2015
DIRECTORS’ REPORT
FINANCIAL STATEMENTS
We shall create good
food moments for
people
TINE
TINE AIMS TO BE A LEADING SUPPLIER of food and
drink brands, focusing primarily on dairy products.
The TINE Group’s business concept is to add value in
close partnership with nature, agriculture and the market.
The TINE Group turns pure, natural ingredients into good,
healthy food which consumers prefer, making it the
country’s leading supplier of food products. The TINE
Group is owned by a cooperative association of Norwegian
milk producers.
CONTENTS
The year in retrospect
4
CEO’s statement
6
This is TINE
8
The TINE map in Norway
10
Our brands
12
Directors’ report
14
Annual accounts
34
Auditor’s report
66
TINE Group– subsidiaries
68
Contact information
70
TINE annual report 2015 | 2
FINANCIAL HIGHLIGHTS
1 678
5 362
22 241
MNOK
OPERATING PROFIT
MNOK
PEOPLE EMPLOYED
BY THE TINE GROUP
OPERATING REVENUES
COWS MILK AND GOATS CONSUMPTION
MILK SUPPLIED TO TINE PER CAPITA, 2015 (2014)
MILLION LITRES
1 454,4
COWS MILK
KG/LITRES
20,2
GOATS MILK
87,4
11,6
9,5
19,1
3,0
MILK/LITRES
YOGHURT INC.
IMPORT/KG
CREAM, SOUR
CREAM/KG
WHITE, BROWN,
IMPORTED,
PROCESSED
CHEESE/KG
BUTTER INC.
MIXED
PRODUCTS/KG
(89,5)
(11,6)
(9,5)
(18,8)
(2,9)
KEY FIGURES, TINE GROUP
Operating revenues
Operating profit (EBIT)
Net profit margin
Profit before tax
Net profit for the year
Assets
Equity ratio (%)
Net interest-bearing debt/EBITDA
EBITDA Investments
Operational cash flow
NOK millions
NOK millions
Operating profit/ revenue in percent
NOK millions
NOK millions
NOK millions
NOK millions
NOK millions
2015
2014
2013
2012
2011
22 241
1 678
7,5 %
1 579
1 424
15 117
44,0 %
1,11
1 039
1 780
21 440
1 363
6,4 %
1 187
1 013
14 627
41,9 %
1,39
852
1 959
20 429
948
4,6 %
790
685
14 323
41,3 %
2,14
905
1 325
19 751
934
4,7 %
762
669
13 700
40,8 %
2,28
1 843
1 202
19 373
1 176
6,1 %
1 095
937
12 957
41,3 %
1,54
2 365
1 627
DEVELOPMENT, ENVIRONMENT/HSE FIGURES
EMPLOYEES
Number of employees,
TINE Group LTI rate
TINE Group Sick leave
ENVIRONMENT
Gross energy consumption (GWh)
Packaging consumption
Packaging consumption in relation to sales consumption (tonnes)
Emissions, CO2 equiv. total (tonnes/NOK millions)
Emissions, CO2 equiv. from dairies (tonnes)
Emissions, CO2 equiv. from transport
Transport (km/1000 litres of raw (tonnes)
Sorted waste (percentage of total)
SAFE FOOD
Pathogenic bacteria, no. of negative samples
Pathogenic bacteria, no. of positive samples1
No. of recalls
2015
2014
2013
2012
2011
5 362
8,1
6,2 %
5 480
13,2
6,2 %
5 600
10
6,2 %
5 485
10
6,4 %
5 505
12
6,7 %
531
28 684
2,40
87 291
27 291
54 988
37
87 %
543
28 730
2,47
90 606
27 323
58 139
39
85 %
565
28 834
2,53
96 687
33 212
58 259
38
86 %
531
29 433
2,60
90 773
31 039
55 100
36
74 %
465
28 784
2,54
82 842
23 112
53 933
37
69 %
2 830
1
2
4 011
3
2
3 799
4
1
3 381
0
0
4 550
0
1
TINE annual report 2015 | 3
2015
THE YEAR IN RETROSPECT
This selection of events from the past year shows that TINE has many
irons in the fire. We are grateful for some prestigious industry awards
and are continuing to work steadily to maintain our position, offering high
quality products and services.
1
January
2
February
TINE and Diplom-Is are named 2014
Supplier of the Year by 7-Eleven and
Narvesen respectively. Our capacity for
innovation and the work done in store
every single day are what customers value
the most.
TINE is launching Osteriet, a digital
magazine about cheese in general, and
Norwegian cheese in particular.
”At last we are venturing to tell people
that our food is good. Norway is a cheese
country,” says Arne Hjeltnes.
From January, consumers are able to
buy YT drinking yoghurt produced on the
first TINE bottle line for drinks, which is
situated in Tunga.
For the third consecutive year, TINE wins
ICA Super’s Supplier of the Year award.
Stores voted for TINE with this coveted
award.
We would like to congratulate Ørjan
Johannessen, winner of this year’s Bocuse
d’Or, the world chef championship.
We are launching ”Skjørost fra Trysil”.
Skjørost – a cheese similar to cottage
cheese, but made from soured milk instead
of fresh milk – has been a Norwegian
tradition for a very long time, dating all the
way back to the Vikings.
4 | TINE annual report 2015
3
March
Eco-friendly milk transport throughout
Norway is TINE’s objective in 2015
following its purchase of new vehicles
which run on biofuel. Many of the
company’s older trucks are replaced with
new, more eco-friendly vehicles in 2015.
THE YEAR IN
RETROSPECT
4
April
7
July
10
October
Many cheeses have always been lactosefree, but it is only now that TINE starts
labelling them ”naturally lactose-free”.
With a score of 83.7 points in Rep Trak
2015 and the rating ”Outstanding reputation”,
TINE has the same reputation score as in
2004, which was a record year.
”High quality products and services” is the
most important criterion and matters the most.
5
Together with farmers from Valdres, TINE
launches Norway’s first mountain farm
cream; TINE Stølsfløyte.
8
August
May
President and CEO Hanne Refsholt
welcomes Sylvi Listhaug, former Minister
of Agriculture and Food, during a visit to
TINE subsidiary Norseland Inc. in the US.
We received some excellent feedback
with regard to the work done by TINE and
Norseland for Jarlsberg® in the US and
Canada for many years.
11
Markedsføringsforeningen i Oslo (the
Marketing Association of Oslo) names
TINE ”Marketer of the Century”.
TINE wins this prestigious award in the
face of strong competition from Mills,
Freia, Stabburet leverpostei and SAS.
No fewer than 44 teams from the entire
TINE value chain, from subsidiaries
in Norway and abroad and from the
ownership organisation take part in the YT
Holmenkollstafetten Relay Race.
6
TINE Football School is organised in
Zambia under the supervision of Harestua
IL. Who would ever have thought that TINE
Football School would be organised in
Africa when TINE and NFF started working
together to launch the concept in 1998?
9
September
June
November
The first distribution vehicles showing
pictures of farms and employees are on
the roads. With these new decals, we
want to show people that TINE continuing
to distribute liquid products directly from
dairies to stores is the most efficient
option, best for the environment, best for
consumers and best for our communities.
TINE Advisory Services launches a new
management tool for milk producers. Even
before its launch at Agroteknikk 2015, TINE
Business Management wins the Sølvakset
silver award for innovation at the trade fair.
12
Gamalost frå Vik is one of six Norwegian
products entered in the ”Les Rencontres
de Normandie” food festival. The people
of France were totally captivated by our
Gamalost cheese.
Jarlsberg® Minis, both standard and light
versions, are launched in the US with a
view to reaching out to modern Generation
Y consumers in the US.
A new 400 m2 facility with new processing
equipment is ready to produce Ridderost and
Port Salut at TINE Meieriet Tresfjord.
December
TINE MatSans attracts attention with its
pancake campaign. The world-famous
Nathan Shields makes pancakes depicting
pictures of famous Norwegians, including
Erna Solberg.
While TINE shoots straight to the top as
Coop Mega’s 2015 Supplier of the Year,
Diplom-Is ends up in a respectable second
place.
Chevre Ramsløk Haukeli wins the
”Speciality brand” award from Matmerk.
”We have seen a massive increase in
the available range of quality Norwegian
goats milk products,” said Matmerk when
presenting the unique flavour diploma.
The Standing Committee on Foreign Affairs
and Defence of the Parliament of Norway
issues its recommendation in connection
with the Globalisation Report. This indicates
that all parties, with the exception of the
Centre Party and the Socialist Left Party,
want to phase out export subsidies for
Jarlsberg® towards 2019.
TINE annual report 2015 | 5
GOOD TODAY
– BETTER TOMORROW
2015 was a landmark year for TINE. We have delivered the best results
ever in financial terms.
The Styrk TINE improvement project has
surpassed its 2013 target to improve
profits by NOK 750 million. At the start of
2016, this figure stood at more than NOK
800 million. This was duly marked in the
New Year, but we have no plans to ease
off. Our sights are firmly set on the future.
Styrk has not just been a profit improvement programme, it is also a potent seed
in our efforts to create a lasting culture of
change.
We are seeing a number of positive
developments as regards our markets. It
is particularly inspiring to receive good
feedback from consumers with regard to
innovations, leaving a very definite mark
on the market. At the same time, the
decline in whole milk sales presents TINE
with a challenge. TINE will be continuing its
systematic attempts to reverse this trend
and redoubling its efforts in 2016.
Furthermore, there is agreement at the
World Trade Organization concerning the
phasing out of export subsidies for agricultural products by the end of 2020. The
Parliament of Norway has concluded the
same in its discussion of the Globalisation
Report. This will result in significant impairment of profitability when exporting dairy
products from Norway. Sales of cheese are
increasing in Norway at the same time, and
the population growth is providing greater
potential for further growth. This may help
to diminish the impact of the loss of export
subsidies. As regards Jarlsberg®, TINE’s
international flagship product, TINE’s
6 | TINE annual report 2015
unequivocal ambition is to maintain and
develop the value of this brand – at an
international level as well.
Sustainability is at the heart of everything
we do here at TINE, and our partnership
model gives us a unique opportunity to
implement the measures needed throughout the entire value chain. By the end of
2015, 12 of our 35 industrial plants are
using district heating, while the amount
of renewable, climate-friendly energy
used will increase to an estimated 85
per cent by 2020. We are also using new
engine technology and biofuels to reduce
transport emissions of particulate matter,
dust, nitrogen oxides and greenhouse
gases by 75 per cent by 2020. This will
make as a climate-neutral carrier of milk
and dairy products. We have already made
excellent progress with our shift towards
greener transport. TINE has reduced
emissions from its own vehicles travelling
between farms and dairies by 18 per cent
since 2013 by using technology, but also
by implementing more efficient driving
patterns. TINE also has an active advisory
service which is working purposefully with
dairy farmers to reduce primary greenhouse gas emissions. Norwegian cattle and
Norwegian milk production are generally
very climate-efficient in an international
context. One kilogram of milk produced in
Norway results in emissions corresponding
to 1 CO2 equivalent, while the international average is 2.6.
In 2016, TINE will be making the links
between healthy diet and public health
even clearer. TINE has been working as a
food producer for 150 years, and throughout that time the company has gained the
trust of consumers and society. We have
to manage that trust wisely. Discussions
on which food products we should eat
more or less of are often based on myths
or flawed surveys. We have also noted
that the health authorities are concerned
about the fact that children are replacing
milk with other, less nutritious alternative drinks. Even so, TINE’s voice in the
debate must be based on expertise and
integrity. And in the future, we must also
work actively to establish arenas in which
we work together with the authorities and
other stakeholders to place nutrition and
public health on the agenda.
We still know there is only one way to get
the job done: Properly.
HANNE REFSHOLT
President and CEO
PRESIDENT AND CEO
Sustainability
is at the heart of
everything we do
here at TINE, and
our partnership
model gives us a
unique opportunity
to implement the
measures needed
throughout the
entire value chain.
TINE årsrapport 2015 | 7
THIS IS
TINE
The TINE Group is one of Norway’s biggest food
product companies and a full-scale supplier of wellknown dairy product brands. TINE is owned by 11,406
dairy farmers working as a cooperative association.
Our business concept involves producing pure,
natural ingredients to make tasty, healthy food
in close partnership with nature, agriculture,
consumers and trade.
For more than 130 years, TINE has built its
business on meticulousness in terms of both food
product and production expertise.
TINE has a portfolio of more than 1,200 product
lines produced at 31 dairies all over Norway.
TINE also has two central warehouses and two
terminals, as well as several wholly and partly
owned subsidiaries both in Norway and abroad,
such as Diplom-Is AS, Fjordland AS, Werners-
son Ost AB in Sweden, Norseland Inc. in the US
and Norseland Ltd. in the UK. Most of TINE’s
international business is conducted in the US,
Sweden, Denmark and the UK. TINE has production contracts with dairies in some of these
countries. Jarlsberg® is currently TINE’s biggest
export product. In 2015 we exported 9,265 tonnes
of Jarlsberg®, which is equivalent to around 50
per cent of total production in Norway. Other
TINE exports include TINE Gudbrandsdalsost and
Snøfrisk®.
The TINE Group has 5,362 employees and
operating revenues totalling NOK 22.2 billion in
2015.
THE TINE GROUP
Owners = organized
in 205 member societies
Wholly owned
international subsidiaries
Wholly owned
Norwegian subsidiaries
Partly owned
Norwegian subsidiary
Annual meeting
Wernersson Ost AB
Diplom-Is AS
Fjordland AS
Group Board of
Directors
Norseland Ltd. (UK)
OsteCompagniet AS
TINE SA
Norseland Inc. (US)
8 | TINE annual report 2015
THIS IS
TINE
TINE’S THREE-PART ROLE
TINE has three roles to maintain: as a market regulator on behalf of the authorities, as
a commercial brand supplier, and as a member organisation for its owners.
mm
o
C
ial
erc
Brand Supplier
Commercial brand supplier
With operating revenues in excess of
NOK 22 billion a year, TINE is one of
Norway’s biggest food industry stakeholders. TINE thrives on consumer
trust by supplying brands.
Cooperative organisation
TINE’s aim is to run an efficient, high
quality, market-oriented food
enterprise on a cooperative basis. TINE
works to ensure that its owners
achieve the best possible financial
results from their dairy production,
safeguarding owners’ other interests.
e
o
rg
a
sa
ni
or
ulat
g
e
r
et
k
ar
Co
o
p
e
rati
v
Market regulator
As a market regulator, TINE is required
to accept milk from all milk producers
in Norway. This guarantees that all milk
producers will be able to supply the
milk they produce at a set price (the
target price). TINE also has an obligation to supply milk commodities to
other industry stakeholders.
tio
M
n
MARKET REGULATION
Ministry of Agriculture and Food
Norwegian milk farmers
Norwegian Agriculture Agency
Sales fee
TINE SA
TINE Milk Supply
Norwegian dairy industries
The Sales Council is a
public body with autonomy.
The Sales Council’s primary
objective is to effectively
regulate the market for
various agricultural
products, at the lowest
possible cost.
TINE Industry
Norwegian dairy stakeholders include: Synnøve Finden AS,
Normilk AS, Q-Meieriene AS and Rørosmeieriet AS.
In simple terms, Market regulation
involves TINE Milk Supplies accepting
responsibility from the authorities and
ensuring that there is enough milk
(milk commodities) in Norway. This
level is stipulated in negotiations
between the Norwegian authorities
and the agricultural trade unions.
The scheme is self-funded by
Norwegian dairy farmers, with TINE
securing sales and prices for farmers in
line with the Agricultural Agreement
and a stable supply of products in all
markets at virtually identical prices.
The market regulator is also obliged to
ensure supply, guaranteeing all dairy
companies the necessary access to
commodities, as well as receiving milk
from all producers in Norway.
TINE annual report 2015 | 9
THE TINE MAP IN
NORWAY
NO. OF DAIRIES
31
13
8
TINE LIQUID
PRODUCTS
TINE SOLID
PRODUCTS
NUMBER OF DAIRIES
PRODUCING:
Liquid Products
13
8
Speciality Products
10
Central warehouses and terminals
4
Solid Products
TINE Liquid Products include the production process
from the receipt of raw milk and inputs, goods production and delivery to storage. TINE’s liquid products include Tinemelk, TINE Kremfløte, TINE Yoghurt, Litago
and Sunniva juice.
TINE Solid Products cover the production process
from the receipt of raw milk and inputs, goods production and delivery to storage. Norvegia®, Jarlsberg®
and TINE Ekte Smør are all examples of TINE solid products.
10
4
TINE SPECIALITY
PRODUCTS
TINE CENTRAL
WAREHOUSES AND
TERMINALS
TINE Speciality Products cover the production
process from the receipt of raw milk and inputs, production, maturing and packaging. Speciality products
include Selbu Blå, Gamalost frå Vik, TINE Pultost and
Ryfylkegome.
10 | TINE annual report 2015
TINE Central Warehouses receive products from the
production plants for further processing. This includes
division into consumer packs, cheese slicing and
grating, as well as storage. TINE Terminal receive the
finished products for onward distribution to
customers.
TINE has two central warehouses and two
terminals.
THE TINE MAP
IN NORWAY
THE TINE MAP IN
NORWAY AS AT 31.12.2015
22. TINE Meieriet Dovre
Hvitmuggost, organic brie
10. TINE Meieriet Tresfjord
Ridder®, Port Salut
11. TINE Meieriet Selbu
Normanna, Norzola, Royal Blue, Selbu
Blå, Kybos, Solvår, cubed and marinated Jarlsberg®
12. TINE Meieriet Tunga
Fresh and soured milk, cream,
Go’morgen, Biola, organic kefir, Cultura, YT and drinking yoghurt, organic
milk
13. TINE Sentrallager Heimdal
Grated, sliced and cubed cheese, packaging, storage, imports, sales
14. TINE Meieriet Elnesvågen
Jarlsberg®, Sveitser, brown cheese,
cumin cheese
15. TINE Meieriet Ålesund
Fresh and soured milk, cream, iced
tea, Piano desserts, creams and
sauces, YT, iced coffee, long-life
drinks, organic milk
16. TINE Meieriet Ørsta
Edam, Norvegia®, Norbo, Kremost,
Snøfrisk, brown cheese, Kvitlin natural
white goat’s cheese, goats milk butter,
søst and gomme
1. TINE Meieriet Tana
Fresh milk, butter, Kesam®, cream,
junket, buttermilk pudding, Greek yoghurt
2. TINE Meieriet Alta
Fresh milk, cream
3. TINE Meieriet Storsteinnes
Norvegia®, brown cheese, casein, cumin cheese, Balsfjord
4. TINE Terminal Tromsø
Storage and transshipment
5. TINE Meieriet Harstad
Fresh milk, sour cream, cream, juice,
organic milk
6. TINE Terminal Bodø
Storage and transshipment
7. TINE Meieriet Sandnessjøen
Fresh milk, organic milk, powdered
milk, butter, cream, storage and transshipment
8. TINE Meieriet Sømna
Norvegia®
9. TINE Meieriet Verdal
Jarlsberg®, Norvegia®, Gräddost,
butter, Bremykt, dried whey products.
17. TINE Meieriet Byrkjelo
Fresh and soured milk, cream, Norvegia®, brown cheese, Norvegia® portions.
18. TINE Meieriet Vik
Gamalost, Mylse, raspberry juice
19. TINE Meieriet Voss
Norvegia®, Dravle
20. TINE Meieriet Bergen
Fresh and soured milk, cream, juice
21. TINE Meieriet Hardanger
TINE Kremost, cream cheese base,
desserts
23. TINE Meieriet Frya
Fresh and soured milk, yoghurt, sour
cream, cottage cheese, cream
24. TINE Meieriet Brumunddal
Lactose-free products, long-life consumer milk products, flavoured milk,
juice, desserts, ingredient and powdered milk products, milk concentrates
25. TINE Meieriet Lom & Skjåk
Brown cheese
26. TINE Meieriet Sem
Fresh milk, cream, organic milkk
27. TINE Meieriet Trysil
Pultost, Skjørost
28. TINE Meieriet Tretten
Processed cheese, porridge, desserts,
sauces, waffle batter, cheese spread.
29. TINE Meieriet Oslo
Fresh milk, yoghurt, sour cream, juice,
iced tea, cream, organic kefir, organic
milk
30. TINE Meieriet Sola
Fresh and soured milk, cream, organic
milk
31. TINE Sentrallager Klepp
Grated, sliced and cubed cheese, packaging, storage
32. TINE Meieriet Jæren
Jarlsberg®, Norvegia®, mozzarella,
pizza topping, butter, Brelett®,
primost, dried whey products
33. TINE Meieriet Kristiansand
Fresh and soured milk, cream
34. TINE Meieriet Setesdal
Sour cream porridge, Kviteseidsmør,
herb butter, Ryfylkegome,
Setesdalssmør, organic Setesdalsmør
35. TINE Meieriet Haukeli
Frozen Curd, chevre, Ystil
36. TINE SA Head Office
Oslo
TINE annual report 2015 | 11
OUR
BRANDS
The TINE Group has more than 110 brands. Most of them are dairy
products made from Norwegian ingredients, but they also include juice
products, bottled drinks and ready meals. The Group’s subsidiaries
abroad also produce cheeses.
Consumers are concerned about health, and they want to buy products
with less fat and sugar and more protein. Many people are also
concerned about Norwegian culinary traditions and specialities. We have
used this information as a starting point for our product launches over
the years. Here are some of our new products from 2015.
TINE PRODUCTS
Tinemelk is one of Norway’s most familiar brands.
Milk is one of our most complete foods as it
contains a number of important nutrients and is a
staple of the Norwegian diet. TINE offers a total of
13 fresh milk variants, three of which are organic.
The flavoured milk category is experiencing
growth, while sales of fresh milk and soured milk
are performing less well. We launched a number
of exciting new products in 2015:
14 launched a cottage cheese with jam, available in two
flavours: strawberry and pomegranate and apple and
pear. A new variant of 14 Greek yoghurt 90 kcal was
launched, with the fresh flavour of lemon and lime.
Biola launched two new variants of its soured milk –
mango and pomegranate/raspberry – with absolutely
no added sugar or fat. Biola Zero is sweetened with
sweeteners, and the product contains a combination
of vitamin D and lactic acid bacteria that provide
Biola with its excellent consistency and flavour.
July saw the launch of TINE Stølsfløyte from
Valdres, along with TINE Stølsmjølk.
12 | TINE annual report 2015
Biola Smoothie is a tasty,
rich, milk-based smoothie
containing fruit and berries. This product contains
only the sugar occurring
naturally in the milk and
the fruit and berry
concentrate.
Go’morgen ZERO is a huge
success. Consumers want to
buy products with no added
sugar, but without compromising on flavour.
Sprett Yoghurt PLUSS is a
healthy children’s yoghurt
from TINE. Sprett PLUSS has a
small amount of added sugar,
is sweetened with fruit juice
concentrate, contains more
fruit and berries, has added
vitamin D and its lactose content is reduced.
OUR
BRANDS
Both trends and consumers
indicate to us that there is a
requirement for a wider
selection of lighter products.
TINE Lett Crème Fraîche 10 %
has the same excellent consistency and the smooth, rich
flavour as current products.
TINE is launching a new series of traditional products
which are specific to the district in which they are
produced and which are firmly rooted in Norwegian
culinary tradition. These products will be manufactured locally using local ingredients, but they will be
sold all over Norway.
TINE Kremfløte Økologisk 3 dl is a
top quality dairy product from local,
organic dairy farms. It contains
38 % fat and enhances the flavour
of most things.
Sunniva Supri frukt- og grønnsaksjuice is a new
juice product containing no less than 30 %
vegetables.
