurance contracts. The impact is
under review within the Group.
* Not yet endorsed for use by the European Union as of 31 December 2020
CONSOLIDATION PRINCIPLES
The consolidated financial statements comprise the financial
statements of the company and its subsidiaries in which it has
control. The control is based either to governing power established
through direct or indirect holding of over 50% of the voting
rights and/or control established through other means. The
financial statements of the subsidiaries are prepared for the same
accounting period as the company, using consistent accounting
policies.
Acquired subsidiaries are accounted for using the acquisition
cost method, according to which the assets and liabilities of
the acquired company are measured at fair value at the date of
acquisition. The excess of the consideration over the fair value
of net assets acquired is recognized as goodwill. If the cost of
acquisition is less than the fair value of the Group’s share of the
net assets acquired, the dierence is recognized directly through
income statement. Goodwill on consolidation is not amortized
but tested for impairment annually. Consideration includes the
fair value of any contingent consideration arrangement. Also,
cost directly related to acquisition were included in the cost of
acquisition up to 1 January 2010. The consolidated financial
statements include the results of acquired companies for the period
from the completion of the acquisition. Conversely, divestments are
included up to their date of sale.
Associated companies are companies where the Group holds
voting rights of 2050% and/or in which the Group has significant
influence, but not control. Joint ventures are companies, over which
the Group has contractually agreed to share control with another
venturer. Currently associated companies and joint ventures are
included in the consolidated financial statements using the equity
method. Under the equity method, the Group’s share of the profit
or loss of an associate or a joint venture is recognized in the
consolidated income statement before operating profit.
The Group’s interest in an associated company or a joint
venture is carried in the balance sheet at an amount that reflects
the Group’s share of the net assets of the associate or joint
venture together with goodwill on acquisition, as amortized, less
any impairment. Unrealized gains, if any, between the Group and
the associated companies or joint ventures are eliminated to the
extent of the Group’s ownership. Associated companies’ and joint
ventures’ financial statements have been converted to correspond
with the accounting principles in use in the Group. If the Group’s
share of losses exceeds the carrying amount of the investment,
the carrying amount is reduced to nil and any recognition of
further losses ceases unless the Group has incurred obligations in
respect of the associated companies or joint venture.
The investments in subsidiaries have been eliminated using
the acquisition cost method. All transactions between Group
companies as well as assets and liabilities, dividends and
unrealized internal margins in inventories and tangible assets have
been eliminated in the consolidated financial statements. Non-
controlling interest is presented separately from the net profit
and disclosed as a separate item in the equity in accordance with
the share of the non-controlling interest. All transactions with
non-controlling interests are recorded in equity when the parent
company remains in control. When the Group loses the control in
a subsidiary, the remaining investment is recognized at fair value
through the income statement.
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATIONS
Each entity in the Group determines its own functional currency
and items included in the financial statements of each entity are
measured using that functional currency.
Foreign currency transactions are translated into functional
currency using the exchange rates prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the functional currency
rate of exchange ruling at the balance sheet date. Non-monetary
items denominated in foreign currency, measured at fair value,
are translated using the exchange rates at the date when the
fair value was determined. Other non-monetary items have been
translated into the functional currency using the exchange rate on
the date of the transaction. Foreign exchange gains and losses for
operating business items are recorded in the appropriate income
statement account before operating profit. Foreign exchange
gains and losses from the translation of monetary interest-bearing
assets and liabilities denominated in foreign currencies are
recognized in financial income and expenses. Exchange dierences
arising on a monetary item that forms a part of a net investment
in a foreign operation are recognized in the statement of other
comprehensive income and recognized in profit or loss on disposal
of the foreign operation.
The consolidated financial statements are presented in euros,
which is the company’s functional and reporting currency. Income
statements of subsidiaries, whose functional and reporting
currencies is not euro, are translated into the Group reporting
currency using the average exchange rate for the year. Their
balance sheets are translated using the exchange rate of balance
sheet date. All exchange dierences arising on the translation
are entered in the statement of other comprehensive income and
presented in equity. The translation dierences arising from the
use of the purchase method of accounting and after the date
of acquisition as well as fair value changes of loans which are
hedges of such investments are recognized in statement of other
comprehensive income and presented in equity. On the disposal of
a subsidiary, whose functional and reporting currency is not euro,
the cumulative translation dierence for that entity is recognized
in the income statement as part of the gain or loss on the sale.
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
14
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
Any goodwill arising on the acquisition of a foreign company
and any fair value adjustments to the carrying amounts of assets
and liabilities arising on the acquisition are treated as assets
and liabilities of the foreign subsidiary and translated using the
exchange rate of balance sheet date. Goodwill and fair value
adjustments arising from the acquisition prior to January 1, 2004
have been treated as assets and liabilities of the Group, i.e. in
euros.
REVENUE RECOGNITION
Net sales comprise of consideration received less indirect sales
taxes, discounts and exchange rate dierences arising from sales
denominated in foreign currency. Sales of goods are recognized
after the significant risks and rewards of ownership of the goods
have passed to the buyer and no significant uncertainties remain
regarding the consideration, associated costs and possible return
of goods. The costs of shipping and distributing products are
included in other operating expenses. Revenues from services are
recorded when the service has been performed.
Rental income arising from operating leases is accounted for
on a straight-line basis over the lease terms. Royalty income is
recorded according to the contents of the agreement. Interest
income is recognized by the eective yield method. Dividend
income is recognized when the company has acquired a right to
receive the dividends.
INCOME TAXES
The Group’s income tax expense includes taxes of the Group
companies based on taxable profit for the period, together with
tax adjustments for previous periods and the change in deferred
income taxes. The income tax eects of items recognized directly
in other comprehensive income are similarly recognized. The
current tax expense for the financial year is calculated from the
taxable profit based on the valid tax rate of each country. The tax
is adjusted with possible taxes related to previous periods. The
share of results in associated companies is reported in the income
statement as calculated from net profit and thus including the
income tax charge.
Deferred taxes are provided using the liability method,
as measured with enacted tax rates, to reflect the temporary
dierences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for financial
reporting purposes. The main temporary dierences arise from
the depreciation dierence on tangible assets, fair valuation of
net assets in acquired companies, intra-group inventory profits,
defined benefit plans, inventory allowances and other provisions,
untaxed reserves and tax losses carried forward. Temporary
dierences are recognized as a deferred tax asset to the extent
that it is probable that future taxable profits will be available,
against which the deductible temporary dierence can be utilized.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as they are
incurred, unless they relate to a clearly defined project that
meets certain criteria. Development costs for such projects are
capitalized if they are separately identifiable and if the products
are assessed to be technically feasible and commercially viable and
the related future revenues are expected to exceed the aggregate
deferred and future development costs and related production,
selling and administrative expenses, and if adequate resources
exist or will be available to complete the project. Capitalized
development costs include all directly attributable material,
employee benefit and testing costs necessary to prepare the asset
to be capable of operating in the manner intended. Research and
development costs that were initially recognized as an expense are
not to be capitalized at a later date.
Amortization of such a product is commenced when it is
available for use. Unfinished products are tested annually for
impairment. Capitalized development expenses are amortized on a
straight-line basis over their expected useful lives, a maximum of
five years.
GOODWILL
Goodwill represents the excess of the cost of an acquisition over the
fair value of the Group’s share of the net assets of the subsidiary,
associated undertaking or joint venture acquired after January 1,
2004. Until December 31, 2009, any costs directly attributable to
the business combination, such as professional fees, were included
to the cost of an acquisition. From January 1, 2010 onwards, costs
related to acquisitions are recognized directly to income statement.
Goodwill from the combination of operations acquired prior to
January 1, 2004 corresponds to the carrying amount according to
the previous financial statement standards, which has been used as
the assumed acquisition cost according to IFRS.
Goodwill is tested annually for impairment. For this purpose,
goodwill has been allocated to cash generating units. Goodwill is
measured at cost less any accumulated impairment loss, and is not
amortized.
INTANGIBLE ASSETS
Intangible assets include customer relations, trademarks,
capitalized development expenses, patents, copyrights, licenses
and software. An intangible asset is recognized in the balance
sheet only if it is probable that the future economic benefits that
are attributable to the asset will flow to the Group, and the cost of
the asset can be measured reliably. Intangible assets are stated at
cost, amortized on a straight-line basis over the expected useful
lives which vary from 3 to 15 years and adjusted for any impairment
charges.
Trademarks and other intangible assets whose useful life
is estimated to be indefinite are estimated to aect cash flow
accumulation for an undefined period of time. The expected useful
life for most trademarks is indefinite and therefore they are
not amortized. These intangibles are measured at cost less any
accumulated impairment loss and not amortized. Intangible assets
with indefinite useful lives are tested for impairment annually. The
valuation of intangible assets acquired in a business combination is
based on fair value as at the date of acquisition.
Expected useful lives and indefinite lives of intangible assets
are reviewed at each balance sheet date and, where they dier
significantly from previous estimates, amortization periods are
changed accordingly.
TANGIBLE ASSETS
Tangible assets are stated at historical cost, amortized on a
straight-line basis over the expected useful life and adjusted for
any impairment charges. The valuation of tangible assets acquired
in a business combination is based on fair value as at the date of
acquisition. Land is not depreciated as it is deemed to have an
indefinite life.
1
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
15
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
Depreciation is based on the following expected useful lives:
Buildings and structures 1025 years
Machinery and equipment 510 years
Other tangible assets 310 years
Expected useful lives of tangible assets are reviewed at each
balance sheet date and, where they dier significantly from
previous estimates, depreciation periods are changed accordingly.
Ordinary maintenance and repair costs are expensed as incurred.
The cost of significant renewals and improvements are capitalized
and depreciated over the remaining useful lives of the related
assets. Gains and losses on sales and disposals are determined by
comparing the received proceeds with the carrying amount and are
included in the income statement in other operating income and
expenses.
Depreciation of a tangible asset is discontinued when the
tangible asset is classified as being held-for-sale in accordance
with IFRS 5 standard Non-Current Assets Held-for-sale and
Discontinued Operations.
BORROWING COSTS
Borrowing costs, that are directly attributable to the acquisition,
construction or production of a qualifying asset, are capitalized as
part of the cost of that asset. Other borrowing costs are expensed
when incurred.
ACCOUNTING TREATMENT OF GOVERNMENT GRANTS
IAS 20 DUE TO COVID19
As a response to the COVID19 pandemic, governments around
the world implemented support measures to help businesses and
economies. Government assistance comes in many forms and
therefore Rapala VMC Corporation has specified its accounting
policy concerning grants received.
The Group recognizes a government grant or subsidy when
there is reasonable assurance that it will comply with all conditions
attached and the grant will be received. Government grants are
recognised in statement of income over the periods in which
Group recognises the expenses which the grants are intended
to compensate. However, the accounting treatment for grants
depends on nature and type of the grant.
Due to the COVID19 situation, Rapala VMC Corporation has
received 1.4 MEUR of governmental subsidies related to salaries
and other personnel expenses, which are shown as deduction
of personnel expenses in statement of income. These subsidies
concern typically a period of a few months during 2020. In some
countries there are terms and conditions related to the subsidies
which prohibit redundancies of employees during the subsidized
period.
General business subsidies received amount to 0.6 MEUR.
These are shown as other income in statement of income.
Generally, there are no significant terms and conditions for
receiving the subsidies. However, in some countries there are
certain restrictions of cross-border money transfers related to
receiving the subsidies, but these do not have major impacts on
Group’s normal practices.
The Group has been granted government-backed loans which
amount to 12.2 MEUR and for which the terms dier from market-
based terms. The Group accounts for the benefit of government-
backed loans at a below-market interest rate as a government
grant. The dierence between the fair value of the loan on initial
recognition and the amount received is accrued and recognized as
grant in other operating income. This totaled to EUR 0.2 million.
Additionally, rent reliefs of 0.1 MEUR have been received.
These are granted by private lessors and are therefore outside
of the scope of IAS 20. These concerns rent contracts treated
according to IFRS 16 and impacts are therefore shown accordingly,
as minor deductions in depreciations and financial expenses
in statement of income. These are also reflected in right-of-
use assets and right-of-use liabilities in statement of financial
position.
Impairment assessment was immediately performed due to
COVID19 outbreak and there was no indication that assets may be
impaired.
IMPAIRMENTS OF TANGIBLE AND INTANGIBLE ASSETS
The carrying amounts of tangible and intangible assets are
reviewed at each balance sheet date to determine whether there is
any indication of impairment. If indication exists, the recoverable
amount is measured. Indications of potential need for impairment
may be for example changes in market conditions and sales prices,
decisions on significant restructurings or change in profitability.
Goodwill, intangible assets with indefinite useful lives and
unfinished intangible assets are in all cases tested annually. For
the purposes of assessing impairment, assets are grouped at the
lowest cash generating unit level for which there are separately
identifiable, mainly independent, cash inflows and outflows.
An impairment loss is the amount by which the carrying amount
of the assets exceeds the recoverable amount. The recoverable
amount is determined by reference to discounted future net cash
flows expected to be generated by the asset. Discount rate used
is a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the asset. Impairment
loss is immediately recognized in the income statement.
Impairment losses attributable to a cash-generating unit
are used to deducting first the goodwill allocated to the cash-
generating unit and, thereafter, the other assets of the unit on
an equal basis. The useful life of the asset to be depreciated is
reassessed in connection with the recognition of the impairment
loss. A previously recognized impairment loss is reversed only if
there has been a change in the estimates used to determine the
recoverable amount. However, the reversal must not cause that the
adjusted value is higher than the carrying amount that would have
been determined if no impairment loss had been recognized in prior
years. Impairment losses recognized for goodwill are not reversed.
ACCOUNTING FOR LEASES
Group as a lessee
Group’s capitalised lease agreements consist mainly of buildings
as production facilities, oce premises and warehouses, also the
Group has several vehicle lease agreements. The Group recognises
a right-of-use (ROU) asset and a right-of-use liabilities at the
commencement of the lease. At the commencement date, a right-of-
use asset as defined by IFRS 16 is measured at cost. The Group
applies the two available exemptions, which relate to short-term
contracts, in which the lease term is less than 12 months, or low-
value assets, which are expensed to other operating expenses.
The nominal right-of-use liabilities is initially measured at the
present value of the lease payments over the lease term. The lease
payments are discounted using the lessee´s incremental borrowing
rate.The incremental borrowing rates used are relevant interbank
rates and the Group’s internal finance margins. The incremental
borrowing rates are currency specific.
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
The initial measurement of the lease payments does not
include possible variable elements. Variable lease payments not
included in the initial measurement of the right-of-use liabilities
are recognised directly in the statement of income. The lease
term is the non-cancellable period of the lease plus period
covered by an option to extend or option to terminate if the
lessee is reasonably certain to exercise the extension option.
Management judgment based on realistic estimates is used
when determining the lease term, especially concerning lease
agreements containing termination and purchase options and
lease agreements with indefinite lease terms.
Subsequently, the right-of-use assets are measured at initial
measurement less accumulated depreciation and impairment
losses. The right-of-use assets are depreciated and interest on
right-of-use liabilities recognised in the statement of income
over the lease term. The right-of-use liabilities are subsequently
measured at initial recognition less occurring lease payments
that are allocated to the principal.
Lease payments are presented as repayments of liabilities
and related interest expenses. The lease payments are presented
in the cash flow from financing activities and the interest
related to leases are presented in the cash flow from operating
activities. Lease payments related to short-term leases, low-
value assets and variable payments are presented in the cash
flow from operating activities. Modifications to lease agreements
may result in adjustments to existing right-of-use assets and
lease liabilities. A gain or loss arising from a modification and a
termination of a lease agreement is recognised in other operating
income or other operating expenses in the statement of income.
Group as a lessor
IFRS 16 did not modify substantially how a lessor recognizes
lease agreements. Those leases under which the Group is a lessor
are classified as operating leases. Leased assets are presented
in the balance sheet under tangible assets according to the
nature of the asset. They are depreciated over their estimated
useful lives in accordance with the depreciation policy used
for comparable assets in own use. Lease income is recognized
in the income statement on a straight-line basis over the lease
term. The Group acting as a lessor is not material to the Group
consolidated financial statements.
FINANCIAL ASSETS
Financial assets are initially measured at fair value at trade
date. Subsequently, financial assets are classified and measured
at amortized cost, at fair value through other comprehensive
income, or at fair value through profit and loss.
Financial assets are measured at amortized cost when
business model is hold-to-collect and cash flows are solely
payments of principal and interest. Financial assets at amortized
cost include non-derivative financial assets such as cash and
cash equivalents, trade receivables and loan receivables.
Loan and trade receivables are measured at amortized cost
using the eective interest rate method less any expected credit
losses. Initially recognized amount includes directly attributable
transaction costs. Gains and losses are recognized in the
income statement when loans and receivables are derecognized,
impaired, and through the amortization process.
Financial assets measured at fair value through profit and
loss are assets which are derivatives not in hedge accounting.
Financial assets measured at fair value through other
comprehensive income are equity instruments where entity has
done an irrevocable election at initial recognition for particular
investments in equity instruments that would otherwise be
measured at fair value through profit or loss.
Impairment of financial assets is assessed regularly and when
the carrying value exceeds the fair value or recoverable value of
discounted cash flows, appropriate impairment is recognized in the
income statement.
For trade receivables Rapala applies IFRS 9 expected credit
loss assessment. See note 22.
DERIVATIVE FINANCIAL INSTRUMENTS
AND HEDGE ACCOUNTING
When hedge accounting is applied it is fulfilled according to IFRS
9. The Group is exposed to financial risks related especially to
changes in foreign currency exchange rates and interest rates for
loans and borrowings. Derivative financial instruments are used,
from time to time, to hedge financial risk. All derivatives are initially
recognized at fair value on the date derivative contract is entered
into, and are subsequently remeasured at fair value on each
balance sheet date. Determination of fair values is based on quoted
market prices and rates, discounting of cash flows and option
valuation models. The fair values of these instruments are received
from the respective bank or calculated to match the current market
price. Currently, the Group does not have embedded derivatives.
Derivatives may be designated as hedging instruments, in
which case hedge accounting is applied. At the inception of a
hedge relationship, the Group designates and documents the
hedge relationship to which the Group wishes to apply hedge
accounting and the risk management objective and strategy for
undertaking the hedge. The documentation includes identification
of the hedging instrument, the hedged item or transaction, the
nature of the risk being hedged and how the entity will assess the
eectiveness of changes in the hedging instrument’s fair value in
osetting the exposure to changes in the hedged item’s fair value
or cash flows attributable to the hedged risk. Such hedges are
expected to be highly eective in achieving osetting changes in
fair value or cash flows and are assessed on an ongoing basis to
determine that they actually have been highly eective throughout
the financial reporting periods for which they were designated. In
the case hedge accounting is applied, the accounting for hedging
instruments is dependent on the particular nature of the hedging
relationship.
In cash flow hedges, changes in the fair value of derivative
financial instruments that are designated and eective as hedges
of future cash flows are recognized as other comprehensive
income and the ineective portion is recognized immediately in
the income statement. Accumulated fair value changes recognized
in the statement of other comprehensive income are reclassified
into income statement in the period when the hedged cash flow
aects income. Changes in fair value of derivative instruments are
recognized in the income statement based on their nature either
in the operative costs if the hedged item is an operative foreign
currency transaction or as financial income or expenses, if the
hedged item is a monetary transaction.
Changes of the fair value of derivative financial instruments that
are designated and qualify as fair value hedges are recorded in the
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income statement together with the changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk.
The changes in the fair values of derivatives that are
designated as hedging instruments but are not accounted for
according to the principles of hedge accounting are recognized
in the income statement based on their nature either in the
operative costs, if the hedged item is an operative transaction, or
as financial income or expenses, if the hedged item is a monetary
transaction.
In principal, the fair values of derivative instruments are
presented in the statement of financial position under short-term
or long-term non-interest bearing assets or liabilities based on
their maturity. Derivative instruments that are designated and
qualify as fair value hedges of monetary assets or liabilities,
are presented in the same group of interest-bearing assets or
liabilities as the hedged instrument.
Eective portion of changes in the fair values of foreign
currency hedges used against the translation dierences arising
from the consolidation of net investments in foreign subsidiaries
are recognized in translation dierences in the statement of other
comprehensive income. The ineective portion is recognized in
financial income and expenses. Accumulated fair value changes
recognized in the items of other comprehensive income are
reclassified into income statement if the hedged subsidiary is
disposed of partially or in its entity.
