RAPALA VMC PLC STOCK EXCHANGE RELEASE 10.5.2005 1(6) RAPALA VMC PLC PRELIMINARY OPENING BALANCE SHEET AND COMPARATIVE FINANCIAL INFORMATION 2004 ACCORDING TO IFRS Rapala VMC Group applies IFRS (International Financial Reporting Standards) standards as of 1 January 2005. The first interim report according to IFRS will be published on 11 May 2005. The Group s date of transition to IFRS accounting standards is 1 January 2004. The essential changes to financial information for 2004 arising from the FAS/IFRS transition are presented in this stock exchange release. The effects of IFRS transition are not material. The main adjustments relate to reversal of goodwill amortizations, recording financial leases in the balance sheet, expensing the costs of the Group s stock option program at fair value in the income statement, reversal of capitalized foreign exchange differences on long-term loans. The reconciliation of extraordinary items to operating income and expenses and to taxes have changed the structure of the income statement but not the equity and net profit for the period. The attachment presents comparative IFRS information for 2004. For further information, please contact: Mr. Jouni Grönroos, CFO, +358 9 7562 540 Rapala VMC Oyj Jorma Kasslin President and CEO Rapala VMC Corporation is the leading manufacturer and distributor of fishing lures and treble hooks in the world. The group distributes lures, hooks and other fishing related products in the largest market in the world in North America, through its own distribution companies. Rapala has also a leading distribution network in Europe for fishing tackle products and other outdoor related products. Its primary manufacturing facilities are located in Finland, France, Ireland, Estonia and China. The Group, with net sales of EUR 174 million, employs approximately 3,000 people in 23 countries.
RAPALA VMC PLC STOCK EXCHANGE RELEASE 10.5.2005 2(6) IFRS COMPARISON FIGURES Unaudited GROUP S INCOME STATEMENT, IFRS EUR (1000) IFRS IFRS IFRS IFRS 1-3/04 1-6/04 1-9/04 1-12/04 Sales 51 053 106 899 139 020 174 498 Other operating income and expenses -41 094-86 271-119 214-154 010 Operating profit 9 959 20 628 19 806 20 488 Financial income and expenses -567-1 983-3 074-4 813 Profit before taxes 9 392 18 645 16 732 15 675 Taxes -2 136-4 142-3 438-3 685 Net profit for the period 7 256 14 503 13 294 11 990 Attributable to: Equity holders of company 7 222 14 433 13 198 11 872 Minority interest 34 70 96 118 Earnings per share, basic (EUR) 0,19 0,38 0,35 0,32 Earnings per share, diluted (EUR) 0,19 0,38 0,35 0,32 Return on equity % 12,7 % 25,1 % 23,1 % 21,2 % Return on investment % 6,6 % 13,4 % 13,4 % 13,7 % GROUP S INCOME STATEMENT, FAS EUR (1000) FAS FAS FAS FAS 1-3/04 1-6/04 1-9/04 1-12/04 Sales 51 053 106 899 139 020 174 498 Other operating income and expenses -42 036-87 939-121 205-154 485 Operating profit 9 017 18 960 17 815 20 013 Financial income and expenses -383-3 443-4 502-6 091 Profit before extraordinary items 8 634 15 517 13 313 13 922 Extraordinary expenses 0 0 0-1 375 Taxes -2 177-3 713-3 013-3 706 Minority interest -38-77 -106-130 Net profit for the period 6 419 11 727 10 194 8 711 Earnings per share, basic (EUR) 0,17 0,31 0,27 0,27 Earnings per share, diluted (EUR) 0,17 0,31 0,27 0,27 Return on equity % 11,2 % 20,6 % 18,1 % 18,5 % Return on investment % 6,0 % 12,4 % 12,2 % 13,6 %
RAPALA VMC PLC STOCK EXCHANGE RELEASE 10.5.2005 3(6) GROUP S BALANCE SHEET, IFRS IFRS IFRS IFRS IFRS EUR (1000) 3/04 6/04 9/04 12/04 Fixed assets 69 593 70 582 71 222 69 865 Inventories 62 399 59 938 62 733 62 995 Receivables & other current assets 54 917 54 510 33 928 39 525 Cash in hand and at banks 11 584 18 852 13 807 14 807 Total assets 198 493 203 882 181 690 187 192 Equity 61 142 62 166 62 009 59 852 Long-term debt 18 595 38 277 37 385 30 847 Short-term debt 118 756 103 439 82 296 96 493 Total liabilities 198 493 203 882 181 690 187 192 Equity per share (EUR) 1,61 1,64 1,64 1,58 Equity ratio % 30,8 % 30,5 % 34,2 % 32,0 % Gearing % 144,3 % 137,8 % 126,2 % 137,2 % GROUP S BALANCE SHEET, FAS FAS FAS FAS FAS EUR (1000) 3/04 6/04 9/04 12/04 Fixed assets 67 128 67 243 66 996 64 767 Inventories 61 827 59 383 62 132 62 404 Receivables & other current assets 55 921 54 337 33 734 39 281 Cash in hand and at banks 11 584 18 852 13 807 14 807 Total assets 196 460 199 815 176 669 181 259 Equity 60 832 59 782 58 726 55 781 Minority interest 559 585 582 607 Long-term debt 16 504 36 177 35 279 28 737 Short-term debt 118 565 103 271 82 082 96 134 Total liabilities 196 460 199 815 176 669 181 259 Equity per share (EUR) 1,62 1,59 1,56 1,49 Equity ratio % 31,3 % 30,2 % 33,6 % 31,1 % Gearing % 140,9 % 139,1 % 129,1 % 142,7 % SEGMENT INFORMATION (11) Sales by geographical area IFRS IFRS IFRS IFRS IFRS 1-3/04 1-6/04 1-9/04 1-12/04 North-America 29 517 69 016 87 184 119 066 Europe 38 985 76 838 111 535 130 853 Other countries 2 980 8 447 22 409 32 986./. Intra group sales -20 429-47 402-82 108-108 407 Total 51 053 106 899 139 020 174 498