TINE Lettrømme fra Nord contains both goats
cream and cows milk – a truly exciting and tasty
combination.
TINE Skjørost fra Trysil has been a Norwegian tradition for a very long time. This is a cultured milk cheese that used to be made on a huge number of farms
so as to be able to use the entire commodity.
TINE isTe Sparkling Original is
a refreshing, sweet, sparkling
iced tea. This product was also
launched in a Zero variant for
people who prefer products
containing no sugar.
TINE Styrk Kaffe has been
well received by healthconscious Norwegians
who are keen to stay in
shape in their active and
hectic daily lives. This is
the latest version with coffee.
Piano Isbase gives consumers the opportunity to
make their dream ice cream at home and serve it as
”home-made”.
TINE Setesdalsmør is churned in the traditional way
at one of the smallest dairies in Norway. It is made
from soured organic cream and includes 2 % added
salt, making this a very tasty butter.
OSTECOMPAGNIET AS
FJORDLAND AS
NORSELAND INC.
Fjordland AS is a brand company that develops,
markets and sells fresh ready meals, margarines,
yoghurts and desserts in the Norwegian market.
Norseland Inc. is the leading distributor of premium
special food brands in the US. They market, import
and sell their exclusive brands at all outlets throughout the US. Jarlsberg® is America’s bestselling brand
in its segment.
WERNERSSON OST AB
NORSELAND LTD.
Wernersson Ost AB is one of Scandinavia’s biggest
speciality cheese wholesalers. They are turnkey
suppliers of cheese and have also specialised in the
storage and processing of cheese, with many strong
brands in their portfolio
Norseland Ltd. is one of the UK’s innovative cheese
specialists and number one in the British Blended
Cheese segment with a 41 % market share. They
have many market-leading brands and many awardwinning products in their brand portfolio.
OsteCompagniet AS markets and sells speciality
cheese products from TINE and a few small-scale
producers, along with cheese from a number of European countries. Norwegian products account for most
of its sales, but cheese is imported from other countries as a supplement to the range available to consumers, thereby increasing interest in cheese.
DIPLOM-IS AS
Diplom-Is AS is a brand company that produces and
markets ice cream and frozen desserts.
TINE annual report 2015 | 13
DIRECTORS’
REPORT
Highlights of the year:
•
Considerable improvements to TINE operation
and development of the TINE organisation
•
Strong growth for Norvegia® and
Go’morgen®, while fresh milk continues to
decline
•
Reduced emissions from TINE transport and
production, thanks to an increase in the use of
renewable energy
TINE TARGETS AND STRATEGY
TINE aims to be a leading supplier of food and drinks, focusing
specifically on dairy products. The parent company TINE SA is a
cooperative society owned by Norwegian milk producers. Top
quality milk forms a basis for its business. The aim is to add as
much value as possible for the owners’ milk production, both now
and in the future.
Competition in TINE segments has become significantly more fierce
in recent years. TINE’s primary approach in order to deal with this
is: To process Norwegian milk to create high-quality dairy products
and strong brands.
Strategic focus areas:
Growth is important. TINE must create growth in its core
business, but it also has to achieve higher profitability targets on
an international level. TINE’s subsidiaries have an important part
to play in increasing growth.
TINE has to have a value chain which is competitive at all levels. TINE
makes constant improvements in order to streamline production.
TINE’s efforts over the past two years have strengthened profits
considerably, and the company has to continue to build on this. TINE
offers efficient, fast direct distribution with good delivery precision.
We reinforce our partnerships with our customers by customising for
14 | TINE annual report 2015
• TINE works in close partnership with the
health authorities on specific health and
nutrition measures
•
Continuous long-term work on operational
quality at farms creates the best conditions
for creating the competitive advantages of the
future for TINE and TINE’s owners
•
TINE improved its delivery capacity to
customers in 2015 from an already high level
selected products. We aim to increase flexibility in TINE’s industry
so as to go on responding to changes to requirements.
Staff and manager development is key to TINE. We have to
provide a safe work environment and reduce sick leave levels.
TINE must develop its staff and expertise in line with the
company’s business needs. TINE must ensure further development of its change and market orientation and increase efficacy
with targeted management development.
Social responsibility is one of seven fundamental principles
for cooperative association. Cooperatives are based on values
such as equality, fairness and solidarity. These values are firmly
rooted in the TINE Board of Directors and management and in the
company’s corporate social responsibility work. This has been
and will continue to provide a firm foundation for sustainable
value creation and competitiveness in the future.
TINE’s strategic focus areas have sections of their own, but corporate
social responsibility is reported as an integral part of these.
DIRECTORS’
REPORT
2015 RESULTS
TINE’s results for 2015 are affected by effects from TINE’s Styrk
improvement project, favourable currency exchange rates and
growth in cheese sales. Operating revenues for the Group amounted
to NOK 22.2 billion, representing an increase of NOK 0.8 billion. This
is equivalent to a 3.7 per cent increase on 2014 (1.2 per cent with
adjustment for changes in currency exchange rates).
Operating profit amounted to NOK 1,678 million, representing an
increase of NOK 315 million on 2014.
SALES REVENUES FROM
CONVENIENCE PRODUCTS
PER SEGMENT IN THE TINE GROUP (MNOK) 2015
898
834 1 260 70
Convenience
Juice, fruit
drinks and
water
Ice cream and
desserts
Other products
8 581
Liquid dairy
products
Currency
International factors affecting currency exchange rates have affected
TINE’s profitability over the course of the year. The weakening of
the Norwegian krone against foreign currencies has resulted in a
net positive effect of NOK 44 million in 2015. The positive currency
effects were derived from the export of Jarlsberg®, along with TINE’s
international subsidiaries. The export of whey-based powder has
also resulted in a positive currency effect, but falling world market
prices have more than offset this effect. At the same time, changes
in currency exchange rates have resulted in an increase in purchasing
expenses relating to imported inputs for the TINE Group.
A net amount of NOK 22 million has been charged to the 2015
accounts with regard to non-recurring items. This includes
restructuring expenses in connection with reorganisation and the
deduction of profits and losses from the sale of liquidated facilities.
Correspondingly, a net amount of NOK 69 million was charged to the
2014 accounts.
8 978
Solid dairy products
see note 1 for more information
TINE’s business consists of Domestic dairy operations, International
dairy operations and Other business. The purchase and resale of milk
comes under TINE Milk Supplies, a department which is separate from
TINE SA in terms of both administration and accounting.
OPERATING PROFIT BY BUSINESS AREA
NOK MILLIONS
Domestic dairy
2015
2014
1 497
1 199
International dairy
78
30
Other operations
105
150
-1
-16
1 678
1 363
Business eliminations
TINE Group total
Results in connection with corporate social responsibility and the
environment
TINE’s target is to reduce greenhouse gas emissions by 30 per cent
before 2020, compared with emissions levels in 2007. At the end of
2015, emissions had increased by 2.7 per cent since 2007, although
they have decreased by 3.8 per cent since 2014. 2013 marked a
turning point in TINE’s greenhouse gas emissions, and the reduction
over the past two years has amounted to 9.7 per cent.
TINE has focused on renewable energy in production. Targeted
efforts for energy optimisation and utilisation are now starting to
pay off. Plans to phase in renewable energy were meant to have
been implemented in 2015, but they have been delayed slightly.
The full effect will become apparent in 2016.
TINE’s efficient, eco-friendly transport is helping to save on fuel
and reduced greenhouse gas emissions by approximately 3,000
tonnes of CO2 between 2014 and 2015.
Specific measures in the fields of nutrition, transport and production can be found in the Domestic dairy operations section.
Since 2010, TINE has been reporting its corporate social responsibility and environment in accordance with international standards,
the Global Reporting Initiative (GRI-G3). For 2015, TINE will be
reporting its corporate social responsibility pursuant to the new
standard GRI-G4. Please see also further information submitted by
the administration concerning TINE’s corporate social responsibility work pursuant to GRI-G4 (www.tine.no.).
TINE annual report 2015 | 15
Committed staff at TINE Meieriet Oslo are proud of their Styrk results.
GROWTH AND COMPETITIVENESS
TINE milk is perhaps the best in the world. TINE’s owners have
been producing milk of outstanding quality for many years,
forming the very basis for the development and building of
new brands. In 2015, 93.7 per cent of the milk supplied to TINE
is elite milk (92.1 per cent in 2014). This milk is considered
to be outstanding in accordance with objective criteria, and
it is the highest quality award available to Norwegian dairy
farmers for the milk they supply. High levels of access to good
milk commodities are also due to targeted, long-term efforts to
ensure good animal health and animal welfare thanks to TINE’s
unique advisory service for its producers.
DOMESTIC DAIRY OPERATIONS
Sales revenues for domestic dairy operations for 2015 amounted
16 | TINE annual report 2015
to NOK 17.7 billion, representing an increase of 2.4 per cent on
last year (1.6 per cent with adjustment for changes in currency
exchange rates). TINE has seen good value development over
the last year for a number of established and new products.
The cheese category also continued its growth in 2015.
Operating profit for domestic dairy operations amounted to
NOK 1,497 million, representing an increase of NOK 297 million
on 2014.
Overall, the dairy category is declining in value and volume from
stores. For TINE, the decline in fresh milk volume is particularly
significant1. Cheese is undergoing strong growth, with TINE as
the engine driving this growth. Greater emphasis on innovation
DIRECTORS’
REPORT
and communication to meet consumer needs that are constantly
changing will result in future growth.
Skimmed milk growth
Milk-based drinks are experiencing a decline in terms of both
volume and value, particularly the per capita consumption1 of
fresh milk. More and more alternatives are emerging, and per
capita we are drinking a little less milk. TINE saw a slightly
greater decline than the segment as a fresh, with lower volume
sales of both fresh milk and flavoured whole milk in 2015
compared with 2014. Lactose-adjusted products and Ekstra Lett
Tinemelk are developing well.
The decline in both overall volume and per capita is continuing
for soured milk. That said, the launch of Biola variants has
reversed this development and the segment saw growth in the
last six months of the year. TINE’s efforts to improve public
health have included the launch of sugar-free Zero variants
and formats for new on-the-go consumption. Flavoured milk
continued to grow in terms of both volume and value, but TINE
lost shares, mainly on account of the weak development of
TINE Milkshake.
Norvegia® continuing its growth
TINE is ensuring growth in the cheese category in 2015. This
growth is being driven mainly by solid white cheeses, but with
the exception of brown cheese all segments played their part 2 .
For TINE, Norvegia® and TINE Revet Ost, which was relaunched
in 2015, drove growth compared with the same period last year.
We are perceiving an increase in interest in cheese, and both
consumption per capita and total volume are increasing in this
category.
Total retail sales of brown cheese have undergone a decline 2
compared with 2014, and TINE is developing slightly better
than the segment as a whole. Consumers are eating less brown
cheese. TINE has implemented measures in 2015 with a view to
increasing future sales.
becoming increasingly likely to select cottage cheese and
porridge products. However, this is in comparison with a very
strong 2014. There was a decline in store-based value in this
category as well 2 , driven mainly by strong price competition
for TINE yoghurt products.
TINE Yoghurt and Go’morgen are driving volume growth in
the segment 2 ; partly due to the launch of Go’morgen Zero
which is recruiting new, younger consumers. Imports are also
driving volume growth. Sales of yoghurt and snack products
based on TINE are increasing in both volume and value. Health
is continuing to drive the segment, and the 14 brand did well
in this area.
Organic approach from TINE
Organic products are a focus area for TINE, and we want
to offer a wide range of organic dairy products through
profitable, sustainable production. TINE offers consumers 11
organic products, but catering customers are also a channel
in which use of organic products is widespread. Our ambition
is to extend our selection in line with increasing demand from
consumers and catering services. Organic whole milk was
launched in 2014, while organic cream was launched in the
autumn of 2015. Tinemelk Økologisk is increasing in terms
of store-based value and volume 3 . This is also the case for
Norvegia® Økologisk, which is seeing double-digit growth 3 .
FACTS
At the end of 2015, TINE had 31 dairies all over
Norway. TINE also has two central warehouses
and two distribution terminals. TINE processed
a total of 1,262 million litres of cows milk and
goats milk in 2015 (1,239 million litres in 2014).
The biggest product groups were liquid products
with 486 million litres (500 million litres in 2014)
and cheese with 75,103 tonnes (75,074 tonnes
in 2014).
Positive development for lighter sour cream products
TINE’s sales of cooking products are declining in value, partly
as a result of price reductions. In terms of volume, we are
continuing to see growth 2 , and domestic consumption of soured
products and butter is increasing. Sour cream, cream and butter
all saw store-based volume growth in 2015, and TINE is driving
that development. TINE-based sales grew in both value and
volume in 2015. The lighter variants are driving growth for both
crème fraîche and sour cream.
For fresh cheeses such as cottage cheese and quark, we are
still seeing strong volume growth and high levels of interest;
for use in cooking, as desserts and as snacks. New launches
are increasing competition and price pressure.
Increase for TINE yoghurts
The yoghurt category is continuing to see volume growth,
but this is lower than in previous years as consumers are
FOOTNOTE
1
Source: melk.no
2
Source: Nielsen ScanTrack, Total grocery products (Norway), T. Tine SA,
sales in volume 1000, volume change YA, volume change % YA, volume
change % PP, Quarter LY, Quarter TY as at 27 December (week 52), YTD as
at 27 December 2015.
TINE annual report 2015 | 17
TINE’s long-term target is for 6 per cent of the milk it receives
to be organic. The volume of organic milk has fallen slightly in
2015, while demand has increased – in particular from other
stakeholders. The usage of Norwegian organic milk for organic
products currently stands at 54 per cent, up from 48 per cent in
2014. Our target is to achieve a usage level of 80 per cent. This
increase in the usage level means that in 2015, TINE has paved
the way for conclusion of new supply agreements for organic
milk in adjacent areas in order to guarantee sufficient access
to commodities in future.
High-quality goats milk means greater selection of goats milk
products
Targeted and thorough efforts among producers of goats milk
over the past few years have helped to significantly improve
milk quality. 2015 has also been characterised by strong growth
in the production of goats milk, with an increase of 10 per cent.
This has given TINE opportunities to launch new products and
improve existing products.
TINE launched Lettrømme fra Nord, based on both goats milk
and cows milk, in 2015. This met with a positive response from
both consumers and the best chefs in Norway, but even so
sales have not lived up to expectations. We see that the general
increase in interest in cheese among Norwegian consumers has
also resulted in increased sales of cheese based on goats milk.
However, the decline in brown cheese sales has resulted in a
reduced need for goats milk. The market initiative is taking a
long-term perspective.
Sunniva the most recognised juice brand
In 2015, the juice category saw a decline in volume but growth
in value. The Sunniva portfolio was challenged by a strong
increase in competition from both new stakeholders and own
brands. Nevertheless, it is pleasing to see that Sunniva is now
the most recognised juice brand and the biggest retail juice
brand in Norway. The newly launched Sunniva Supri, which
is based on the health trend, also experienced good growth.
TINE’s portfolio of bottled drinks overall has faced a challenging
2015, but sales at kiosks and service stations still increased.
Trends characterise the catering market
In the product areas we saw a considerable increase in the sale
of organic products, particularly to the public sector. As with
the retail sector, we saw an increase in lactose-free products
and products containing less sugar. Products containing lots
of protein and small amounts of fat, such as Kesam® and TINE
Cottage Cheese, continued to grow.
TINE has also focused on offering speciality products suitable
for catering customers. Our E+ products, which are highly
nutritious products for people with special nutritional requirements, are one example of this. These have been received well
and are sold to relevant organisations all over Norway.
Sales growth at kiosks and service stations (KBS)
Summer campaigns and a stronger range are paying off. Snacks
18 | TINE annual report 2015
saw good sales through launches such as Go’morgen Zero and
14 Greek Yoghurt vanilla. After a number of years of decline in
the sale of traditional retail products to the channel, sales of
fresh milk and Norvegia® sliced cheese have increased sales
as a consequence of increased demand for milk for coffee
machines and cheese for sandwiches.
Strong competition among suppliers of ingredients
There is major price competition between Norwegian and
foreign suppliers of ingredients in Norway. Imports are brought
in directly or via processed products such as pizza and confectionery products. TINE supplies products to the food industry,
including meat, fish, bakery products, ready meals, margarines,
dressings, salads, ice cream and chocolate. The company also
exports powdered whey-based products to customers all over
the world.
TINE refines whey into high-value ingredients such as whey
powder concentrate and lactose permeate powder. TINE processes whey from the five biggest cheese factories, equivalent to
around 500 million litres per year. This resulted in production
of around 26,000 tonnes of these types of powder in 2015.
This is a profitable way of using whey, a byproduct from cheese
production.
Direct distribution of perishables good for the environment
In 2015, TINE continued its efforts to reinforce its delivery and
distribution capacity to customers. The company’s position as
a distributor must be reinforced by focusing on renewable fuel
and the latest generation of eco-friendly engine technology.
Before 2020, the entire transport fleet must be made up of
trucks with the most eco-friendly Euro 6 or later engines. This
means that TINE will reduce its emissions of the most significant
substances harmful to health and the environment by at least
about 75 per cent in 2020, assuming that transport requirements remain the same as today.
TINE’s distribution of fresh drinks and milk products results in
fewer kilometres driven, fewer emissions and fewer connecting
links on the way to consumers. TINE had a delivery capacity
to customers for all its products amounting to 98.2 per cent in
2015. This represented an increase of 0.4 percentage points
compared with the previous year. According to comparable
figures for equivalent companies both nationally and internationally, this means that TINE is world-class when it comes to
delivering on its promises.
Focusing on its own distribution makes TINE an attractive
alternative as a distributor for other supplies of goods. TINE
transports goods for more than 100 small scale producers in
Norway.
Good reputation
After having come out on top in terms of reputation in the
Ipsos MMI survey in the autumn of 2014, TINE fell to 4th place
in 2015. In the RepTrak survey, TINE shot up from number 6 to
number 3 as a result of long-term, focused efforts from both
DIRECTORS’
REPORT
talented milk producers and TINE’s own staff.
High customer satisfaction levels
TINE scores highly in supplier surveys, but it is also clear
that our competitors are growing stronger. We are adopting a
targeted and long-term approach to maintaining and underpinning the position we currently hold.
INTERNATIONAL DAIRY OPERATIONS
and improved operation. Jarlsberg® has also maintained its
market position and strengthened its profitability in spite of
strong competition.
In Sweden and Denmark, the development of Wernersson Ost
AB in 2015 was satisfactory despite increasing competition.
Owned brands are taking market shares, and pressure on
prices and margins has remained great throughout 2015.
In 2015, international dairy operations had sales revenues of
NOK 2.9 billion, representing growth of 21.3 per cent on 2014.
Growth stood at 0.8 per cent when adjusted for changes in
currency exchange rates. Operating profit in 2015 amounted
to NOK 78 million, representing an increase of NOK 48 million
on 2014. In 2015, international dairy operations accounted
for almost 13 per cent (11 per cent in 2014) of the Group’s
operating revenues, primarily on the basis of sales of brands
from TINE and other cheese producers.
TINE has subsidiaries in Sweden, Denmark, the UK and the
US. Wernersson Ost AB operates in Sweden and Denmark,
Norseland Ltd. operates in the UK, and Norseland Inc. operates
in the US. TINE products are sold via agencies in other countries.
Jarlsberg® is sold in a total of 16 countries 4 , including Norway.
TINE’s cheese exports at the same time amount to around 9
per cent (10 per cent in 2014) of the milk volume and around
17 per cent (18 per cent in 2014) of white cheese production.
The Jarlsberg® brand is currently TINE’s biggest brand on the
international market, with separate production in Norway and
the US and franchise production in Ireland.
BRAND EXPORT AND SALES,
INTERNATIONAL DAIRY
OPERATIONS
FIGURES (TONNES)
US
Total international sales of Jarlsberg® finished up 13.6 per
cent behind last year. The decline in the sale of Jarlsberg® was
mainly due to increasing competition and fewer campaigns in
the American market.
2014
2015
2014
6 234
6 722
17 153
18 124
Australia
1 198
1 602
1 949
2 413
Canada
1 621
1 697
1 849
1 908
UK
583
497
7 337
6 544
Sweden/Denmark
410
455
14 018
12 901
Other markets
The year was characterised by a rapid drop in milk prices on
an international level, primarily due to the deregulation of EU
quotas of 1 April 2015, the import ban in Russia and considerably reduced demand for dairy products and milk powder in
China. A surplus of cheese on the European market has resulted
in sharply declining prices for the majority of volume cheeses
all over the world. Combined with a weak euro against the
American dollar, this has resulted in a considerable increase
in exports from European producers to the American market.
TOTAL SALES*
BRAND EXPORT*
2015
Total
325
716
948
1 341
10 371
11 689
43 254
43 231
Brand export refers to sales outside Norway. Total sales are sales of all
brands to consumers/end markets.
FOOTNOTES
3
Source:
20160113-DC. Nielsen ScanTrack, Total grocery products (Norway),
Cheese/sour cream, cream, crème fraîche/milk, Norvegia 27 % Organic, 500 Gr, T.
Tinemelk Økologisk, TINE SA, Søtmelk, TINE Tjukkmjølk Økologisk, 1 L, Kefir Økologisk,
1 L, TINE Kremfløte Økologisk, 300 Ml, TINE Lettrømme Økologisk, 0.3 L, sales in value
1000 NOK, value change NOK YA, value change % YA, sales in volume 1,000, volume
change YA, volume change % YA, YTD as at 27 December 2015.
Norseland Inc. in the US has experienced increased competition, but nevertheless it has managed to maintain its profitability. The decline in the sale of Jarlsberg® was compensated for
by increased sales revenues from other parts of the product
portfolio in the US.
4
Source:
Total grocery products (Norway), Cheese/sour cream, cream, crème
fraîche/milk, Norvegia 27 % Organic, 500 Gr, T. Tinemelk Oekologisk, TINE SA,
Soetmelk, TINE Tjukkmjølk Økologisk, 1 L, Kefir Økologisk, 1 L, TINE Kremfløte
Økologisk, 300 Ml, TINE Lettrømme Økologisk, 0.3 L, sales in value 1000 NOK, value
change NOK YA, value change % YA, sales in volume 1000, volume change YA, volume
Norseland Ltd. in the UK has developed very well in 2015
and delivered its best results ever. This success is driven in
particular by the sale of Ilchester products, bigger margins
change % YA, YTD as at 27 December 2015. Jarlsberg® is sold in Australia, Austria,
Canada, Denmark, Finland, Germany, New Zealand, Norway, Japan, Singapore, South
Africa, Spain, Sweden, the UK, Ukraine and the US.
TINE annual report 2015 | 19
OTHER BUSINESS
TINE’s Other business includes the production and sale of food
products such as ice cream and frozen desserts, margarines
and fresh ready meals. This business is largely pursued by the
wholly owned subsidiary Diplom-Is AS and the partly owned
subsidiary Fjordland AS.
Sales revenues for Other business amounted to NOK 2.4 billion,
representing a decline of NOK 17 million compared with 2014.
Sales were weaker for Diplom-Is in 2015, but the company
saw positive development in streamlining. Fjordland experienced positive development in both the dairy and the ready
meal categories in 2015. Operating profit for Other business
amounted to NOK 105 million, representing a decrease of NOK
46 million compared with 2014.
Decline in ice cream sales
Profits for Diplom-Is in 2015 were greatly affected by bad
weather. This had a clear impact on the ice cream category,
with its main May–July season, affecting the small ice cream
category in particular.