FINANCIAL LIABILITIES
Financial liabilities are initially recognized at fair value at
trade date. After initial recognition, the financial liabilities are
subsequently measured and categorized at amortized cost, at
fair value through profit and loss, or as derivatives designated at
hedging instruments in an eective hedge. Financial liabilities,
except derivatives, are initially recognized at the fair value of the
consideration received plus directly attributable transactions
costs. After initial recognition, they are subsequently measured
at amortized cost using the eective interest method. Also
commercial paper programs are measured at amortized cost. Gains
and losses are recognized in the income statement when the
liabilities are derecognized, impaired and through the amortization
process.
Financial liabilities include current and non-current liabilities
and they can be interest-bearing or non-interest-bearing.
Contingent considerations of business combinations are classified
as non-interest-bearing financial liabilities.
RECOGNITION AND DERECOGNITION OF
FINANCIAL ASSETS AND LIABILITIES
Financial assets and liabilities are recognized at trade date. A
financial asset or a financial liability is recognized on the balance
sheet only when the Group becomes a party to the contractual
provisions of the financial instrument.
A financial asset is derecognized only when the contractual
rights to the cash flows from the financial asset expire or when it
transfers the financial asset, so that all the risks and rewards of
ownership of the financial asset are substantially transferred. A
financial liability or a part of a financial liability is removed from
the balance sheet only when it is extinguished, that the obligation
specified in the contract is discharged or cancelled or expires.
INVENTORIES
Inventories are valued at the lower of cost or net realizable
value. Cost is determined by the first-in, first-out (FIFO) method
or, alternatively, weighted average cost where it approximates
FIFO. The cost of finished goods and work in progress comprises
raw materials, direct labor, depreciation, other direct costs and
related production overheads, but excludes borrowing costs.
Net realizable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and
the estimated costs necessary to make the sale. Inventories are
presented net of net realizable value allowance recognized for
obsolete and slow-moving inventories.
TRADE RECEIVABLES
Trade receivables are carried at their anticipated realizable value,
which is the original invoice amount less an estimated valuation
allowance. A credit loss allowance of trade receivables is made
when there is objective evidence (such as significant overdue of
receivables and unsuccessful dunning attempts or known financial
diculties and thus increased probability of customer insolvency)
that the Group will not be able to collect all amounts due according
to the original terms of the receivables. The assessment and
decision for credit loss allowances is done locally in each business
unit on case-by-case basis.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand, deposits held at
call with banks and other short-term highly liquid investments with
original maturities of three months or less. Bank overdrafts are
included within borrowings in current interest-bearing loans.
HYBRID BOND
A hybrid bond is an instrument which is presented under equity
in the consolidated financial statements. A hybrid bond is
subordinated to the company’s other debt obligations, but has
seniority over other equity items. The yield on a hybrid bond is paid
if the Group distributes a dividend. If no dividend is distributed,
the Group will make a separate decision on whether to pay the
yield. Unpaid yields are accumulated. The holders of a hybrid
bond do not possess the same rights as shareholders concerning
control or voting at General Meetings of shareholders.
OWN SHARES
Own shares acquired by the Group, including directly attributable
costs, are presented as a deduction from the total equity on the
day of trading in the consolidated financial statements. Purchases
or subsequent sales of treasury shares are presented as changes
in equity.
PROVISIONS
Provisions are recognized in the balance sheet when the Group
has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and
a reliable estimate can be made of the amount of the obligation.
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
Where the Group expects some or all of a provision to be
reimbursed, the reimbursement is recognized as a separate asset
but only when the reimbursement is virtually certain. Provisions
are valued at the net present value of the expenses required to
cover the obligation. The discount factor used when calculating
present value is selected so that it describes the market view of
the time value of the money and the risk relating to the obligation
at the time of examination.
A warranty provision is recognized when a product containing a
warranty clause is sold. The size of the sum involved is determined
on the basis of what is known about past warranty costs. A
restructuring provision is recognized when the Group has compiled
a detailed restructuring plan, launched its implementation or has
informed the parties concerned.
WASTE ELECTRICAL AND ELECTRONIC EQUIPMENT
The Group is a distributor of electrical equipment that falls under
the EU Directive on Waste Electrical and Electronic Equipment.
Expected costs are recognized as part of other operating
expenses and as a current non-interest-bearing payable.
EMPLOYEE BENEFITS
Employee benefit obligations
Throughout the Group operates various pension plans in
accordance with local conditions and practices. The plans are
classified as either defined contribution plans or defined benefit
plans. The contributions to defined contribution plans are charged
to the income statement in the year to which they relate.
For defined benefit plans, costs are assessed using the
projected unit credit actuarial valuation method, in which the cost
of providing benefit is charged to the income statement so as
to spread the regular cost over the service lives of employees in
accordance with the advice of qualified actuaries who carry out a
full valuation of the plan. The benefit obligation is measured as the
present value of estimated future cash outflows. Defined benefit
liability comprises of the present value of the defined benefit
obligation less the fair value of plan assets. All actuarial gains and
losses are recognized in other comprehensive income immediately
as they occur. The past service cost is recognized as an expense
in the income statement.
Share-based payments
Share-based payment programs are valued at fair value on the
grant date and recognized as an expense in the income statement
during the vesting period with a corresponding adjustment to the
equity or liability. In the cash settled option program the liability
is revalued at each balance sheet date with changes in fair value
recognized in the income statement. The income statement eect
of the share-based payments programs is recognized in employee
benefit expenses.
The expense of the share-based payments determined at the
grant date reflects the Group’s estimate of the number of options
or share rewards that will ultimately vest. Grant date is the date
at which the entity and another party agree to a share-based
payment arrangement, being when the entity and the counterparty
have a shared understanding of the terms and conditions of the
arrangement. The options are valued at fair value using Black-
Scholes option-pricing model. The non-market criteria are not
included in the fair value of the option but taken into account in
the number of options that are assumed to vest. On a regular basis
the Group reviews the assumptions made and revises its estimates
of the share-based payments that are expected to be settled. The
changes in the estimates are recognized in the income statement
with a corresponding adjustment to the equity or liability.
When the share options are exercised, the proceeds received,
net of any transaction costs, are credited in the fund for invested
non-restricted equity.
DIVIDEND
The dividend proposed by the Board of Directors is not deducted
from distributable equity until approved by the Annual General
Meeting of Shareholders.
EARNINGS PER SHARE
Earnings per share is calculated by dividing the net profit
attributable to the shareholders of the company by the weighted
average number of shares in issue during the year, excluding
shares purchased by the Group and held as treasury shares, if any.
Diluted earnings per share amounts have been calculated
by applying the “treasury stock” method, as if the options were
exercised at the beginning of the period, or on the issuance of
options, if that occurs later during the period, and as if the funds
obtained thereby were used to purchase common stock at the
average market price during the period. In addition to the weighted
average number of shares outstanding, the denominator includes
the incremental shares obtained through the assumed exercise
of the options. The assumption of exercise is not reflected in
earnings per share when the exercise price of the options exceeds
the average market price of the shares during the period. The
share options have a diluting eect only when the average market
price of the share during the period exceeds the exercise price of
the options.
OPERATING PROFIT
The IAS 1 (Presentation of Financial Statements) standard
does not define operating profit. The Group has defined it as
follows: Operating profit is the net amount arising from adding
other operating income and share of results in associates and
joint ventures to net sales, deducting cost of sales corrected
for changes in inventories and cost of production for own use,
deducting costs related to employee benefits, depreciation and
possible impairments as well as other operating expenses. Foreign
exchange dierences and changes in the fair value of derivative
financial instruments are included in operating profit in case they
originate from operative business items; otherwise they are booked
in financial income and expenses.
CASH FLOW STATEMENT
Cash and cash equivalents presented in the cash flow statement
comprise cash in hand, deposits held at call with banks and other
short-term highly liquid investments with original maturities of
three months or less. Cash generated from operating activities
has been reported using the indirect method. All income taxes
paid during the financial year are presented in Net cash generated
from operating activities, unless they can be particularly
allocated to net cash from (used in) investing or financing
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
1
activities. Unrealized exchange gains and losses from cash and
cash equivalents denominated in foreign currencies are presented
on a separate row before cash and cash equivalents at the end of
period, separate from cash generated from (used in) operating,
investing and financing activities.
COMPARABLE OPERATING PROFIT AND
ITEMS AFFECTING COMPARABILITY
In order to reflect the underlying business performance and
to enhance comparability between financial periods, the Group
presents alternative performance measures. Comparable operating
profit is operating profit excluding mark-to-market valuations
of operative currency derivatives and other items aecting
comparability, which include material restructuring costs,
impairments, gains and losses on business combinations and
disposals, insurance compensations and other non-operational
items. Alternative performance measures should not be considered
in isolation as a substitute for measures of performance in
accordance with IFRS.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the consolidated financial statements in
accordance with IFRS requires management to make certain
estimates and assumptions that aect the amounts recognized
in the consolidated financial statements and accompanying
notes. Actual results may dier from these estimates. In addition,
judgment has to be exercised in applying the accounting principles
of the financial statements. Management’s estimates and
assumptions are based on historical experience and plausible
future scenarios, which are continually evaluated. Possible
changes in estimates and assumptions are recognized in the
accounting period during which estimates and assumptions were
fixed and in all subsequent accounting periods.
The key assumptions concerning the future and other key
sources of uncertainty related to estimations at the balance sheet
date, that have significant risk of causing material adjustments
to the carrying amounts of assets and liabilities within the next
accounting period, are discussed below.
Determining fair value of acquisitions
The fair values of acquired working capital and tangible assets
were evaluated by the Group and when needed external appraisal
personnel before the acquisition. The fair value of intellectual
property rights (trademarks, patents and technology) and customer
relations are established with discounting the related cash flows.
Impairment testing
The carrying amounts of tangible and intangible assets are
reviewed at each balance sheet date to determine whether there
is any indication of impairment. Goodwill, intangible assets with
indefinite useful lives and unfinished tangible assets are in all
cases tested annually. For the purposes of assessing impairment,
assets are grouped at the lowest cash generating unit level for
which there are separately identifiable, mainly independent,
cash inflows and outflows. An impairment loss is the amount by
which the carrying amount of the assets exceeds the recoverable
amount. The recoverable amount is determined by reference to
discounted future net cash flows expected to be generated by the
asset. These calculations require the use of estimates.
Income taxes
The Group reviews at each balance sheet date especially the
carrying amount of deferred tax assets. Deferred taxes are
measured with enacted tax rates, to reflect the temporary
dierences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for financial
reporting purposes. The main temporary dierences arise from
the depreciation dierence on tangible assets, fair valuation of
net assets in acquired companies, intra-group inventory profits,
defined benefit plans, provisions, untaxed reserves and tax
losses carried forward. Temporary dierences are recognized as
a deferred tax asset to the extent that it is probable that future
taxable profits will be available, against which the deductible
temporary dierence can be utilized. The likelihood for the
recovery of deferred tax assets from future taxable income is
assessed, and to the extent the recovery is not considered likely
the deferred asset is adjusted in accordance. At each balance
sheet date the Group reviews whether distribution of earnings in
subsidiaries is in its control and probable, and books a deferred
tax accordingly.
Defined benefit obligations
Costs for defined benefit plans are assessed using the projected
unit credit actuarial valuation method. Several statistical
and other actuarial assumptions are used in calculating the
expense and liability related to the plans. These factors include
assumptions about the discount rate, future salary increase and
annual inflation rate. Statistical information used may dier from
actual results. Changes in actuarial assumptions are recognized in
other comprehensive income immediately as they occur which could
have a slight impact on the Group’s statement of comprehensive
income.
Provisions
The timing of the recognition of a provision is based on
management’s estimate of the moment when the Group has a
present legal or constructive obligation, as a result of a past
event, and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
Hyperinflation
The Group may have operations in hyperinflatory economies. The
financial statements of a subsidiary whose functional currency
is the currency of a hyperinflationary economy are restated in
accordance of IAS 29 (Financial Reporting in Hyperinflatory
Economies) in case the adjustments are material in relation to the
Group’s consolidated financial statements.
ROUNDING OF FIGURES
The consolidated financial statements are presented in millions
of euros. All figures in these accounts have been rounded.
Consequently, the sum of individual figures can deviate from the
presented sum figure. Key figures have been calculated using
exact figures.
In the financial statements, EUR 0.0 million means the figure is
less than EUR 50 000. If the amount is EUR 0, the cell is left empty.
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
REPORTABLE SEGMENTS
2020
EUR MILLION
GROUP
PRODUCTS
THIRD
PARTY
PRODUCTS
TOTAL
REPORTABLE
SEGMENTS
Net Sales 187.5 73.8 261.3
Depreciation, amortization and
impairment losses
-11.9 -3.5 -15.5
Share of results in associates and
joint ventures (included in OP) 0.0 -0.8 -0.8
Comparable operating profit
23.4 -1.9 21.5
Segment assets
Non-interest-bearing assets
212.7 21.7 234.4
Investments in associates and
joint ventures
0.0 3.4 3.4
Total segment assets
212.7 25.1 237.8
Investments 4.7 0.3 5.0
2019
EUR MILLION
GROUP
PRODUCTS
THIRD
PARTY
PRODUCTS
TOTAL
REPORTABLE
SEGMENTS
Net Sales 185.2 90.2 275.4
Depreciation, amortization and
impairment losses
-9.9 -2.7 -12.6
Share of results in associates and
joint ventures (included in OP) 0.0 -0.2 -0.2
Comparable operating profit
19.5 -1.6 17.8
Segment assets
Non-interest-bearing assets
219.8 45.4 265.2
Investments in associates and
joint ventures
0.0 4.2 4.2
Total segment assets
219.8 49.6 269.4
Investments 5.1 0.6 5.6
SEGMENT
2
INFORMATION
The Rapala Group is led as a whole, as an integrated chain of units
engaged in manufacturing, sourcing and distributing of mainly
fishing tackle equipment as well as hunting, outdoor and winter
sports equipment. The base unit of the Group’s management is
a single subsidiary engaged in one or several activities within
the integrated supply chain. Each subsidiary and business is
represented by a member in the Executive committee. The Group
does not have any structure of independently led divisions, but the
Group is managed as a whole. The Group’s CEO, together with the
Board is the ultimate decision maker.
Despite the integrated nature of the Group’s operations,
the type and source of products being processed by the units
creates dierence in the Group’s management approach. There is
a distinction in the strategic and operative role of the products
depending on whether the product sold is being manufactured
by the Group itself; whether the product is sourced by the Group
externally, but sold under one of the Group’s own brands; whether
the product is a third party product represented and distributed
by the Group; or whether the product is part of Group’s core
fishing tackle business or some supporting product category
outside of fishing. This distinction between the type and source of
products is the basis for the Group’s operating segments.
The Group’s operating segments are Group Fishing Products,
Other Group Products and Third Party Products. Group Fishing
Products and Other Group Products have been combined to
reportable segment Group Products. Group Fishing Products are
fishing tackle products manufactured or sourced by the Group
itself and sold under the Group’s brands. Group Fishing Products
include Lures and Baits, Fishing Hooks, Fishing Lines and Fishing
Accessories. Other Group Products include Group manufactured
and/or branded products for winter sports and some other non-
fishing businesses. Third Party Products include non-Group
branded fishing products and third party products for hunting,
outdoor and winter sports, which are distributed by the Group
utilizing the same supply channel as Group Fishing Products and
Other Group Products.
The Group has changed the measurements of segment
performance by excluding items aecting comparability from
operating profit. The Group measures segment performance
based on sales, comparable operating profit and assets.
Comparable operating profit is adjusted by mark-to-market
valuations of operative currency derivatives and other items
aecting comparability including material restructuring costs,
impairments, gains and losses on business combinations and
disposals, insurance compensations and other non-operational
items. Definitions of the alternative performance measures are
presented in Definitions of Key Figures on page 44. All the other
segment reporting is consistent with IFRS accounting principles.
Reportable segments are consistent with those in the financial
statements 2019.
Pricing of inter-segment transactions is based on market
prices.
2
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
EUR MILLION 2020 2019
Net sales
Total sales for reportable segments 261.3 275.4
Group net sales 261.3 275.4
Comparable operating profit
Total comparable operating profit for
reportable segments 21.5 17.8
Mark-to-market valuations of operative
currency derivatives -0.1 -0.4
Other items aecting comparability -10.7 -4.0
Group total operating profit 10.7 13.4
Group financial income and expenses -4.2 -3.6
Group profit before taxes 6.6 9.8
Other items aecting comparability
Restructurings
Management restructuring -0.6 -1.1
European restructurings -4.6 -
Indonesia manufacturing restructurings -4.2 -1.1
Other restructurings -1.2 -2.1
Acquisition costs of DQC International
-
-0.8
Other items
-
1.0
Total other items aecting comparability -10.7 -4.0
Assets
Total assets for reportable segments 237.8 269.4
Unallocated interest-bearing assets 35.1 20.1
Group total assets 272.9 289.5
RECONCILIATIONS GEOGRAPHICAL AND GROUPWIDE INFORMATION
The Group operates in four geographical areas which are North
America, Nordic, Rest of Europe and Rest of the World. External
net sales and non-current assets are presented separately in the
countries which proportion is significant.
The non-current assets exclude non-current financial assets
and deferred tax assets.
The Group’s customer base consists of a large number
of customers in several market areas and no single customer
represent by itself a significant part of the Group’s net sales.
External net sales by unit location
EUR MILLION 2020 2019
Finland 21.2 27.7
Other Nordic Countries 20.4 28.9
Nordic total 41.6 56.6
Russia 12.7 12.0
France 37.2 37.3
Other European Countries 29.9 32.0
Rest of Europe total 79.8 81.3
USA 96.8 91.6
Other North America 13.4 12.6
North America total 110.2 104.2
Rest of the World total 29.7 33.3
TOTAL 261.3 275.4
Non-current assets by unit location
EUR MILLION 2020 2019
Finland 21.3 23.2
Other Nordic Countries 1.9 4.6
Nordic total 23.2 27.8
Rest of Europe total 21.6 21.3
USA 30.2 32.8
Other North America 2.8 3.6
North America total 33.0 36.5
China (incl. Hong Kong) 26.5 27.5
Other countries 3.6 6.9
Rest of the World total 30.0 34.4
TOTAL 107.8 119.9
2
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
22
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
ACQUISITIONS AND
3
DIVESTMENTS
ACQUISITIONS IN 2020
No acquisitions were carried out in 2020.
ACQUISITIONS IN 2019
ASSOCIATED COMPANY ACQUISITION
On September 18, 2019, Rapala VMC concluded definitive
agreements to acquire in total 49% of the share capital of the
Florida-based DQC International Corp, known especially in the USA
for its 13 Fishing -branded rods and reels. For more details on the
associated companies, see note 13.
DIVESTMENTS IN 2020
No divestments were carried out in 2020.
DIVESTMENTS IN 2019
On 23 December, Rapala VMC divested 100% of the shares of
its Ukrainian subsidiary VMCWaterQueen Ukraine to a private
Ukrainian company. VMCWaterQueen Ukraine is a distribution
company. The sale did not have a significant impact of Rapala VMC
Corporation’s financial position or result during 2019.