RAPALA VMC PLC STOCK EXCHANGE RELEASE 10.5.2005 4(6) Operating profit by geographical area IFRS IFRS IFRS IFRS IFRS 1-3/04 1-6/04 1-9/04 1-12/04 North-America 4 001 7 182 7 308 7 357 Europe 6 570 14 475 14 984 14 594 Other countries 608 1 016 1 597 1 635./. Eliminations -1 220-2 045-4 083-3 098 Total 9 959 20 628 19 806 20 488 RECONCILIATION OF NET PROFIT EUR (1000) Q1 Q1 - Q2 Q1 - Q3 Q1 - Q4 2004 2004 2004 2004 Net profit for the period before minority interest according to FAS 6457 11804 10300 8841 Effects of IFRS Goodwill amortizations (1) 895 1791 2700 3594 Financial instruments (2) -378-464 -464-581 Foreign exchange rates (3) 227 1992 1992 1992 Stock options (4) 0-156 -794-1433 Deferred taxes (5) 41-429 -425-372 Other IFRS adjustments (10) 14-35 -15-51 Total IFRS adjustments 799 2699 2994 3149 Profit for the period according to IFRS 7256 14503 13294 11990 RECONCILIATION OF EQUITY EUR (1000) 12/2003 3/2004 6/2004 9/2004 12/2004 Equity according to FAS 53788 60832 59782 58726 55781 Effects of IFRS: Goodwill amortizations (1) 0 895 1791 2700 3594 Financial instruments (2) 464 86 0 0-117 Foreign exchange rates (3) -1992-1765 0 0 0 Stock options (4) 0 0-8 -39-70 Inventories (6) 525 572 555 601 591 Leases (7) -125-141 -154-169 -183 Employee benefits (8) -362-380 -398-410 -423 Deferred taxes (5) 442 484 13 18 72 Minority interest (9) 501 559 585 582 607 Total IFRS adjustments -547 310 2384 3283 4071 Equity according to IFRS 53241 61142 62166 62009 59852
RAPALA VMC PLC STOCK EXCHANGE RELEASE 10.5.2005 5(6) EFFECTS OF IFRS ON BALANCE SHEET 1.1.2004 FAS IFRS- IFRS EUR (1000) 12/2003 effects 1/2004 Fixed assets 66 735 1 591 68 326 Inventories 58 763 525 59 288 Receivables and other current assets 37 918-797 37 121 Cash in hand and at banks 8 063 0 8 063 Total assets 171 479 1 319 172 798 Equity 53 788-1 048 52 740 Minority interest 501 0 501 Long-term debt 21 078 2 079 23 157 Short-term debt 96 112 288 96 400 Total liabilities 171 479 1 319 172 798 EFFECTS OF IFRS ON BALANCE SHEET 31.12.2004 FAS IFRS- IFRS EUR (1000) 12/2004 effects 12/2004 Fixed assets 64 767 5 098 69 865 Inventories 62 404 591 62 995 Receivables and other current assets 39 281 244 39 525 Cash in hand and at banks 14 807 0 14 807 Total assets 181 259 5 933 187 192 Equity 55 781 3 476 59 257 Minority interest 607-12 595 Long-term debt 28 737 2 110 30 847 Short-term debt 96 134 359 96 493 Total liabilities 181 259 5 933 187 192 NOTES 1. According to IFRS goodwill is not amortized but impairment tested. Goodwill has been tested for impairment according to the standard, and no impairment losses were recognized. (IAS 36) 2. All derivates are measured at fair value and changes recorded in the income statement. Derivates related to off-balance sheet items are recorded in financial items. (IAS 32 and IAS 39) 3. Foreign exchange rate differences (capitalized according to FAS) are recorded in the income statement based on the rate at the end of the period. (IAS 21) 4. The fair value of the Group s 2003 and 2004 stock option programs are calculated based on option pricing model and are expensed during the vesting periods.(ifrs 2) 5. Deferred taxes are recognized for all taxable IFRS adjustments. (IAS 12) 6. A portion of fixed general production costs are added to the purchase price of raw materials. (IAS 2)
RAPALA VMC PLC STOCK EXCHANGE RELEASE 10.5.2005 6(6) 7. Certain lease agreements have been recorded as financial leases. According to IFRS, financial lease agreements are entered in the balance sheet and amortized during the asset s economic life. (IAS 17) 8. Certain pension arrangements in the Group s international subsidiaries have been classified as defined benefit plans. Finnish TEL pension scheme is handled as defined contribution plan. (IAS 19) 9. Minority interest is included in equity in IFRS balance sheet. (IAS 1) 10. The other IFRS adjustments are mainly due to minor changes to items presented in paragraphs 6, 7 and 8. 11. Segment reporting is based on geographical location of the customers. The Group does not use business segments in its reporting. Opening balance sheet and comparative financial information for 2004 have been prepared in accordance with IFRS standards effective on 31 December 2004.