Diplom-Is is seeing positive effects from the rationalisation and
streamlining projects implemented over the past few years. The
company began 2015 with all its production collected together
in Gjelleråsen. This involved starting up new production lines
and initial production of a number of products. This has required
additional production effort, but as planned it also includes a
production merger.
Styrk has two primary objectives:
• To develop a more market and change-oriented
organisation
• To improve revenues and expenses with an impact of
NOK 750 million on profits
At the end of 2015, the last of the 17 Styrk subprojects was
transferred from project to operation. Styrk achieved its
financial target of NOK 750 million in October, and to date
it has implemented measures which will result in a full year
effect of more than NOK 800 million. Of this total improvement,
around NOK 340 million was realised in the accounts for 2015.
This improvement is realised in the domestic dairy operations
business area.
INDUSTRY AND STRUCTURE
There is increasing interest in cottage cheese and yoghurt
products among Norwegian consumers as people focus more
closely on a healthier diet. Porridge products from TINE and
Fjordland are also demonstrating growth. The development
projects taking place at TINE Meieriet Frya and TINE Meieriet
Tretten, which were implemented in order to cope with anticipated growth in demand and to provide scope for innovations,
are on track.
The Board of Directors has made a decision to build a new
dairy and terminal in Bergen, which will be ready for use in
2019/2020. This plant will comprise production, storage and
distribution facilities. This measure will also result in Byrkjelo
consumer milk production being phased out.
Dinner, porridge and margarine improved results
TINE owns 51 per cent of Fjordland AS, a brand company
that develops, markets and sells fresh ready meals, margarines, yoghurt and desserts in the Norwegian market. Fjordland
experienced good sales development, particularly in respect of
dinners, porridge and margarines, resulting in an improvement
in the operating profit for 2015.
In 2015, Fjordland has implemented further development of
Matvarehuset, in which Fjordland holds a 75 per cent share.
Matvarehuset offers online sales of ready-made food and
beverage solutions to municipalities, institutions and households
in Hordaland and the surrounding area.
TINE STREAMLINING
TINE adapts both industrial processes and working methods
for a world undergoing rapid development. Consumer trends
are changing rapidly in line with both interest and changes in
health advice. The Styrk improvement project, which has been
in progress since the autumn of 2013, is laying the foundation
for TINE’s future improvement work. Styrk will come to an end
in early 2016, but our improvement work will continue.
20 | TINE annual report 2015
Anticipated reduction in industrial greenhouse gas emissions
Several important decisions were made in 2015, which will
contribute to a further switch from natural gas and fuel oil
to bioenergy and district heating for production. The dairy in
Brumunddal is the first TINE dairy to have started using bio-oil,
and the dairies in Ålesund and Elnesvågen will be replacing
natural gas with renewable district heating energy in 2016.
At the end of 2015, 10 out of 35 TINE plants were using
renewable district heating energy. In 2015, TINE used 531
gigawatts/hour (GWh) for production. The company’s consumption of renewable energy stood at 75 per cent in 2015. TINE
has identified various projects in which we are significantly
reducing greenhouse gas emissions from dairy production, and
the proportion of renewable, climate-friendly energy used will
increase to an estimated 85 per cent in 2020.
DIRECTORS’
REPORT
ENVIRONMENTAL TARGETS 2015
RESULTS
Greenhouse gas emissions
To reduce greenhouse gas emissions to 86,200 tonnes of CO2 equiv.
(Emissions in 2014: 90,700 tonnes
of CO2 equiv.).
At the end of 2015, greenhouse gas emissions from TINE activities amounted to 87,291 tonnes, representing a reduction
of 3.8 per cent on 2014.
Phasing out plants as a consequence of structural changes, reduced consumption of natural gas and the introduction of bio-oil
are the prime contributors to a reduction in greenhouse gas emissions from dairy activities. However, it is apparent that phasing in renewable energy has taken slightly longer than planned. As a consequence, we will not see the full effect until 2016.
By far the biggest contribution to our reduction in greenhouse gas emissions is made by our reduced consumption of fuel
for transport purposes. We have been working in a targeted fashion over the past two years to reduce consumption for
the transport solutions owned by TINE itself, and the results have now been documented effectively. It is now assumed
that fuel consumption for TINE’s outsourced transport has been reduced to a corresponding extent. This reduction has
initially been included in the environmental accounts for 2015.
Wastage
To reduce wastage by 0.30 percentage points at the consumer milk
plants compared with 2014.
Wastage from the consumer milk plants has been reduced by 0.15 percentage points.
Fuel consumption
To reduce fuel consumption
by 2 per cent in connection
with Commodity handling and
Distribution/Logistics (compared
with 2014).
Fuel consumption has been reduced by 4.7 per cent for TINE Commodity handling and 5.5 per cent for TINE Distribution and Logistics. Overall, fuel consumption has been reduced by 5.1 per cent.
Energy
Use of the ”specific energy
consumption” ratio for target
management and optimisation.
The ”specific energy consumption” ratio is used for target management at a number of TINE plants.
ENVIRONMENTAL TARGETS 2016
MEASURES
Greenhouse gas emissions
To reduce greenhouse gas emissions to 80,000 tonnes of CO2 equiv.
(Emissions in 2015: 87,291 tonnes
of CO2 equiv.).
TINE is continuing to phase out natural gas and fossil fuel oil at its plants. Conversion of energy sources from natural gas to
district heating based on bioenergy is an important measure being implemented at various plants. Optimisation and better
use of resources (ENØK) will also make a valuable contribution.
We have seen a reduction in wastage at several of the company’s consumer milk plants. The Styrk improvement
programme has made a positive contribution, with optimisation and result assurance. However, we still perceive
challenges at some plants. Better surveillance and observations in production will give us the opportunity to implement new improvement measures.
We have been working in a targeted fashion over the past two years to reduce fuel consumption for the transport
solutions owned by TINE itself. It is also apparent that frequent observations and clear target figures are helping to
bring about this good development. We have further potential for reducing our fuel consumption. The results have now
been documented effectively, and it is now assumed that fuel consumption for TINE’s outsourced transport has been
reduced to a corresponding extent. This reduction has initially been included in the environmental accounts for 2015.
There are financial and environmental gains to be had by reducing energy consumption when manufacturing our
products. TINE currently focuses strongly on optimisation and energy-saving measures (ENØK). All TINE plants are
implementing specific measures and activities with a view to reducing energy consumption.
Optimisation in respect of TINE’s transport activities in 2016 will make a positive contribution to a reduction in greenhouse
gas emissions. TINE is in the process of upgrading its vehicle fleet to the latest engine technology, and this will reduce fuel
consumption. Renewable fuel will be introduced for all TINE vehicles by 2020. Greenhouse gas emissions will be reduced
as more and more vehicles start using the new fuel.
Wastage
Use of the ratio associated with the
”drainage index” for the reduction
of wastage and better target
management. Target figures for
2016 and reference figures for 2015
linked with the ”drainage index” are
being established.
There are major financial and environmental gains to be had by reducing wastage at our plants. We will continue
to shine the spotlight on resource utilisation and the financial and environmental results achieved by good improvement work. A ”drainage index” has been established which will help to improve target management from 2016.
Fuel consumption
To reduce fuel consumption by 2 per
cent in connection with Commodity
handling and Distribution/Logistics
(compared with 2015).
Focus on efficient, eco-friendly driving, optimised transport and modern, custom equipment. A new, more modern
vehicle fleet and new IT solutions will help to bring about better, more efficient utilisation of the transport fleet.
Energy
Use of the ”specific energy
consumption” ratio for target
management and optimisation.
Target figures for 2016 linked with ”specific energy consumption” will be established at all TINE plants. There are
major financial and environmental gains to be had by reducing energy consumption when manufacturing our products. Therefore, particular attention will be paid to optimisation and energy-saving measures (ENØK). Target figures
for ”specific energy consumption” are in use at a number of TINE plants.
TINE annual report 2015 | 21
TINE must be an attractive employer, providing employees with opportunities for both professional and personal development.
EMPLOYEES AND
MANAGEMENT
As TINE has to develop the company’s staff and skills and also
develop change and market orientation throughout the entire organisation, organisational development will be a significant element in
the improvements implemented by TINE.
SAFETY, HEALTH AND THE WORK ENVIRONMENT
Healthy employees and a robust workforce in a good work environment are prerequisites if TINE is to achieve efficient operation
and quality at all levels. This work must be organised such that
our employees are not subjected to harmful physical or mental
stresses, and so that no one is injured or falls ill as a result of
their work.
Sick leave
TINE has seen a steady decline in sick leave since 2006. This
22 | TINE annual report 2015
DIRECTORS’
REPORT
excellent trend has now levelled off. Sick leave for TINE SA amounted
to 6.6 per cent for 2015 compared with 6.5 per cent in 2014. The
TINE Group chieved a sick leave result of 6.2 per cent, the same
as in 2014. TINE is not satisfied with these results and is working
systematically on improvements.
Occupational accidents
TINE’s overall target is to achieve a lost-time injury rate (LTI rate) of
zero. In 2015, TINE SA saw 68 incidents leading to absence from work
and has an LTI rate of 5 in 8.5: this represents a clear decrease on the
previous year, when TINE saw 110 incidents leading to absence from
work and an LTI rate of 13.2. For the TINE Group in 2015, 78 injuries
leading to absence from work were recorded (LTI rate: 8.1) compared
with 132 recorded injuries in 2014 (LTI rate: 13.2). Preventive, targeted
efforts in respect of safety and safety culture are starting to pay off. New
safety rules underpinned by training have been introduced to logistics
over the course of the year. A viewpoint analysis relating to safety has
been carried out at TINE dairies, and this indicates the situation at the
time of the analysis. Relevant measures are being implemented.
SICK LEAVE,
STAFF TURNOVER AND LTI RATE
2015
SICK LEAVE STAFF TURNOVER, %
LTI RATE
TINE SA
6,6 %
3,1 %
Subsidiaries
4,2 %
5,8 %
8,5
6,2
TINE Group
6,2 %
3,6 %
8,1
OCCUPATIONAL INJURIES
ACCIDENTS LEADING TO
ABSENCE FROM WORK LTI RATE 1)
TINE GROUP
2015
8,1
2014
Recording HSE incidents and hazardous conditions are important
prerequisites and instruments for reducing occupational accidents
by means of good improvements. In 2015, TINE has considerably
reinforced its efforts by recording unwanted incidents and hazardous
conditions. This is providing a good foundation for the establishment
and implementation of targeted measures to further reduce the number
of occupational accidents.
13,2
2013
6,4
9,9
2012
9,6
2011
As a result of high LTI rates, TINE is emphasising its efforts to enhance
skills in the field of health, safety and environment by means of internal
TINE HSE audits and various courses for TINE managers and staff.
ORGANISATION AND PEOPLE
11,9
0
1)
2
4
6
8
10
12
The results from these projects have helped to simplify the organisational structure,
resulting in fewer organisational levels. The roles of each individual unit and position
have also become clearer, and specific skills requierements have been linked with
individuals' roles.
At the end of 2015, the TINE Group had 5,362 employees, of whom
4,543 were employed by TINE SA. At the end of 2014, the TINE
Group had 5,480 employees, of whom 4,654 were employed by TINE
SA. The employee survey carried out each year by TINE showed
positive development in 2015. Success was apparent in both the
cooperation between managers and staff and the continuous
improvement climate. The response percentage was up compared
with the previous year and stands at 79.8 per cent.
TINE managers play a key part in efforts to ensure that results are
achieved in both the short and the long term. TINE has decided on
a new management practice which will sharpen management focus
in future and clarify anticipated management behaviour.
Mobility and restructuring
TINE has implemented a number of major organisational development projects over the past year. The biggest projects involved
sales, logistics, marketing, production and professional and support
functions. One thing all these projects have in common is the fact
that they have focused on greater market and change orientation and
increasing efficacy by simplifying organisation, clarifying responsibilities and reinforcing skills.
FOOTNOTE
5
LTI rate, definition: Number of injuries leading to absence per million hours worked.
TINE annual report 2015 | 23
EMPLOYEE DISTRIBUTION
WOMEN/MEN
EMPLOYEES
2015
34 per cent of women were in management positions, while 36 per
cent of the Group executive team was made up of women in 2015.
36 per cent of TINE’s Group Board, including employee representatives, were women.
MANAGERS
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
1 614
2 929
4 543
71
139
210
Subsidiaries
329
490
819
20
28
48
TINE Group
1 943
3 419
5 362
91
167
258
TINE SA
ABSENCE DUE TO ILLNESS
IN PERCENT
Cooperation between management and staff
The cooperation between the management and staff must be developed constantly. This requires initiatives such as targeted management development in order to increase efficacy.
TINE maintains good, inclusive dialogue with employees and
employee organisations. This cooperation is based on respect for
their role and the agreements. This dialogue is a strength when
it comes to all the change and development work carried out at
TINE. This is also confirmed by the staff survey. Employees’ rights
in Norway are well regulated in established legislation and practice
6,9
for cooperation between management and employee organisations.
TINE GROUP
2015
6,2
6,8
2014
TINE’s management meets with employee representatives at the
6,7
Group’s coordinating
committee and other fora. Furthermore,
TINE emphasises good interaction between management, safety
6,6
representatives and employee representatives. Around 75 per cent
of TINE SA employees belong to a trade union. As a result of such
6,5
membership, employees have elected four representatives to the
Group Board. 6,4
6,2
2013
6,2
2012
6,4
2011
6,7
Ethics
5,9
6,0
6,1
6,2
6,3
6,4
6,5
6,6
6,7
The results from these projects have helped to simplify the organisational structure, resulting in fewer organisational levels. The roles
of each individual unit and position have also become clearer, and
specific skills requirements have been linked with individuals’ roles.
These projects have helped to streamline professional and support
functions, while also clarifying roles and responsibilities between
line functions and professional/support functions. The final effect
of these projects will come into force in 2016.
A very large number of the company’s employees have been
affected by these changes.
TINE has set great store by implementing a good restructuring
process. The framework for this work is regulated by separate
restructuring guidelines, the main aim of which is to find a new,
lasting solution within or beyond TINE for affected employees.
Diversity
TINE’s ethical guidelines stipulate that all forms of harassment and
discrimination are unacceptable. TINE ensures that both genders
receive equal pay. The company also has an equality representative
who deals with issues such as gender equality. Equality at TINE also
involves diversity in that representation of both genders, various
cultural groups, various age groups and people with disablilities can
help to bring about innovation and positive results.
Women accounted for 36 per cent of TINE’s employees in 2015.
24 | TINE annual report 2015
6,3
6,8
TINE’s
Code of Conduct clarifies the attitudes and conduct which
6,2
TINE expects from every employee in terms of respect, integrity and
loyalty. The Code of Conduct was revised in 2015.
6,1
TINE managers6,0
are responsible for making their employees aware
of TINE’s Code of Conduct And also for reflecting on and practising
the handling of5,9
ethical dilemmas.
TINE has established guidelines for whistleblowing and has appointed an internal ”whistleblowing representative”. Important issues
included in the whistleblowing rules relate to non-discrimination,
anti-corruption, good business ethics and the duty and the right
to speak up about breaches of the law and TINE’s Code of
Conduct. Individual employees must feel they have the security
and scope to speak up if they perceive irregularities.
Ethical trade involves commercial activity that respects and
supports human rights, employee rights, the environment and
development throughout the value chain, irrespective of the
government’s ability and/or desire to exercise its responsibility to
protect its own residents from injustice. TINE is a member of Ethical
Trading Initiative Norway (IEH), and their ethical trading guidelines
have been incorporated in TINE’s purchasing terms.
CORPORATE GOVERNANCE
TINE’s Board of Directors emphasises that the company must be
administered and managed in accordance with good general principles. For TINE, corporate governance involves how the company
is to maintain the trust of various stakeholders and ensure that the
DIRECTORS’
REPORT
Group Board receives sufficient and correct information on the
business. One important part of corporate governance relates to
the establishment and maintenance of systems and procedures that
ensure compliance with regulations, standards and the company’s
own Code of Conduct.
The Norwegian Code of Practice for Corporate Governance (NUES)
stipulates principles and guidelines that help to clarify responsibilities and authorisations at major corporations. This recommendation has been compiled for companies listed on regulated markets
in Norway, but the Group Board decided in 2010 that TINE will
follow the principles of this recommendation insofar as they are
appropriate for TINE’s corporate structure and ownership.
TINE’S OWNERSHIP ORGANISATION
Local election commitee
Central election commitee
The audit commitee
(205 )
Member societies
(4)
Owners committees
Annual meeting
TINE SA
Council
Board
Production cooperatives: The production cooperatives are made up of TINE
members in more closely defined areas and constitute TINE’s local organisational
units.
A more detailed description of how TINE complies with the NUES
principles and guidelines can be found at www.tine.no.
Annual General Meeting at TINE SA: The Annual General Meeting is TINE’s
supreme authority and comprises 110 delegates elected by owners. The members
of the Board and Council are also involved.
TINE’S OWNERSHIP ORGANISATION
Board of Directors: The Board of Directors comprises 14 members, 10 of whom
are elected by the Annual General Meeting. The Annual General Meeting elects 3
deputy members in numerical order.
At the end of 2015, TINE had 11,406 owners, representing a
decrease of 686 compared with the previous year.
Local election committee: The elections at the production cooperative’s annual
general meeting are prepared by a local election committee. Members and a
deputy member and the chairman and vice-chairman of the election committee
are elected by the annual general meeting of the production cooperative.
The 2015 Annual General Meeting adopted new Articles of Association for TINE, with considerable changes to the member organisation. The regions of the member organisation were removed,
along with the regional boards, which had a part to play in both the
member organisation and the operating organisation.
The audit committee must supervise TINE activities in accordance with the
instructions adopted by the Annual General Meeting which are applicable at all
times. Members of the audit committee are elected for three years by the Annual
General Meeting.
Central election committee: TINE must have a central election committee
comprising eight members and three deputy members in numerical order, as
elected by the Annual General Meeting. The central election committee submits
proposals to the Annual General Meeting on matters such as members of the TINE
Group Board and Council.
The owner organisation is divided into four owner areas. The
Annual General Meeting is TINE’s highest governing body and
elects six Council members from each owner area. The Council
provides an advisory function for the Board. Council members
from the owner areas, together with at least one Board member,
make up an owners committee in each owner area. The owners
committee provides a link between the Board and the production
cooperatives, and its job is to promote active ownership and good,
open communication between the Board and TINE members. The
members of the owners committees act as contacts for each of
their production cooperatives and monitor activities within the
cooperatives.
Council: The Council must be a strategy forum and advisory body for the Board.
The Council comprises up to 24 members elected by owners, with equal
distribution from each owner area, along with Council members elected by
employees (2/3 of the number of owner-elected Council members). The chairman
and vice-chairman of the Council are elected by the TINE SA Annual General
Meeting.
2015
2014
2013
2012
2011
Milk price from TINE Milk
Supplies
5,02
4,85
4,65
4,53
4,32
The production cooperatives form the foundation of the member
organisation, and new Articles of Association will be used to
reinforce the production cooperatives by means of increased
activity. Professional, organisational and social activity within the
production 205 production cooperatives at the end of the year,
seven fewer than in the previous year.
Subsequent payment from
TINE SA
0,59
0,43
0,26
0,26
0,42
Total milk price
5,61
5,28
4,91
4,79
4,74
Owners committees: Each owners committee is made up of Council members
elected by owners and at least one member of the Group Board.
MILK PRICE
NOK/litre
TINE conducts an annual owner satisfaction survey. The survey
carried out in the winter of 2015/2016 shows an upturn to 78.3
from 76.1 in 2014. This result is above the ”good satisfaction”
limit of 70. The target is to achieve owner satisfaction of 80 by
the time of the next survey. A number of measures have been
implemented in 2015 and will continue throughout 2016 in order
to reach this target.
TINE annual report 2015 | 25
FAT PERCENTAGE IN MILK
TINE MILK SUPPLIES
PERCENT
TINE Milk Supplies is a separate administrative and accounting
operation at TINE SA and was established pursuant to an agreement
concluded on 19 December 2003 between the government and
TINE concerning clear financial separation between commodities
management and further processing at TINE. TINE Milk Supplies
submits its own audited financial statements with a separate annual
report to the Norwegian Agriculture Agency by June 1, each year.
4,30
4,25
4,20
4,15
4,10
2013
2014
December
November
October
September
August
July
June
May
April
March
February
4,00
January
4,05
2015
TARGET
TARGETPRICE
PRICEDEVELOPMENT
DEVELOPEMENT
NOK
PER LITRE
NOK/LITRE
5,5
5,0
TINE Milk Supplies deals with all activities relating to the handling
of milk as a commodity from milk producers until the milk has been
supplied and billed to the individual stakeholders in the milk market
scheme. All stakeholders, including TINE as a processing industry,
purchase raw milk at the applicable listing price at the time the
milk is supplied by TINE Milk Supplies, and this is monitored by
the Norwegian Agriculture Agency.
To be able to fulfil its obligations, TINE Milk Supplies purchases
services from other function areas at TINE on the basis of clearly
defined service instructions. Regular audits are carried out with
the service providers in order to clarify the autonomous and
independent role of TINE Milk Supplies and ensure that actions
are implemented in accordance with adopted plans and targets.
Service instructions have currently been established with the
following function areas at TINE: TINE Consultancy and Members,
TINE Milk Supplies Management, TINE Logistics and TINE Economy
and Finance.
In 2015, TINE Milk Supplies received 1,475 million litres (1,449
million litres in 2014) of cow and goats milk: 1,455 million litres
of cows milk and 20 million litres of goats milk. 51 million litres of
the cows milk were organic (52 million litres in 2014). Of the total
volume, 224 million litres (219 million litres in 2014) were sold
to external stakeholders. The dry solids content of the milk has
increased throughout 2015, particularly as regards the fat content
in cow’s milk.
4,5
4,0
3,5
2.h.15
1.h.15
2.h.14
1.h.14
2.h.13
1.h. 13
2.h.12
1.h.12
2.h.11
1.h.11
2.h.10
1.h.10
2.h.09
1.h.09
2.h.08
1.h.08
3,0
The target price for milk is established by the parties to the agricultural agreement and amounted to NOK 5.20 per litre for the first six
months of the year, while it increased by NOK 0.08 to NOK 5.28
per litre for the second six months of the year. TINE Milk Supplies
has achieved the target price in its sales of milk to stakeholders
during both six-month periods. Please see Notes 31 and 32 to the
financial statements for further information.
TINE’s responsibilities as a market regulator are assigned in organisational terms to TINE Milk Supplies. This involves reporting at
regular intervals to the Norwegian Agriculture Agency and the
Sales Council, as well as providing regular information to stakeholders regarding the market situation and market prospects for milk
and milk products on the TINE website. Information letters (in
Norwegian) can be found by following this link: http://www.tine.
no/presserom/om-tine-gruppa/noteringspris.
26 | TINE annual report 2015
Milk quality and sales are crucial to TINE’s business
FINANCIAL SITUATION AND CAPITAL STRUCTURE
Financial results and tax
Net financial expenses amounted to NOK 99 million in 2015,
down from NOK 177 million in 2014. Net interest expenses fell
from NOK 117 million in 2014 to NOK 87 million in 2015. This
reduction was due to the fact that the average net interestbearing liability was 14 per cent lower in 2015 than in the
previous year, and that the average interest on loans was lower
than in 2014.
TINE hedges elements of the import of inputs, primarily purchases in euros (EUR), as well as elements of sales in foreign
currencies, primarily American dollars (USD). The Norwegian
krone was considerably weakened in the autumn of 2014 and
has remained weak ever since. As a result, TINE experienced net
foreign exchange losses of NOK 13 million in 2015, compared
with losses of NOK 32 million in 2014.