OTHER OPERATING
4
INCOME
EUR MILLION 2020 2019
Royalty income
0.2 0.2
Rental income
0.1 0.5
Business cost support for COVID19
0.6 -
Gains from sale of intangible and tangible assets
0.1 1.0
Insurance compensations
0.0 0.1
Other income
0.5 0.4
TOTAL
1.6 2.2
OTHER OPERATING
5
EXPENSES
EUR MILLION 2020 2019
Selling and marketing expenses -7.8 -11.5
Rents paid -0.9 -1.0
Freight out -6.2 -6.1
Maintenance and utility expenses -5.9 -5.7
Traveling expenses -2.1 -4.1
Sales commissions -3.6 -4.3
Consulting expenses -1.4 -2.1
IT and telecommunication -2.8 -2.7
Auditors' fees and services -0.9 -0.8
Outsourced logistics -1.1 -0.9
Currency derivatives 0.4 0.3
Losses on sale of tangible and intangible assets - -0.5
Other expenses -8.7 -9.3
TOTAL -41.0 -48.6
AUDITORS’ FEES AND SERVICES
EUR MILLION 2020 2019
Audit fees -0.7 -0.7
Fees for tax services -0.2 -0.1
Non-audit fees 0.0 0.0
TOTAL -0.9 -0.8
MATERIALS AND
6
SERVICES
EUR MILLION 2020 2019
Materials, goods and supplies
Purchases during the period -104.5 -121.6
Change in inventory -2.1 2.6
External services -1.4 -1.7
TOTAL -108.0 -120.6
43 5 6
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
23
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
7 8 9
FINANCIAL INCOME
9
AND EXPENSES
EUR MILLION 2020 2019
Foreign exchange gains and losses
From financial assets -4.4 2.6
From financial liabilities measured at amortized cost 2.7 -3.4
From right-of-use liabilities -0.1 0.0
Interest and other financial income
Interest income from financial assets
measured at amortized cost 0.6 0.8
Change in fair value of interest rate derivatives -
hedge accounted - 0.0
Interest rate derivatives - non-hedge accounted 0.8 0.0
Other financial income 0.0 0.0
Interest and other financial expenses
Interest expense on financial liabilities
measured at amortized cost -2.2 -2.0
Interest rate derivatives - non-hedge accounted -0.1 -0.4
Interest expenses on right-of-use liabilities -0.4 -0.5
Other financial expenses -1.1 -0.9
TOTAL -4.2 -3.6
RECOGNIZED IN THE STATEMENT OF OTHER
COMPREHENSIVE INCOME
EUR MILLION 2020 2019
Change in fair value of interest rate derivatives -
hedge accounted, net of tax - 0.0
Gains and losses on hedges of net investments,
net of tax -1.1 1.2
TOTAL -1.1 1.2
EXCHANGE GAINS AND LOSSES IN
OPERATING PROFIT
EUR MILLION 2020 2019
In net sales 0.3 0.3
In purchases -0.5 -0.1
In other operating expenses
Currency derivatives, non-hedge accounted 0.4 0.3
TOTAL 0.2 0.5
EMPLOYEE BENEFIT
7
EXPENSES
EUR MILLION 2020 2019
Wages and salaries
-54.9 -57.8
Pension costs - defined contribution plans
-4.0 -4.2
Pension costs - defined benefit plans
-1.6 -0.4
Other long-term employee benefits
-0.1 -0.1
Option programs to be settled in shares
-0.8 0.0
Other personnel expenses
-8.1 -9.1
TOTAL
-69.4 -71.6
The employee benefit expenses in 2020 included EUR 2.8 million
employee related restructuring expenses (2019: EUR 2.3 million).
For more details on employee benefits for top management and
possible share-based incentive plans, see notes 28 and 29.
AVERAGE PERSONNEL
PERSONS 2020 2019
North America 130 129
Nordic 330 348
Rest of Europe 860 859
Rest of the World 785 1 268
TOTAL 2 105 2 604
RESEARCH AND DEVELOPMENT
8
EXPENSES
Net profit for the period includes research and development
expenses of EUR 1.1 million recognized as an expense in 2020
(2019: EUR 1.7 million). Group has not capitalized development
costs.
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
24
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
DEFERRED TAXES
EUR MILLION 2020 2019
Tax losses and credits carried forward 3.1 1.4
Provisions 1.3 0.8
Employee benefits 0.6 0.6
Depreciation dierence 1.0 0.1
Inventories 2.5 3.2
Other temporary dierences 0.2 0.0
Total 8.7 6.0
Oset against deferred tax liabilities -0.9 -1.4
TOTAL DEFERRED TAX ASSETS 7.8 4.6
Depreciation dierence and other untaxed reserves 1.9 2.6
Fair value allocations for acquired net assets 3.9 4.1
Other temporary dierences 0.0 0.2
Total 5.8 6.8
Oset against deferred tax assets -0.9 -1.4
TOTAL DEFERRED TAX LIABILITIES 5.0 5.4
NET DEFERRED TAX ASSETS / LIABILITIES 2.8 -0.8
MOVEMENT IN THE NET DEFERRED TAX BALANCE
EUR MILLION 2020 2019
Net deferred tax assets (+) and liabilities (-) at Jan 1 -0,8 -0,1
Recognized in income statement 3,0 -1,0
Recognized in other comprehensive income 0,2 0,0
Recognized in equity 0,3 0,0
Translation dierences 0,2 0,3
NET DEFERRED TAX ASSETS AND LIABILITIES
DEC 31 2,8 -0,8
Deferred taxes have been reported as a net balance according to
IAS 12. As of December 31, 2020, the Group had tax losses carried
forward of EUR 29.2 million (2019: EUR 29.5 million), for which
deferred tax assets have not been recognized in the consolidated
financial statements because the realization of the tax benefit is
not probable. EUR 0.1 million of these tax losses will expire during
the next five years (2019: EUR 0.9 million).
Deferred tax liability on undistributed earnings of subsidiaries
has not been recognized in the consolidated balance sheet
because distribution of the earnings is in the control of the Group
and such distribution is not probable within the foreseeable
future.
The consolidated balance sheet includes deferred tax assets
of EUR 2.7 million (2019: EUR 0.9 million) in group companies,
which have generated losses in financial year 2020 or 2019. The
recognition of these assets is based on profit estimates, which
indicate that the realization of these deferred tax assets is
probable.
INCOME
10
TAXES
INCOME TAXES IN THE INCOME STATEMENT
EUR MILLION 2020 2019
Income taxes -6.2 -4.8
Deferred taxes 3.0 -1.0
TOTAL -3.2 -5.8
INCOME TAX RECONCILIATION
EUR MILLION 2020 2019
Profit before taxes
6.6 9.8
Income taxes at Finnish statutory tax rate (20%)
-1.3 -2.0
Dierence between Finnish and foreign rates
-0.3 -0.1
Prior year income taxes
-0.1 -1.0
Foreign withholding taxes
-0.0 -0.2
Eect of deferred taxes not recognized
-1.0 -2.3
Benefit arising from previously unrecognized deferred
tax assets
0.4 0.1
Eect of changes of tax rates
-0.0 0.1
Other items
-0.8 -0.4
INCOME TAXES IN THE INCOME STATEMENT
-3.2 -5.8
TAXES IN OTHER COMPREHENSIVE INCOME
2020
EUR MILLION
BEFORE
TAX
TAX
EXPENSE/
BENEFIT
NET OF
TAX
Translation dierences -10.7 -10.7
Remeasurements of defined benefit liabilities 0.0 0.0 0.1
Cash flow hedges
Net investment hedges -1.3 0.2 -1.1
TOTAL -11.9 0.2 -11.7
2019
EUR MILLION
BEFORE
TAX
TAX
EXPENSE/
BENEFIT
NET OF
TAX
Translation dierences 2.4 2.4
Remeasurements of defined benefit liabilities -0.2 0.0 -0.1
Net investment hedges 1.3 0.0 1.2
TOTAL 3.5 0.0 3.5
10
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
25
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
11
INTANGIBLE
11
ASSETS
EUR MILLION GOODWILL TRADEMARKS
CUSTOMER
RELATIONS
OTHER
INTANGIBLE
ASSETS TOTAL
Acquisition cost Jan 1 49.1 25.2 4.0 8.4 86.7
Additions 0.4 0.4
Disposals 0.0 0.0
Reclassifications
1)
0.2 0.2
Translation dierences -2.1 -1.3 -0.3 -0.1 -3.8
ACQUISITION COST DEC 31 47.0 23.8 3.8 8.8 83.4
Accumulated amortization Jan 1 -0.9 -3.6 -6.7 -11.2
Disposals 0.0 0.0
Reclassifications
1)
- -
Amortization during the period -0.1 -0.5 -0.6
Translation dierences 0.0 0.2 0.1 0.3
ACCUMULATED AMORTIZATION DEC 31 -0.9 -3.5 -7.9 -12.2
CARRYING VALUE JAN 1 49.1 24.2 0.4 1.7 75.5
CARRYING VALUE DEC 31 47.0 23.0 0.3 1.0 71.2
2019
EUR MILLION GOODWILL TRADEMARKS
CUSTOMER
RELATIONS
OTHER
INTANGIBLE
ASSETS TOTAL
Acquisition cost Jan 1 48.5 24.6 3.9 8.3 85.3
Additions 0.5 0.5
Disposals 0.0 -0.4 -0.5
Reclassifications
1)
0.0 0.0
Translation dierences 0.6 0.6 0.1 0.0 1.3
ACQUISITION COST DEC 31 49.1 25.2 4.0 8.4 86.7
Accumulated amortization Jan 1 -0.9 -3.4 -6.6 -10.9
Disposals 0.4 0.4
Reclassifications
1)
0.0 0.0
Amortization during the period -0.1 -0.5 -0.7
Translation dierences 0.0 -0.1 0.0 -0.1
ACCUMULATED AMORTIZATION DEC 31 -0.9 -3.6 -6.7 -11.2
CARRYING VALUE JAN 1 48.5 23.7 0.6 1.7 74.5
CARRYING VALUE DEC 31 49.1 24.2 0.4 1.7 75.5
1)
Includes reclassifications between intangible and tangible assets.
2020
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
26
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
GOODWILL AND TRADEMARKS WITH INDEFINITE
LIVES BY BUSINESS SEGMENTS
EUR MILLION
GROUP
FISHING
PRODUCTS
OTHER
GROUP
PRODUCTS
THIRD
PARTY
PRODUCTS TOTAL
2020
Goodwill
45.4 0.1 1.6 47.0
Trademarks with indefinite lives
22.5 0.4 23.0
Discount rate, %
9.2 9.2 11.0
2019
Goodwill
47.3 0.0 1.8 49.1
Trademarks with indefinite lives
23.8 0.4 24.2
Discount rate, %
8.0 8.0 6.3
IMPAIRMENT TESTING OF GOODWILL AND
TRADEMARKS WITH INDEFINITE LIVES
The Group is led as a whole and not organized nor managed
in independent divisions. Most of the units are also strongly
interlinked i.e. some units do not have a sales or a production
organization or some other functions or operations needed to
operate on a stand-alone basis. However, according to IFRS,
the lowest cash-generating unit (CGU) cannot be larger than
an operating segment in the Group’s segment reporting. As a
consequence, goodwill and trademarks with indefinite lives are
tested on the operating segment level. Impairment assessment was
immediately performed due to COVID19 outbreak and there was no
indication that assets may be impaired.
The recoverable amount of the CGU is determined based on
value-in-use calculations. Cash flow projections, which were used
in these calculations, were based on most recent 5-year financial
forecasts prepared by the management and approved by the Board.
The estimated sales and production volumes are derived from the
utilization of existing property, plant and equipment. The most
important assumptions on which management has based its cash
flow projections are the sales and profitability. Discount rate
is the weighted average pre-tax cost of capital (WACC) which is
defined for each cash-generating unit separately. The components
of WACC are the risk-free yield rate, market risk premium, industry
specific beta, cost of debt, and target capital structure. In the
impairment tests prepared in 2020 and 2019, the growth rate used
to extrapolate the cash flow beyond the five-year period is 0%. As
a result of the performed impairment tests, no impairment losses
have been recognized in 2020 or 2019.
Key assumptions
Sales – The Group’s estimated sales are based on present and
future product assortment and utilization of distribution and
manufacturing capacity. In addition, estimated sales are based
on long-term growth of industry and further implementation of
Group’s strategic objectives.
EBITDA margin – The Group’s estimated EBITDA margin,
operating profit before depreciation and impairments compared to
net sales, is based on past years actual margins and management’s
view on sales and gross margin development. The increase
in general cost level has also been taken into account in the
development of EBITDA margin.
Discount rate – Discount rate is the weighted average pre-
tax cost of capital (WACC). Weighted average cost of capital
represents the total cost of Group’s equity and debt taken into
account specific risks related to assets.
Growth rate – Compared to historical sales growth
development, management has been conservative in determining
the growth rate for impairment purposes.
Sensitivity analysis
The key sensitivity factors for the impairment test are the
estimated EBITDA margin and the discount rate. According to
the Group’s management in the main business segments Group
Fishing Products and Third Party Products no probable change
in any of the key sensitivity factors would lead to a situation
where the carrying amount would exceed the recoverable amount.
Even if the discount rate would be 11.0 percentage points higher
in Group Fishing Products and 13.0 percentage points in Third
Party Products or EBITDA 42.0 percentage lower than used in
the management’s estimates in Group Fishing Products and 67.0
percentage points in Third Party Products, it would not lead to an
impairment loss in these main cash generating units.
11
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
27
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
TANGIBLE
12
ASSETS
2020
EUR MILLION LAND
BUILDINGS AND
STRUCTURES
MACHINERY
AND EQUIPMENT
OTHER
TANGIBLE
ASSETS
ADVANCE PAYMENTS
AND CONSTRUCTION
IN PROGRESS TOTAL
Acquisition cost Jan 1
2.0 26.3 60.6 22.1 1.2 112.2
Additions
0.2 1.4 0.9 2.0 4.6
Disposals
-0.2 -0.7 -1.4 -2.3
Reclassifications
1)
0.1 1.0 0.2 -1.4 -0.2
Translation dierences
-0.1 -0.7 -1.0 -1.3 -0.5 -3.6
ACQUISITION COST DEC 31
1.9 25.7 61.2 20.5 1.3 110.6
Accumulated depreciation Jan 1
-18.3 -49.8 -17.2 -85.2
Disposals
0.2 0.4 1.1 1.7
Reclassifications
1)
0.0 0.0 0.0
Depreciation during the period
-0.8 -2.9 -2.8 -6.5
Impairments
-0.2 -0.2
Translation dierences
0.4 0.7 1.1 2.2
ACCUMULATED DEPRECIATION DEC 31
-18.4 -51.7 -17.9 -88.0
CARRYING VALUE JAN 1
2.0 8.1 10.8 4.9 1.2 26.9
CARRYING VALUE DEC 31
1.9 7.3 9.5 2.6 1.3 22.6
2019
EUR MILLION LAND
BUILDINGS AND
STRUCTURES
MACHINERY
AND EQUIPMENT
OTHER
TANGIBLE
ASSETS
ADVANCE PAYMENTS
AND CONSTRUCTION
IN PROGRESS TOTAL
Acquisition cost Jan 1
1.9 27.4 59.5 23.2 0.9 113.0
Additions
0.2 2.0 1.2 1.6 5.1
Disposals
-2.0 -2.2 -3.0 -7.2
Reclassifications
1)
0.4 0.7 0.1 -1.3 -0.1
Translation dierences
0.1 0.4 0.6 0.6 -0.1 1.5
ACQUISITION COST DEC 31
2.0 26.3 60.6 22.1 1.2 112.2
Accumulated depreciation Jan 1
-18.4 -48.2 -16.8 -83.4
Disposals
1.2 1.9 1.8 4.8
Reclassifications
1)
0.0 0.0 0.0
Depreciation during the period
-0.8 -3.0 -1.7 -5.5
Impairments
0.0 0.0 0.0
Translation dierences
-0.2 -0.4 -0.4 -1.0
ACCUMULATED DEPRECIATION DEC 31
-18.3 -49.8 -17.2 -85.2
CARRYING VALUE JAN 1
1.9 9.0 11.3 6.4 0.9 29.5
CARRYING VALUE DEC 31
2.0 8.1 10.8 4.9 1.2 26.9
1)
Includes reclassifications between intangible and tangible assets and inventories.
12
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
28
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
INVESTMENTS IN ASSOCIATES
13
AND JOINT VENTURES
The Group acquired 49% of the share capital and voting rights of
DQC International Corp, an unlisted company domiciled in the USA.
DQC International Corp, known especially in the USA for its 13
Fishing -branded rods and reels on September 18, 2019.
The Group has a 33.3% interest in associate Lanimo Oü,
an unlisted company domiciled in Estonia. Its main activity is
producing leather-haberdashery. The carrying amount does not
include goodwill or impairments. Lanimo Oü’s figures are based
on the information for the period ending on September 30, due
to dierences in reporting time schedule. Information for the
financial period ending on December 31, 2019 is the following:
assets EUR 0.1 million, liabilities EUR 0.1 million, sales EUR 0.2
million and profit EUR -0.0 million.
Associated companies are consolidated according to the equity
method.
EUR MILLION 2020 2019
Acquisition cost Jan 1 4.2 0.0
Increase 0.1 4.4
Share of profit/loss -0.8 -0.2
ACQUISITION COST DEC 31 3.4 4.2
Information on associates and joint ventures
LANIMO OÜ
DQC INTERNATIONAL
CO R P.
MILJ. EUR 2020 2019 2020 2019
Net sales 0.1 0.2 12.6 6.2
Purchases and other expenses -0.1 -0.2 -9.4 -6.5
Depreciation 0.0 0.0 -0.7 0.0
Interest income and expenses 0.0 0.0 -4.0 -0.2
Net profit for the period 0.0 0.0 -1.4 -0.5
Non-current assets 0.0 0.0 1.9 1.6
Current assets 0.1 0.1 6.5 7.4
Of which cash and cash
equivalents 0.0 0.0 0.0 0.1
Non-current liabilities 0.0 0.0 10.3 10.1
Of which financial liabilities 0.0 0.0 - -
Current liabilities 0.0 0.0 1.5 1.1
Net assets of associate/ joint
venture 0.0 0.0 -3.5 -2.2
Net assets belonging to Rapala
Group 0.0 0.0 -1.7 -0.7
14
MATERIAL PARTLY OWNED
SUBSIDIARIES
Rapala Group includes one company, where non-controlling
interest is material based on Group’s consolidated net profit for
the period. Group owns 50% of AO Normark domiciled in Russia.
The other 50% is owned by Shimano Inc. AO Normark distributes
Rapala Group’s and Shimano’s products in Russia. Rapala Group
has control over the company, based on operative leadership model
and a shareholder contract, which gives majority of the voting
power to Rapala in the board of a holding company directly owning
AO Normark. The company is treated as a subsidiary and fully
consolidated to the figures of Rapala Group.
Financial information below is based on AO Normark’s reported
figures before intra-Group eliminations.
PROFIT LOSS
ALLOCATED TO
NONCONTROLLING
INTERESTS
EQUITY
BELONGING TO
NONCONTROLLING
INTERESTS
EUR MILLION 2020 2019 2020 2019
AO Normark 0.7 0.5 1.8 1.5
Other partly-owned subsidiaries 0.2 -0.9 3.4 3.2
TOTAL 1.0 -0.4 5.2 4.6
Summarized financial information
AO Normark
EUR MILLION 2020 2019
Net sales 12.2 11.8
Purchases and other expenses -10.2 -9.9
Depreciation -0.5 -0.7
Interest income and expenses -0.1 -0.2
Net profit for the period 1.4 1.0
Non-current assets 0.2 0.2
Current assets 4.5 4.9
Non-current liabilities 0.2 0.1
Current liabilities 0.9 2.1
Equity 3.6 2.9
Cash flows from operating activities 3.0 1.1
Cash flows from investing activities -0.6 0.1
Cash flows from financing activities -1.0 -2.0
OTHER
15
SHARES
EUR MILLION 2020 2019
Carrying value Jan 1 0.2 0.3
Translation dierences 0.0 0.0
CARRYING VALUE DEC 31 0.2 0.2
Other shares comprise of unlisted shares. The most significant is
As Oy Tahkon Eagle.
13 14 15
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
29
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
RECEIVABLES
16
EUR MILLION 2020 2019
Non-current receivables
Interest-bearing
Loan receivables
7.2 7.8
Other interest-bearing receivables
0.0 0.0
Non-interest-bearing
Trade receivables
0.0 0.0
Derivatives
- 0.0
Other receivables
0.1 0.2
Current receivables
Non-interest-bearing
Trade receivables
43.5 43.1
Derivatives
0.2 0.3
VAT receivable
1.4 1.1
Other prepaid expenses and accrued income
3.5 2.9
Other receivables
3.3 2.4
TOTAL
59.2 57.9
Fair values of financial assets are presented in the note 23.
The average interest rate of non-current loan receivables was
4.87% (2019: 4.78%).
ALLOWANCES BOOKED FOR TRADE RECEIVABLES
EUR MILLION 2020 2019
Allowance for trade receivables Jan 1
2.0 2.7
Additions
2.2 1.1
Deductions
-0.3 -1.4
Recovery
-0.7 -0.4
Translation dierences
-0.1 0.1
ALLOWANCE FOR TRADE RECEIVABLES DEC 31
3.1 2.0
In most cases allowances are determined individually, when there is
objective evidence (such as significant overdue of receivables and
unsuccessful dunning attempts or known financial diculties and
thus increased probability of customer insolvency) that the Group
will not be able to collect all amounts due according to the original
terms of the receivables.
INVENTORIES
17
EUR MILLION 2020 2019
Raw material
12.0 14.7
Work in progress
8.4 9.2
Finished products
55.6 77.4
Net realizable value allowance
-7.2 -8.6
TOTAL
68.8 92.6
CASH AND CASH
18
EQUIVALENTS
EUR MILLION 2020 2019
Cash at bank and in hand 27.9 12.3
TOTAL 27.9 12.3
SHARE CAPITAL AND
19
EQUITY FUNDS
EUR MILLION 2020 2019
Share capital Jan 1 3.6 3.6
SHARE CAPITAL DEC 31 3.6 3.6
Share premium fund Jan 1 16.7 16.7
SHARE PREMIUM FUND DEC 31 16.7 16.7
Hedging fund Jan 1 - 0.0
Cash flow hedges, fair value gains and losses
during the year - 0.0
HEDGING FUND DEC 31 - 0.0
Fund for invested non-restricted equity Jan 1 4.9 4.9
FUND FOR INVESTED NONRESTRICTED EQUITY DEC 31 4.9 4.9
SHARES AND SHARE CAPITAL
SHARES 2020 2019
Number of shares Jan 1 39 000 000 39 000 000
NUMBER OF SHARES DEC 31 39 000 000 39 000 000
Own shares Jan 1 452 208 677 208
Directed issue of own shares - -225 000
OWN SHARES DEC 31 452 208 452 208
On December 31, 2020, the share capital fully paid and reported
in the Trade Register was EUR 3.6 million and the total number of
shares was 39 000 000.
For more information on shares and share capital, see the
section Shares and Shareholders.
16 17 18 19
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
30
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
EQUITY FUNDS
Share premium fund includes the premiums received on exercise
of share options and other share issues under the old Finnish
Companies Act. Fund for invested non-restricted equity includes
subscription prices for shares to the extent that it is specifically
not to be credited to share capital and other types of equity
investments.
Translation dierences contain exchange dierences arising
from the currency translation of foreign subsidiaries’ financial
statements and exchange dierences arising from monetary
items that form part of net investments in foreign companies.
Hedging fund includes movements in the fair values of derivative
instruments used for cash flow hedging.
HYBRID BOND
On 31 May 2019, Group redeemed its hybrid loan of 25 MEUR,
issued in May 2017, following the permitting conditions of the
bond. Accrued interest 1.3 MEUR was paid out in May 2019,
resulting from the decision to pay dividends, and was recognized
as a deduction from Group’s equity.
In November 2019, the Group issued a new EUR 25 million
hybrid bond, which is classified as equity with no maturity date
and subordinated to other debt obligations. The bond bears a fixed
interest rate of 5.25 per cent per annum until November 13, 2021.
The Group is entitled to redeem the hybrid bond after 2 years.
The interest on hybrid bond is paid if the Annual General Meeting
decides to pay a dividend or in other ways to distribute capital to
shareholders. If a dividend is not paid the Group has the right to
decide on the possible payment of interest at its own discretion.
Non-payable interest accumulates and is disclosed as o-balance
sheet commitment. The hybrid bond does not confer to its holders
the rights of a shareholder and does not dilute the holdings of the
current shareholders. According to IAS 33, interest accrued in
local books has been taken into account as an expense in earnings
per share calculation as described in calculation of key figures.
The accrued non-recognised interest on hybrid bond at December
31, 2020 was EUR 1.1 million (0.7). The accrued interest of EUR
1.1 million, resulting from the decision of the Board of Directors,
was paid out in November 2020 and was recognized as a deduction
from Group’s equity.
DIVIDENDS
No dividend was paid for 2019. The Board of Directors proposes to
the Annual General Meeting of Shareholders to be held on March
25, 2021 that no dividend will be paid for 2020 either.
BOARD’S AUTHORIZATIONS
For information on the Board’s authorizations and acquisition
of own shares, see section Shares and Shareholders.
EMPLOYEE BENEFIT
20
OBLIGATIONS
Most of the Group´s pension plans are defined contribution plans.
The Group has defined benefit pension plans in France and in
some Rest of the World countries. The plans in Rest of the World
countries are immaterial as a whole. The retirement benefits are
determined based on salary and period of employment. These
obligations are unfunded. The Group has no other post-employment
benefit obligations. The pension security of the personnel of the
Group’s Finnish companies is arranged under the Finnish statutory
employee pension plan (TYEL) through an external pension
insurance company. Employee benefit obligations also include a
long-term profit-sharing payable to the employees in France and in
some Rest of the World countries.
EXPENSES RECOGNIZED IN THE INCOME STATEMENT
EUR MILLION 2020 2019
Current service cost -0.2 -0.2
Interest cost 0.0 -0.1
TOTAL -0.3 -0.3
AMOUNTS RECOGNIZED IN THE BALANCE SHEET
EUR MILLION 2020 2019
Rest of Europe
2.2 2.3
Rest of the World
1.3 0.6
PRESENT VALUE OF UNFUNDED OBLIGATIONS
3.5 2.9
BALANCE SHEET RECONCILIATION
EUR MILLION 2020 2019
Obligations Jan 1 2.9 2.7
Current service cost 0.3 0.3
Interest cost 0.0 0.1
Actuarial gains and losses
Changes in demographic assumptions 0.0 0.0
Changes in financial assumptions 0.1 0.2
Changes in experience assumptions -0.1 0.0
Eect of any curtailments or settlements -0.1 -0.1
Translation dierences 0.4 -0.1
OBLIGATIONS DEC 31 3.5 2.9
The following payments are expected contributions to be made in
the future years out of the defined benefit plan obligation.
EUR MILLION 2020 2019
Within one year 0.1 0.1
15 years 0.3 0.2
510 years 0.8 0.6
Later than 10 years 2.4 2.0
TOTAL 3.5 2.9
19 20
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
ASSUMPTIONS
Rest of Europe
% 2020 2019
Discount rate 0.4 0.7
Future salary increase 2.53.0 3.0
Annual inflation rate 1.8 1.8
Rest of the World
% 2020 2019
Discount rate 1 .47.8 3.08.0
Future salary increase 8.0 8.0
The discount rate and the future salary increase are identified as
significant actuarial assumptions. Changes in these assumptions
do not cause material impact on the net defined benefit obligation.
The Group expects to pay EUR 0.1 million as contributions to
its defined benefit pension plans in 2021.
PROVISIONS
21
EUR MILLION 2020 2019
Warranty provisions
Provisions Jan 1 - -
Additions 0.3 -
WARRANTY PROVISIONS DEC 31 0.3 -
Other provisions
Provisions Jan 1 0.6 0.2
Additions 0.8 0.5
Utilized provisions -0.5 -
OTHER PROVISIONS DEC 31 1.0 0.6
Non-current 0.1 0.2
Current 1.3 0.5
TOTAL PROVISIONS 1.4 0.6
FINANCIAL RISK MANAGEMENT AND
22
DERIVATIVE FINANCIAL INSTRUMENTS
The main objective of the Group’s financial risk management is
to reduce the impacts of price fluctuations in financial markets
and other factors of uncertainty on earnings, cash flows and
balance sheet, as well as to ensure sucient liquidity. The Board
has approved the Group’s risk management principles and CEO
is responsible, together with the Chief Financial Ocer, for
development and implementation of financial risk management
procedures.
Group Risk Management review financial risks on regular basis
to manage Group’s financial risk position and decide on necessary
actions to manage financial risks. Group Risk Management
continued monitoring and management of foreign exchange,
interest rate, liquidity and counterparties’ solvency risks.
Financial risks consist of market risks, credit and default risks
and liquidity risks. This note also presents the Group’s capital
management.
MARKET RISKS
The Group’s market risks are mainly caused by changes in foreign
exchange and interest rates. These changes may have a significant
impact on the Group’s earnings, cash flows and balance sheet.
The Group is also exposed to market price changes of certain
raw materials, mainly metals and plastics, which are priced on
commodity markets.
1. Foreign exchange risk
Foreign currency risk is the risk that the fair value or future cash
flows will fluctuate because of changes in foreign exchange rates.
The Group’s exposure to the risk of changes in foreign exchange
rates relates primarily to the Group’s operating activities, when
revenue or expense is denominated in a foreign currency, financing,
when debt is denominated in a foreign currency, and the Group’s
net investments in foreign subsidiaries.
The Group’s foreign exchange risk is managed by the business
units and Group Risk Management in accordance with the Foreign
Exchange Risk Management policy approved by the Board of
Directors.
Foreign exchange transaction risk
Foreign exchange transaction exposure arises when an operating
unit has commercial or financial transactions and payments in other
than its own functional currency, and when related cash inflow and
outflow amounts are not equal or noncurrent.
As a result of sales and purchases in foreign currencies as
well as operations in several jurisdictions, the Group has foreign
currency denominated receivables and payables that are exposed to
movements in foreign exchange rates. Income and expenses within
dierent currencies net each other out to some extent, creating
thus an eective natural hedge. The remaining, estimated 1215
month commercial net exposure is then systematically hedged
by using derivative instruments. Depending on whether foreign
currency monetary receivables and payables relate to sales and
purchases or financial items, the foreign exchange gains and losses
are recognized in the income statement either above or below
operating profit.
The Group has also intra-group loans denominated in currencies
that exposes the Group to currency risk that is not fully eliminated
on consolidation. In order to hedge currency risk arising from
intra-group loans, part of the Group’s external financing is
denominated in foreign currencies. Depending on whether these
loans are classified as net investments on foreign operations
or loan receivables, the foreign exchange gains and losses are
recognized in the other comprehensive income or income statement.
The connections possibly prevailing between dierent currencies
are not taken into account, e.g. US dollar and Honk Kong dollar are
considered as separate currencies in this analysis.
Business units are responsible for forecasting net foreign cash
flows and do most of their currency hedging transactions with the
Group’s parent company. Group Risk Management is responsible
for monitoring the Group’s consolidated currency risk exposure
and when needed, enters into derivative transactions with group
external counterparties.
20 21 22
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
32
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
Derivative instruments that are used for hedging purposes
are mainly short term and can include forward contracts, option
contracts and structured instruments. Because the Group does
not apply hedge accounting on currency derivatives, the income
statement eect arising from fair value changes of derivative
instruments is recognized partly or entirely in dierent financial
periods than exchange rate gains and losses arising from the
hedged cash flows.
In 2020 currency derivatives that are used for operative
hedging purposes had an income statement eect of EUR 0.4
million (2019: EUR 0.3 million). Fair values and nominal values of
currency derivatives are summarized under section 4. Derivatives.
At the end of 2020 and 2019 the following currencies
represent a significant portion of the currency mix in the
outstanding financial instruments:
Transaction risk position
2020
EUR MILLION USD RUB IDR CAD ZAR
Transaction risk and hedging
Transaction exposure
6.2 11.8 1.4 8.7 5.8
Hedges
1)
-3.9 -2.7 -0.8 -2.4 -2.1
2019
EUR MILLION USD RUB IDR CAD ZAR
Transaction risk and hedging
Transaction exposure
-19.5 11.3 -9.1 7.3 8.2
Hedges
1)
14.0 -4.3 3.5 -3.1 -2.6
1)
Currency derivatives are used to hedge both transaction risks and translation
risks. Hence the derivatives and transaction risks cannot be netted to a net
position.
Foreign exchange translation risk
The group is exposed to currency translation risk through its
investments in foreign subsidiaries, joint ventures and associated
companies with equities’ denominated in foreign currencies. The
most significant translation exposures are in USD, HKD, IDR,
SEK and CAD, which comprise approximately 84.1% of the total
translation exposure. In the Group consolidation equity changes
resulting from movements in foreign exchange rates are presented
as translation dierences within the equity.
The Group Risk Management monitors regularly the amounts
of net investments denominated in foreign currencies and when
needed, enters into hedging transactions in order to reduce the
volatility in equity in the consolidated balance sheet. During 2020
the Group did not hedge any equity exposure.
The total non-euro denominated equity excluding net income of
the Group’s subsidiaries and associated companies was EUR 139.4
million as of December 31, 2020 (2019: EUR 173.2 million). The
exposures are summarized in the following table.
Group translation exposure 2020 2019
EUR MILLION
NET
INVESTMENTS
NET
INVESTMENTS
USD 84.5 107.2
HKD 12.2 16.6
IDR 9.4 11.5
SEK 5.9 5.7
CAD 5.3 5.2
TOTAL 117.3 146.2
Sensitivity analysis
Sensitivity analysis is based on the following assumptions and
factors:
• The sensitivity analysis is based on change of value in a single
analyzed currency and assumes other variables (including
values of other currencies) to remain unchanged. The
connections possibly prevailing between some currencies are
not taken into account.
• The sensitivity is analyzed against balance sheet conversion
rates prevailing at December 31, 2020.
• The analysis includes the eect of income statement
transactions made in the analyzed currency between January
1 and December 31 in Group companies, whose functional
currency is other than the analyzed currency (so called
transaction impact) as well as in Group companies, whose
functional currency equals to the analyzed currency (so
called translation impact). The analysis takes into account
the currency forward contracts in place at December 31. The
sensitivity analysis of income statement transactions excludes
Group’s internal items as these net out.
• The sensitivity analysis includes the eect of the translation of
subsidiaries’ equity as per December 31 in subsidiaries, whose
reporting currency equals to the analyzed currency.
Group transaction risk sensitivity analysis
The eect of a 10% weakening of most significant foreign
currencies (against euro) in euros:
2020
EUR MILLION USD RUB IDR CAD ZAR
Operating profit -2.6 -0.8 1.3 -1.1 -0.3
Equity
2)
-8.5 -0.3 -0.9 -0.5 -0.3
2019
EUR MILLION USD RUB IDR CAD ZAR
Operating profit -0.7 -0.8 1.2 -0.9 -0.4
Equity
2)
-10.7 -0.3 -1.2 -0.5 -0.4
2)
Without the eect of net income.
2. Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes in
market interest rates. The Group’s exposure to the risk of changes
in market interest rates relates primarily to the Group’s long-term
debt obligations with floating interest rates. The Group’s interest-
bearing liabilities have mainly an interest period length shorter
than one year.
The Group’s funding, and consequently also interest rate risk,
is managed centrally by the Group’s parent company. Interest rate
risk, covering cash flow and fair value risk, is analyzed regurarly by
the Group Risk Management who is also responsible of taking the
actions needed to change the Group’s risk position. These actions
include changing the currency split of the external loan portfolio,
selection between dierent sources of financing, changing the
interest rate duration as well as entering into transactions in
derivative financial instruments.
Derivative instruments that are used for hedging purposes
consist of interest rate swaps, where the Group pays fixed rate
22
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
33
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
22
interest and receives a variable rate interest. Fair values and
nominal values of interest rate swaps are presented under section
4. Derivatives.
Interest rate sensitivity analysis
Below is presented the eect of liabilities with variable interest
rate and interest rate swaps on net income and equity if there was
a 1 percentage point increase in interest rates. The sensitivity
analysis is based on following assumptions and factors:
• All other variables, in particular foreign exchange rates, are
assumed to remain unchanged.
• The sensitivity is analyzed against interest rates applicable on
December 31.
• The sensitivity analysis includes the liabilities and interest rate
swaps with variable interest rate in force on December 31.
2020 2019
EUR MILLION
NET INCOME
NET OF TAX
EQUITY NET
OF TAX
3
NET INCOME
NET OF TAX
EQUITY NET
OF TAX
3
Loans with variable interest rate 0.1 - -0.3 0.0
3)
Without the eect of net income.
3. Other market price risks
The Group purchases certain raw-materials, which are priced
on global financial markets. These include commodity metals
such as copper, zinc and lead, and certain plastics. The value
of these purchases is relatively low and actions regarding the
management of price risk are decided on an performed locally in
each manufacturing unit. Group Risk Management also monitors
the development of these raw-material prices. The Group does not
currently hedge commodity price risk.
The amount of the Group’s investments in available-for-sale
financial assets is insignificant and consists of investments in real
estate and other unquoted shares for which reliable market values
are not obtainable.
4. Derivatives
The Group uses derivative instruments, such as forward contracts,
option contracts, interest rate swaps and structured instruments,
to manage foreign exchange and interest rate risk in accordance
with the guidelines set by the The Group’s Risk Management policy.
Foreign currency derivatives, consisting of forward contracts,
option contracts and structured instruments, are used to reduce
the uncertainty in the fair value of future cash flows that is
created by changes in foreign exchange rates. The fair values of
the foreign currency derivatives that do not qualify as hedging
instruments in accordance with IFRS 9, are recognized based
on their nature either in operative costs, if the hedge item is an
operative transaction, or in financial income and expenses, if the
hedged item is a monetary transaction. Because hedge accounting
is not applied, the P&L eect arising from foreign currency
derivatives is recognized partly or entirely in dierent financial
period than exchange rate gains and losses arising from the
hedged cash flows.
Interest rate derivatives, consisting of interest rate swaps,
are used to reduce the volatility of interest expenses in the income
statement and to adjust the duration of the debt portfolio.
Cash flow hedges
Following tables summarizes the nominal values and fair values of
the Group’s derivative instruments as at December 31, 2020.
EUR MILLION
NOMINAL
VALUE
2020
FAIR
VALUE
NOMINAL
VALUE
2019
FAIR
VALUE
Non-hedge accounting derivative
financial instruments
Interest rate swaps, less than 12 months 16.0 -0.1 - -
Interest rate swaps, 1 to 5 years 5.0 -0.1 21.0 -0.1
Currency forwards, less than 12 months 26.9 -0.2 48.3 -0.4
TOTAL 47.9 -0.3 69.3 -0.5
LIQUIDITY RISK
Liquidity risk is defined as financial distress or extraordinarily
high financing cost arising due to a shortage of liquid funds in
a situation where outstanding debt needs to be refinanced or
where business conditions unexpectedly deteriorate and require
financing. Transactional liquidity risk is defined as the risk of
executing a financial transaction below fair market value, or not
being able to execute the transaction at all, within a specific
period of time.
The objective of liquidity risk management is to maintain
sucient liquidity, and to ensure that it is available fast enough
without endangering its value, in order to avoid uncertainty related
to financial distress at all times.
Generally, the seasonality of the Group’s cash flow is fairly
predictable and Group Treasury monitors Group’s liquidity position
using the cash pooling system as well as regular cash flow and
liquidity reporting.
The Group’s interest bearing funding is mainly managed
centrally by the Group Treasury. The Group seeks to reduce
liquidity and refinancing risks with balanced maturity profile
of loans as well as by keeping sucient amount of credit lines
available. The Group has a EUR 80 million domestic commercial
paper program, which together with Group’s credit limits is utilized
to balance the seasonality of the Group’s cash flow. The size
and maturity of issued commercial papers is decided by Group
Treasury, based on forecasted cash flows, status of commercial
paper markets and applicable interest rates. The renewal of
commercial papers upon maturity creates certain liquidity risk,
which is managed by maintaining sucient other liquidity reserves
available at the maturity dates. During 2020 the commercial paper
program was used as part of Group funding and competitively
priced debt was acquired through this market.
The Group has agreed with its lenders to temporarily change
financial covenants used in its loan agreements for the periods
from Q2/2020 to Q1/2021. These financial covenants include limits
on the amount of indebtedness, available liquidity, EBITDA as well
as gearing ratio. The Group is currently compliant with all financial
covenants and expects to comply with all requirements set in the
financing agreements also in the future.
Below are presented the Group’s unutilized credit limits as of
December 31, 2020. Group’s domestic commercial paper program
not sold at December 31, 2020 was EUR 80.0 million (2019 EUR
55.0 million).
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
34
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
Committed unutilized credit facilities
EUR MILLION 2020 2019
Overdraft facilities, expiring within one year 18.6 19.1
Revolving credit facility, expiring within one year 49.9 30.0
Revolving credit facility, expiring beyond one year 10.0 29.9
TOTAL 78.5 79.1
CREDIT AND DEFAULT RISK
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk from
its operating activities (primarily trade receivables) and from its
financing activities, including deposits with banks and financial
institutions, foreign exchange transactions and other financial
instruments. The maximum exposure to credit risk is limited to
the carrying value of the financial assets as included in the
consolidated statement of financial position. The carrying value of
financial assets is disclosed in note 23.