Other financial expenses in 2015 amounted to NOK 10 million,
the same as in 2014.
Profits from associated companies in 2015 amounted to NOK
10 million, representing an improvement compared with the
NOK -17 million of the previous year. This is mainly due to an
improvement in profits at Skala AS (NOK -26 million in 2014).
Positive development at Tun Media has also helped to bring
about this improvement.
Tax expenses for the TINE Group in 2015 amounted to NOK
155 million. The effective tax rate was 9.8 per cent in 2015,
down from 14.6 per cent in 2014. It has been confirmed that
the corporation tax rate in Norway from 2016 will be reduced
from 27 per cent to 25 per cent. This has reduced the Group’s
deferred tax liability by NOK 54 million and helped to bring
about the low effective tax rate for 2015. The annual profit
after tax for the TINE Group amounted to NOK 1,424 million,
representing an increase of NOK 411 million on 2014.
Balance sheet
The balance sheet as at 31.12.2015 for the TINE Group amounted
TINE annual report 2015 | 27
to NOK 15.1 billion, representing an increase of NOK 489 million
compared with the end of 2014. This development has many
come about on account of an increase in working capital,
tangible fixed assets and pension funds. Since December 2014,
working capital has increased by NOK 195 million, mainly as
a result of increased stock levels. The need for investment in
2015 was moderate, but nevertheless slightly higher than the
depreciation level. As a result, tangible fixed assets increased
by NOK 147 million.
Net interest-bearing liabilities as at 31.12.2015 for the TINE
Group amounted to NOK 2,918 million, down NOK 277 million
since the end of 2014. This decline is explained by a healthy
profit in 2015, but this will be partly offset by an increase in
capital tied up in fixed assets, pensions and capital equipment,
along with subsequent payment to owners. Net interest-bearing
liabilities would be lower if the amount of tied up capital
remained unchanged. The Group equity ratio amounted to 44.0
per cent at the end of 2015.
Cash flow statement
The net cash flow for the TINE Group from operational activities
contributed NOK 1,780 million, down NOK 180 million on 2014.
Profit before tax improved by NOK 392 million. However, this
did not compensate for the change in capital equipment, increased payments to pension schemes and other changes to tied-up
capital. The net cash flow for investment activities amounted to
NOK 988 million, representing an increase of NOK 223 million
on 2014. This increase was mainly due to increased production
capacity for yoghurt, cottage cheese and porridge. The net cash
flow from financing activities amounted to NOK -821 million
in 2015, compared with the 2014 level of NOK -1 031 million.
This includes subsequent payment and loans to owners in 2015
amounting to NOK 476 million, an increase of NOK 97 million
compared with 2014.
Estimates and continued operation
The assessments made in the consolidated and company
financial statements for 2015 are based on expectations of
future earnings and the business structure that existed at the
time when the financial statements were submitted. Changes to
these expectations could result in value estimates and assessments used as a basis having to be changed. No events have
occurred after the end of the financial year that are of significance to the assessment of TINE SA or the TINE Group, beyond
what is stated in the financial statements and associated notes.
The Group Board confirms that the financial statements have
been prepared with the assumption that operation will continue,
and that the conditions for this are in place.
TINE’s exposure to changes in interest levels was reduced in 2015 as
a consequence of the decrease in the Group’s net interest-bearing
liabilities compared with the end of 2014. Elements of the Group’s
liabilities are hedged at fixed interest rates in order to limit this
exposure. TINE SA manages the Group’s interest rate risk by using
various interest rate hedges. TINE’s financial statements include
a pension fund amount owing via the MP Pensjon pension fund.
The funds in this pension fund are invested in shares, bonds and
property. TINE’s financial statements are thus also exposed to risk
in respect of fluctuations in these asset classes.
TINE is exposed to changes in currency exchange rates, particularly with regard to the euro (EUR), the American dollar (USD),
the Swedish krona (SEK) and the British pound (GBP). TINE
receives net payments in USD as a result of its international
activities, while importing various inputs and purchasing of
machinery and equipment involves making net payments in
EUR. The Norwegian krone was considerably weakened in the
autumn of 2014 and has weakened still further in 2015. As a
result of this, inputs, machinery and equipment – items mainly
purchased in EUR – are more expensive. At the same time, the
weakened Norwegian krone is having a positive impact on the
value of exported goods and international business. TINE SA
enters into forward exchange contracts in order to limit the
Group’s foreign exchange risk. The value of assets in SEK, USD
and GBP is hedged against foreign exchange risk.
TINE is susceptible to changes to energy prices as a result of
both energy-intensive production and – not least – extensive
distribution. The price of oil fell significantly in the last six
months of 2014 and has remained at a considerably lower level
in 2015 compared with 2014. The decline in the price of oil
has had no major effect on transport expenses in 2015. This is
primarily due to a considerably strengthened USD.
TINE finances current liquidity requirements in the certificate
market, and by means of short-term loans as well. A long-term
credit facility has been established with recognised banks in
order to reduce the refinancing risk when loans mature. This
credit facility totals NOK 1.2 billion. This was renegotiated in
June 2015 and covers short-term loans maturing within one
year. TINE’s liquidity is deemed to be good.
TINE’s customers include wholesalers and individual customers
in all customer segments. Their solvency is considered to be
good, as is apparent from the low level of losses on receivables
over many years. TINE actively monitors the credit limits of all
its customers. In addition, all new customers are subject to
credit checks. TINE has not found it necessary to insure against
losses from outstanding receivables. Overall, TINE’s financial
risk is considered moderate.
Financial risk in 2015 and beyond
TINE’s financial risk is linked with changes to interest rates,
share prices, currency exchange rates, energy prices, liquidity
and credit. Our objective is to limit financial risk and thus help
to achieve stability and predictability in TINE’s results over time.
A financial policy has been prepared for TINE that provides
guidelines on how to manage risks of this type. TINE SA deals with
this on behalf of the entire Group.
28 | TINE annual report 2015
Allocation of profit for 2015
The Group Board has approved a subsequent payment policy
where the objective is for between 50 and 65 per cent of the
Group’s net profit to be allocated for subsequent payment to
owners. The annual allocation must be affected by the level of
investments in future years, but the target of at least 40 per cent
equity must take priority over the subsequent payment policy.
DIRECTORS’
REPORT
For 2015, 61 per cent of the Group’s net profit has been allocated for subsequent payment to owners. This gives a subsequent
payment of NOK 0.59 per litre of milk received.
The net profit of the parent company, TINE SA, is showing a
surplus of NOK 1,302 million.
the entire value chain, and that the scheme must be transparent and competition-neutral. The government is expected to
submit proposals for potential changes to market balancing
when issuing a report to the Parliament of Norway in the autumn
of 2016.
Reinforce the competitiveness of Norwegian milk
The Group Board proposes that the funds be allocated as
follows:
MNOK
2015
2014
Subsequent payment to owners
870
623
Allocated to other equity
432
325
1 302
948
Total allocated
REGULATORY FRAMEWORK
In 2015, TINE has continued its work on guaranteeing the
competitiveness of Norwegian milk. TINE’s business policy
work is carried out in cooperation with the Confederation of
Norwegian Enterprise (NHO), the Federation of Norwegian
Agricultural Co-operatives, the Norwegian Farmers’ Union
and the Norwegian Farmers’ and Smallholders’ Union. As far
as employees are concerned, TINE works in partnership with
organisations such as the Norwegian Confederation of Trade
Unions (LO) and the Norwegian Food and Allied Workers Union
(NNN). TINE works via Grocery Manufacturers of Norway (DLF)
to assist with the development of guidelines, Legislation and
good principles for supplier relations with the retail sector.
Climate and the environment
Global and national environmental challenges are of significance
to TINE’s business. New national and international environmental measures and regulations will affect both farmers’ milk
production and TINE’s industrial production. For instance, costs
relating to energy, greenhouse gas emissions and pollution will
increase. TINE is working to adapt its activities to meet future
environmental requirements. Eco-friendly milk production has
to be based on the utilisation of Norwegian feed resources.
The utilisation of Norwegian feed resources assumes that milk
production is distributed all over the country, taking place at
production units of all sizes appropriate for the local land available. TINE is working to safeguard a regulatory framework for
scattered production. Continuation of the quota scheme for
milk, active use of investment funds and targeted use of budget
funding are important elements for safeguarding this.
Market balancing
Predictable markets are vital for producers, industry and
consumers. A committee that has assessed the Norwegian
system for balancing the market for agricultural products issued
its recommendation in June 2015. The committee is divided in
its assessments of alternative ways of balancing the market, but
there is broad consensus concerning the need for instruments
which help to achieve balance. TINE recommends continuation
of the main features of the current scheme, but focusing on
streamlining and simplification. TINE is also of the opinion that
it is important to have confidence in the scheme throughout
The government’s report to the Parliament of Norway concerning ”globalisation and trade” is based on the fact that export
subsidies for agricultural products will be abolished by the end
of 2019. This will affect TINE’s options for Regulation export of
cheese and butter and weaken the profitability associated with
exports of Jarlsberg®. The WTO made a decision in December
2015 to prohibit export subsidies. This will take effect from
the end of 2020 for Norwegian dairy products. It is assumed
that an in-depth discussion will take place with authorities and
other stakeholders with regard to mitigation measures as are
being outlined by the government in its report to the Parliament of Norway concerning globalisation and trade. Measures
to reinforce the competitiveness of Norwegian milk and dairy
products in Norway are absolutely crucial if we are to avoid a
lasting decline in the volume of Norwegian milk production.
Good Trading Practices Act
Efforts have been in progress for a number of years in order
to clarify and establish regulations for good trading practices. Further concentration of the retail sector with the COOP
procurement of ICA Norway makes this need more urgent. The
government has signalled that these considerations are to be
dealt with by means of existing competition law. It is important
for satisfactory regulations to be put in place in order to guarantee predictability and development opportunities for the supply
industry.
Government taxes
TINE’s activities and projects are subject to taxes in a range of
contexts. As regards taxes relating to health and the environment, TINE is working to ensure that these are focused and
knowledge-based. We would like tax policy to reward high return
rates and the efforts of the industry to reduce salt and sugar
content – for example – in our products. It is also important for
Norwegian tax policy not to weaken the competitiveness of
foods produced in Norway.
Ongoing efforts for potentially changing calculations with
respect to packaging tax must not involve unrealistic demands
to change recycling forms. This could be extremely costly for
the industry, and in a worst-case scenario it could reduce the
effect of established packaging return systems.
FUTURE PROSPECTS
TINE is well positioned for the future in that it has implemented measures over the past few years which have reinforced
TINE as an industrial enterprise, a logistics company and an
innovator. TINE meets changing consumer needs by maintaining close contact with both all channels of the retail sector
and Norwegian consumers. TINE is also one of Norway’s most
TINE annual report 2015 | 29
familiar brand names and represents good quality and tasty,
healthy foods.
WTO stops export subsidies
The WTO held a ministerial meeting in Nairobi in December
2015. A decision was made to terminate the subsidised export
of agricultural products from 1 January 2016, with certain
exceptions. As a result, the subsidised export of dairy products
may continue until the end of 2020. For TINE, this decision
means that existing cheese exports can continue pursuant to
the WTO regulations until the end of 2020. One significant
challenge is presented by the fact that even cheese and butter
exports subject to occasional subsidies as a market regulation
measure will also be discontinued. This means that it will not
be possible to redress temporary imbalances in the Norwegian
dairy products market by using instruments of this kind. Norway
has not exercised this regulation option for cheese since 2006.
TINE is working on measures to minimise the potential adverse
consequences of the change.
Focus on health and nutrition
TINE plays an active part in the work of the Norwegian health
authorities aimed at underpinning public health, and TINE will
be continuing with this work. TINE must provide good advice
on nutrition and help people achieve a good balance between
nutrition and physical activity. We are adapting our selection of
goods to make it easy to choose healthy alternatives from TINE.
TINE is working along several lines in order to devise good
solutions for better nutrition at Norwegian nurseries and
schools. One of these initiatives involves separate schemes,
making it easier for institutions to ensure a good balance
between nutritious food and physical activity. TINE is also
concerned about the health of the elderly in Norway and is
working on a concept that will ensure the elderly are able to
eat nutritious food even if they are ill. TINE also offers dietary
advice and TINE product purchases to sportsmen and women.
This may enhance the catering during sporting events of all sizes
throughout Norway.
Access to commodities
Growth and profitability
Good access to milk commodities is expected in 2016. The free
range requirement from 2024 means that there is a significant
need to refurbished primary production buildings over the
next few years in order to guarantee the long-term supply of
commodities to the dairy industry.
Good contact and efforts to meet the needs of Norwegian
consumers in the form of both products and channels will be
developed in future. Among other things, online shopping has
become slightly more widespread and this development is
continuing. TINE is of the opinion that having new channels
and new solutions is a positive thing.
Societal trends
Rapid shifts in the society surrounding TINE are high on the
agenda, whether they involve political framework conditions,
structural changes to TINE’s sales channels, solutions in order
to reach out to consumers, or technological development and
digitisation in the fields of production and transport. As a result,
TINE has to be flexible and adaptable. We are seeing potential
offered by new technology aimed at increasing efficiency
– robot technology, digitisation and fully automated processes, for example – but there is just as much potential offered
for customisation and creating new growth opportunities for
a greener TINE. The importance of expertise, research and
innovation will be crucial in order to guarantee TINE’s finances,
market position and development.
TINE aims to strengthen the position of the brand by utilising
the qualities offered by farmers’ quality work, advisors’ added
value in terms of production and animal welfare, a trackable
value chain, high milk quality and unique Norwegian tradition
as a foundation.
A high Norwegian cost level and persistent price pressure on
Norwegian food and drink mean that TINE has to constantly
work to make the business more efficient and less resourceintensive. TINE is dependent on achieving continuous success
with this in order to develop its competitiveness. Streamlining
and constant improvement are vital measures in this work.
Sales trends
2015 saw the number of major grocery chains fall from four to
three. As a result, every customer is of greater importance to
every supplier.
OSLO, FEBRUARY 16, 2016
ANDERS JOHANSEN
HELGA THORVIK ULVEN
ASKILD EGGEBØ
CECILIE BJØRLO
TURID NÆSS
NORVALD DALSBØ
ROLF ØYVIND THUNE
MARIT HAUGEN
TOR ARNE JOHANSEN
SVEIN FØRDE
ELIN AARVIK
STEINAR KOEN
NILS ASLE DOLMSETH
Vice-chairman
30 | TINE annual report 2015
TROND REIERSTAD
Chairman
HANNE REFSHOLT
President and CEO
DIRECTORS’
REPORT
Group Board:
1st row, from left: Hanne Refsholt, Marit Haugen, Helga T. Ulven, Turid Næss, Nils Asle Dolmseth and Rolf Øyvind Thune.
2nd row, from left: Cecilie Bjørlo, Elin Aarvik, Trond Reierstad and Tor Arne Johansen.
3rd row, from left: Norvald Dalsbø, Askild Eggebø, Steinar Koen, Svein Førde, Jarle Bogen and Anders Johansen.
TINE annual report 2015 | 31
Group executives, from left: Bjørn Moldskred, Per Ivar Berg, Johnny Ødegård, Hanne Refsholt, Lise Falkfjell, John Ole Skeide, Kathrine Mo,
GROUP MANAGEMENT
LARS GALTUNG, Director of Communications
Galtung began working for TINE in 2009 after having worked as Director of Communications
for Nordic power exchange Nord Pool AS. Galtung was educated at the Norwegian Military
Academy and the Norwegian School of Economics (NHH). Galtung has spent most of his
professional life working in journalism and communication consultancy, working for employers such as Finansavisen, various listed companies and the PR company Grey Communication International.
JØRN SPAKRUD, Group Director Economy, Finance, Business Management, ICT and
TINE Milk Supplies
Spakrud started working for TINE in 2008 after having worked for Yara International ASA/
Norsk Hydro ASA for 11 years in various positions involving economy and finance.
Before joining TINE, Spakrud spent six years working as an auditor with Deloitte AS. Spakrud
is a Master of Business and Economics and a government-authorised accountant, graduating
from the Norwegian School of Economics. Spakrud is the chairman of TINE’s MP Pensjon
(pension scheme) and subsidiary Fjordland AS, as well as being a Board member at Skala AS.
LISE FALKFJELL, Group Director Development
Falkfjell has worked for TINE for 15 years. Falkfjell studied psychology (cand. polit.) at the
Norwegian University of Science and Technology and has a master’s degree in finance,
administration and management from ESCP/EAP and BI Norwegian Business School. At
TINE, Falkfjell’s roles have included Acting General Manager for Sunniva Drikker AS and
Group Development Director, as well as being responsible for managing a number of strategic projects. Falkfjell is a Board member at Diplom-Is AS.
KATHRINE MO, Group Director Marketing
Mo joined TINE on October 1, 2014 after having worked as Vice President Brand Management at Statoil ASA. Mo has broad professional experience in the field of marketing and
brand building, working with Norwegian and foreign companies such as Procter & Gamble
Inc., Ringnes AS, The Coca-Cola Company, Telenor ASA and Statoil ASA. Mo studied at
Ecole des Hautes Etudes Commerciales (HEC) in Lausanne, Switzerland.
JOHNNY ØDEGÅRD, Group Director Consultancy and Members, Policy and Community Contact
Ødegård has been working for TINE since 2011. Ødegård joined the company from Felleskjøpet AS, where he worked with industry policy. He also has experience from the Norwegian Farmers and Smallholders Union. Ødegård was trained at Norges Landbrukshøgskole
(now the Norwegian University of Life Sciences), specialising in agricultural economics. He
is the chairman of TUN Media AS.
32 | TINE annual report 2015
HANNE REFSHOLT, President and CEO
Refsholt has been working for TINE since 1988, with a short break between 1996 and 1998
while working as a Director at Kjøttbransjens Landsforbund. Refsholt started working as a
consultant for TINE R&D, then took over as R&D Director between 1998 and 2001 before
becoming for Deputy CEO of TINE Norske Meierier. Refsholt became Vice President of the
Group from 2002 and was promoted to President and CEO in 2005. Refsholt received a
Cand. Agric. (master’s degree in agricultural science) from the Norwegian University of Life
Sciences. Refsholt has an MBA from BI Norwegian Business School and studied for her
master’s at HEC, Paris and SAID, Oxford. Refsholt is the chairman of the Red Cross centres
and a Board member at the Grocery Manufacturers of Norway (DLF) and Arcus AS.
ANIELA GJØS, Group Director Logistics
Gjøs started working for TINE in December 2013. Gjøs has specialised in logistics for her
entire working life, and she joined the company after working as the CEO of Ontime Logistics AS. Before that, Gjøs held a number of management positions: she was Head of Logistics at Ringnes AS and Group Director for Distribution Networks at Posten Norge AS. Gjøs
graduated as a chartered engineer from the Silesian University of Technology and as a
business economist from BI, and continued her education at Stanford University and Insead.
Gjøs is a Board member at Tomra Systems ASA.
EIRIK SELMER-OLSEN, Group Director R&D
Selmer-Olsen started working for TINE in 1989 and has held a number of positions at TINE
R&D. His most recent position has been as Director R&D, holding this position since 2008.
Selmer-Olsen’s background also includes working as a consultant at Meierienes Bygningskontor. Selmer-Olsen holds a Cand. Agric. (master’s degree in agricultural science) from the
Norwegian University of Life Sciences (NMBU), as well as a Dr. Scient degree from the
same university. Selmer-Olsen’s degree involves specialism in the field of resource utilisation in the food industry. Selmer-Olsen is chairman of the Bionær programme at the Research Council of Norway, Deputy Chairman on the Group Board at Nofima AS, and a Board
member at Norseland Inc. and Måltidets Hus AS.
PER IVAR BERG, Group Director Production
Berg started working for TINE in the summer of 2013. Berg came from a position as Managing Director of Skala AS (formerly Landteknikk) which he had held since 2008. Berg has
considerable managerial experience thanks to more than 20 years working in both Norwegian and international industrial production. Berg started his professional career at Peterson
AS, followed by Norske Skog AS, where his positions included working as the Factory
Director at Norske Skog Follum. Berg was also the production and maintenance manager at
Norske Skog Saugbrugs, followed by a period as Factory Director at Norske Skog Parenco
BV in the Netherlands. Berg is a chartered engineer, graduating from the Institute of Chemical Engineering at the Norwegian University of Science and Technology in Trondheim. Berg
has also completed a number of management development programmes both in Norway
and abroad.
DIRECTORS’
REPORT
Jørn Spakrud, Eirik Selmer-Olsen, Lars Galtung and Aniela Gjøs.
JOHN OLE SKEIDE, Group Director Sales
Skeide joined TINE in 2009 after working as Director of Group Development at Orkla ASA.
Skeide had worked for the Orkla group for 17 he is at that time, holding positions such as
Director at Peter Möller AS and Sales Director at Lilleborg AS. Skeide has an MSc in Economics from the Norwegian School of Economics (NHH), specialising in strategy and international economics, and has taken foundation courses in law at the University of Bergen.
Skeide is the Chairman of Diplom-Is AS and Ostecompagniet AS, as well as a Board member
at Fjordland AS.
BJØRN MOLDSKRED, Group Director International
Moldskred started working for TINE in August 2014, working previously as Managing Director at Diplom-Is AS, a position he held for eight years. Before this, Moldskred worked for 18
years abroad in different positions for a variety of companies, including Stolt Seafarm/
Marine Harvest ASA, the Norwegian Seafood Council, the Norwegian Trade Council and the
UN. Moldskred is the chairman of TINE’s international subsidiaries Norseland Inc., Norseland Ltd. and Wernersson Ost AB, as well as being a Board member at Hunderfossen Familiepark AS. Moldskred has an MSc from the Norwegian School of Economics (NHH),
specialising in finance and strategy.
TINE'S GROUP MANAGEMENT PER 01.01.2016
Hanne Refsholt
President and CEO
Kathrine Mo
Group Director
Marketing
Lars Galtung
Director of Communications
Johnny Ødegård
Group Director Consultancy and
Members, Policy and Community
Contact
Jørn Spakrud
Group Director Economy, Finance,
Business Management, ICT and
TINE Milk Supplies
Lise Falkfjell
Group Director Business
Developement, HR and Strategy
Eirik
Selmer-Olsen
Group Director
R&D
Per Ivar Berg
Group Director
Production
Aniela Gjøs
Group Director
Logistics
John Ole Skeide
Group Director
Sales
Bjørn Moldskred
Group Director
International
TINE annual report 2015 | 33
FINANCIAL STATEMENT
2015
The table below shows some key elements of income, balance sheet, cash flow and notes
for the TINE Group for the period from 2011 to 2015.