The Group follows actively credit and default risks associated
with customers and other counterparties. The Group’s credit
and default risk portfolio did not significantly change during the
course of the financial period. The proportional amount of Group’s
trade receivables which are past due, decreased moderately from
2019. Net allowance for credit losses related to trade receivables
increased by EUR 1.0 million from 2019.
Maturity of the group’s financial liabilities
The following are the contractual maturities of financial liabilities. including the possible interest payments.
2020
EUR MILLION
CARRYING
VALUE
FINANCIAL
LIABILITIES
4
CONTRACTUAL
CASH FLOWS 2021 2022 2023
2024
ONWARDS TOTAL
Interest-bearing liabilities
Loans from financial institutions 67.8 67.8 70.3 16.4 26.7 10.2 17.0 70.3
Right-of-use liabilities 12.5 12.5
Non-interest-bearing liabilities
Trade and other non-interest-bearing payables 37.3 13.2 13.2 13.2 13.2
Derivative liabilities and receivables
Interest rate derivatives, non-hedge accounted 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.1
Currency derivatives, non-hedge accounted 0.2 0.2
TOTAL 117.9 93.8 83.6 29.7 26.7 10.2 17.0 83.6
2019
EUR MILLION
CARRYING
VALUE
FINANCIAL
LIABILITIES
4
CONTRACTUAL
CASH FLOWS 2020 2021 2022
2023
ONWARDS TOTAL
Interest-bearing liabilities
Loans from financial institutions 56.2 56.2 59.1 11.1 6.2 26.6 15.2 59.1
Commercial paper program 25.0 25.0 25.0 25.0 25.0
Right-of-use liabilities 13.5 13.5 13.3 4.4 3.0 2.0 3.9 13.3
Non-interest-bearing liabilities
Trade and other non-interest-bearing payables 33.0 10.9 10.9 10.9 10.9
Derivative liabilities and receivables
Interest rate derivatives, non-hedge accounted 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.1
Currency derivatives, non-hedge accounted 0.4 0.4 0.4 0.4 0.4
TOTAL 128.2 106.1 108.9 51.9 9.3 28.6 19.1 108.9
4)
The proportion of the carrying values which are classified as financial liabilities according to IFRS 9.
22
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
35
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
22
Business related credit risk
The Group’s accounts receivables are generated by a large
number of customers worldwide and do not include any significant
concentrations of credit risk by customer or by geographical area.
The management of credit risk is allocated to each operative
business unit. Before providing credit to any new customer,
background checks are carried out. Cash, advance payments
and letters of credit are also applied with new and existing
customers. Each business unit is responsible for setting credit
limits and monitoring it’s credit customers’ financial situation.
Customers’ payment behavior is monitored regularly and delays in
payments can trigger payment reminders, stopping the shipments,
requirements for advance payments for future shipments and
eventually legal collection procedures. In significant cases,
business units consult with the Group’s finance management
before taking final decisions. In exceptional cases, payment terms
may be renegotiated.
Group recognizes credit loss of trade receivables by applying
simplified approach of expected credit loss according to IFRS
9, which uses a lifetime expected loss allowance. Group has
estimated based on previous year’s credit losses by aging category
and nature as well as macroeconomic outlook in the near future,
the expected credit loss provision. Trade receivables are monitored
in client segment and location information.
Estimate on expected credit losses is based on management’s
best judgement.
More information on allowance for trade receivables is
presented in note 16.
In the table below is presented analysis of trade receivables
that were past due but not impaired.
Analysis of trade receivables that were past due, but not impaired
EUR MILLION 2020 2019
Neither past due nor impaired 35.3 33.4
Past due but not impaired
Less than 1 month 5.0 4.7
13 months 1.9 2.8
36 months 0.9 1.8
Over 6 months 0.3 0.5
TOTAL 43.5 43.2
Trade loss provision from expected credit loss model
% 2020
Neither past due or impaired 0.2
Past due but not impaired
Less than 1 month 0.9
13 months 6.0
36 months 11.0
Over 6 months 20100
Financial credit risk
Financial instruments contain an element of risk resulting from
changes in market price of such instruments due to counterparties
becoming less creditworthy or risk of loss due to counterparties
being unable to meet their obligations. This risk is measured and
monitored centrally by the Group Risk Management.
Financial credit risk is managed actively by limiting
counterparties to a sucient number of major banks and financial
institutions and monitoring the credit worthiness and exposure
size continuously as well as through entering into collateral
agreements with certain counterparties. The Group reduces
credit risk by executing treasury transactions only with approved
counterparties. All significant counterparties are rated with the
minimum counterparty credit rating requirement being BBB (S&P).
Foreign subsidiaries may have bank accounts in unrated financial
institutions. In order to decrease credit risk associated with local
banks used by subsidiaries in foreign countries, the subsidiaries
are required to deposit their excess cash balances with the Group
Treasury on an ongoing basis.
Group’s all investments related to liquidity management are
made in liquid instruments with low credit risk. For instance, the
Group does not have investments in commercial papers.
CAPITAL MANAGEMENT
The objective of the Group’s capital management is to ensure that
it maintains healthy capital ratios in order to support its business
and to maximize shareholder value.
The Group manages its capital structure and makes
adjustments to it taking into account changes in economic
conditions and requirements of strategy implementation. To
maintain or develop the capital structure, the Group may adjust the
dividend payments and repayments of capital to shareholders by
buying back shares, issue new shares and/or increase/decrease
the amount of borrowings.
Group’s objective for capital management is to keep:
1. Gearing ratio below 150% and
2. Net interest-bearing debt to EBITDA (rolling 12 months)
below 3.8.
The Group capital structure is reviewed by the Board regularly.
The achievement of the objectives for capital management are
presented in the table below.
For definitions of key figures, see page 44.
TARGET 2020 2019
Gearing, % below 150% 31.6 49.2
Net interest-bearing debt to EBITDA below 3.8 1.7 2.9
Definitions of the alternative performance measures are presented on page 44.
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
36
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FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
FINANCIAL ASSETS AND LIABILITIES
23
BY CATEGORIES AND FAIR VALUES
2020 2019
EUR MILLION NOTE
CARRYING
VALUE
FINANCIAL
ASSETS
AND
LIABILITIES
1
FAIR VALUE
OF FINANCIAL
ASSETS AND
LIABILITIES
1
CARRYING
VALUE
FINANCIAL
ASSETS AND
LIABILITIES
1
FAIR VALUE
OF FINANCIAL
ASSETS AND
LIABILITIES
1
FINANCIAL ASSETS
Financial liabilities measured at amortized cost
2)
Non-current financial assets
Loan receivables 16 7.2 7.2 7.2 7.8 7.8 7.8
Other interest-bearing receivables 16 0.0 0.0 0.0 0.0 0.0 0.0
Trade and other non-interest-bearing receivables 16 0.2 0.0 0.0 0.2 0.0 0.0
Current financial assets
Cash and cash equivalents 18 27.9 27.9 27.9 12.3 12.3 12.3
Trade and other non-interest-bearing receivables 16 51.7 43.5 43.5 49.6 43.1 43.1
Fair value through other comprehensive income
Other shares 15 0.2 0.2 0.2 0.2 0.2 0.2
Financial assets at fair value through income statement
Currency and interest derivatives - non-hedge accounted 16, 22 0.2 0.2 0.2 0.3 0.3 0.3
FINANCIAL LIABILITIES
Financial liabilities at fair value through income
statement
Interest rate and currency derivatives - non-hedge accounted 22, 25 0.5 0.5 0.5 0.9 0.9 0.9
Financial liabilities measured at amortized cost
2)
Non-current financial liabilities
Loans from financial institutions 24 52.7 52.7 52.7 46.0 46.0 45.9
Other non-interest-bearing liabilities 25 0.0 0.0 0.0 0.0 0.0 0.0
Current financial liabilities
Loans from financial institutions 24 15.1 15.1 15.1 10.2 10.2 10.2
Commercial paper program 24 25.0 25.0 25.0
Trade and other non-interest-bearing payables 25 37.3 13.2 13.2 33.0 10.9 10.9
1)
The proportion of the carrying value which is classified as financial assets and liabilities according to IFRS 9.
2)
Fair value hierarchy level 2.
FAIR VALUE HIERARCHY OF THE FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
2020 2019
EUR MILLION TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTAL LEVEL 1 LEVEL 2 LEVEL 3
FINANCIAL ASSETS AT FAIR VALUE
Fair value through other comprehensive income
Other shares 0.2 0.2 0.2 0.2
Financial assets at fair value through income statement
Currency and interest derivatives - non-hedge accounted 0.2 0.2 0.3 0.3
TOTAL 0.4 0.2 0.2 0.6 0.3 0.2
FINANCIAL LIABILITIES AT FAIR VALUE
Financial liabilities at fair value through income statement
Currency and interest derivatives - non-hedge accounted 0.5 0.5 0.9 0.9
TOTAL 0.5 0.5 0.9 0.9
23
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
37
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
Fair value hierarchy levels
The fair values of the financial assets and liabilities on the
hierarchy level 1 are based on quoted market prices of similar
financial instruments traded in an active market. Currently there
are no financial instruments on level 1.
The fair values of the financial assets and liabilities on the
hierarchy level 2 are based on other price information than
quoted market prices for a significant part of the valuation. This
information is supported by observable market inputs either
directly (i.e. prices) or indirectly (i.e. derived from prices).
The fair values of the financial assets and liabilities on the
hierarchy level 3 are calculated using a valuation technique based
on assumptions that are not supported by available observable
market data. For example management estimates are utilized in
generally accepted valuation models of the financial instruments
on the Level 3.
The fair value hierarchy level, into which the entire financial
asset or liability is classified, is determined based on the lowest-
hierarchy-level information being significant for the valuation of
that particular financial asset or liability. The significance of the
information is estimated considering the financial asset or liability
in its entirety.
No significant transfers between the hierarchy levels took
place during the financial period.
Other shares
Other shares comprise of unlisted shares that are measured at
fair value. Certain unlisted shares for which fair values cannot be
measured reliably are measured at cost less possible impairment.
Derivatives
All derivatives are initially recognized at fair value on the date
derivative contract is entered into, and are subsequently
remeasured at fair value on each balance sheet date.
Determination of fair values is based on quoted market prices and
rates, discounting of cash flows and option valuation models.
Current financial assets and liabilities
Due to their short maturity, the fair value of current financial
assets and liabilities is regarded as corresponding to their original
carrying amount.
Non-current financial assets
The fair value of non-current financial assets is based on
discounted future cash flows. The discount rate used corresponds
to the market rate on the balance sheet date.
Non-current interest-bearing liabilities
On December 31, 2020, 0.0% (2019: 0.0%) of non-current loans
based on floating rates was connected to one-month euribor,
libor or similar and the rest to maximum six-month euribor, libor
or similar. Therefore, the fair value of non-current loans based
on floating rates is regarded as equaling their book value. A part
of non-current loans on floating rates is hedged with separate
interest rate derivatives which are described in note 22. The fair
value of non-current loans on fixed rates is based on discounted
future cash flows. The discount rate used corresponds to the
market rate on the balance sheet date.
Non-current non-interest-bearing liabilities
Contingent considerations of business combinations and other
acquisitions are recognized at fair value on the date of acquisition.
Determination of fair values is based on discounted future cash flows.
23
INTERESTBEARING
24
LIABILITIES
EUR MILLION
AVERAGE INTEREST
RATE 2020, %
1
2020 2019
Non-current interest-bearing liabilities
Loans from financial institutions 2.46 52.7 46.0
Right-of-use liabilities 1.85 8.0 9.0
Current interest-bearing liabilities
Loans from financial institutions 2.10 4.7 5.2
Current portion of non-current loans
from financial institututions
3.44 10.3 5.0
Commercial paper program 25.0
Right-of-use liabilities 3.08 4.5 4.4
TOTAL 80.3 94.7
1)
Average interest rates are calculated without the eect of the interest rate
swaps. More information in note 22.
Fair values of financial liabilities are presented in the note 23.
INTERESTBEARING LIABILITIES BY CURRENCY
EUR MILLION
NON
CURRENT
2020
CURRENT
NON
CURRENT
2019
CURRENT
Loans from financial institutions
EUR 52.9 14.2 46.0 6.9
USD 2.1
ZAR 0.8 1.2
Commercial paper program
EUR 25.0
TOTAL 52.9 15.0 46.0 35.3
NONINTERESTBEARING
25
LIABILITIES
EUR MILLION 2020 2019
Non-current non-interest-bearing liabilities
Derivatives 0.1 0.1
Other non-current liabilities 0.0 0.0
Current non-interest-bearing liabilities
Trade payables 13.2 10.9
Accrued employee-related expenses 12.2 10.5
Other accrued expenses and deferred income 6.9 6.9
Derivatives 0.4 0.8
Advances received 0.5 0.4
VAT payable 2.4 1.7
Other current liabilities 2.1 2.6
TOTAL 37.8 33.9
Other non-current non-interest-bearing liabilities include
contingent considerations of business combinations and other
acquisitions on the date of acquisition. Fair values of financial
liabilities are presented in the note 23.
24 25
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
38
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
COMMITMENTS AND
26
CONTINGENCIES
Since Normark Logistics Europe Oy, a 100% owned subsidiary
of Rapala VMC Corporation, is the legal shareholder of the
distribution joint venture with Shimano, the parent company
has guaranteed to Shimano the fulfillment of its subsidiary’s
obligations related to the joint venture.
Group’s lease commitments are presented in note 27.
DISPUTES AND LITIGATIONS
The Group’s management does not have knowledge of any open
disputes or litigations, which would have a significant impact on
the company’s financial position.
LEASE
27
CONTRACTS
RIGHTOFUSE ASSETS
2020
EUR MILLION
LAND AND
BUILDINGS
OTHER
ASSETS TOTAL
Acquisition cost Jan 1 18.1 1.5 19.6
Additions 5.2 0.6 5.8
Disposals -1.1 0.0 -1.1
Translation dierences -0.9 0.0 -0.9
ACQUISITION COST DEC 31 21.4 2.0 23.3
Accumulated depreciations Jan 1 -5.6 -0.6 -6.2
Disposals 0.3 - 0.3
Impairments -1.8 - -1.8
Depreciations during the period -5.1 -0.5 -5.7
Translation dierences 0.4 0.0 0.5
ACCUMULATED DEPRECIATIONS DEC 31 -11.8 -1.1 -12.9
CARRYING VALUE JAN 1 12.5 0.9 13.3
CARRYING VALUE DEC 31 9.6 0.9 10.4
2019
EUR MILLION
LAND AND
BUILDINGS
OTHER
ASSETS TOTAL
Acquisition cost Jan 1 - - -
Additions 18.2 1.5 19.6
Disposals -0.1 0.0 -0.1
Translation dierences 0.1 0.0 0.1
ACQUISITION COST DEC 31 18.1 1.5 19.6
Accumulated depreciations Jan 1 - - -
Disposals 0.0 - 0.0
Depreciations during the period -5.6 -0.6 -6.2
Translation dierences 0.0 0.0 0.0
ACCUMULATED DEPRECIATIONS DEC 31 -5.6 -0.6 -6.2
CARRYING VALUE JAN 1 - - -
CARRYING VALUE DEC 31 12.5 0.9 13.3
Group’s most material right-of-use assets capitalised consist of
buildings as production facilities, oces and warehouses. Right-
of-use asset section other assets consists mainly of vehicles.
OFFBALANCE SHEET LEASE COMMITMENTS
EUR MILLION 2020 2019
The group as a lessee
Minimum future lease payments on leases 0.4 0.6
TOTAL 0.4 0.6
The non-cancellable lease agreements include short-term and
other lease contracts that are not included in right-of-use
liabilities. Other rents include IT equipment leases, that are not
material.
OFFBALANCE SHEET LEASE ASSETS
EUR MILLION 2020 2019
The group as a lessor
Future minimum rental receivable under non-
cancellable leases
- 0.2
TOTAL - 0.2
27
26
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
39
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
28
RELATED PARTY
28
TRANSACTIONS
The Group’s related parties include members of the Board, CEO, members of the Executive Committee, family members of the above-
mentioned individuals, entities controlled by the above-mentioned individuals, Rapala VMC Corporation´s subsidiaries, associated
companies and joint ventures and entities with significant influence. Subsidiaries owned directly or indirectly by the parent company as
well as associates and foreign branches are listed in note 32. Related party transactions between Group companies have been eliminated.
Entities with significant influence are specified in section ‘Shares and Shareholders’.
TRANSACTIONS AND BALANCES WITH RELATED PARTIES
EUR MILLION SALES AND OTHER INCOME PURCHASES PAID RENTS OTHER EXPENSES RECEIVABLES PAYABLES
2020
DQC International Corp. 7.1 -0.5 6.5
Associated company Lanimo Oü 0.0 -0.1 0.1
Entity with significant influence over the Group
1)
-0.2 0.0 0.0
Management 0.0 -0.3 0.0 0.6 0.0
2019
DQC International Corp. 0.4 -0.2 7.1
Associated company Lanimo Oü 0.0 0.0
Entity with significant influence over the Group
1)
-0.2 -0.1 0.0
Management 0.0 -0.4 0.0 0.7 0.0
1)
Lease agreement for the real estate for the consolidated operations in France and a service fee. Entity with significant influence is Viellard Migeon & Cie, who’s
shareholding alone and together with its subsidiary is presented in section ’Shares and Shareholders’.
EMPLOYEE BENEFITS FOR TOP MANAGEMENT
EUR MILLION 2020 2019
Salaries and other employee benefits -5.4 -3.7
TOTAL -5.4 -3.7
Top management consists of members of the Board of Directors,
CEO and other members of the Executive Committee.
On December 31, 2020, the members of the Board and the
Executive Committee held (shares and share-based rights of each
member and corporations over which he/she exercises control in
the company and its group companies) a total of 112 678 Rapala
VMC Corporation shares (on December 31, 2019: 110 678). Top
management owned 0.3% (0.3%) of the issued share capital and
voting rights of the company on December 31, 2019. Details of top
management shareholdings are given in the section ‘Board and
Management’.
In 2018 share-based long-term incentive plans were granted
to the CEO and other members of the executive committee. Salaries
and other employee benefits include a provision for share-based
incentives in total of EUR 0.7 million for 2020. Details of the
long-term incentive plan are given in the section ‘Shared-based
payments’.
The Group’s business transactions or outstanding balances
with top management or close members of their family are
presented in the table ‘Transactions and balances with related
par ties’.
EMPLOYEE BENEFITS FOR CHIEF EXECUTIVE OFFICER
EUR MILLION 2020 2019
Salaries and other employee benefits
Nicolas Warchalowski, CEO starting from Mar 1, 2020 -0.6 -
Louis d’Alançon, CEO from Sep 27, 2019 to Mar 1, 2020
2)
-0.1 -0.1
Jussi Ristimäki, CEO until Sep 26, 2019 - -0.4
TOTAL -0.7 -0.4
2)
Excluding compensation for being a member of the Board which is presented in
section employee benefits for Board of Directors.
In 2020 annual base salary and benefits as CEO amounted to EUR
231 274. Nicolas Warchalowski was also entitled to a profit bonus
according to the principles of the Group’s senior management
bonus scheme. His bonus accrued in 2020 totaled EUR 0.2 million.
His pension security was arranged under the statutory Finnish
contribution based employee pension plan.
Louis d’Alançon was paid in 2020 under the CEO agreement
in total a compensation of EUR 0.1 million. He did not have any
pension agreement and his termination time was 1 month.
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
40
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
SHAREBASED
29
PAYMENTS
The Board of Directors of Rapala VMC Corporation approved on
February 16th 2018 a new Performance Share Plan for the Group
key employees. The aim of the new plan is to align the objectives
of the shareholders and the key employees in order to increase the
value of the Company in the long-term, to retain the key employees
at the Company, and to oer them a competitive reward plan that is
based on earning and accumulating the Company’s shares.
Performance Share Plan 20182020 includes one three-year
performance period, calendar years 20182020. The potential
reward from the performance period will be based on the Group’s
financial performance criteria which will be measured during
the financial year 2020 and the Company’s share price criterion
which will be measured during a measurement period of forty (40)
consecutive trading days in November-December 2020. The Board
of Directors may also resolve on other 40 trading day measurement
periods. The financial performance criteria for the performance
period are the Group Product Sales in 2020, the Group’s
Comparable Earnings before Interest and Taxes margin in 2020
(EBIT %) and the Group’s Average Working Capital Ratio in 2020.