Amounts in MNOK
THE TINE GROUP
2015
2014
2013
2012
2011
Revenues and other operating income
22 241
21 440
20 429
19 751
19 373
Cost of materials and changes in inventory
12 523
11 969
11 437
11 312
11 386
3 870
3 834
3 860
3 570
3 170
950
939
910
850
769
Other operating expenses
3 220
3 335
3 274
3 084
2 871
Total operating expenses
20 563
20 777
19 481
18 817
18 197
1 678
1 363
948
934
1 176
-99
-177
-158
-172
-81
1 579
1 187
790
762
1 095
From income statement:
Personnel expenses
Depreciation, amortisation and impairment
Operating profit
Financial income and expenses
Profit before tax
Tax expense
Net profit for the year
155
173
105
93
158
1 424
1 013
685
669
937
From balance sheet:
Intangible assets
131
150
158
172
179
Tangible fixed assets
7 927
7 780
7 861
7 804
6 871
Non-current financial assets
2 362
2 048
1 987
2 015
2 088
Inventories
2 058
1 861
1 826
1 604
1 471
Short-term receivables
2 080
2 207
2 078
1 966
1 946
559
582
414
138
402
15 117
14 627
14 323
13 700
12 957
Equity
6 649
6 127
5 914
5 586
5 358
Long-term liabilities
3 801
4 408
4 368
3 868
3 160
Short-term liabilities
4 667
4 093
4 040
4 245
4 439
15 117
14 627
14 323
13 700
12 957
From operating activities
1 780
1 959
1 325
1 203
1 627
To investment activities
-988
-765
-826
-1 638
-2 294
To / from financing activities
-821
-1 031
-215
179
494
-30
163
284
-256
-174
Average number of employees calculated in full-time equivalents
5 272
5 386
5 414
5 316
5 364
Offset raw cow and goat milk in million litres
1 475
1 449
1 467
1 475
1 426
870
623
381
383
599
Bank deposits, cash, money market securities and unit trust funds
Total assets
Total equity and liabilities
Net cash flow
Net change in bank deposits, cash and money market securities
Note information:
Allocated payment from TINE SA to the milk producers in MNOK
34 | TINE annual report 2015
TINE ANNUAL REPORT 2015
INCOME STATEMENT
Amounts in NOK 1000
THE TINE GROUP
2015
TINE SA
2014
Note
2015
2014
REVENUES AND OTHER OPERATING INCOME
1, 2 Sales revenues convenience products
20 619 528
19 836 504
1 189 361
1 132 751
431 874
470 860
22 240 763
21 440 115
12 522 846
11 968 863
3 869 664
3 833 225
942 700
930 715
7 580
8 640
3 219 972
3 335 395
20 562 762
20 076 838
1 678 001
1 363 277
–
–
10 409
-17 222
-86 838
-117 418
-12 675
-31 688
20 Net realised and unrealised currency gain and loss
-10 318
-10 369
21 Net other financial income and expenses
-99 422
-176 697
1 578 579
1 186 580
154 857
173 400
1 423 722
1 013 180
Sales revenues raw materials
3 Other operating income
Total revenues and other operating income
16 406 553
15 910 743
1 189 361
1 132 751
620 494
646 285
18 216 408
17 689 779
OPERATING EXPENSES
6, 31 Cost of materials and changes in inventory
7, 8, 26 Personnel expenses
12, 13 Depreciation and amortisation
12, 13 Impairment property, plant and equipment and intangible assets
10 072 968
9 780 740
3 230 377
3 209 977
813 175
800 970
7 344
4 070
9, 10 Other operating expenses
2 600 281
2 689 489
Total operating expenses
16 724 145
16 485 246
1 492 263
1 204 533
43 685
57 204
Operating profit
FINANCIAL INCOME AND EXPENSES
26 092
24 874
1 397 630
988 306
14 Income from investments in subsidiaries
14 Result of investments in joint ventures and associated companies
20 Net interest income and expenses
777
6 858
-79 863
-111 823
-100 373
-66 198
42 863
-8 767
-92 911
-122 726
1 399 352
1 081 807
97 631
133 393
1 301 721
948 414
17 Payments to milk producers
-870 029
-622 981
17 Allocated to other equity
-431 692
-325 433
-1 301 721
-948 414
4 677
16 060
Total financial income and expenses
Profit before tax
11 Tax expense
Net profit for the year
17 Minorities share of profits
17 Majority share of profits
Allocations:
Total allocations
Net group contributions to subsidiaries
TINE annual report 2015 | 35
TINE ANNUAL REPORT
BALANCE SHEET
Amounts in NOK 1000
THE TINE GROUP
2015
TINE SA
2014
Note
2015
2014
ASSETS
NON-CURRENT ASSETS
Intangible assets
11 Deferred tax asset
5 121
5 534
52 551
67 549
12 Goodwill
–
–
16 800
21 000
73 772
76 796
12 Other intangible assets
-
–
131 444
149 879
Total intangible assets
16 800
21 000
3 743 054
3 530 678
12, 13 Land, buildings and other real property
3 364 608
3 170 468
4 184 163
4 249 515
13, 18 Machines, fixtures and fittings and means of transport
3 736 093
3 816 296
7 927 217
7 780 193
Total tangible fixed assets
7 100 701
6 986 764
–
–
14 Investments in subsidiaries
1 319 464
1 268 873
84 070
72 859
22 942
20 017
6 979
6 851
2 253 075
1 944 122
Tangible fixed assets
Non-current financial assets
14 Investments in joint ventures and associated companies
Other shares and ownership interests
8 Pension plan assets
Other long-term receivables
6 922
6 797
2 087 329
1 800 408
17 493
23 898
2 361 617
2 047 730
Total non-current financial assets
10 420 278
9 977 802
Total non-current assets
2 057 818
1 861 207
15 Inventories
1 770 220
1 781 750
16 Trade receivables
–
–
310 016
424 773
22 Other short-term receivables
256 721
385 431
2 080 236
2 206 523
Total short-term receivables
2 033 928
2 080 814
2 689
12 406
3 439 346
3 108 501
10 556 847
10 116 265
1 548 773
1 408 530
1 312 564
1 340 732
464 643
354 651
CURRENT ASSETS
Short-term receivables
558 609
581 921
4 696 663
4 649 651
15 116 941
14 627 453
36 | TINE annual report 2015
Accounts receivable from group companies
23 Bank deposits, cash and money market securities
Total current assets
Total assets
402 080
460 447
3 984 781
3 949 791
14 541 628
14 066 056
TINE ANNUAL REPORT
BALANCE SHEET
Amounts in NOK 1000
THE TINE GROUP
2015
TINE SA
Note
2014
2015
2014
LIABILITIES AND EQUITY
EQUITY
Paid-in equity
6 429
6 891
17 Cooperative share capital
6 429
6 891
6 429
6 891
Total paid-in equity
6 429
6 891
340 000
340 000
6 241 664
5 726 123
6 581 664
6 066 123
61 126
53 757
6 649 219
6 126 771
Retained earnings
17 Subsequent payment fund
17 Other equity
Total retained earnings
17 Minorities share of equity
Total equity
340 000
340 000
6 103 887
5 696 218
6 443 887
6 036 218
–
–
6 450 316
6 043 109
LONG-TERM LIABILITIES
Provisions
154 037
121 197
203 996
289 376
8 Pension liabilities
Long-term financial liabilities
116 397
94 530
181 614
274 925
584 593
564 643
11 Deferred tax liabilities
510 019
492 549
942 626
975 216
Total provisions
808 030
862 004
858 195
1 432 688
Long-term liabilities to financial institutions
842 922
1 413 606
2 000 000
2 000 000
Bond issues
2 858 195
3 432 688
3 800 821
4 407 904
Other long-term liabilities
2 000 000
2 000 000
2 842 922
3 413 606
3 650 952
4 275 610
Short-term liabilities to milk producers
735 074
781 471
Trade and other payables to group companies
309 450
140 667
24 Total other long-term liabilities
Total long-term liabilities
SHORT-TERM LIABILITIES
Trade and other payables
735 074
781 471
–
–
1 049 354
1 013 352
1 784 428
1 794 823
618 678
344 420
870 029
16 Trade and other payables
797 564
764 807
1 842 088
1 686 945
25 Short-term interest-bearing liabilities
552 160
300 000
622 981
31 Allocated to subsequent payment to milk producers
870 029
622 981
104 887
107 915
11 Taxes payable
236 691
181 741
Total trade and other payables
Other short-term liabilities
Public duties payable
Other short-term liabilities to group companies
–
–
1 052 188
1 040 898
Other short-term liabilities
2 882 473
2 297 955
4 666 901
4 092 778
15 116 941
14 627 453
75 284
81 119
204 955
163 949
6 406
22 000
889 438
870 343
Total other short-term liabilities
2 598 272
2 060 392
Total short-term liabilities
4 440 360
3 747 337
Total equity and liabilities
14 541 628
14 066 056
OSLO, FEBRUARY 16, 2016
ANDERS JOHANSEN
HELGA THORVIK ULVEN
ASKILD EGGEBØ
CECILIE BJØRLO
TURID NÆSS
NORVALD DALSBØ
ROLF ØYVIND THUNE
MARIT HAUGEN
TOR ARNE JOHANSEN
SVEIN FØRDE
ELIN AARVIK
STEINAR KOEN
NILS ASLE DOLMSETH
Deputy Chariman
TROND REIERSTAD
Chariman
HANNE REFSHOLT
CEO
TINE annual report 2015 | 37
TINE ANNUAL REPORT 2015
CASH FLOW
Amounts in NOK 1000
THE TINE GROUP
2015
TINE SA
2014
2015
2014
Cash flows from operating activities
1 578 579
1 186 580 Profit before tax
1 399 352
1 081 807
-55 711 Taxes paid for the period
-83 193
-36 424
-16 453
-30 230 Profit (-) and loss on sale of fixed assets
-16 067
-30 711
950 280
939 355 Depreciation, amortisation and impairments
820 519
805 040
-114 550
–
205
-229 833
–
-276 112
-10 408
29 284
-196 611
6 036
– Reversal of impairment of financial assets
-540 Profit (-) and loss on sales of financial fixed assets
29 472 Unrealised change in value of financial items
– Group contributions received form subsidiaries
Difference between pension charged as an expense and payments/disbursements in
-35 582 pension plans
Difference between recognised and received dividend from joint ventures and
20 029 associated companies
-859 Effect of changes in foreign currency rates and unrealised exchange gains
-35 215 Change in inventories
-127 266 Change in trade receivables and other short-term receivables
-52 000
–
1 060
2 143
-127 022
71 677
-19 577
-14 056
-265 054
-29 745
–
–
–
–
-140 243
-52 435
33 101
-7 023
-10 394
97 271 Change in accounts payable
-13 641
60 900
69 711
-27 912 Change in other short-term liabilities
73 974
-26 033
–
1 779 733
– Change in intercompany balances from operational activities
1 959 392 Net cash flow from operating activities
30 209
10 839
1 641 417
1 835 979
Cash flows to investment activities
38 215
-1 038 318
15 207
–
-3 528
44 851 Payments from the sale of tangible fixed assets
-796 351 Disbursements from purchase of tangible fixed assets
-4 546 Change in long-term receivables and liabilities
5 792 Payments received from the sale of financial non current assets
-14 863 Payments by purchase of business
36 839
43 722
-951 028
-678 621
9 757
-9 821
1 689
5 757
-4 100
-21 430
–
– Payments received from the sale of financial current assets
19 577
5 985
-988 424
-765 117 Net cash inflow on intercompany long-term receivables
-887 266
-654 408
Cash flows to / from financing activities
–
-600 588
100 000
-18 723
174 258
-462
–
-475 781
-821 295
925 749 New long-term borrowing
-1 202 599 Repayment of long-term borrowing
– Net receipts and payments of commercial paper
-13 446 Disbursed to minorities
-361 735 Net change in bank overdraft
-428 Net payments and disbursements of cooperative share capital
– Change of net group contributions
-378 700 Disbursed subsequent payment and credit to milk producers
-1 031 159 Net cash flow to/ from financing activities
–
925 370
-601 423
-1 202 591
100 000
–
–
–
152 160
-369 929
-462
-428
12 988
1 153
-475 781
-378 700
-812 517
-1 025 125
-29 987
163 116 Net change in bank deposits, cash and money market securities
-58 367
156 446
581 921
413 932 Bank deposits, cash and money market securities at 01.01
460 447
304 001
6 674
558 609
38 | TINE annual report 2015
4 873 Currency effect on bank deposits, cash and money market securities
581 921 Bank deposits, cash and money market securities at 31.12
–
–
402 080
460 447
TINE ANNUAL REPORT 2015
ACCOUNTING PRINCIPLES
ACCOUNTING PRINCIPLES
REVENUES AND OTHER INCOME
The annual accounts are prepared in accordance with the Accounting Act and
Operating revenues are measured at fair value of the compensation, net after
generally accepted accounting principles in Norway.
deductions for value added tax, returns, rebates and other public fees. Reve-
CONSOLIDATION
The TINE Group accounts present the overall financial position, the result of
the year’s activity and cash flows for the parent company, TINE SA, and the
subsidiaries. The subsidiaries include the companies where TINE SA directly
or indirectly has a controlling influence because of legal or de facto control.
Controlling influence is present when there is direct or indirect ownership
of more than 50 % of the voting capital. All companies in the TINE Group
apply uniform accounting principles. All internal transactions between group
nues from sale of goods are recognised in the accounts when the products are
delivered to the customer and there are no unsatisfied liabilities to affect the
customer’s acceptance of the delivery. Delivery is not made until the products
have been sent to the agreed location and risk of loss and obsoleteness has
been transferred to the customer. Individual assessments based on agreements
are used as a basis for estimating and accounting for provisions for volume
discounts and returns at the time of sale. Services are recognised as income as
and when they are provided.
companies, outstanding accounts and unrealised internal gains are eliminated
OPERATING EXPENSES
in the TINE Group accounts.
Costs are recognised in the income statement in accordance with the mat-
Shares in subsidiaries are included in the TINE Group accounts according to
ching principle.
the acquisition method. The difference between the cost price of the shares
MAIN RULE FOR CLASSIFICATION OF ASSETS AND LIABILITIES
and book value of net assets at the time of acquisition is analysed and allo-
Assets intended for permanent ownership or use, are classified as non-cur-
cated to the relevant items in the balance sheet according to fair value. Cost
price that exceeds the fair value of net identifiable assets is capitalised as
goodwill and amortised in the income statement in accordance with the underlying circumstances and expected economic life. For acquisitions, nominal
tax rates are applied to excess value, excluding goodwill.
The minority share is included in the TINE Group equity. Changed ownership
rent assets. Receivables to be repaid within one year, as well as other assets
related to goods circulation, are classified as current assets. In the classification of short-term and long-term liabilities, the corresponding criteria are
used. Current assets are recognised at the lowest of acquisition cost or fair
value. Non-current assets are recognised at acquisition cost with the deduction of depreciation and impairment. Long-term and short-term liabilities are
interests in subsidiaries are treated as equity transactions in the Group and
recognized at nominal value.
there is thus no gain or loss in the TINE Group accounts.
INTANGIBLE ASSETS
Goodwill
Joint ventures are companies where TINE SA has joint control together with
one or more owners, and where the investment is of long-term strategic character. Joint control normally exists where the TINE Group has an ownership
interest of 50 %.
Goodwill is the difference between the acquisition cost of the purchased business and the fair value of the TINE Group’s share of net identifiable assets in
the purchased business at the time of acquisition. Goodwill from acquisition
of subsidiaries is classified as an intangible asset. Goodwill at acquisition of
Associated companies are companies where the TINE Group has significant
shares in joint ventures or associated companies are included in the value of
influence, but not control, and where the interest is of a long-term strategic
the investment in the balance sheet. Goodwill is tested for impairment and is
nature. Significant influence is normally present when the TINE Group has an
recognised in the balance sheet at acquisition cost with the deduction of ac-
ownership interest of between 20 % and 50 %.
cumulated amortisation and impairment. The amortisation period for goodwill
Joint ventures and associated companies are included according to the equity
is five years unless there are special reasons for a longer lifetime.
method in the TINE Group accounts. Cost prices that exceed the acquired
Other intangible assets
share of booked equity are recognised in the balance sheet as excess value.
Expenses for other intangible assets are recognised in the balance sheet to
Excess values are amortised in accordance with the underlying circumstances
the extent a future financial benefit connected to the development of an iden-
and expected economic life. The TINE Group’s share of the result in joint
tifiable intangible asset has been identified, and the expenses can be reliably
ventures and associated companies is based on the result after tax in these
measured. Should this not be the case, such costs are expensed on an on-
companies with the deduction of any depreciation on excess values, as well
going basis. Intangible assets with a limited useful economic life are amor-
as gains and losses on realisation of interests. In the income statement, the
tised according to schedule. Intangible assets are written down to fair value
share of the result in joint ventures and associated companies are presented
if the residual value is lower than the total of the value recognised in the
as part of the financial result. In the balance sheet, interests in joint ventures
balance sheet and any remaining production expenses.
and associated companies are classified as long-term investments. The share
of the loss in joint ventures and associated companies are not recognised in
the income statement if this entails that the value of the investment recog-
Research and product development costs
Own expenses for research and product development are expensed on a
nised in the balance sheet is negative, unless the TINE Group has underta-
continuous basis.
ken an obligation or provided guarantees for the joint ventures or associated
NON-CURRENT ASSETS
Property, plant and equipment
company.
In the case of recognition of investments in subsidiaries, joint ventures and
associated companies where the annual accounts are presented in foreign
currency, the items in the balance sheet are converted to Norwegian kroner
using the exchange rate on the balance sheet date. The income statement
items are converted to Norwegian kroner using the average exchange rate
for the accounting year. The conversion difference, which arises when the
TINE’s opening equity and the result for the year are converted at a different exchange rate than the closing equity, is recognised in the TINE Group’s
equity.
Investments in production facilities and other property, plant and equipment
are recognised at cost less accumulated depreciation and impairments. Borrowing costs related to the construction period for substantial property, plant
and equipment during construction are recognised in the balance sheet as
part of the cost price. The acquisition cost for property, plant and equipment
with a limited useful economic life is depreciated according to the straightline method over the economic lifetime. Costs associated with normal maintenance and repairs will be expensed on a continuous basis. Costs for major
replacements and renovations, which substantially increase the lifetime of
the fixed asset, are capitalised and depreciated in line with the fixed asset. If
TINE annual report 2015 | 39
TINE ANNUAL REPORT 2015
ACCOUNTING PRINCIPLES
the recoverable amount of the fixed asset is lower than the value recognised
Procurement of essential spare parts are included in the book inventory. The
in the balance sheet and the impairment is not expected to be temporary,
portions are expensed upon withdrawal.
then the asset must be written down. The recoverable amount is the highest
of the net sales value and the value-in-use. The value-in-use is the current
Receivables
value of the future cash flows, which the asset is expected to generate.
Accounts receivable and other receivables are recognised at nominal value
after the deduction of expected losses. Provisions for loss are based on indi-
Lease agreements
vidual assessments of each receivable.
Lease agreements are classified as financial or operational leases after a concrete evaluation of the individual agreement. Lease agreements associated
Unit trust funds and listed shares
with assets leased on terms where TINE SA principally bears the financial
Market-based financial instruments, including unit trust funds and listed sha-
risk and control of the ownership are classified as financial lease agreements.
res, which are included in the trade portfolio, are valued at fair value on the
Non-current assets under financial lease agreements are recognised in the
date of the balance sheet. Other short-term investments are valued at the
balance sheet and associated lease obligations are included in the balance
lowest of average acquisition cost and fair value on the balance sheet date.
sheet item other long-term liabilities at the current value of the lease payments. The fixed asset is depreciated according to schedule, and the obligation is reduced by the paid lease amount after the deduction of calculated
Bank deposits, cash and money market securities
This accounting item includes cash, bank deposits and other means of pay-
interest cost.
ment with a due date that is less than three months from acquisition.
Lease agreements where a significant share of risk and returns associated
EQUITY
Cooperative share capital
with ownership are still borne by the lessor, are classified as operational lease
agreements. Lease amounts associated with operational lease agreements
are expensed according to the linear method over the lease period.
Shares and interests in subsidiaries, joint ventures and associated companies.
Investments in subsidiaries, joint ventures and associated companies are
valued according to the cost method in the company accounts. The investments are valued at acquisition cost with the deduction of any impairment.
Impairment to fair value is carried out if the impairment is not temporary.
Dividend and group contributions received from subsidiaries, which represent returns during the period of ownership, are recognised as other financial
income. The write-down is reversed if the reason for impairment no longer
exists. Group contributions from subsidiaries are recognised in the balance
sheet the same year as the subsidiary allocates this amount. Dividend received is recognised as income when the dividend has been adopted.
Other shares and interests classified as non-current assets
Investments in long-term shareholdings and interests where TINE SA does
not have significant influence, are recognised in the balance sheet at acquisition cost. The investments are written down to fair value in the event of
an impairment, which is not expected to be temporary. Dividend received
from the companies, which represent return in the ownership period, are entered as income and presented as other financial income when the dividend
is adopted.
Long-term receivables
Long-term receivables are recorded in the balance sheet at nominal value after the deduction of expected losses. Loss provisions are based on individual
assessments. Interest income is recognised as it is earned.
CURRENT ASSETS
Inventories
Inventories Inventories are valued at the lowest of acquisition cost according
to the «first in - first out» principle and fair value. The acquisition cost for
self-produced goods and goods under production consist of direct materials,
direct wages as well as other direct and indirect production costs (based on
normal production). Acquisition costs are adjusted for price compensation
charges and subsidies. The acquisition cost for raw materials and goods for
resale is the net cost price. Fair value is the estimated sale price with the deduction of estimated expenses for completion, sale and distribution.
40 | TINE annual report 2015
The cooperative share capital of TINE SA is the sum of shares held by members of TINE SA. Each member has one share. The share’s face value is NOK
500. Membership in TINE SA is open to milk producers with a milk quota.
Provision for subsequent payment
Provision subsequent payment is regulated by the Law on Cooperatives §
27. Provision subsequent payment is decided by the general assembly. The
frame is the year’s profit after tax. The distribution is based on the delivery
of milk. It cannot be paid out more than is consistent with prudent and good
business practice.
Subsequent payment fund
Following a decision by the board and within the overall framework proposed
by the board, profit might be allocated to the subsequent payment fund and
subsequent payments for delivered milk during the year. The annual meeting
decides potential disbursements from the subsequent payment fund. Disbursements go to those who are members at the time of the decision and shall
be based on the delivery of milk for the previous calendar year.
DEBT
Long-term liabilities
Long-term debt is recognised in the balance sheet at the nominal debt
amount. The costs of raising loans are expensed at the time of admission.
Contingent liabilities
Contingent liabilities are recognised in the income statement if it is probable
that they will have to be settled. A best estimate is used to calculate the value
of the settlement sum.
Restructuring and realignment provisions
When restructuring or realignment measures are adopted, a provision is
made for the anticipated expenses related to implementation of the measure.
The provision is based on a best estimate and is reassessed at the end of
each reporting period. Expenses, which are incurred during the implementation of the restructuring, are recognised against the provision as they are
incurred.
PENSION PLAN – BENEFIT PLANS
TINE has pension plans, which give employees the right to agreed future pension benefits. The obligations are expensed over the service period in accordance with the plan’s benefit formula. The allocation method corresponds to
TINE ANNUAL REPORT 2015
ACCOUNTING PRINCIPLES
the plan’s benefit formula unless most of the accrual takes place towards the
end of the service life. Straight-line accrual is then used.
The pension obligations are calculated based on assumptions regarding the
number of service years, discount rate, expected returns on plan assets, future adjustment of wages and pensions and the level of the Norwegian National Insurance’s basic amount and actuarial assumptions regarding mortality,
voluntary turnover and disability rate. The plan assets are valued at fair value.
differences between book values and tax values at the end of the accounting year, as well as any tax-related loss carried forward. Nominal
tax rates are used in the calculation. Positive and negative differences
are evaluated against one another within the same time period. Deferred
tax liabilities and deferred tax assets are presented as net in the balance
sheet. The TINE Group presents net deferred tax liabilities for tax positions related to companies that are part of the same tax group.
The net pension obligation consists of gross pension obligation with the deduction of fair value of the plan assets. Net pension obligations for underfinanced plans are recognised in the balance sheet as long-term financial
obligations, while net pension funds for over-financed plans are recognised in
the balance sheet as financial non-current assets if it is probable that the net
Deferred tax assets arise if one has temporary differences, which give
rise to tax-related deductions in the future. Deferred tax assets are recognised in the balance sheet when it is probable that this can be utilized in future years.
asset can be utilized. Social security tax is included in the figures for actually
underfinanced plans.
Changes in obligations due to changes in the pension plan are expensed
immediately if the changes in the plan are unconditional at the time of the
change. Any changes in the pension plan that are conditional upon future
employment are amortised linearly over the period up to when the benefit
is vested. Changes in the obligation and plan assets, which are due to changes in, and deviation from the actuarial assumptions, are amortised over the
expected remaining service period for that part of the deviation that exceeds
10 % of the highest of the gross pension obligation and gross pension plan
assets, respectively.
In the event of participation in defined-benefit group plans, TINE SA enters its
share of the defined-benefit pension obligation, plan assets and cost associated with the pension plan, into the accounts. When insufficient information
is available for recording a group plan into the accounts as a defined-benefit
pension plan, the plan is recorded in the accounts as if it was a definedcontribution plan.
Obligations within the new Fellesordningen for AFP (joint plan for contractual
pension) are a defined-benefit group plan, but this is recorded in the accounts as a contribution plan, as it is currently not measurable and cannot be
allocated between the participating companies.
CURRENCY
Transactions in foreign currency are converted at the exchange rate on
the transaction date. Money items in foreign currency, which are not
hedged, are valued at the current exchange rate. Realised and unrealised
gains and losses on currency are recognised net in the income statement.
FINANCIAL DERIVATIVES AND HEDGING
The accounting treatment of financial derivatives follows the intention
behind entering into the agreements. Derivatives are classified as longterm non-current assets or long-term financial liabilities if the remaining
term is longer than one year.
Interest rate derivatives
TINE SA uses interest rate hedging instruments to hedge against large
fluctuations in the interest rates. Recognition of gains and losses depends on whether the interest rate derivative has been classified as a
hedging instrument and, if applicable, the type of hedging. Interest rate
derivatives, which are not hedging instruments, are recorded in accordance with the principle of lowest value. Unrealised losses are expensed as financial expenses.
Currency derivatives
tions are included in net pension expense.
In order to hedge against fluctuations in the foreign currency rates, TINE
SA uses currency derivatives in line with approved financial policy. Recognition of gains and losses depends on whether the currency derivative is designated as a hedging instrument and, if applicable, the type
of hedging. Currency derivatives, which are not hedging instruments,
are valued at fair value. Changes in value are recognised in the income
statement as financial income or financial costs.
PENSIONS PLANS - CONTRIBUTION PLANS
Hedging
The pension plan in a defined contribution plan is a pension scheme
where TINE SA pays annual pension contributions for each member. The
pension contribution paid to a custodian and TINE SA has no obligations
related to the scheme after the deposit is paid. Thus, one cannot predetermine how great the future pension benefit will be. Deposit schemes
pensions are accrued according to the matching principle. This year’s
contributions to defined deposit schemes pensions are expensed as incurred. Deposit schemes pensions are not capitalized as liabilities or assets.
The accounting treatment of financial derivatives designated as hedging
instruments are recorded in line with the principles for the hedging types asset hedging, cash flow hedging or hedging of net investment in
foreign business activities.
TAXES
In the event of hedging of future cash flows, the derivatives are recognised in the balance sheet after tax at fair value. Both unrealised and
realised gains or losses on derivatives are recognised directly against
the equity until the hedged cash flow affects the income statement.
Net pension cost, which is the gross pension cost with the deduction of expected return on the pension plan assets, adjusted for allocated effect of deviations in estimates and changes in pension plans, is classified as ordinary
operating costs and is presented together with wages and other benefits under employee benefit expenses in the income statement. Employee contribu-
The tax cost consists of tax payable on taxable income and wealth as
well as change in deferred tax liabilities. The tax cost is offset against
profit before tax. Tax associated with equity transactions are recognized in equity. Deferred tax liabilities are calculated based on temporary
In the event of hedging of assets or liabilities recognised in the balance
sheet, the derivative is entered at fair value. The book value of the hedged asset or liability is adjusted for the value of the financial derivative’s
change in value, which is related to hedged risk.
TINE annual report 2015 | 41
TINE ANNUAL REPORT 2015
ACCOUNTING PRINCIPLES
Hedging of net investment in foreign currency is used at the TINE Group
level. Derivatives are recorded in the balance sheet at fair value as for
cash flow hedging. Unrealised gains and losses on the derivatives (after
tax) are recognised in the accounts directly against equity until the foreign activity is sold or the hedge is phased out.
USE OF ESTIMATES AND INFORMATION REGARDING SUBSTANTIAL ESTIMATES
The accounting principles that have been described entail that TINE’s
management has applied estimates and assumptions, which affect items
in the income statement and balance sheet. The estimates are based
on experience and an evaluation of underlying factors. Future events
and changes in the framework conditions can entail that estimates and
assumptions must be changed. Changes in accounting estimates are
recognised in the income statement in the period when the estimates
are changed, unless deferred entry into the income statement is in accordance with generally accepted accounting principles. Valuations, estimates and assumptions that have a substantial effect on the accounts
are summarised below.
enough to utilise the tax asset, either because the entity has shown a
profit recently or because there are identifiable assets with excess value.
Provisions
Regarding some income statement items in the accounts, provisions are
made for expected future costs based on estimates and information,
which is available at the time the accounts are submitted. These provisions can deviate from the actual future cost. For example, provisions
are related to loss of customers, restructuring obsoleteness of goods,
restructuring cost and contingent loss, which are probable and quantifiable, including disputed circumstances and court cases.
SEGMENTS
Operational segments are reported in the same manner as for internal
reporting to the company’s top decision-maker. The company’s top
decision-maker, who is responsible for allocating resources to and assessment of earnings in the operational segments, is defined as the TINE
Group management.
CASH FLOW STATEMENT
Depreciation and amortisation
Depreciation and amortisation of property, plant and equipment and
intangible assets are based on their assumed economic life. Changed
market conditions and future investment decisions will affect existing
production capacity and expected useful life. This can provide the basis
for changed depreciation and amortisation profiles and will affect future
results.
The cash flow statement is prepared according to the indirect method.
PRESENTATION CURRENCY
All amounts are in TNOK unless otherwise indicated. The parent company TINE SA functional currency is NOK and the TINE Group presentation
currency is NOK.
Impairment
CHANGES IN ACCOUNTING PRINCIPLES AND COMPARATIVE FIGURES
TINE SA has considerable investments in property, plant and equipment,
intangible assets including goodwill, associated companies, joint ventures and subsidiaries. These non-current assets are tested for impairment
when indications are present for possible decline in value. Such indicators can include changes in market prices, contract structures, negative
events or other operating circumstances. Calculating the recoverable
amount requires a series of estimates concerning future cash flows,
where price and production volume are the most important.
It has not been implemented significant reclassifications or changes to
policies in 2015. Some minor changes regarding the presentation of financial income and expenses are completed.
Pensions
Calculation of fair value of pension obligations is based on several financial and demographic assumptions. Any change in the applied assumptions affects the calculated obligation. Reference to note eight for a
more detailed description of the applied assumptions.
Fair value financial instruments
Principles for estimating fair value are mainly based on market prices
and various valuation methods. The fair value of currency futures contracts is fixed by using the exchange rate on the balance sheet date. The
fair value of currency swaps is calculated at the present value of future
cash flows. The fair value of options is fixed using option pricing models.
The fair value of interest rate swaps is calculated as the present value of
estimated future cash flows based on observable market yield curve. For
all of the above derivatives, the financial institution with which TINE SA
has contracts confirms fair value.
Deferred tax asset
The deferred tax asset is entered in the balance sheet only to the degree it is probable that there will be future taxable profits that are large
42 | TINE annual report 2015
Comparative figures are based on the same principles as figures for the
current accounting period.
NEW NORWEGIAN ACCOUNTING STANDARD FOR OTHER COMPANIES
Other companies are mainly companies not listed and companies defined as small enterprises by the Norwegian Accounting Act § 1-6. Accordingly, TINE SA will be covered by the new accounting standard. Earliest
implementation is expected on January 1, 2017. For 2015, there are not
made any adjustments to this.
The areas that may be of greater significance are briefly mentioned
below. The principle to deferred recognition of actuarial gains and losses
(corridor method) is proposed discontinued. This will affect TINE SA.
Comprehensive income is proposed as a new income statement concept. It consists of net income and total other comprehensive income,
unless these presented as part of the equity note. It must be clarified
which result term to be used as a basis for allocation to subsequent payment to the milk producers. Today there is no standard in Norway that
distinguishes between debt and equity or defining these items. This is
expected regulated in the new standard. In this field, the Cooperative
Act must be harmonized with the new accounting standard. The outcome of this may affect the balance of TINE SA with the relationship
between debt and equity and equity ratio.
TINE ANNUAL REPORT 2015
NOTES
NOTE INDEX
INCOME STATEMENT
NOTE 1
Segment information
NOTE 2
Sales revenues from convenience products by geographical area
NOTE 3
Other operating income
NOTE 4
Government grants
NOTE 5
Major individual transactions
NOTE 6
Cost of materials and changes in inventory
NOTE 7
Personnel expenses and number of full-time equivalents
NOTE 8
Pensions and pension obligations
NOTE 9
Auditor’s remuneration
NOTE 10
Other operating expenses
NOTE 11
Taxes
44
44
45
45
45
45
45
46
48
48
48
BALANCE SHEET
NOTE 12
Intangible assets and goodwill
NOTE 13
Tangible fixed assets
NOTE 14
Investments in subsidiaries, joint ventures and associated companies
NOTE 15
Inventories
NOTE 16
Balances with joint ventures and associated companies
NOTE 17
Equity
NOTE 18
Obligations related to lease agreements in the balance sheet
NOTE 19
Carrying provisions
50
51
52
53
53
53
54
54
FINANCIAL INFORMATION
NOTE 20
Financial risk and derivatives
NOTE 21
Net other financial income and expenses
NOTE 22
Loans and guarantees
NOTE 23
Bank deposits, cash and money market securities
NOTE 24
Other long-term liabilities
NOTE 25
Short-term interest-bearing liabilities
55
56
57
57
57
58
OTHER INFORMATION
NOTE 26
Related parties and senior management
NOTE 27
Off balance sheet lease liabilities
NOTE 28
Transactions with related parties
NOTE 29
Pledges
NOTE 30
Environmental issues
59
60
60
60
60
TINE MILK SUPPLY AND MARKET REGULATION
NOTE 31
TINE Milk Supply
NOTE 32
Purchase of raw cow and goat milk from the milk producers
NOTE 33
Outstanding accounts with the Norwegian Agricultural Authority the market
regulation and subsidy schemes
61
62
62
TINE annual report 2015 | 43
TINE ANNUAL REPORT 2015
NOTES
INCOME STATEMENT
NOTE 1
Segment information
Amounts in NOK 1000
The TINE Group’s business consists of three operating segments. The segmentation is based on the product and geography, and in agreement with
the organizational structure used in the Group’s internal performance measurement and resource allocation. Dairy segment is divided into Norwegian and international business.
2015
2014
TINE's domestic dairy
operations
TINE’s
international dairy
operations
Liquid dairy products
8 399 552
Solid dairy products
Other
business
Other
activities
and
eliminations
–
181 122
–
5 709 358
2 857 879
410 328
897 582
–
–
10 275
–
823 381
250 543
–
61 517
–
Total sales revenues from
external convenience
products
15 328 826
Sales revenues from external
convenience products
Sales revenues from internal
convenience products
Sales revenues / operating
profit
Juice, fruit drinks and water
Convenience food
Ice cream and desserts
Other products
Total sales revenues from
convenience products
Sales revenues from
raw materials
Other income
Revenues and other
operating income
Depreciation,
amortisation and impairments
Other operating expenses
Operating profit
Total
TINE's domestic dairy
operations
TINE’s
international dairy
operations
Other
business
Other
activities
and
eliminations
Total
8 580 674
8 318 948
–
193 393
–
8 512 341
–
8 977 564
5 479 722
2 355 633
391 128
–
8 226 483
–
897 582
927 564
–
–
–
927 564
–
833 656
14 743
–
778 438
–
793 181
1 009 930
–
1 260 472
213 585
–
1 079 401
–
1 292 986
8 062
–
69 580
76 497
–
7 452
–
83 949
2 857 879
2 432 823
–
20 619 528
15 031 060
2 355 633
2 449 812
–
19 836 504
15 328 826
2 857 879
2 432 823
–
20 619 528
15 031 060
2 355 633
2 449 812
–
19 836 504
1 203 373
2 939
–
-1 206 312
–
1 139 559
2 250
–
-1 141 809
–
16 532 199
2 860 818
2 432 823
-1 206 312
20 619 528
16 170 619
2 357 883
2 449 812
-1 141 809
19 836 504
1 189 361
–
–
–
1 189 361
1 132 751
–
–
–
1 132 751
581 296
16 738
30 434
-196 593
431 875
611 359
15 769
29 188
-185 457
470 860
18 302 856
2 877 556
2 463 257
-1 402 905
22 240 763
17 914 729
2 373 652
2 479 000
-1 327 266
21 440 115
-817 078
-60 869
-72 332
–
-950 280
-808 512
-56 365
-72 478
-2 000
-939 355
-15 989 093
-2 738 820
-2 286 369
1 401 800
-19 612 482
-15 906 808
-2 287 648
-2 256 285
1 313 258
-19 137 483
1 496 684
77 867
104 556
-1 105
1 678 001
1 199 409
29 639
150 236
-16 007
1 363 277
14 178 819
1 033 258
957 243
-1 052 379
15 116 941
13 813 140
879 623
956 093
-1 021 403
14 627 453
4 246 917
789 804
387 075
-432 948
4 990 849
3 967 506
660 446
416 127
-320 504
4 723 574
952 362
29 822
57 042
–
1 039 225
679 328
36 052
137 032
–
852 412
BALANCE
Assets
Liabilities, non-interest-bearing
Investments
Description of the segments:
The TINE’s domestic dairy operations segment consists mainly of TINE SA and OsteCompagniet AS. TINE’s international dairy operations segment
consists of the sub-group corporates Wernersson Ost AB (Sweden), Norseland Inc. (USA) and Norseland Ltd. (UK). Other business activities segment consists of the corporate subsidiaries Diplom-Is AS and Fjordland AS, addional by TINE SAs other subsidiaries (see note 14). Other activities
and eliminations includes TINE Holding AB.
NOTE 2
Sales revenues from convenience products by geographical area
THE TINE GROUP
2015
Amounts in NOK 1000
TINE SA
2014 Geographical area
17 533 621
17 252 630
1 231 828
1 126 750
3 604
2 545
1 708 942
1 323 404
751
769
140 782
130 406
20 619 528
19 836 504
Norway
Other Europe
Africa
America
Asia
Oceania
Sales revenues from convenience products
2015
2014
15 698 075
15 260 697
157 370
146 630
33
206
468 493
421 580
751
748
81 831
80 882
16 406 553
15 910 743
The sales revenue in 2015 is characterized by strong growth in sales of cheese and increased activity internationally. The positive trend in sales revenues outside Norway is also affected by favorable exchange rates. Otherwise reference is made to the discussions in the annual report from the
board of directors.
44 | TINE annual report 2015
TINE ANNUAL REPORT 2015
NOTES/INCOME STATEMENT
NOTE 3
Other operating income
THE TINE GROUP
2015
TINE SA
2014 Income groups
2015
2014
110 503
111 578 Transport income
118 012
118 126
293 602
324 971 Other income
475 191
493 390
27 769
431 874
NOTE 4
Amounts in NOK 1000
34 311 Profit from sale of non-current assets
470 860 Total other operating income
27 291
34 769
620 494
646 285
Government grants
Amounts in NOK 1000
For the TINE Group and TINE SA funds from tax-related intensive scheme (Skattefunn) and other governmental and municipal grant programs have
been received as shown in the following table.
THE TINE GROUP
2015
863
NOTE 5
TINE SA
2014 Revenue category
2015
839 Tax-related incentive scheme
2014
376
378
16 976
20 256 Other governmental and municipal grants
16 976
20 256
17 839
21 095 Total government grants
17 352
20 634
Major individual transactions
THE TINE GROUP
2015
24 326
-36 097
Amounts in NOK 1000
TINE SA
2014 Profit and loss items
36 751 Gain on sales on tangible fixed assets
-88 603 Costs related to restructuring
2015
2014
23 858
36 031
-36 097
-88 603
250 190
71 160
Balance sheet
250 190
71 160 Investments in lager new plants
Gain on sale of fixed assets consist primarily of gains from the sale of dairy plants. There are expensed various restructuring measures in TINE SA for
both 2015 and 2014. Restructuring costs include severance payment and pensions. Investments in major new plants mainly apply to the expansion of
the capacity at the dairy plants at Tretten and Frya.
NOTE 6
Cost of materials and changes in inventory
THE TINE GROUP
2015
12 605 699
-82 853
12 522 846
NOTE 7
Amounts in NOK 1000
TINE SA
2014 Cost category
12 055 800 Consumption of raw materials and goods purchased for resale
2015
2014
10 198 093
9 858 812
-86 937 Changes in inventories in production and convenience products
11 968 863 Total cost of materials and changes in inventory
-125 125
-78 072
10 072 968
9 780 740
Personnel expenses and number of full-time equivalents
THE TINE GROUP
2015
3 081 672
Amounts in NOK 1000
TINE SA
2014 Expense category
3 108 649 Wages and salaries, holiday pay and costs for temporary staff
2015
2014
2 606 073
2 651 731
396 931
396 884 Employers' national insurance contribution
338 382
334 090
201 892
145 979 Net pension expenses including social security tax, cf. note 8
158 357
101 209
189 169
181 713 Other personnel expenses
127 565
122 947
3 869 664
3 833 225 Total personnel expenses
3 230 377
3 209 977
4 377
4 436
5 272
5 386 Average number of employees calculated in full-time equivalents
The personnel expenses increased slightly from 2014 to 2015. A weaker Norwegian krone has resulted in a significantly increase in personnel expenses in the segment TINE Meieri International expressed in Norwegian kroner. In addition, pension expenses did increase as a consequence of payroll
tax on increased premiums and a reduction in the expected return on pension assets. Efficiency improvements of Diplom-Is AS and organizational
development of TINE SA have influenced the labor costs positively. For the same reasons, the number of employees measured in full-time equivalents, decreased from 2014 to 2015. See also the discussion in the annual report from the board of directors under the subtopic other activities and
organization and people.
TINE annual report 2015 | 45
TINE ANNUAL REPORT 2015
NOTES/INCOME STATEMENT
NOTE 8
Pensions and pension obligations
Amounts in NOK 1000
TINE SA and its Norwegian subsidiaries have a group pension scheme in MP Pension. The pension scheme is in accordance with the Norwegian
defined benefit scheme Act and the Mandatory Occupational Pensions Scheme Act (Norwegian abbreviation - OTP). The group pension scheme is
recognised in the financial statement as a defined benefit pension scheme. The benefits from the scheme are mainly dependent on the number of
years in service and the salary at time of retirement. The pension scheme is independent from the Norwegian National Insurance Scheme and the
benefits from the scheme is in addition to the benefits provided by the Norwegian National Insurance Scheme. The Group’s subsidiaries outside
Norway have established pension plans in accordance with local laws.
MP Pension is an independent foundation that covers employees in TINE SA and Norwegian subsidiaries. The purpose of MP Pension is to provide
retirement and disability benefits to members and survivors pensions to spouses, registered partners, cohabitants and children. MP Pension’s assets
are separated from the company’s assets. MP Pension is under supervision from the Financial Supervisory Authority of Norway and is licensed to
operate as a pension fund.
The pension scheme in MP Pension provides the following benefits with full service period (30 years or more).
Pension benefits
Calculation basis
Retirement benefit
Up to 6 G
16 % of the pension-qualifying income. 1)
From 6 G to 12 G
44 % of the pension-qualifying income. 1)
Spouse benefit
Calculated retirement
benefit
55 % of the calculated retirement pension.
Child's benefit
Pension-qualifying income
55 % of calculated retirement benefit for the youngest child and 25 % for other children under 21
years. Total child’s benefit are equally divided between the children.
Disability benefit
Calculated retirement
benefit
Equals calculated retirement benefit. Additional 10 % of disability benefit for each child, limited
up to 6 children
1)
Pension benefit
Until 31.12.2013, the retirement benefits were respectively 20 % and 48 % of the pension-qualifying income.
In addition to the group pension scheme, TINE SA and the Norwegian subsidiaries have an unfunded defined benefit scheme for employees with salaries exceeding 12 G. The pension benefits of this scheme is 66 % of salaries exceeding 12 G and is effective from the age of 62 or 67. The pension
benefits from the 12 G benefit scheme was on condition of employment in the TINE Group. This condition was changed by the board of directors in
2014. After the change the employees will have the right for accrued benefits from the scheme even if not employed in the TINE Group. The effect
of the changes is included in the pension expense in 2014 as amortisation of plan amendment.
Employees in TINE SA and most Norwegian subsidiaries are under the agreement of early retirement pensions organized by LO - NHO (respectively
employee and employer organization). Employees in these companies have the opportunity to apply for early retirement pension from the age of
62. The current early retirement pension scheme is a defined benefit multi-employer plan. The companies within the agreement with LO-NHO have
a financial liability as a result of the agreement on early retirement scheme. However, there is not sufficient information to recognise the liabilities in
the financial statements. This means that no obligations for the current early retirement pension scheme is recognized.
The pension schemes include the following number of employees for TINE SA and the TINE Group of December 31, 2015.
THE TINE GROUP
1)
TINE SA
Employees
Retirees
5 104
3 957
Employees
Retirees
4 569
44
34
3 652
39
335
–
Defined contribution schemes
–
34
–
–
9
Early retirements pension schemes
–
–
Defined benefit schemes in MP Pension
Unfunded defined benefits scheme 1)
Unfunded pension schemes primarily relates to pension schemes for employees with salaries exceeding 12 G and gift schemes for employees who is not included in the pension scheme in MP Pension.
THE TINE GROUP
2015
396 914
358 814
-634 332
14 373
–
-50 717
TINE SA
2014 Pension expenses
389 531 Present value of accrued pension entitlements for the year
362 375 Interest expenses on pension liabilities
-692 178 Projected net yield on pension assets
29 178 Recognised actuarial loss (+) / gain (-)
44 447 Amortisation of plan amendment effect
-50 175 Employee contributions
2015
2014
347 008
338 319
329 016
331 476
-581 773
-634 074
14 317
24 989
–
36 506
-45 791
-44 901
55 607
17 966 Employers' national insurance contribution
49 117
11 733
61 233
44 835 Other pension expenses (including early retirement and contribution schemes)
46 463
37 161
158 357
101 209
201 892
145 979 Net pension expenses
Note 8 continues on the following page
46 | TINE annual report 2015
TINE ANNUAL REPORT 2015
NOTES/INCOME STATEMENT
Note 8 continued
Reconciliation of the pension scheme’s financial status with amounts in the balance sheet:
Amounts in NOK 1000
THE TINE GROUP
TINE SA
31.12.2015
31.12.2014 Pension obligations and plan assets
31.12.2015
31.12.2014
-12 202 741
-11 522 500 Present value of accrued pension obligations
-11 311 571
-10 644 858
14 673 483
13 726 844 Pension assets (at fair value)
13 545 793
12 652 269
2 234 222
2 007 412
-146 893
-206 428
2 470 742
2 204 344 Net pension assets excluding taxes and actuarial gains/losses
-258 885 Unrecognised actuarial gains/losses
-216 455
-1 337 Employers' national insurance contribution
-1 212
2 253 075
1 944 122 Net pension assets recognised in the balance sheet
-
-576
2 087 329
1 800 408
-122 593
-108 334
-189 926 Present value of pension obligations
-211 391
55 879 Pension assets (at fair value)
65 378
-134 048 Net pension obligations excluding tax and actuarial gains/losses
-146 013
436
593
-122 157
-107 741
10 715
29 654 Unrecognised actuarial gains/losses
22 984
28 384
-18 739
-16 804 Employers' national insurance contribution
-17 224
-15 173
-116 397
-94 530
-121 197 Net pension obligations recognised in the balance sheet
-154 037
The following assumptions are used in Norway for the TINE Group and TINE SA:
Economic assumptions
31.12.2015
31.12.2014
Annual discount rate
2,30 %
3,00 %
Salary adjustment
3,00 %
3,50 %
Adjustment of the National Insurance Scheme’s basic amount (G)
2,50 %
3,00 %
Adjustment of current pensions
2,00 %
2,70 %
Projected return on pension plan assets 1)
4,00 %
4,75 %
Demographical assumptions
Applied mortality table
Applied disability risk
K2013
K2013
Strengthened KU
Strengthened KU
Average 3-5 %
per year
Average 3-5 %
per year
Voluntary exit (all ages)
1)
Projected return of pension plan assets used when calculating pension expense is based on historical and expected return on assets in the MP Pension.