A significant proportion of the reward allocations of the CEO
and other members of the Executive Committee of the Group
will be dependent on their personal investments in the Company
shares and share ownership of the shares acquired through such
investments.
SHARE BASED INCENTIVES
Plan Long-Term Incentive Plan
Type SHARE
Instrument PSP Earning Period 20182020
Issuing date 16.2.2018
Initial amount, pcs 900 000
Dividend adjustment No
Grant date 9.3.2018
Beginning of earning period 1.1.2018
End of earning period 31.12.2020
End of restriction period 30.4.2021
Performance criteria
Total share return, Group product sales,
EBIT margin in 2020, Group’s
average working capital ratio in 2020
Maximum contractual life, years 3.1
Remaining contractual life, years 0.3
Number of persons at the end of the reporting year 28
Payment method Cash & Equity
Changes during the period 2020 PSP Earning Period 20182020
Outstanding at the beginning of the reporting
period Jan 1 629 500
Changes during the period
Granted 0
Forfeited 56 500
Excercised 0
Expired 0
Outstanding at the end of the period Dec 31 573 000
EMPLOYEE BENEFITS FOR OTHER MEMBERS OF
THE EXECUTIVE COMMITTEE
EUR MILLION 2020 2019
Salaries and other employee benefits -4.4 -2.9
TOTAL -4.4 -2.9
In addition to the monthly salary, CEO and other members of the
Executive Committee participate in the Group’s senior management
bonus scheme. The amount and payment of the bonus requires that
the financial and strategic targets are achieved. If the targets
are not achieved, payment of bonus is fully at the discretion of
the Board of Directors. Bonuses awarded under the scheme are
paid in two installments, the first when the audited results for
the relevant financial year are known and the second after a
predetermined vesting period, to encourage retention of senior
management. Principally the bonus can be no more than 100
percent of the annual salary. In 2020, salaries and other employee
benefits included a provision for share-based incentives in total of
EUR 0.7 million.
EMPLOYEE BENEFITS FOR BOARD OF DIRECTORS
EUR MILLION 2020 2019
Salaries and other employee benefits
Louis d’Alançon, Chairman of the Board -0.1 -0.1
Other Board members -0.2 -0.2
TOTAL -0.3 -0.3
In 2020, the annual fee to the Chairman of the Board was EUR
80 000 and the fee to other Board members was EUR 30 000.
In addition a reward of EUR 1 000 was paid of a Board or its
Committee meeting. Members of the Board are reimbursed for
travel expenses corresponding to the corporation’s traveling
compensation principles. Louis d’Alançon had as the CEO of the
Group a separate CEO agreement, which remuneration is presented
under the employee benefits to the CEO.
28 29
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
41
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
29
EARNINGS PER
30
SHARE
2020 2019
Net profit for the period attributable to the equity
holders of the parent company, EUR million 2.5 4.4
Accrued interest on the hybrid bond -1.1 -0.7
Tax eect 0.2 0.1
Net eect -0.8 -0.6
1.6 3.8
Weighted average number of shares,
1000 shares 38 548 38 387
Diluted weighted average number of shares,
1000 shares 38 548 38 387
Earnings per share, EUR
0.04 0.10
Diluted earnings per share, EUR
0.04 0.10
Earnings per share are calculated by dividing the profit for the
period attributable to the parent company’s shareholders less
the tax-adjusted interest on hybrid bond by the weighted average
number of shares outstanding during the financial period. The
outstanding shares do not include treasury shares held by the
Group. For more details on the calculation of earnings per share,
see accounting principles for the consolidated accounts.
FAIR VALUE DETERMINATION
The fair value of share based incentives have been determined at
grant date and the fair value is expensed until vesting. The pricing
of the share based incentives granted during the period was
determined by the following inputs and had the following eect:
Eect of Share-based Incentives on the result
and financial position during the period
Expenses for the financial year, share-based payments 0.8
Expenses for the financial year, share-based payments,
equity-settled 0.6
Liabilities arising from share-based payments Dec 31, 2020 0.2
Future cash payment to be paid to the tax authorities from
share-based payments, estimated at the end of the period 1.2
30 31
EVENTS AFTER THE BALANCE
31
SHEET DATE
The Group has no knowledge of any significant events after the
balance sheet date that would have a material impact on the
financial statements for 2020.
In January 27, 2021 Rapala VMC Corporation announced to
have agreed with Okuma Fishing Tackle Co Ltd that Okuma will
transfer to Rapala VMC its European and Russian trademarks
and associated intangible assets against a consideration of 8
million USD. Simultaneously Rapala VMC and Okuma have agreed
to conclude a supply agreement to buy Okuma branded reels and
rods from Okuma. Rapala will commence with the sales of Okuma
products to some extent in selected European countries in 2021,
but the large scale European wide and Russian launch of Okuma
brand will occur in 2022.
Okuma, known worldwide for its high-quality rods and reels,
is a Taiwan based company established some 30 years ago by Mr.
Charles Chang. The company has manufacturing facilities and R&D
centers in Taiwan and China. Okuma has fully owned distribution
companies in USA and Japan. Okuma has won Best in Category
awards at many recent industry’s ICAST and EFTTEX show’s and
is generally recognized as one of the top players in the global rod
and reel business. Okuma’s current sales in Europe and Russia
through distributors at wholesale value in Europe and Russia
exceeds slightly 10 million EUR.
It was also announced that Rapala VMC will initiate
negotiations with Shimano Europe BV to end the distribution of
Shimano branded products and joint ownership of Rapala VMC
distribution companies situated in Russia, Kazakhstan, Czech,
Belarus, Hungary, Romania and Croatia.
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
42
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
GROUP COMPANIES
32
SUBSIDIARIES BY GEOGRAPHICAL AREA COUNTRY
GROUP
HOLDING % NATURE OF ACTIVITY
Nordic
Normark Denmark A/S * Denmark 100 Distribution
KLTe h o O y * Finland 100 Manufacturing
Marttiini Oy * Finland 100 Manufacturing
Normark Logistics Europe Oy * Finland 100 Sourcing
Normark Suomi Oy Finland 100 Distribution
Peltonen Ski Oy Finland 100 Manufacturing
Rapala Shimano East Europe Oy
1)
Finland 50 Administration
Rapala VMC Iceland ehf * Iceland 100 Distribution
Normark Norway AS * Norway 100 Distribution
Remen Slukfabrikk AS Norway 100 Administration
Vangen AS Norway 100 Administration
Normark Scandinavia AB * Sweden 100 Distribution
Rest of Europe
FLLC Normark
1)
Belarus 50 Distribution
Ltd. Normark-Bel Belarus 100 Distribution
Rapala Finance N.V. * Belgium 100 Administration
Normark Adriatik D.o.o. Croatia 66.6 Distribution
Normark S.r.o.
1)
Czech Republic 50 Distribution
Marttiini Oü Estonia 100 Manufacturing
Normark Eesti Oü Estonia 100 Distribution
Rapala Eesti AS * Estonia 100 Manufacturing
Mystic s.a.r.l. France 100 Manufacturing
Normark France SAS * France 100 Distribution
VMC Péche SA * France 100 Manufacturing
Normark Deutschland Gmbh Germany 100 Distribution
Normark Hungary Ltd * Hungary 66.6 Distribution
Normark Italia S.R.L. Italy 100 Distribution
Normark Kazakhstan LLP
1)
Kazakhstan 50 Distribution
SIA Normark Latvia Latvia 100 Distribution
Normark UAB Lithuania 100 Distribution
Rapala B.V. * Netherlands 100 Administration
Normark Polska Sp.z.o.o. * Poland 100 Distribution
Normark Portugal SA Portugal 100 Distribution
SC Normark Sport Romania S.r.l. Romania 66.6 Distribution
AO Normark
1)
Russia 50 Distribution
Normark LLC Russia 100 Distribution
OOO Raptech * Russia 100 Manufacturing
Normark Spain SA * Spain 100 Distribution
Rapala-Fishco AG * Switzerland 100 Distribution
Normark UK Sport Ltd. UK 100 Distribution
Dynamite Baits Ltd. * UK 100 Manufacturing
Normark Fishing Ltd. UK 100 Administration
VMCWater Queen Ukraine
1)
Ukraine 50 Distribution
North America
Normark Inc. Canada 100 Distribution
NC Holdings Inc. * USA 100 Administration
Normark Corporation USA 100 Distribution
Normark Innovations, Inc. USA 100 Sourcing
VMC Inc. USA 100 Distribution
32
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
43
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
32
SUBSIDIARIES BY GEOGRAPHICAL AREA COUNTRY
GROUP
HOLDING % NATURE OF ACTIVITY
Rest of the World
Rapala VMC Australia Pty Ltd * Australia 100 Distribution
Rapala V.M.C. Do Brazil * Brazil 100 Distribution
Normark Chile Ltd Chile 100 Distribution
Rapala VMC China Co. * China 100 Distribution
Rapala VMC (ShenZhen) Ltd China 100 Sourcing
Willtech (PRC) Ltd. Hong Kong 100 Sourcing
PT Rapala Indonesia * Indonesia 100 Distribution
PT Rapala VMC Batam Indonesia 100 Manufacturing
PT VMC Fishing Tackle Indonesia Indonesia 100 Manufacturing
Rapala Japan K.K. * Japan 100 Distribution
Rapala VMC (Asia Pacific) Sdn Bhd. * Malaysia 100 Distribution
Rapala VMC Mexico S. de R.L. de C.V Mexico 100 Distribution
Normark Africa (Pty) Ltd. * South Africa 100 Distribution
Rapala VMC Korea Co., Ltd * South Korea 100 Distribution
Rapala VMC Singapore Pte. Ltd. Singapore 100 Administration
Rapala VMC (Thailand) Co., Ltd. * Thailand 100 Distribution
Rapala MENA FZE United Arab Emirates 100 Distribution
ASSOCIATED COMPANIES AND JOINT VENTURES COUNTRY
GROUP
HOLDING % NATURE OF ACTIVITY
Lanimo Oü Estonia 33.3 Manufacturing
DQC International Corp. USA 49 Distribution
FOREIGN BRANCHES
Rapala VMC (Hong Kong) Ltd, branch oce in Taiwan
Normark S.r.o., branch oce in Slovak Republic
1)
Controlled by the Rapala Group.
* Shares owned by the parent company.
44
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ DEFINITIONS OF KEY FIGURES
DEFINITIONS OF KEY FIGURES
Operating profit before depreciation and
impairments (EBITDA)
=
Operating profit + depreciation and impairments
Items aecting comparability =
Change in mark-to-market valuations of operative currency derivatives +/- other items aecting
comparability
Other items aecting comparability =
Restructuring costs + impairments +/- gains and losses on business combinations and disposals
- insurance compensations +/- other non-operational items
Comparable operating profit =
Operating profit +/- change in mark-to-market valuations of operative currency derivatives +/-
other items aecting comparability
Net interest-bearing debt = Total interest-bearing liabilities - total interest-bearing assets - cash and cash equivalents
Capital employed (average for the period) = Total equity (average for the period) + net interest-bearing debt (average for the period)
Working capital = Inventories + total non-interest-bearing assets - total non-interest-bearing liabilities
Total non-interest-bearing assets =
Total assets - interest-bearing assets - intangible and tangible assets - assets classified as
held-for-sale
Total non-interest-bearing liabilities = Total liabilities - interest-bearing liabilities
Net interest-bearing debt to EBITDA
=
Net interest-bearing debt
Operating profit before depreciation and impairments
Return on capital employed (ROCE), %
=
Operating profit x 100
Capital employed (average for the period)
Return on equity (ROE), %
=
Net profit (loss) for the period x 100
Total equity (average for the period)
Debt-to-equity ratio (Gearing), %
=
Net interest-bearing liabilities x 100
Total equity
Equity-to-assets ratio, %
=
Total equity x 100
Total shareholders’ equity and liabilities - advances received
Earnings per share, EUR
=
Net profit for the period attributable to the equity holders of the parent Company - hybrid capital
accrued unrecognised interests after tax
Adjusted weighted average number of shares
Dividend per share, EUR
=
Dividend for the period
Adjusted number of shares at the end of the period
Dividend/earnings ratio, %
=
Dividend for the period x 100
Net profit for the period attributable to the equity holders of the parent Company
Equity per share, EUR
=
Equity attributable to equity holders of the parent Company
Adjusted number of shares at the end of the period
Eective dividend yield, %
=
Dividend per share x 100
Adjusted share price at the end of the period
Price/earnings ratio
=
Adjusted share price at the end of the period
Earnings per share
Average share price, EUR
=
EUR amount traded during the period
Adjusted number of shares traded during the period
Year-end market capitalization, EUR = Number of shares at the end of the period, exluding own shares x share price at the end of the period
Average number of personnel = Calculated as average of monthly end personnel amounts
45
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ PARENT COMPANY FINANCIAL STATEMENTS, FAS
PARENT COMPANY FINANCIAL STATEMENTS, FAS
PARENT COMPANY INCOME STATEMENT
EUR NOTE 2020 2019
Net sales
2 33 316 496 29 518 413
Other operating income 3 1 714 629 288 693
Change in inventory of finished products and work in progress -1 179 223 420 043
Production for own use 186 188 97 871
Materials and services 5 -16 399 490 -14 487 586
Employee benefit expenses 6 -10 054 765 -8 732 861
Other operating expenses 4 -9 914 597 -6 148 402
Operating profit before depreciation and impairments -2 330 762 956 170
Depreciation and impairments 7 -1 123 859 -1 185 898
Operating profit -3 454 621 -229 728
Financial income and expenses 8 9 663 710 2 954 485
Profit before appropriations and taxes 6 209 090 2 724 756
Appropriations 9 170 120 2 284 889
Income taxes 10 -16 188 -17 999
NET PROFIT FOR THE PERIOD 6 363 022 4 991 646
46
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ PARENT COMPANY FINANCIAL STATEMENTS, FAS
PARENT COMPANY BALANCE SHEET
ASSETS
EUR NOTE 2020 2019
Non-current assets
Intangible assets
11 71 001 116 341
Tangible assets
12 4 471 809 4 672 683
Investments
13 151 336 603 179 162 203
Interest-bearing receivables
15 26 724 797 16 997 844
Non-interest-bearing receivables
15 409 464 367 011
Total non-current assets
183 013 675 201 316 082
Current assets
Inventories
14 4 878 516 6 054 781
Current financial assets
Interest-bearing
15 25 151 567 20 361 581
Non-interest-bearing
15 7 353 803 7 560 098
Cash and cash equivalents
2 245 787 305 064
Total current assets
39 629 674 34 281 525
TOTAL ASSETS
222 643 349 235 597 607
SHAREHOLDERS’ EQUITY AND LIABILITIES
EUR NOTE 2020 2019
Shareholders' equity
Share capital
3 552 160 3 552 160
Share premium fund
16 680 961 16 680 961
Fair value reserve
- -
Fund for invested non-restricted equity
4 914 371 4 914 371
Own shares
-4 889 643 -4 889 643
Retained earnings
23 682 123 18 690 477
Net income for the period
6 363 022 4 991 646
Total shareholders' equity 16
50 302 995 43 939 972
Appropriations
888 484 1 058 604
Provisions
468 839 203 596
Non-current liabilities
Interest-bearing
66 000 000 78 800 000
Non-interest-bearing
51 868 90 241
Total non-current liabilities
17 66 051 868 78 890 241
Current liabilities
Interest-bearing
91 727 949 105 275 226
Non-interest-bearing
13 203 214 6 229 968
Total current liabilities
17 104 931 164 111 505 194
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
222 643 349 235 597 607
PARENT COMPANY FINANCIAL STATEMENTS, FAS
47
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
PARENT COMPANY STATEMENT OF CASH FLOWS
EUR THOUSAND NOTE 2020 2019
Net profit for the period 6 363 4 992
Adjustments
Income taxes 10 16 18
Financial income and expenses 8 -9 664 -2 954
Reversal of non-cash items
Depreciation and impairments 7 1 124 1 186
Other items -86 -2 089
Total adjustments -8 609 -3 838
Financial items
Interest paid -3 190 -3 479
Interest received 615 1 552
Income taxes paid/received 10 -18 31
Other financial items, net -122 40
Total financial items -2 715 -1 856
Change in working capital
Change in receivables -1 727 4
Change in inventories 916 33
Change in liabilities 7 408 -141
Total change in working capital 6 598 -103
Net cash generated from operating activities 1 637 -806
Net cash used in investing activities
Purchases of intangible assets 11 -23 -
Proceeds from sale of tangible assets 120 513
Purchases of tangible assets 12 -919 -1 260
Disposals of other shares 13 - 47
Investments to associates 13 - -4 387
Investments to subsidiaries 13 -5 855 -
Dissolution of subsidiary 267 -
Change in interest-bearing receivables -736 164
Dividends received 8 24 346 6 017
Total net cash used in investing activities 17 200 1 094
Net cash generated from financing activities
Dividends paid - -2 306
Directed issue of own shares - 663
Hybrid bond -1 314 -
Loan withdrawals 61 198 108 917
Loan repayments -76 967 -109 817
Group contributions received 2 010 2 105
Total net cash generated from financing activities -15 073 -2 013
Change in cash and cash equivalents 3 764 -1 724
Cash and cash equivalents at the beginning of the period 305 1 579
Foreign exchange rate eect -1 823 450
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 2 246 305
PARENT COMPANY FINANCIAL STATEMENTS, FAS
48
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
ACCOUNTING
1
PRINCIPLES
The financial statements of Rapala VMC Oyj have been prepared
according to Finnish Accounting Standards (FAS).
Foreign currency transactions
Monetary assets and liabilities denominated in foreign currencies
are translated into euros using the exchange rates at the balance
sheet date and exchange dierences arising from translation are
recognized in the income statement.
Revenue recognition
Sales of goods and services are recognized on accrual basis
when the significant risks related to goods and services sold have
passed to the buyer and it is not probable that the client would
return the goods. Net sales comprise of gross sales less cash
discounts and sales taxes.
Research and development costs
Research and development costs are expensed as they are
incurred, unless they clearly relate to developing new business
areas. Such development costs are capitalized if they are
separately identifiable and if the products are assessed to be
technically feasible and commercially viable and the related
future revenues are expected to exceed the accrued and
future development costs and related production, selling and
administrative expenses, and other possible costs related to the
project.
Capitalized development expenses are amortized on a straight-
line basis over their expected useful lives, a maximum of five years.
Inventories
Inventories are valued at the lower of cost or net realizable
value using the first-in, first-out (FIFO) method. The cost of
finished goods and work in progress comprises of raw materials,
direct labor costs including social costs and other direct costs.
Inventories are shown net of a reserve for obsolete or slow-moving
inventories.
Tangible and intangible assets
Tangible and intangible assets are stated at historical cost
excluding accumulated depreciation according to plan. Planned
depreciation is based on historical cost and expected useful life.
Land is not depreciated. Depreciation is based on the following
expected useful lives:
Intangible assets 315 years
Buildings 1020 years
Machinery and equipment 510 years
Other tangible assets 310 years
Pension arrangements
All of the company’s pension arrangements are defined
contribution plans, with the majority being local statutory
arrangements. Pension costs are expensed as incurred.
Valuation of financial derivatives
All derivatives are initially recognized at fair value on the date
derivative contract is entered into, and are subsequently
remeasured at fair value on each balance sheet date. Fair value of
standard foreign currency forwards are determined by discounting
the future nominal cash flows with relevant interest rates and
then converting the discounted cash flows to the foreign currency
using spot rates. Determination of fair values of other derivative
instruments are based on quoted market prices and rates,
discounting of cash flows and option valuation models. The fair
values of these instruments are received from the respective bank
or calculated to match the currenct market price.
In cash flow hedges, changes in the fair value of derivative
financial instruments that are designated and eective as
hedges of future cash flows are recognized directly in equity and
the ineective portion is recognized immediately in the income
statement as well as the change in fair value of the contracts that
are not designated to hedge accounting.
Own shares
Own shares acquired by the company, including directly
attributable costs, are presented as a deduction from the total
equity on the day of trading. Purchases or subsequent sales of
treasury shares are presented as changes in equity.
Cash flow statement
Changes in financial position are presented as cash flows from
operating, investing and financing activities.
1
PARENT COMPANY FINANCIAL STATEMENTS, FAS
49
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
1 8 9 10 11 12 13 14 15 16 17 18 19 20
NET
2
SALES
EUR THOUSAND 2020 2019
By destination
North America
20 288 16 186
Nordic
1 475 2 955
Rest of Europe
9 154 7 571
Rest of the World
2 400 2 807
TOTAL 33 316 29 518
The parent company’s net sales consist of Lure Business which is
included in Group Products in the consolidated operating segment
reporting.
OTHER OPERATING
3
INCOME
EUR THOUSAND 2020 2019
Rental income
24 22
Insurance compensation
- 126
Business cost support for COVID19
389 -
Subsidiary dissolution result
1 163 -
Gains from sale of intangible and tangible assets
104 141
Other income
35 -
TOTAL
1 715 289
OTHER OPERATING
4
EXPENSES
EUR THOUSAND 2020 2019
Maintenance -974 -922
Selling and marketing expenses -875 -733
Traveling expenses -220 -573
IT and telecommunication -600 -632
Rents paid -388 -525
Auditors fees and services -202 -163
Freight -159 -108
Sales commissions -32 -82
Losses on disposals of intangible and tangible assets - -13
Currency derivatives 374 312
Other expenses -6 839 -2 710
TOTAL -9 915 -6 148
MATERIALS AND
5
SERVICES
EUR THOUSAND 2020 2019
Materials, goods and supplies
Purchases during the financial year
-16 374 -14 049
Change in inventory
3 -402
External services
-29 -37
TOTAL
-16 399 -14 488
EMPLOYEE BENEFIT
6
EXPENSES
EUR THOUSAND 2020 2019
Wages and salaries
-8 521 -7 449
Pension costs
-1 262 -1 164
Other personnel expenses
-271 -119
TOTAL
-10 055 -8 733
Average personnel for the period
118 114
The remuneration of the Board of Directors amounted to EUR 304
thousand (2019: EUR 324 thousand).
DEPRECIATION AND
7
IMPAIRMENTS
EUR THOUSAND 2020 2019
Depreciation of intangible assets
Trademarks
-1 -85
Other intangible assets
-68 -127
Depreciation of tangible assets
Buildings
-80 -63
Machinery and equipment
-740 -781
Other tangible assets
-62 -129
Impairments
-174 -
TOTAL
-1 124 -1 186
2 3 4 5 6 7
EUR THOUSAND 2020 2019
Audit fees -202 -163
TOTAL -202 -163
AUDITORS’ FEES AND SERVICES
PARENT COMPANY FINANCIAL STATEMENTS, FAS
50
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
1 2 3 4 5 6 7 12 13 14 15 16 17 18 19 20
FINANCIAL INCOME
8
AND EXPENSES
EUR THOUSAND 2020 2019
Dividend income 24 346 6 017
Foreign exchange gains 3 748 6 595
Foreign exchange losses -4 435 -6 499
Impairment losses
Investments in Group companies -5 855 -
Non-current loan receivables -5 362 -
Interest and other financial income
Interest income 931 1 695
Other financial income 1 037 370
Interest and other financial expenses
Interest expenses -3 891 -3 904
Other financial expenses -857 -1 321
TOTAL
9 664 2 954
FINANCIAL INCOME AND EXPENSES
FROM AND TO SUBSIDIARIES
EUR THOUSAND 2020 2019
Dividend income from subsidiaries
24 346 6 017
Interest and other financial income
Interest income
759 1 110
Other financial income
227 297
Interest and other financial expenses
Interest expenses
-531 -1 324
TOTAL
24 802 6 100
TRANSLATION DIFFERENCES RECOGNIZED
IN THE INCOME STATEMENT
EUR THOUSAND 2020 2019
Translation dierences recognized in net sales 99 414
Translation dierences included in purchases and
other expenses 23 48
Foreign exchange gains and losses in financial
income and expenses -686 96
TOTAL
-564 557
EXTRAORDINARY
9
ITEMS
EUR THOUSAND 2020 2019
Change in depreciation dierence 170 275
Group contribution - 2 010
TOTAL 170 2 285
INCOME
10
TAXES
EUR THOUSAND 2020 2019
Income taxes -18 -18
Taxes from previous financial years 2 -
INCOME TAXES IN THE INCOME STATEMENT -16 -18
Deferred tax assets and liabilities of the parent company are not
presented in the parent company’s balance sheet.
CHANGE IN DEPRECIATION DIFFERENCE
EUR THOUSAND 2020 2019
Intangible assets 35 83
Buildings -1 -27
Machinery and equipment 137 218
TOTAL 170 275
INTANGIBLE
11
ASSETS
2020
EUR THOUSAND
TRADE
MARKS
OTHER
INTANGIBLE
ASSETS
ADVANCE
PAYMENTS AND
CONSTRUCTION
IN PROGRESS TOTAL
Acquisition cost Jan. 1 930 2 425 3 355
Additions 23 23
Impairments -174 -174
Reclassifications 174 174
ACQUISITION COST DEC 31 930 2 448 3 378
Accumulated amortization
Jan 1 -927 -2 312 -3 239
Amortization during the period -1 -68 -69
ACCUMULATED
AMORTIZATION DEC 31 -928 -2 380 -3 308
Book value Jan 1 3 113 116
Book value Dec 31 2 68 71
2019
EUR THOUSAND
TRADE
MARKS
OTHER
INTANGIBLE
ASSETS
ADVANCE
PAYMENTS AND
CONSTRUCTION
IN PROGRESS TOTAL
Acquisition cost Jan 1 930 2 380 3 310
Reclassifications 45 45
ACQUISITION COST DEC 31 930 2 425 3 355
Accumulated amortization
Jan 1 -842 -2 185 -3 026
Amortization during the period -85 -127 -213
ACCUMULATED
AMORTIZATION DEC 31 -927 -2 312 -3 239
Book value Jan 1 88 195 283
Book value Dec 31 3 113 116
8 9 10 11
PARENT COMPANY FINANCIAL STATEMENTS, FAS
51
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
TANGIBLE
12
ASSETS
2020
EUR THOUSAND LAND BUILDINGS
MACHINERY
AND EQUIPMENT
OTHER TANGIBLE
ASSETS
ADVANCE PAYMENTS
AND CONSTRUCTION
IN PROGRESS TOTAL
Acquisition cost Jan 1 106 4 927 19 854 1 641 602 27 130
Additions 156 39 724 919
Disposals -65 -65
Reclassifications 40 540 18 -772 -174
ACQUISITION COST DEC 31 106 4 967 20 550 1 698 489 27 810
Accumulated depreciation Jan 1 -4 188 -16 880 -1 390 -22 457
Depreciation during the period -80 -740 -62 -881
ACCUMULATED DEPRECIATION DEC 31 -4 268 -17 619 -1 452 -23 339
Book value Jan 1 106 739 2 974 251 602 4 673
Book value Dec 31 106 699 2 931 246 489 4 472
2019
EUR THOUSAND LAND BUILDINGS
MACHINERY
AND EQUIPMENT
OTHER TANGIBLE
ASSETS
ADVANCE PAYMENTS
AND CONSTRUCTION
IN PROGRESS TOTAL
Acquisition cost Jan 1 106 4 691 19 523 1 613 359 26 293
Additions 86 116 1 058 1 260
Disposals -50 -88 -239 -377
Reclassifications 235 295 -576 -45
ACQUISITION COST DEC 31 106 4 927 19 854 1 641 602 27 130
Accumulated depreciation Jan 1 -4 125 -16 098 -1 261 -21 484
Depreciation during the period -63 -781 -129 -973
ACCUMULATED DEPRECIATION DEC 31 -4 188 -16 880 -1 390 -22 457
Book value Jan 1 106 566 3 425 352 359 4 808
Book value Dec 31 106 739 2 974 251 602 4 673
INVESTMENTS
13
2020
EUR THOUSAND
SHAREHOLDINGS
IN SUBSIDIARIES
SHARES IN
ASSOCIATES OTHER SHARES TOTAL
Book value Jan 1 174 593 4 387 181 179 162
Additions 5 855 5 855
Disposals -27 825 -27 825
Impairments -5 855 -5 855
BOOK VALUE DEC 31 146 769 4 387 181 151 337
2019
EUR THOUSAND
SHAREHOLDINGS
IN SUBSIDIARIES
SHARES IN
ASSOCIATES OTHER SHARES TOTAL
Book value Jan 1 174 593 228 174 821
Additions 4 387 4 387
Disposals -47 -47
BOOK VALUE DEC 31 174 593 4 387 181 179 162
12 13
PARENT COMPANY FINANCIAL STATEMENTS, FAS
52
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
INVENTORIES
14
EUR THOUSAND 2020 2019
Raw material 245 242
Work in progress 2 096 2 177
Finished products 2 538 3 636
TOTAL 4 879 6 055
RECEIVABLES
15
EUR THOUSAND 2020 2019
Non-current receivables
Interest-bearing
Loan receivables 26 725 16 998
Non-interest-bearing
Derivatives - 7
Other receivables 409 360
Current receivables
Interest-bearing
Loan receivables 25 152 20 362
Non-interest-bearing
Trade receivables 4 220 2 565
Prepaid expenses and accrued income 663 2 480
Other receivables 2 275 2 192
Derivatives 196 323
TOTAL 59 640 45 287
RECEIVABLES FROM SUBSIDIARIES
EUR THOUSAND 2020 2019
Non-current receivables
Interest-bearing
Loan receivables 26 105 16 321
Current receivables
Interest-bearing
Loan receivables 25 152 20 362
Non-interest-bearing
Trade receivables 4 194 2 548
Prepaid expenses and accrued income 255 2 010
Other receivables 2 275 2 192
TOTAL 57 982 43 432
SHAREHOLDERS’
16
EQUITY
EUR THOUSAND 2020 2019
Share capital Jan 1 3 552 3 552
SHARE CAPITAL DEC 31 3 552 3 552
Share premium fund Jan 1 16 681 16 681
SHARE PREMIUM FUND DEC 31 16 681 16 681
Fair value reserve Jan 1 - 16
Gains and losses on cash flow hedges - -16
FAIR VALUE RESERVE DEC 31 - -
Fund for invested non-restricted equity Jan 1 4 914 4 914
FUND FOR INVESTED NON RESTRICTED
EQUITY DEC 31
4 914 4 914
Own shares Jan 1 -4 890 -5 553
Directed issue of own shares - 663
OWN SHARES DEC 31 -4 890 -4 890
Retained earnings Jan 1 23 682 20 997
Dividends paid - -2 306
RETAINED EARNINGS DEC 31 23 682 18 690
Net income for the period 6 363 4 992
TOTAL SHAREHOLDERS’ EQUITY 50 303 43 940
DISTRIBUTABLE FUNDS
EUR 2020 2019
Fund for invested non-restricted equity 4 914 371 4 914 371
Retained earnings 23 682 123 18 690 477
Own shares -4 889 643 -4 889 643
Net income for the period 6 363 022 4 991 646
TOTAL DISTRIBUTABLE FUNDS 30 069 874 23 706 851
PARENT COMPANY SHARE CAPITAL
2020 2019
Shares 39 000 000 39 000 000
EUR 3 510 000 3 510 000
Each share is entitled to one vote. Information on Board’s
authorizations and own shares is available in the section
Shares and shareholders.
14
15 16
PARENT COMPANY FINANCIAL STATEMENTS, FAS
53
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
LIABILITIES
17
EUR THOUSAND 2020 2019
Non-current liabilities
Interest-bearing
Loans from financial institutions 41 000 46 000
Hybrid bond - 25 000
Other non-current liabilities - 7 800
Non-interest-bearing
Derivatives 52 90
Current liabilities
Interest-bearing
Loans from financial institutions 13 835 8 188
Hybrid bond 25 000 -
Commercial paper program - 25 000
Other current liabilities 77 893 72 087
Non-interest-bearing
Derivatives 438 762
Advances received 1 1
Trade payables 4 258 2 358
Accrued liabilities and deferred income 8 507 3 109
TOTAL 170 983 190 395
LIABILITIES TO SUBSIDIARIES
EUR THOUSAND 2020 2019
Non-current liabilities
Interest-bearing
Other non-current liabilities - 7 800
Current liabilities
Interest-bearing
Other non-current liabilities 77 893 72 087
Non-interest-bearing
Trade payables 3 769 1 709
TOTAL 86 116 81 702
All loans included in non-current liabilities mature in less than
5 years.
LEASE
18
CONTRACTS
PARENT COMPANY AS A LESSEE
Repayment schedule of non-cancellable operating
lease commitments
EUR THOUSAND 2020 2019
Within one year
464 289
13 years
547 778
TOTAL
1 011 1 067
COMMITMENTS AND
19
CONTINGENCIES
COMMITMENTS
EUR THOUSAND
2020 2019
On own behalf and on behalf of subsidiaries
Guarantees
2 481 3 814
TOTAL
2 481 3 814
Guarantees consist of subsidiaries’ lease agreements and of other
guarantees given on behalf of subsidiaries. The company’s loan
facilities are unsecured and include normal financial covenants.
Since Normark Logistics Europe Oy, a 100% owned subsidiary
of Rapala VMC Corporation, is the legal shareholder of the
distribution joint venture with Shimano Inc., the parent company
has guaranteed to Shimano the fulfillment of its subsidiary’s
obligations related to the joint venture.
DERIVATIVES
20
EUR THOUSAND 2020 2019
Currency derivatives with bank
Fair value -178 -439
Nominal value 26 907 48 252
Interest rate derivatives
Fair value -116 -83
Nominal value 21 000 21 000
In 2020, changes in fair value of currency derivatives had an
income statement eect of EUR 262 thousand (2019: EUR -1 041
thousand) and interest rate derivatives EUR -33 thousand (2019:
EUR -41 thousand).
20
18
17
19
54
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ RISK MANAGEMENT
RISK MANAGEMENT
The objective of Rapala VMC Corporation’s risk management is to
support the implementation of the Group’s strategy and execution
of business targets. This is done by monitoring and mitigating
the related threats and risks and simultaneously identifying and
managing opportunities.
APPROACH TO RISK MANAGEMENT
The Board evaluates the Group’s financial, operational and
strategic risk position regularly and establishes related policies
and instructions to be implemented and coordinated by Group
management. The daily risk management activities are primarily
delegated to the management of business units.
Risk management continued to receive management attention
in 2020. The focus of Group level risk management in 2020 was
on foreign exchange risk management as well as risk management
activities on liquidity, interest rate and hazard risks. Other
emphasized areas were account receivables, Group wide insurance
programs and strategic supply chain management.
Below is a summary of key strategic, operational and financial
risks as well as the main actions to mitigate these risks.
STRATEGIC RISKS
Sport fishing is a form of leisure hobby and the Group’s products
are competing against a wide range of other hobbies. The Group is
promoting the attractiveness of sport fishing through active sales
and marketing as well as brand management. By utilizing its unique
research and development processes and resources, the Group is
constantly developing new products to meet consumer needs and
creating new needs for the consumers.
Brand portfolio and corporate reputation are among the
most valuable intangible assets of the Group. The Rapala Group
is actively managing its brands and their identity and securing
that the value of the brands or corporate reputation are not
jeopardized or violated by any means. The Group’s brands are also
legally protected.
Consumers relate the Group’s brands to high quality, unique
fishing experience, special functional features and trustworthy
distribution channel. Consumers are able to dierentiate illegal
copy products and they don’t constitute a strategic threat for
the Group. The Group protects vigorously its intellectual property
rights and acts against illegal copiers and distributors.
Sport fishing is dependent on availability of fresh fishing
waters for fishes to live and breed. Pollution and potential
environmental catastrophes are concerns for the Group. The
Rapala Group is actively promoting initiatives to enhance
environmental protection and increasing preparedness to comply
with continuously tightening environmental regulations by taking
steps to reduce environmental impacts of its operations and
products. The Group is also acting in the forefront to develop
products, e.g. catch-and-release equipment, to comply with fish
protection initiatives. For more details on environmental actions,
see the “Corporate Responsibility and Sustainable Development”
report available on corporate website (www.rapalavmc.com).
The Group faces competition in all markets where its products
are sold. Due to the uniquely wide distribution network, the
Group’s geographical market risk is truly globally spread, evening
out seasonal and local market fluctuations.
The Rapala Group has a limited amount of global competitors.
The biggest competitors have significant power in their home
markets, but globally the geographical scope of their operations is
smaller. The Group’s global distribution network is unique in the.
Within each market, the Group’s competitors are often local fishing
tackle producers and distributors operating with a limited range
of products and narrow geographical scope. In some countries,
competition is created by fishing tackle retailers selling private
label products. Cross-border internet sales is an increasing
trend and could cause some price erosion. Established fishing
tackle brands’ expansion into new product categories is also
creating competition in some product segments. The strength of
the Group’s product development and brand portfolio, as well as
flexibility to serve dierent markets with market-specific products
ranges, is essential in succeeding in market competition.
The Group’s production is spread out in several countries.
Some of these countries have higher political risks but
simultaneously provide access to competitive labor cost. The
Group monitors country risks and costs and is actively seeking
ways to manage the risk of rising production and distribution
costs.
Manufacturing of sport fishing products is not dependent
on any proprietary manufacturing technologies or patents.
The Group’s manufacturing units are actively monitoring the
development of generic manufacturing technologies and
considering dierent production applications.
Distribution of third party fishing and outdoor products
creates a material part of the Group’s sales. Making new
distribution agreements or terminating old agreements or changes
in product oering made by the principal may aect sales and
profitability of Third Party Products. The Group has several
RISK MANAGEMENT
55
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
factories and various raw material and finished good suppliers.
Dierent factories produce for the most part separate product
categories and the Group is not critically dependent on any single
product or raw material supplier.
The Group’s customer base is geographically and quantitatively
well diversified. Customers are mostly country-specific and not
operating globally. The Group is not critically dependent on any
single customer: even the biggest single customer represents
moderate share of the Group’s net sales. The Group is not largely
engaged in direct consumer retailing. This is not considered
to be a risk as consumer demand is largely driven by brand
consciousness and alternative routes to market can be established
when needed.
The Board evaluates the Group’s strategic risks annually
and the Group management continuously monitors changes in
the business environment. Strategic risk management in local
jurisdictions is delegated to the management of each business unit.
OPERATIONAL AND HAZARD RISKS
The fishing tackle business has traditionally been relatively
resilient to increased uncertainties and downturns in the general
economic climate. The truly global nature of the Group’s sales and
operations spreads the market risks caused by uncertainties in the
global economy.
The underlying consumer demand for the Group’s products
is seasonal and also impacted by unforeseeable factors such
as weather. To oset and balance the seasonality, the Group is
engaged in production and distribution of winter fishing and winter
sports equipment. To mitigate the eects of seasonality, the Group
is also operating with own distribution in the southern hemisphere
and is developing its production planning to better respond to
changes in the market demand.
Due to the seasonality in demand, the Group’s product
shipments concentrate annually to relatively short time periods,
where supply problems could endanger the sales of the season.
Similarly, lower than expected sales volumes may lead to excess
inventories, as it is dicult to cancel committed orders within
short notice.
There is a high level of dependency between the Group’s
manufacturing and distribution units and interruption at earlier
stage of the supply chain could have knock-on eects throughout
the rest of the Group. The importance of proper order forecasting
and production planning has increased. The related risks are
managed with high level of co-operation between manufacturing
and distribution units, safety stocks and extensive insurance
coverage. The Group-wide supply chain and logistics initiatives
continued in 2020 and mitigated these risks relating to
operational eciencies.
The Group’s sales prices are primarily fixed annually or bi-
annually, normally before each season. Sudden changes in raw
material prices or foreign exchange rates may have significant
impact on costs of some products. The Group aims to push
increases in costs to the sales prices immediately or during a
period of time. The Group’s market risks and mitigation actions
are analyzed in more detail in the section “Financial Risks” and in
note 22 to the consolidated financial statements.
In respect of manufacturing activities, the Group is not
critically dependent on any single external production factor
supplier. Availability of competent production labor is essential
and the Group aims to maintain good employer reputation and
labor relations.
There are significant dependencies between the Group’s
manufacturing units, which could cause supply challenges
e.g. in case of fire or other hazard. Such hazard could lead
to property damages but also to business interruption losses
throughout the supply chain. Therefore, the Group emphasizes
hazard risk management. The Group has together with its
property and business interruption insurer continued to conduct
annually hazard prevention reviews to Group’s key factories and
distribution warehouses. Group management has also continued
to maintain risk awareness throughout the organization.
The Group constantly develops its global insurance programs,
which cover most of the Group companies. Global insurance
policies, which take into account the Group’s interdependency,
are in place for property damage and business interruption,
transportation as well as general and product liability. The Group
has increased its focus also on mitigating fraud risk.