Economic and demographic assumptions used for calculating and accounting for pensions are based on the expectations of the actual membership, the
conditions of the pension scheme in MP Pension and TINEs expectations of future economic development.
THE TINE GROUP
2015
7,25 %
31.12.2015
TINE SA
2014 Actual return on pension plan assets
4,71 % Actual return on pension assets in the group pension scheme
2015
2014
7,25 %
4,71 %
31.12.2014 The pension assets in MP Pension consist of:
50,21 %
48,87 % Shares
50,21 %
48,87 %
42,93 %
43,62 % Bonds
42,93 %
43,62 %
4,31 %
4,69 % Investments in property
4,31 %
4,69 %
2,56 %
2,82 % Other assets
2,56 %
2,82 %
Sensitivity analysis regarding changes in assumptions
Measurement of defined benefit obligations and pension costs are based on several economic and demographic assumptions. The table below shows the
estimated sensitivity of the most important assumptions in the TINE Group. The sensitivity analysis specifies the effect a change in assumptions will have on
pension expense and pension obligation related to the pension scheme in MP Pension.
Discount rate
Salary adjustment
Adjustment of current pensions
0,5 %
-0,5 %
0,5 %
-0,5 %
0,5 %
-0,5 %
-1 164
1 355
396
-362
507
-468
-56
68
32
-29
20
-19
Change in (MNOK):
Capitalized accrued pension liabilities
Expensed present value of accrued pension entitlement for the year
The most significant demographic assumption is mortality table. One year longer life for the members will result in an increase in gross pension liability at
December 31, 2015 of 503 MNOK.
The analysis as specified above, is carried out by actuaries and based on conditions of 31.12.2015. The calculations are based on the assumption that all
other assumptions are unchanged. Keeping other assumptions unchanged, represent a limitation of the analysis, as it may be a correlation between some
of the changes.
TINE annual report 2015 | 47
TINE ANNUAL REPORT 2015
NOTES/INCOME STATEMENT
Auditor’s remuneration
NOTE 9
Amounts in NOK 1000
THE TINE GROUP
TINE SA
2015
2014 Remuneration to elected auditor - Deloitte AS
2015
2014
4 773
5 341 Statutory audit services
2 639
3 123
762
630 Remuneration for certification services
727
625
815
891 Remuneration for tax advisory service
627
673
359
6 709
1 140 Remuneration for other services
8 002 Total remuneration to elected auditor - Deloitte AS
332
80
4 325
4 501
The table shows expensed audit fees excluding VAT. The remuneration for other certification services are mainly linked to certification services due to
the Norwegian Agriculture Agency and the CSR report. For the TINE Group fees for other services includes in 2014 technical assistance in connection
with the evaluation of acquisitions. Remunerations to auditors are expensed in the year in which they are incurred.
THE TINE GROUP
2015
2014 Remuneration to other auditors
1 725
1 403 Statutory audit services
251
84
2 060
188 Remuneration for tax advisory service
89 Remuneration for other services
1 680 Total remuneration to other auditors
Remuneration to other auditors includes the companies Norseland Inc., Alpine Dairy LLC and Bunes Fryselager AS.
NOTE 10
Other operating expenses
Amounts in NOK 1000
THE TINE GROUP
2015
2014 Cost category
1 083 022
1 110 910 Indirect costs associated with production and operations
1 059 690
1 068 146 Transportation costs
-491 529
1 548 010
-474 288 Feed transport subsidy income (transport supplement and distribution supplement)
1)
1 613 373 Sales costs, marketing and other operating expenses
2015
2014
940 258
970 935
979 782
992 656
-491 529
-474 288
1 153 105
1 184 629
9 971
8 877 Property tax
8 599
8 163
7 873
5 342 Loss on sale of tangible fixed assets
7 791
5 319
2 935
3 035 Loss on receivables and contracts
2 275
2 075
2 600 281
2 689 489
3 219 972
1)
TINE SA
3 335 395 Total other operating expenses
Reimbursement from the price equalisation scheme for raw milk transport costs for the distance from milk producer to the quoting point, see also note 33.
Other operating expenses decreased from 2014 to 2015. The main reason is the rationalization and efficiency projects that have been completed in
Diplom-Is AS and the improvement project Styrk in TINE SA. A weaker Norwegian krone caused a significantly increase of other operating expenses
in the segment TINE Dairy international expressed in Norwegian currency. Reference is made to the topics other activities and efficiency improvements of TINE in the annual report from the board of directors.
NOTE 11
Taxes
Amounts in NOK 1000
THE TINE GROUP
2015
1 578 579
426 217
TINE SA
2014 Reconciliation from nominal to actual tax rate
1 186 580 Profit before tax
320 377 Expected income tax according to nominal tax rate in Norway
2015
2014
1 399 352
1 081 807
377 825
292 088
Tax effect of the following items
9 820
9 390 Non-deductible costs
-1 391
-2 076 Non-taxable income
-1 163
-234 908
5 559
-5 935
-2 600
28
-54 017
11 386
1 861
-16 Differences in tax rates in other countries
-168 205 Payments to milk producers
5 643 Amortisation of goodwill
-4 833 Change in impairment of deferred tax assets
5 617 Net result from joint ventures and associated companies
15 Impairment of long-term financial assets
-233 Change in tax rate
9 951 Wealth tax
-2 230 Other items
7 199
6 519
-5 485
-5 793
–
–
-234 908
-168 205
–
–
–
–
–
–
-13 741
1 836
-46 719
–
11 386
9 951
2 074
-3 003
154 857
173 400 Total tax expense
97 631
133 393
9,8 %
14,6 % Effective tax rate
7,0 %
12,3 %
Note 11 continues on the following page
48 | TINE annual report 2015
TINE ANNUAL REPORT 2015
NOTES/INCOME STATEMENT
Note 11 continued
THE TINE GROUP
2014 Deferred tax effect of items recognised directly in equity
2015
-65 421 Hedging of future cash flows
-1 074
-21 615
-11 250 Equity hedging of foreign subsidiaries
-22 689
-76 671 Deferred tax effect of items recognised directly in equity
THE TINE GROUP / NORWAY
2015
139 701
93 501
104 887
2014
-65 421
–
–
-1 074
-65 421
2015
2014
15 156
7 685
31.12.2015
31.12.2014
65 627
77 108
-1 729
-5 940
165 715 Total tax expense
TINE SA
31.12.2014 Tax payable in the balance sheet
97 964 Income tax
– Tax effect of disbursed group contribution
–
11 386
2015
-1 074
THE TINE GROUP / INTERNATIONAL
2014 Split of income tax expense between Norway and other countries
THE TINE GROUP
31.12.2015
Amounts in NOK 1000
TINE SA
9 951 Wealth tax
107 915 Tax payable in the balance sheet
11 386
9 951
75 284
81 119
THE TINE GROUP
31.12.2015
31.12.2014
Specification of tax effect of temporary differences and loss carried forward
Assets
Liabilities
–
94 285
–
9 082
7 046
–
Long-term receivables / liabilities
46 242
–
Financial derivatives
–
563 269
Assets
Liabilities
Tangible fixed assets
–
134 818
Excess values through acquisitions
–
9 862
6 026
–
81 655
–
–
524 913
Pension Funds
Inventories
–
29 240
1 050
–
Short-term receivables
32 983
–
38 509
–
–
10 970
–
32 585
1 207
–
Short-term liabilities
31 435
–
Pension liabilities
33 601
–
–
12 522
Profit and loss account
Remuneration/loss carried forward
68 088
–
68 340
–
193 918
706 846
Total before offsetting
222 264
714 700
-122 253
-122 253
Offsetting of tax assets/tax liabilities
-150 057
-150 057
71 665
584 593
Deferred tax assets / tax liabilities
72 207
564 643
-66 544
–
Unrecognised deferred tax asset
-66 673
–
5 121
584 593
5 534
564 643
Net deferred tax asset / tax liability in the balance sheet
Deferred tax assets are recognized based on future income. Tax losses carried forward have no time limit. TNOK 68 088 of tax effect of the loss per
31.12.2015 belong to the Swedish business in the TINE Group. The corresponding figure for 31.12.2014 was TNOK 68 340.
TINE SA
31.12.2015
31.12.2014
Specification of tax effect of temporary differences and loss carried forward
Assets
Liabilities
–
61 061
Tangible fixed assets
Assets
–
46 242
–
Financial derivatives
81 655
–
–
521 831
–
486 110
Pension Funds
Inventory
–
27 869
464
–
Short-term receivables
30 837
–
29 099
–
–
5 900
Profit and loss account
Liabilities
112 621
–
25 623
524
–
Short-term liabilities
29 781
–
Pension liabilities
25 523
–
–
5 678
106 642
616 661
Total before offsetting
137 483
630 032
-106 642
-106 642
Offsetting of tax assets / tax liabilities
-137 483
-137 483
–
510 019
Deferred tax assets / tax liability in the balance sheet
–
492 549
THE TINE GROUP
2015
43 053
93 500
11 386
6 918
154 857
TINE SA
2014 Specification of tax expense
68 441 Deferred tax
101 220 Income tax payable
9 951 Wealth tax
-6 212 Change in tax payable previous years
173 400 Total tax expense
2015
2014
20 273
52 018
63 898
74 425
11 386
9 951
2 074
-3 001
97 631
133 393
TINE annual report 2015 | 49
TINE ANNUAL REPORT 2015
NOTES
BALANCE
NOTE 12
Intangible assets and goodwill
THE TINE GROUP
Amounts in NOK 1000
Patents
Brand
Other rights
Goodwill
Total 2015
Total 2014
7 089
90 949
47 577
292 666
438 282
394 956
–
–
1 345
–
1 345
12 971
Disposals (-) during the year
-1 180
–
-2 077
–
-3 257
-459
Exchange differences
1 203
9 544
8 121
31 072
49 941
30 814
Acquisition cost at 31.12
7 112
100 493
54 967
323 738
486 310
438 282
–
-66 487
-22 312
-271 188
-359 987
-293 937
Acquisition cost at 01.01
Acquisitions (+) during the year
Accumulated depreciation and impairments at 31.12
Book value 31.12
7 112
34 006
32 654
52 551
126 323
144 345
Depreciation for the year
–
-7 577
-5 819
-20 592
-33 988
-35 512
Impairments for the year
–
–
–
–
–
–
5 yearsforever
10-20 years
5 years
5-10 years
Linear
Linear
Linear
Linear
31.12.2015
31.12.2014
Economic period of depreciation
Depreciation schedule
Import licence in Norseland Inc., classified as patents, is evaluated to have an indefinite lifetime and is not amortised.
Goodwill relates to:
Matvarehuset AS and Transporty AS
7 571
9 898
Wernersson Ost AB
22 844
34 314
Alpine Dairy LCC
20 298
19 763
Norseland Ltd.
1 837
3 574
Total goodwill
52 551
67 549
Goodwill
Total 2015
Total 2014
21 000
21 000
Acquisitions (+) during the year
–
–
Disposals (-) during the year
–
–
–
21 000
21 000
21 000
TINE SA
Acquisition cost at 01.01
Acquisition cost at 31.12
21 000
Accumulated depreciation and impairments at 31.12
-4 200
-4 200
–
Book value at 31.12
16 800
16 800
21 000
Depreciation for the year
-4 200
-4 200
–
Impairments for the year
–
–
–
Economic period of depreciation
Depreciation schedule
5 years
Linear
Goodwill for TINE SA is related to the acquisition of the business in Sunniva Drikker AS. Refers to note 14.
An impairment test has been performed for goodwill and other intangible assets where there are indications of a decline in value. The calculation of
the recoverable amount is based on discounting future cash flow. The cash flow is based on the budget and other available information at the time of
assessment. A moderate annual increase is expected in the sales and contribution margin ratio for the first five years. Constant figures are used for
remaining life. It is used required return before tax (WACC) that reflects the risks relevant for the companies.
Amounts in NOK 1000
THE TINE GROUP
2015
42 617
66 539
109 156
TINE SA
2014 Expensed research and product development
58 427 Research
46 515 Product development
104 942 Total expensed research and product development
2015
2014
42 617
58 427
60 701
41 828
103 318
100 255
A considerable part of on-going research and development work is connected to our priority areas within the dairy sector, especially within health
and wholesomeness.
50 | TINE annual report 2015
TINE ANNUAL REPORT 2015
NOTES/BALANCE
NOTE 13
Tangible fixed assets
Amounts in NOK 1000
THE TINE GROUP
Land/buildings/ other real
property
Buildings/ installations
Machinery/furniture and fixtures
Vehicles
Total 2015
Total 2014
303 947
5 733 553
9 745 749
839 993
16 623 243
16 278 587
3 752
401 376
512 517
121 581
1 039 225
819 651
-6 547
-63 687
-1 242 260
-91 595
-1 404 090
-548 429
Acquisition cost at 01.01
Acquisitions (+) during the year
Disposals (-) during the year
Acquisition cost at 31.12
1 542
27 535
45 821
53
74 950
73 434
302 694
6 098 776
9 061 827
870 032
16 333 329
16 623 243
Book value at 31.12
-14 986
-2 643 430
-5 134 473
-613 224
-8 406 112
-8 843 050
Depreciation for the year
287 708
3 455 346
3 927 354
256 808
7 927 217
7 780 193
Impairments for the year
-3 768
-202 191
-629 611
-73 142
-908 712
-895 204
–
–
-7 580
–
-7 580
-8 640
10 years-forever
20–30 years
3–15 years
5–10 years
Accumulated depreciation and impairments at 31.12
Economic period of depreciation
Depreciation schedule
Avskrivningsplan
Linear
Linear
Linear
Linear
Profit (+) / loss (-) on sale of property, plant and equipment
4 651
11 940
-7 876
6 609
15 324
25 912
509
–
509
9 304
-8 600
–
-8 600
-14 019
Book value at 31.12 of lease agreements recognised in
the balance sheet 1)
Current year depreciation of leased assets
TINE SA
Land/buildings/ other real
property
Buildings/ installations
Machinery/furniture and fixtures
Vehicles
Total 2015
Total 2014
168 327
5 361 125
8 816 670
738 004
15 084 126
14 890 968
3 752
391 255
451 702
105 653
952 362
678 622
-6 532
-63 687
-1 223 618
-85 403
-1 379 241
-485 463
Acquisition cost at 01.01
Acquisitions (+) during the year
Disposals (-) during the year
Acquisition cost at 31.12
165 547
5 688 693
8 044 754
758 254
14 657 247
15 084 126
-14 149
-2 475 482
-4 531 611
-535 304
-7 556 546
-8 097 362
151 398
3 213 210
3 513 143
222 950
7 100 701
6 986 764
Depreciation for the year
-3 704
-189 571
-554 857
-60 843
-808 975
-800 970
Impairments for the year
–
–
-7 344
–
-7 344
-4 070
10 years-forever
20–30 years
3–15 years
5–10 years
Accumulated depreciation and impairments at 31.12
Book value at 31.12
Economic period of depreciation
Depreciation schedule
Linear
Linear
Linear
Linear
Profit (+) / loss (-) on sale of property, plant and equipment
4 651
11 940
-7 819
6 363
15 135
30 711
Book value at 31.12 of lease agreements recognised in
the balance sheet 1)
–
–
173
–
173
8 828
Current year depreciation of leased assets
–
–
-8 460
–
-8 460
-13 879
1)
Reference to note 18.
Buildings and installations consist of own production premises, warehouses and administration buildings for use in own dairy activity and production
of ice cream. Rental to external tenants is insignificant. Tangible fixed assets are tested for impairment where indications of a decline in value exicts.
Impairment to recoverable amount of property, plant and equipment is carried out as a result of decisions on future closing of plants, re-organisation
of operations and projects which have been experienced as less profitable than expected.
The table below shows the accounted value of buildings, technical installations and machinery under construction. Plant under construction is recognized as fixed assets, but not depreciated before starting up.
Amounts in NOK 1000
THE TINE GROUP
2015
351 327
4 496
TINE SA
2014 Construction in progress
92 858 Buildings
27 586 Technical installation
2015
2014
350 812
92 386
4 224
27 086
181 624
288 778 Machinery
172 472
279 656
537 447
409 222 Total construction in progress
527 508
399 128
Reference to investment in lager new plants in note 5.
TINE annual report 2015 | 51
TINE ANNUAL REPORT 2015
NOTES/BALANCE
NOTE 14
Investments in subsidiaries, joint ventures and associated companies
Subsidiaries
Bunes Fryselager AS
1)
Diplom-Is AS
Norsk Iskrem AS
Parent company
TINE SA
Ownership
interest/voting
shares
Sub-group
corporates /
subsidiaries
Ownership
interest/voting
shares
40 %
Registered offices
Procurement
time
Porsgrunn
1975
19 %
Nittedal
1991
100 %
Amounts in NOK 1000
Share of equity
in the company
at 31.12.2015
Book value
in TINE SA at
31.12.2015
Book value
in TINE SA at
31.12.2014
9 744
95
95
272 546
471 394
471 394
51 144
18 333
18 333
1 699
Nittedal
1989
Oslo
1985
Bergen
2014
Bergen
2014
Oslo
2002
100 %
–
–
Landbrukets Ferskvaredistribusjon AS
Oslo
1994
100 %
347
390
383
Maritex AS
Oslo
2001
100 %
9 135
8 624
8 624
Oslo
2002
100 %
1 638
3 501
3 501
Ilchester, UK
2004
100 %
91 135
119 999
67 999
Norseland Ltd.
Ilchester, UK
2008
100 %
Phonefood Ltd.
Ilchester, UK
2008
100 %
Ridgebrick Ltd.
Ilchester, UK
2013
Stamford, USA
1978
187 872
3 153
3 153
Winesburg, USA
2012
Næringsmiddelproduksjon AS
Oslo
2001
100 %
1 000
1 103
1 103
OsteCompagniet AS
Oslo
2001
100 %
8 874
3 053
3 053
Sunniva Drikker AS
Oslo
2002
100 %
23 584
12 427
12 427
TINE Eiendom Espehaugen AS
Bergen
2010
100 %
36 650
87 615
87 333
TINE Holding AB
Ulricehamn, Sweden
2007
100 %
675 301
589 776
589 776
Wernersson Glass AB
Ulricehamn, Sweden
2003/04/06
100 %
Wernersson Ost AB
Ulricehamn, Sweden
2007
100 %
Wernersson ETC Ost AB
Ulricehamn, Sweden
2007
100 %
Wernersson Ost Danmark AS
Roskilde, Denmark
2007/08/11
100 %
Ulricehamn, Sweden
2007/08
100 %
1 368 968
1 319 464
1 268 873
Fjordland AS
Matvarehuset AS
Transporty AS
Floren Eiendom AS
2)
Melkerampa AS
Norseland Holdings Ltd.
3)
Norseland Inc.
Alpine Dairy LLC
Wernersson Ost Färskvarugruppen AB
4)
100 %
51 %
75 %
75 %
100 %
100 %
100 %
Sum
1)
2)
3)
4)
The total ownership in Bunes Fryselager for TINE SA and Diplom-Is AS is 59 % (TINE SA 19 % and Diplom-Is AS 40 %).
Floren Eiendom AS was liquidated in 2015.
Previous impairment in Norseland Holding Ltd. is reversed in 2015 due to improvement in operations and results over the past years.
Changed name from Färskvarugruppen AL AB to Wernersson Ost Färskvarugruppen AB in 2015. Change in registred office from Jönkoping, Sweden to Ulricehamn, Sweden in 2015.
JOINT VENTURES (JV) AND ASSOCIATED COMPANIES (AC)
Registered
offices
Procurement
time
Ownership
interest/ voting shares
THE TINE GROUP
No. of shares/units
Share of
result 2015
TINE SA
Share of
equity at
31.12.2015
Share of
result 2014
Amounts in NOK 1000
Share of
equity at
31.12.2014
Book
value at
31.12.2015
Book
value at
31.12.2014
5 600
Fjordkjøkken AS 5)
Varhaug
1996
23,46 %
6 100
3 905
24 900
3 887
19 275
9 700
Skala AS 6)
Oslo
1948
50,00 %
12 500
4 120
41 831
-26 460
37 712
984
984
TUN Media AS
Oslo
2000
25,50 %
23 523 807
2 079
13 052
757
10 973
10 212
10 212
Other JV and AC 7)
Total JV and AC
5)
6)
7)
305
4 287
4 594
4 899
2 046
3 221
10 409
84 070
-17 222
72 859
22 942
20 017
Ownership in Fjordkjøkken AS changed from 21,54 % til 23,46 % in 2014.
One-time effect related to pension funds constitute about half of the loss for Skala AS in 2014.
Åstoppen Eiendom AS was sold in October 2014. Gains on sale of the shares are included in the share of result in 2014.
BoviBank AS was liquidated in 2015.
INCOME FROM INVESTMENTS IN SUBSIDARIES
Amounts in NOK 1000
TINE SA
Finance income art
Group contribution
2015
2014
24 108
43 148
Dividend
19 577
14 056
Total income from investments in subsidiaries
43 685
57 204
CHANGES IN OWNERSHIP INTERESTS
Fjordland AS acquired in 2014 75 % of the shares in Matvarehuset AS and Transporty AS. The companies deliver hot and cold ready-made dinners to
the elderly and to institutions in Bergen and Hordaland.
The business in Sunniva Drikker AS was sold to TINE SA pr. 29.12.2014. Sunniva Drikker AS as a legal entity will consist but inactive.
52 | TINE annual report 2015
TINE ANNUAL REPORT 2015
NOTES/BALANCE
NOTE 15
Inventories
Amounts in NOK 1000
THE TINE GROUP
TINE SA
31.12.2015
31.12.2014 Specification
31.12.2015
31.12.2014
288 440
287 074 Raw materials
261 996
258 403
305 500
612 336 Goods in production
250 306
555 730
693 468 Convenience products
991 204
560 655
1 083 157
268 330 Goods for resale
380 721
1 861 207 Total inventories
2 057 818
THE TINE GROUP
45 267
33 742
1 548 773
1 408 530
TINE SA
31.12.2014 Principle for valuation of inventory
31.12.2015
1 768 877 Valued at acquisition cost
1 996 303
31.12.2015
31.12.2014
1 507 851
1 335 206
92 330 Valued at fair value
61 515
1 861 207 Total inventories
2 057 818
40 922
73 324
1 548 773
1 408 530
The TINE Group’s inventories were written down by MNOK 44,2 as of 31.12.2015 due to obsolescence and changed market conditions for some individual product segment. The impairment applies mainly to butter and cheese. The figure for 2014 was MNOK 38,5.