The Board evaluates the Group’s operational risks at least
once a year. Group management monitors and coordinates
the continuous management of operational risks, which is the
responsibility of the management of each business unit.
FINANCIAL RISKS
The Group’s financial risks consist of market risks, credit and
default risks and liquidity risks. The Board evaluates financial
risks during the year and Group management monitors and
manages them continuously. Financial risks are discussed in detail
in note 22 of the consolidated financial statements.
56
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ SHARES AND SHAREHOLDERS
SHARES AND SHAREHOLDERS
Rapala VMC Corporation’s shares have been traded on the Nasdaq
Helsinki since 1998. In 2020, the shares traded between EUR 4.58
and EUR 2.15 with an average price of EUR 3.04.
Shares and Voting Rights
On December 31, 2020, the share capital fully paid and reported in
the Trade Register was EUR 3 552 160.41 and the total number of
shares was 39 000 000. The average number of shares during the
financial year was 39 000 000. Each share is entitled to one vote.
There were no changes in the share capital in 2020.
Board’s Authorizations
The AGM on 23 March, 2020 authorized the Board of Directors
to resolve to repurchase a maximum of 2 000 000 own shares by
using funds in the unrestricted equity. The proposed number of
shares corresponds to less than 10 per cent of all shares in the
company. The shares may be repurchased to develop the company’s
capital structure. In addition, the shares may be repurchased to
finance or carry out business acquisitions or other arrangements,
to settle the company’s equity-based incentive plans, to be
transferred for other purposes, or to be cancelled. The shares
may be repurchased in deviation from the proportion of the shares
held by the shareholders. The shares will be repurchased through
public trading arranged by NASDAQ Helsinki Oy at the market price
of the acquisition date. The shares will be acquired and paid in
pursuance of the rules of NASDAQ Helsinki Oy and applicable rules
regarding the payment period and other terms of the payment. The
authorization is in force until the end of the next Annual General
Meeting, however, no longer than until June 30, 2021.
The AGM on 29 March, 2018 authorized the Board of Directors
to decide on a share issue and the issue of special rights entitling
to shares as defined in §1 of Chapter 10 of the Companies Act,
against or without consideration, as follows. By virtue of the
authorization the Board is entitled to issue up to 5 000 000 shares
corresponding to approximately 12.8 per cent of all current shares.
Except for issuing of option rights or special rights entitling
to shares, the authorization can also be used for incentive
arrangements for the management and key persons, however, not
more than 900 000 shares in total. The Board would decide on all
terms and conditions of share issues and the issues of special
rights. The authorization covers both the issuance of new shares
and the transfer of own shares. A share issue or the issue of
special rights may be executed in deviation of the shareholders
pre-emptive rights to subscribe for new shares. This authorization
shall be eective until March 29, 2021.
Own Shares
In 2020, no own shares were repurchased. At the end of December
2020, the company held 452 208 own shares, representing 1.2% of
the total number and the total voting rights of shares. The average
share price of all repurchased own shares held by the company was
EUR 4.95.
Shareholder Register
The shares of the company belong to the Book Entry Securities
System. Shareholders should notify the particular register holding
their Book Entry Account about changes in address or account
numbers for payment of dividends and other matters related to
ownership of shares.
Share-Based Incentive Plans
The Board of Directors of Rapala VMC Corporation approved on
February 16th 2018 a new Performance Share Plan for the Group
key employees. The aim of the new plan is to align the objectives
of the shareholders and the key employees in order to increase the
value of the Company in the long-term, to retain the key employees
at the Company, and to oer them a competitive reward plan that is
based on earning and accumulating the Company’s shares.
A significant proportion of the reward allocations of the CEO
and other members of the Executive Committee of the Group will be
dependent on their personal investments in the Company shares and
share ownership of the shares acquired through such investments.
Details of Share-Based Incentive plans are given on note 29.
Management Shareholding
On December 31, 2019, the members of the Board and the Executive
Committee held directly a total of 112 678 company shares and
corresponding to 0.3% of all shares and voting rights. Details of
management shareholdings are given on pages 5859.
Trading and Performance of the Company’s Shares
The company share (RAP1V) is quoted on the Nasdaq Helsinki. The
closing price on December 31, 2020 was EUR 4.36. The highest price
in 2020 was EUR 4.58, the lowest price EUR 2.15 and the average
price EUR 3.04. A total 6 044 245 company’s shares were traded in
2020. This represents 15.5% of all shares on December 31, 2020.
At the end of 2020, the market capitalization of all outstanding
shares, excluding own shares, was EUR 168.1 million. Earnings per
share (basic) were EUR 0.04 (EUR 0.10 in 2019). For more share
related key figures see page 7.
Dividend
The Board proposes to the AGM that no dividend is paid for the 2020.
SHARES AND SHAREHOLDERS
57
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
PRINCIPAL SHAREHOLDERS ON DECEMBER 31, 2020
SHAREHOLDERS NUMBER OF SHARES %
Viellard Migeon & Cie 15 000 088 38.5
Sofina S.A. 7 500 000 19.2
Nordea Funds 4 807 575 12.3
The State Pension Fund 1 290 000 3.3
Shimano Singapore Private Limited 889 680 2.3
Taaleritehdas Funds 570 000 1.5
Ilmarinen Mutual Pension Insurance 292 007 0.7
Coble James Jay 225 000 0.6
Elo Mutual Pension Insurance 155 000 0.4
Säästöpankki Funds 125 000 0.3
Rapala VMC Oyj (own shares) 452 208 1.2
Other shareholders total 7 693 442 19.7
TOTAL NUMBER OF SHARES 39000000 100.0
* Viellard Migeon & Cie’s holds together with its subsidiary De Pruines Industries
15 105 398 shares, representing 38.7% of total number and the total voting
rights of shares.
SHAREHOLDERS BY CATEGORY ON DECEMBER 31, 2020
SHAREHOLDER CATEGORY NUMBER OF SHARES %
Private and public corporations 1 324 359 3.4
Financial and insurance companies 5 963 412 15.3
Public institutions 1 737 307 4.5
Non-profit organizations 47 612 0.1
Individuals 2 950 364 7.6
International shareholders 23 567 917 60.4
Administrative registrations 3 409 029 8.7
TOTAL 39000000 100.0
DISTRIBUTION OF SHAREHOLDING ON DECEMBER 31, 2020
NUMBER OF SHARES
NUMBER OF
SHAREHOLDERS %
TOTAL
SHARES %
1 - 100 1 908 38.9 95 467 0.2
101 -500 1 785 36.4 490 213 1.3
501 - 1 000 622 12.7 505 997 1.3
1 001 - 10 000 513 10.5 1 356 212 3.5
10 001 - 1 000 000 75 1.5 4 697 556 12.0
1 000 001 - 6 0.1 31 854 555 81.7
TOTAL 4 909 100.0 39 000 000 100.0
Number of shares includes 452 208 own shares held by the parent company.
SHARE PRICE IN 2020, %
SHARE PRICE DEVELOPMENT IN
20162020, EUR
4.8
4.4
4.0
3.6
3.2
2.8
2.4
2.0
12/15 12/16 12/17 12/18 12/19 12/20
Rapala VMC Oyj
Rapala VMC Oyj
OMX Nordic Small Cap
12/19 03/20 06/20 09/20 12/20
160
150
140
130
120
110
100
90
80
58
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ BOARD OF DIRECTORS AND MANAGEMENT
BOARD OF DIRECTORS AND MANAGEMENT
BOARD OF DIRECTORS
LOUIS D’ALANÇON
Chairman of the Board since 2018
Board member since 2017
M.Sc. Civil Engineering, Major in Economy and Finance
Year of birth 1959
Shareholding*: 7 700
JORMA KASSLIN
Board member since 1998
Chairman of the Board 20162018
M.Sc. (Eng.)
Year of birth: 1953
Shareholding*: 26 878
EMMANUEL VIELLARD
Board member since 2000
Chairman of the Board 20052016
President of Viellard Migeon & Cie
CEO of LISI
MBA, CPA
Year of birth: 1963
Shareholding*: 2 000
* Shares and share-based rights of each member and corporations over which he/she exercises control in the company and its group companies.
MARC SPEECKAERT
Board member since 2005
MBA
Year of birth: 1951
Shareholding*: 4 500
JULIA AUBERTIN
Board member since 2014
M.Sc. (EDHEC)
Year of birth: 1979
Shareholding*: -
VESA LUHTANEN
Board member since March 25, 2020
LFashion Group Oy, Managing Director / CEO
Bachelor of Science in Business Administration
Year of birth: 1961
Shareholding*: -
BOARD OF DIRECTORS AND MANAGEMENT
59
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ
EXECUTIVE COMMITTEE
Rapala VMC Corporation announced change of CEO on February 12, 2020. Nicolas Warchalowski was appointed as the company’s new
President and CEO starting from March 1, 2020. Nicolas Warchalowski succeeded Louis d’Alançon, who acted as President and CEO since
September 27, 2019. David Neill was appointed as Executive Vice President, Product Development & Innovation starting from September
9, 2020 and Enrico Ravenni Executive Vice President, Executive Vice President, Head of Distribution in APAC countries and Global Rods,
Reels and Lines Product starting from October 30, 2020.
* Shares and share-based rights of each member and corporations over which he/she exercises control in the company and its group companies.
CYRILLE VIELLARD
Executive Vice President of VMC Peche
Executive Committee member since 2015
MBA, ESSEC
Year of birth: 1977
Shareholding*: 10 100
ARTO NYGREN
Executive Vice President, Lure Manufacturing
Executive Committee member since 2017
Bachelor’s degree in Mechanical Engineering
Year of birth: 1965
Shareholding*: 10 100
JANELOF CAVANDER
Chief Financial Ocer
Executive Committee member since 2017
Master of Science (Technology)
Year of birth: 1985
Shareholding*: 10 100
JEANPHILIPPE NICOLLE
Executive Vice President, Head of European Distribution
Executive Committee member since 2020
Executive MBA, Business School ICS, Paris and CPA
Year of birth: 1968
Shareholding*: -
DAVID NEILL
Executive Vice President, Product Development &
Innovation
Executive Committee member since September 9, 2020
Bachelor of Commerce
Year of birth: 1973
Shareholding*: -
ENRICO RAVENNI
Executive Vice President, Head of Distribution in APAC
countries and Global Rods, Reels and Lines Product
Development & Innovation
Executive Committee member since October 30, 2020
Year of birth: 1966
Shareholding*: -
NICOLAS WARCHALOWSKI
President and Chief Executive Ocer since March 1, 2020
Executive Committee member since March 1, 2020
Chairman of the Executive Committee since March 1, 2020
M.Sc. in Business and Economics
Year of birth 1971
Shareholding*: -
OLLI AHO
Executive Vice President, General Counsel, Investor
Relations and Secretary of the Board
Executive Committee member since 1998
Master of Laws
Year of birth: 1959
Shareholding*: 10 100
STANISLAS DE CASTELNAU
Executive Vice President, Head of Operations
Executive Committee member since 2002
Engineer
Year of birth: 1963
Shareholding*: 8 000
TOM MACKIN
Executive Vice President, Distribution and Brands in
North America
Executive Committee member since 2007
Bachelor of Fine Arts
Year of birth: 1961
Shareholding*: 3 000
LARS OLLBERG
Chief Operating Ocer
Executive Committee member since 2008
Vocational Qualification in Business and Administration
Year of birth: 1956
Shareholding*: 10 100
VICTOR SKVORTSOV
Executive Vice President Distribution in Russia, Belarus,
Kazakhstan
Executive Committee member since 2013
Engineer
Year of birth: 1962
Shareholding*: 10 100
60
RAPALA VMC OYJ SIGNATURES FOR THE REPORT OF THE BOARD OF DIRECTORS AND FINANCIAL STATEMENTS
SIGNATURES FOR THE REPORT OF THE BOARD
OF DIRECTORS AND FINANCIAL STATEMENTS
THE AUDITOR’S NOTE
Helsinki, February 9, 2021
Mikko Rytilahti
Authorized Public Accountant
Jorma Kasslin
Louis d’Alançon,
Chairman of the Board
Marc Speeckaert
Julia AubertinVesa Luhtanen
Emmanuel Viellard
A report on the audit performed has been issued today.
Helsinki, March 2, 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Nicolas Warchalowski,
President and CEO
61
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ AUDITOR’S REPORT
AUDITOR’S REPORT
TO THE ANNUAL GENERAL MEETING OF RAPALA VMC OYJ
REPORT ON THE AUDIT OF FINANCIAL STATEMENTS
OPINION
We have audited the financial statements of Rapala VMC
Oyj (business identity code 10162388) for the year ended
31 December, 2020. The financial statements comprise the
consolidated balance sheet, income statement, statement of
comprehensive income, statement of changes in equity, statement
of cash flows and notes, including a summary of significant
accounting policies, as well as the parent company’s balance
sheet, income statement, statement of cash flows and notes.
In our opinion
• the consolidated financial statements give a true and fair
view of the group’s financial position as well as its financial
performance and its cash flows in accordance with International
Financial Reporting Standards (IFRS) as adopted by the EU.
• the financial statements give a true and fair view of the
parent company’s financial performance and financial position
in accordance with the laws and regulations governing the
preparation of financial statements in Finland and comply with
statutory requirements.
Our opinion is consistent with the additional report submitted to
the Board of Directors.
BASIS FOR OPINION
We conducted our audit in accordance with good auditing practice
in Finland. Our responsibilities under good auditing practice are
further described in the Auditor’s Responsibilities for the Audit of
Financial Statements section of our report.
We are independent of the parent company and of the group
companies in accordance with the ethical requirements that are
applicable in Finland and are relevant to our audit, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements.
In our best knowledge and understanding, the non-audit
services that we have provided to the parent company and group
companies are in compliance with laws and regulations applicable
in Finland regarding these services, and we have not provided
any prohibited non-audit services referred to in Article 5(1) of
regulation (EU) 537/2014. The non-audit services that we have
provided have been disclosed in note 5 to the consolidated
financial statements.
We believe that the audit evidence we have obtained is
sucient and appropriate to provide a basis for our opinion.
TRANSLATION OF THE FINNISH ORIGINAL
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed
in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
We have fulfilled the responsibilities described in the Auditor’s
responsibilities for the audit of the financial statements section
of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to
respond to our assessment of the risks of material misstatement
of the financial statements. The results of our audit procedures,
including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying
financial statements.
We have also addressed the risk of management override of
internal controls. This includes consideration of whether there was
evidence of management bias that represented a risk of material
misstatement due to fraud.
Revenue Recognition
Refer to accounting principles for the consolidated accounts and
note 2 (Segment information).
The Group focuses on revenue as a key performance measure
which could create the incentive for revenue to be recognized
before the customer obtains control of the goods or services in an
amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods and services. Due to
the subsidiaries being relatively independent management may also
have an opportunity to overstate revenues.
Proper revenue recognition was determined to be a key audit
matter and a significant risk of material misstatement referred to
in EU Regulation No 537/2014 point (c) of Article 10(2).
Our audit procedures to address the risk of material
misstatement relating to revenue recognition, which was
considered to be a significant risk, included, among others:
• Assessing the Group’s accounting policies over revenue
recognition and assessing compliance with applicable
accounting standards.
• Testing of the Group’s controls over correct timing of revenue
recognition. These controls comprised of a combination of
transaction level prevent controls and detect controls.
• We tested the cuto of revenue with analytical procedures
supplemented with tests on a transaction level either side of
the balance sheet date as well as credit notes prepared after
the balance sheet date.
• Considering the Group’s disclosures in respect of revenues
62
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ AUDITOR’S REPORT
Valuation of goodwill and intangible assets
Refer to accounting principles for the consolidated accounts and
note 11 (Intangible assets).
At the balance sheet date, the value of goodwill and
intangibles amounted to 71,2 M€ (75,5 M€) representing 26,1 %
(26,1 %) of the total assets.
Procedures regarding management’s annual impairment test
were significant to our audit because the test imposes estimates.
The Group management use assumptions in respect of future
market and economic conditions such as revenue and margin
developments.
Our audit procedures included among others:
• Involvement of EY valuation specialists to assist us in evaluating
methodologies, impairment calculations and underlying
assumptions applied by the management in impairment testing.
• Testing of the mathematical accuracy of the impairment
calculations.
• We focused on how much recoverable amounts exceed the
carrying amounts of cash-generating units and whether any
reasonably possible change in assumptions could cause the
carrying amount to exceed its recoverable amount.
• We also assessed the adequacy of the Group’s disclosures in
note 11 (Intangible assets) in the financial statements about
the assumptions to which the outcome of the impairment tests
were more sensitive.
Valuation of inventories
Refer to accounting principles for the consolidated accounts and
note 17 (Inventories).
Inventories are valued at the lower of cost or net realizable
value. Inventories are presented net of an impairment loss
recognized for obsolete and slow-moving inventories. At the
balance sheet date, the total value of inventory and related
provision for obsolete goods amounted to 76,0 M€ and 7,2M€,
respectively (net 68,8 M€).
Valuation of inventories was a key audit matter because the
carrying value of inventories and related provisions are material
to the financial statements, and because valuation of inventories
requires management judgment relating to future sales and the
level of provision for obsolete goods.
Our audit procedures included among others:
• Assessing the Group’s accounting policies regarding inventory
allowances and assessing compliance with applicable
accounting standards.
• Evaluating, amongst others, the analyses and assessments
made by management with respect to obsolete and slow-moving
inventories, the expected demand and market value related to
the items.
• Assessing the adequacy of the Group’s disclosures in notes 17
(Inventories) in the financial statements.
RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THE
MANAGING DIRECTOR FOR THE FINANCIAL STATEMENTS
The Board of Directors and the Managing Director are responsible
for the preparation of consolidated financial statements that give
a true and fair view in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU, and of financial
statements that give a true and fair view in accordance with
the laws and regulations governing the preparation of financial
statements in Finland and comply with statutory requirements. The
Board of Directors and the Managing Director are also responsible
for such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors
and the Managing Director are responsible for assessing the
parent company’s and the group’s ability to continue as going
concern, disclosing, as applicable, matters relating to going
concern and using the going concern basis of accounting. The
financial statements are prepared using the going concern basis
of accounting unless there is an intention to liquidate the parent
company or the group or cease operations, or there is no realistic
alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE
AUDIT OF FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance on whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with good auditing practice will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
the financial statements.
As part of an audit in accordance with good auditing practice,
we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sucient and appropriate to
provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing
an opinion on the eectiveness of the parent company’s or the
group’s internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’
and the Managing Director’s use of the going concern basis of
accounting and based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions
that may cast significant doubt on the parent company’s or the
group’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in
the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit
63
FINANCIAL STATEMENTS 2020RAPALA VMC OYJ AUDITOR’S REPORT
evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the parent
company or the group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and
events so that the financial statements give a true and fair view.
• Obtain sucient appropriate audit evidence regarding the
financial information of the entities or business activities within
the group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical
requirements regarding independence,and communicate with them
all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
OTHER REPORTING REQUIREMENTS
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting
on 5.4.1995, and our appointment represents a total period of
uninterrupted engagement of 26 years. Rapala VMC Oyj has been a
public interest entity since 4.12.1998.
Other information
The Board of Directors and the Managing Director are responsible
for the other information. The other information comprises the
report of the Board of Directors and the information included in
the Annual Report, but does not include the financial statements
and our auditor’s report thereon. We have obtained the report of
the Board of Directors prior to the date of this auditor’s report,
and the Annual Report is expected to be made available to us after
that date.
Our opinion on the financial statements does not cover the
other information.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially
misstated. With respect to report of the Board of Directors, our
responsibility also includes considering whether the report of
the Board of Directors has been prepared in accordance with the
applicable laws and regulations.
In our opinion, the information in the report of the Board
of Directors is consistent with the information in the financial
statements and the report of the Board of Directors has been
prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other
information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have
nothing to report in this regard.
Helsinki, March 2, 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Mikko Rytilahti
Authorized Public Accountant
CONTACTS
RAPALA VMC CORPORATION
Mäkelänkatu 91
FI00610 HELSINKI
FINLAND
OLLI AHO
Company Counsel and Investor Relations
Tel: +358 9 7562 540
E-mail: olli.aho@rapala.fi
www.rapalavmc.com
FINANCIAL STATEMENT 2020