NOTE 16
Balances with joint ventures and associated companies
Amounts in NOK 1000
THE TINE GROUP
TINE SA
31.12.2014 Balances with joint ventures and associated companies
31.12.2015
29 539 Short-term liabilities to joint ventures and associated companies
51 675
NOTE 17
31.12.2015
926 Short-term receivables to joint ventures and associated companies
1 775
31.12.2014
1 762
874
51 173
29 539
Equity
Amounts in NOK 1000
THE TINE GROUP
31.12.2014
31.12.2015
Cooperative share
capital
Subsequent
payment
fund
Other
equity
Minorities
share
Total
equity
6 891
340 000
5 726 123
53 757
6 126 771
–
–
1 397 630
26 092
1 423 722
–
–
-870 029
–
-870 029
Cooperative share
capital
Subsequent
payment
fund
Other
equity
Minorities
share
Total
equity
7 319
340 000
5 526 887
40 080
5 914 286
Net profit for the year and minorities share
–
–
988 306
24 874
1 013 180
Allocated to the milk producers
–
–
-622 981
–
-622 981
Equity at 01.01
Change in the equity for the year
Net payments and disbursements of the
cooperative share capital
-462
–
–
–
-462
-428
–
–
–
-428
–
–
-24 817
–
-24 817
Hedging of future cash flows
–
–
-176 878
–
-176 878
–
–
-73 623
–
-73 623
Hedging of net investment in foreign
subsidiaries
–
–
-30 418
–
-30 418
–
–
–
–
–
Changes in minorities
–
–
–
2 247
2 247
–
–
–
-18 723
-18 723
The minorities share of disbursed dividend
–
–
–
-13 444
-13 444
–
–
93 000
–
93 000
Currency conversion difference
–
–
43 433
–
43 433
–
–
-6 620
–
-6 620
Miscellaneous
–
–
-2 226
–
-2 226
6 429
340 000
6 241 664
61 126
6 649 219
6 891
340 000
5 726 123
53 757
6 126 771
Minorities represent external owner’s share of subsidiaries.
The minorities share in the equity is distributed as follows.
Bunes Fryselager AS
Fjordland AS
Matvarehuset AS
Transporty AS
Total minorities share of the equity
Equity at 31.12
THE TINE GROUP
31.12.2015
31.12.2014
6 771
6 486
50 258
43 834
3 120
2 615
977
822
61 126
53 757
Note 17 continues on the following page
TINE annual report 2015 | 53
TINE ANNUAL REPORT 2015
NOTES/BALANCE
Note 17 continued
TINE SA
Amounts in MNOK
31.12.2015
Cooperative
share capital
Subsequent
payment fund
Other
equity
Total
equity
6 891
340 000
5 696 218
6 043 109
–
–
1 301 721
1 301 721
–
–
-870 029
-870 029
-462
–
-
-462
–
–
-24 817
-24 817
–
–
794
794
6 429
340 000
6 103 887
6 450 316
31.12.2014
Cooperative
share capital
Subsequent
payment fund
Other
equity
Total
equity
7 319
340 000
5 547 663
5 894 982
Net profit for the year
–
–
948 414
948 414
Allocated to the milk producers
–
–
-622 981
-622 981
-428
–
–
-428
Hedging of future cash flows
–
–
-176 878
-176 878
Miscellaneous
–
–
–
–
6 891
340 000
5 696 218
6 043 109
Equity at 01.01
Change in the equity for the year
NOTE 18
Net payments and disbursements of the
cooperative share capital
Equity at 31.12
Obligations related to lease agreements in the balance sheet
THE TINE GROUP
Amounts in NOK 1000
TINE SA
31.12.2015
31.12.2014
31.12.2015
31.12.2014
1 366
11 102 Present value of lease payments
1 366
11 102
1 391
11 415 Nominal value
1 391
11 415
Estimated minimum lease payments which fall due during one year, two to five years, and over five years respectively.
THE TINE GROUP
TINE SA
1 year
2 to 5 year
more than 5 year
Total
1 year
2 to 5 year
more than 5 year
1 366
–
–
1 366 Present value of lease payments
1 366
–
–
1 366
Total
1 391
–
–
1 391 Nominal value
1 391
–
–
1 391
Book value of assets related to lease agreements in the balance sheet are specified in note 13 tangible fixed assets.
NOTE 19
Carrying provisions
Amounts in NOK 1000
The following provisions for future obligations have been recognised in the balance sheet as debt.
THE TINE GROUP
31.12.2015
127 084
TINE SA
31.12.2014
124 212 Restructuring costs
31.12.2015
31.12.2014
125 749
112 700
Provisions for restructuring costs include restructuring measures, severance pay and pensions in TINE SA and Diplom-Is AS.
54 | TINE annual report 2015
TINE ANNUAL REPORT 2015
NOTES
FINANCIAL INFORMATION
NOTE 20
Financial risk and derivatives
TINE SA has a comprehensive approach to the Group’s financial risk.
The primary objective of TINE’s financial policy is to contribute to the
highest and most stable milk price possible. TINE SA utilises interest
rate and currency derivatives as part of managing the Group’s currency
and interest rate exposure. Interest rate swaps, currency forward contracts and currency options are used achieving the desired interest rate
structure for the lending portfolio as well as to hedge cash flows in foreign currency.
FOREIGN CURRENCY RISK
The currency risk of TINE SA arises from future trade transactions mainly related to the sale of goods and purchase of raw materials and packaging abroad as well as investments in and dividends from subsidiaries
outside Norway. Balance sheet risk is related to ownership interests in
foreign subsidiaries in Sweden, Denmark, the UK and the US with functional currency other than NOK.
To reduce the risk that is related to transactions in foreign currency,
TINE SA has entered into currency forward contracts and currency options in USD and EUR. These currencies represent the main exposure
to TINE SA. Most of the derivatives in EUR are related to purchases,
while derivatives in USD are linked to sales. The currency derivatives are
evaluated in accordance with Section 5-9 of the Norwegian Accounting
Act at fair value on the balance sheet. Realised gain and loss, as well as
unrealised changes in fair value are recognised in the income statement.
The TINE Group uses hedging of net investment in foreign subsidiaries.
THE TINE GROUP
31.12.2015
1)
Amounts in NOK 1000
TINE SA
31.12.2014 Market value of currency derivatives
31.12.2015
31.12.2014
-5 208
-36 073 Total currency derivatives at fair value in the balance sheet
-5 208
-36 529
-5 208
-36 073 Total market value of currency derivatives
-5 208
-36 529
1)
Total carrying value of currency derivatives are included in the balance sheet item other short-term receivables and other short-term liabilities
Recognised changes in unrealised gain (loss) on currency derivatives in TINE SA in 2015 is MNOK 31.
THE TINE GROUP
2015
-113 599
100 924
-12 675
2)
Amounts in NOK 1000
TINE SA
2014 Realised and unrealised currency profit and loss
-47 357 Realised currency profit and loss
2015
2014
-93 464
3 141
15 669 Unrealised currency profit and loss
-31 688 Net realised and unrealised currency profit and loss
2)
-6 909
-69 339
-100 373
-66 198
Currency profit and loss is recorded as part of the profit accounting in TINE SA
TINE SA has hedged part of the net investment in TINE Holding AB, Wernersson Ost AB, Norseland Ltd. and Norseland Inc. Foreign currency loans
and currency derivatives are used as hedging instruments. Changes in value of hedging instruments are recorded against the equity of the TINE
Group. Accumulated unrealized change in value of hedges of net investments account as of 31.12.2015 is NOK -154 after tax compared to MNOK
-80 as of 31.12.2014. This amount is included in the balance sheet item other equity in the TINE Group.
INTEREST
RATE RISKMost of TINE SA’s interest rate exposure is related to long-term liabilities. The purpose of TINE SA’s financial policy for managing interest
rate risk is to provide the TINE Group with the most cost-effective financing possible, together with a desire for a certain stability and predictability
of the financial expenses.
TINE SA can enter into interest rate swaps, FRAs (forward rate agreements) and interest rate options. This is in order to reduce risk related to future
interest rate payments that arise due to fluctuations in the interest rate markets. As of 31.12.2015 TINE SA has only outstanding interest rate swaps.
The interest rate hedges have duration of up to 20 years with varying degree of hedging relative to expected future of net interest-bearing debt.
THE TINE GROUP
2015
–
13 240
-100 078
-86 838
2014 Interest income and expenses
– Interest income from group company
3)
2015
2014
7 213
6 387
10 214 External interest income
12 423
9 495
-127 632 External interest expenses
-99 499
-127 605
-117 418 Net interest income and expenses
-79 863
-111 823
THE TINE GROUP
31.12.2015
Amounts in NOK 1000
TINE SA
Amounts in NOK 1000
TINE SA
31.12.2014 Market value interest rate derivatives excluding accrued interest
31.12.2015
31.12.2014
-179 760
-273 113 Total interest rate derivatives where the change in value is charged to equity
-179 760
-273 113
-179 760
-273 113 Total market value interest rate derivatives excluding accrued interest
-179 760
-273 113
3)
Total carrying amount of interest rate derivatives is recognised in the balance sheet as long-term financial liabilities.
Interest rate derivatives related to cash flow hedges of future interest payments and changes in value are recognised in equity. TINE SA realised
interest rate derivatives with a total market value of MNOK -116 in December 2015. Realized interest rate derivatives was entered into as part of
the cash flow hedge of future interest payments. Realisable amount is included in other equity and recognised in line with the interest payments the
derivatives originally hedged. Accumulated unrealised and realised changes in value of cash flow hedges of interest payments is NOK -222 after tax
per 31.12.2015, compared with MNOK -197 per 31.12.2014. This amount is included in the balance sheet item retained earnings both for the TINE
Group and TINE SA.
Note 20 continues on the following page
TINE annual report 2015 | 55
TINE ANNUAL REPORT 2015
NOTER/FINANCIAL INFORMATION
Note 20 continued
INTEREST SENSITIVITY ANALYSIS
The analysis illustrates the interest rate risk related to the TINE Group’s interest-bearing liabilities and interest rate derivatives pr 31.12.2015. This shows
how an interest rate change of 2 % will affect the result for the next fiscal year (amounts in MNOK). The TINE Group has entered into interest rate
derivatives, but these have not start-up until the end of 2016 at the earliest and are therefore not included in the analysis. A nominal tax rate of 25 % is
used.
Amounts in MNOK
THE TINE GROUP
TINE SA
Net interest bearing liabilities
2 918
2 918
Profit after tax
Net interest bearing liabilities
2 993
-45
The net effect of adverse changes in interest rate
(-2 %)
2 993
45
44
CREDIT RISK
Credit risk is the risk of a party inflicting a financial loss on the other party
by not fulfilling its obligations. The TINE Group assumes counterparty risk
in the sale of goods, through operational guarantee for milk producers, in
investment of surplus liquidity and in financial derivatives trading.
The TINE Group has established procedures for assessing customers
and credit limits are determined according to the credit policy. These
guidelines permit inter alia to require a form of settlement that provides security for payment for deliveries. Customers of the TINE Group
are wholesalers and individual customers in several customer segments.
Their ability to pay is considered as good and bad debts in the TINE
Group has historically been low. Changed outlook for Norwegian macroeconomics has led to closer follow-up of exposed customers of the TINE
Group.
TINE SA has also entered into an operating guarantee scheme where
TINE SA guarantees for a maximum of 50 % of outstanding credit the
milk producers have in the Trade Credit Facility for Agriculture. Historically there have been low payments under this scheme.
Counterparty risk for financial derivatives and investment of surplus liquidity is reduced by choosing counterparties with high credit ratings,
as well as diversification.
NOTE 21
Profit after tax
The net effect positive change in the interest rate
-44
(+2 %)
LIQUIDITY RISK
The liquidity risk is the risk that TINE will not be able to pay its financial liabilities at maturity. The TINE Group manages its liquidity risk
by having sufficient liquid reserves, credit facilities with banks and
by continuously monitoring future cash flows related to the TINE
Group’s financial assets and liabilities. The TINE Group’s liquidity
is considered to be good. The TINE Group has at 31.12.2015 available credit in the back-stop-facility that can cover short-term refinancing needs. The available credit indicates that the liquidity risk may
be considered very low.Reference is made to note 24 where a further
description is given of overdraft facilities and the financing situation.
COMMODITY RISK
The world market prices for the main bulk products such as butter, milk
powder, cheddar and gouda developed negatively in 2015 compared to
2014. This is mainly due to excess of raw milk in the world since the
milk production increased more than the consumption. Termination of
the quota system in the EU was one of the main factors that lead to
increased production from 2014 to 2015. Some EU countries increased
their production with a two-digit percentage. Lower demand for dairy
products and milk powder in China and the import ban in Russia were
important factors that affected consumption.
Going forward, it is expected that China, which is one of the largest importers of dairy products, will increase . The estimate for 2016 shows
that China will remain below historical import levels. These and other
factors may indicate that the bottom has been reached in the world market for milk and that it will not deteriorate further in 2016.
Net other financial income and expenses
THE TINE GROUP
2015
TINE SA
2014 Financial cost art
–
– Impairment of investment in joint ventures and associated companies
–
– Impairment of investment in subsidiaries
–
-170
-559
641
Amounts in NOK 1000
– Reversal impairment of investment in subsidiaries
-55 Impairment of investment in other companies
1 336 Change in market value of market-based financial current assets
1 260 Other financial income
-10 230
-12 910 Other financial expenses
-10 318
-10 369 Net other financial income and expenses
2015
–
–
-6 796
52 000
–
-105
-1
-593
1 216
321
870
-7 760
-4 056
42 863
-8 767
Reversal of previous impairment of subsidiary in 2015 relates to Norseland Ltd. Impairment of subsidiaries in 2014 relates to Melkerampa AS.
56 | TINE annual report 2015
2014
-1 000
TINE ANNUAL REPORT 2015
NOTER/FINANCIAL INFORMATION
Loans and guarantees
NOTE 22
LOANS
TINE SA has previously given loans to individual milk producers based
on the member’s monthly delivery of milk, and where accumulated loans during the year were offset against the subsequent payment resolved at the annual meeting of TINE SA. The Board of TINE SA resolved
to terminate the credit scheme for milk producers with effect from April
2015. As of 31.12.2015 the loan amount for milk producers was MNOK
55. The loans will be offset against subsequent payment resolved at the
annual meeting in TINE SA April 2016. The loans are granted against
security in members forthcoming milk deliveries.
The TINE Group provides loans to employees mainly for the purchase
of vehicles and computers. Total loans in this connection amounted to
MNOK 3 for the TINE Group per 31.12.2015.
GUARANTEES:
Bank guarantees
The TINE Group has at its disposal a guarantee facility of MNOK 200 at
Euler Hermes Norway. The guarantees are mainly related to tax guarantees for TINE SA and the subsidiaries, as well as transport license guarantees for TINE SA. Utilised frame per 31.12.2015 was MNOK 176, whereof
tax guarantees totalled NOK 162.
Guarantees provided by TINE
The abovementioned MNOK 200 guarantee facility was at 31.12.2015
utilised with MNOK 18 by majority-owned subsidiaries. This utilisation
was guaranteed by TINE SA in favor of Euler Hermes Norge.
In addition, TINE SA covers a maximum of 50 % of the current operating credits the milk producers have through the Trade Credit Facility
for Agriculture. See note 20, section credit risk, for further description.
Bank deposits, cash and money market securities
NOTE 23
Amounts in NOK 1000
THE TINE GROUP
TINE SA
31.12.2014 Bank deposits, cash and money market securities
31.12.2015
31.12.2015
120 991 Bank deposits and cash
556 321
1 771
–
54 930
54 930 Overdraft facilities
–
406 000 Money market fund
2 288
581 921 Total bank deposits, cash and money market securities
558 609
31.12.2014
402 080
–
403 746
402 080
460 447
–
–
consisting of:
12 661 Restricted bank deposits
17 308
TINE SA has a cash pool agreement with Danske Bank A/S which includes an overdraft facility for TINE SA and its subsidiaries. Norseland Inc. and
Fjordland AS do not participate as they have separate bank agreements and overdraft facilities. The net balance of TINE SA’s overdraft facility was
negative at 31.12.2015 and recorded as short term interest bearing liability, see note 25.
Other long-term liabilities
NOTE 24
Amounts in NOK 1000
The table below shows the long-term loans in TINE:
THE TINE GROUP
TINE SA
31.12.2014 Type of loan
31.12.2015
31.12.2015
2 000 000 Bonds
2 000 000
1 100 000 Other long-term interest-bearing debt
600 000
302 479 Multi-currency credit facility
241 531
15 273
19 082 Bank loans
1 391
11 127 Other loans
3 432 688 Total other long-term liabilities
2 858 195
31.12.2014
2 000 000
2 000 000
600 000
1 100 000
241 531
302 479
–
–
1 391
11 127
2 842 922
3 413 606
The table below shows the contractual loan payments per type of loan and per year:
THE TINE GROUP
TINE SA
Repayment
in:
2017
2018
2019
–
1 000 000
500 000
500 000
–
–
92 308
92 308
–
–
–
–
1 316
1 316
1 316
1 316
1 391
–
–
–
2 707
1 001 316
593 624
593 624
2020
and later Type of loan
Repayment
in:
2017
2018
2019
2020
and later
–
1 000 000
500 000
500 000
–
415 384 Other long-term interest-bearing debt
–
–
92 308
92 308
415 384
241 531 Multi-currency credit facility
–
–
–
–
241 531
–
–
–
–
–
1 391
–
–
–
–
1 391
1 000 000
592 308
592 308
656 915
– Bonds
10 009 Bank loans
– Other loans
666 924 Total contractual installment
Note 24 continues on the following page
TINE annual report 2015 | 57
TINE ANNUAL REPORT 2015
NOTER/FINANCIAL INFORMATION
Note 24 continued
The average interest rate for long-term interest bearing debt for 2015
was 3,1 %. The equivalent average interest rate was 3,4 % in 2014.
Bond issues
TINE SA has four bonds issued on ABM (Alternative Bond Market) with
a total outstanding amount of MNOK 2 000 at 31.12.2015. All loans are
based on contracts with Nordic Trustee ASA. The loans have a negative
pledge clause and are pari passu with other interest-bearing loans.
Other long-term interest-bearing debt
TINE SA’s other long-term interest bearing debt at 31.12.2015 is MNOK
600 and consists of a loan from the Nordic Investment Bank.
NOTE 25
Multi-currency credit facility
TINE SA has an agreement with four banks for a long-term multi-currency credit facility of MNOK 1 200. The credit facility was renegotiated in
June 2015 and has a maturity of 5+1+1 years. The credit facility is primarily used as a ’back-stop’ for short-term financing. At 31.12.2015 MNOK
242 was utilised under this facility. The amount is related to hedging of
net investments in international subsidiaries. The hedging is reflected in
the accounts in the TINE Group. See further description in note 20.
Covenants
Issuance of new loans with pledge is permitted only with the acceptance
of the current lenders. Furthermore, the TINE Group has restrictions related to the use of financial leasing and sales of assets that constitute a
substantial part of the business. The equity ratio in the TINE Group shall
be at least 40 %.
Short-term interest-bearing liabilities
THE TINE GROUP
31.12.2015
400 000
152 160
66 518
618 678
839 884
Amounts in NOK 1000
TINE SA
31.12.2014 Short-term interest-bearing liabilities
300 000 Certificate loans
– Overdraft facilities, cash pool agreement
44 420 Overdraft facilities, outside the cash pool agreement
344 420 Total short-term interest-bearing liabilities
1 004 244 Unused overdraft facilities
31.12.2015
31.12.2014
400 000
300 000
152 160
–
-
–
552 160
300 000
747 840
900 000
TINE SA has a cash pool agreement with Danske Bank A/S which includes an overdraft facility for TINE SA and its subsidiaries. Norseland Inc. and
Fjordland AS do not participate as they have separate bank agreements and overdraft facilities. The limit of TINE SA’s overdraft facility is MNOK 900.
58 | TINE annual report 2015
TINE ANNUAL REPORT 2015
NOTES
OTHER INFORMATION
NOTE 26
Related parties and senior management
Amounts in NOK
The Group board, Council, Control Committee and Group senior management in TINE SA are defined as related parties and management personnel in
the TINE Group.
Group board
Trond Reierstad (deputy chairman)
Board remuneration TINE SA 1)
2)
Nils Asle Dolmseth (deputy chairman)
Nina Kolltveit Sæter (deputy chairman) 3)
Other remuneration
526 250
342 108
256 250
194 350
81 250
98 800
Anders Johansen
211 250
189 789
Turid Næss
200 000
122 950
Cecilie Bjørlo
211 250
153 808
Askild Eggebø
211 250
137 700
Helga Thorvik Ulven
211 250
131 450
Norvald Dalsbø
196 250
127 600
Marit Haugen 4)
152 500
102 414
Rolf Øyvind Thune 5)
170 000
101 881
57 500
68 800
Svein Førde (employee elected)
211 250
–
Steinar Koen (employee elected)
142 500
–
Elin Aarvik (employee elected)
186 250
–
Tor Arne Johansen (employee elected)
186 250
–
Helge Arne Espeland 4)
97 750
134 100
Ottar Råd (employee elected)
51 500
–
Annual meeting and Council
Remuneration TINE SA
Other remuneration
Lars Woie 3)
Deputy member
Jarle Bogen (chief)
Elisabeth Irgens Hokstad (deputy)
140 925
99 742
60 150
76 800
Control Committee
Helge Sommerseth (chief)
69 775
35 900
Per Amb
52 025
30 100
Randi Bjørås 3)
22 525
33 350
Sigrid Bakken Lerhol 4)
37 500
27 500
Including remuneration from internal regional boards. It is not paid remuneration from the TINE Group companies.
2) The payment to Trond Reierstad is distinguished between NOK 526 250 in directors’ fees and NOK 331 000 in payments to self-employed business (included in other allowances).
3) Left 23.04.2015.
4) Started 23.04.2015.
5) Started 23.04.2015. The same day left as deputy member.
1)
Group senior management
Total expenses for salaries
Board remuneration subsidiaries
Pension costs
Other remuneration
Hanne Refsholt (CEO)
2 907 149
–
1 270 025
158 207
Johnny Ødegård
1 419 496
–
568 545
135 224
Eirik Selmer-Olsen
1 485 543
22 750
451 308
140 880
Jørn Spakrud
2 053 006
65 000
927 265
173 025
John Ole Skeide
1 961 092
151 500
884 738
185 817
Lars Galtung
1 214 182
–
416 356
137 704
Per Ivar Berg
1 826 856
–
783 233
168 562
Aniela Gjøs
1 858 664
–
800 186
137 533
Kathrine Mo
1 659 249
–
965 067
152 550
Bjørn Moldskred
1 791 059
72 150
784 836
176 240
Lise Falkfjell
1 353 454
32 500
389 169
140 559
Employed in TINE SA
Neither the Chairman of the Board, the Group Board, the Group Chief
Executive nor the Group senior management receive bonuses, options
or have agreements on profit sharing. Disbursements are used as a basis
in the note with the exception of pensions where the service cost is
used as a basis. None of the above-mentioned management personnel
or board members have loans or guarantees in the TINE Group beyond
those directors who provide raw milk and are included in the milk producer loan scheme on raw milk deliveries, see comments in note 27.
Hanne Refsholt has pension agreements which come into force upon
attaining the age of 62. The agreements are funded by operations. The
amount of pension is: 80 % from age 62 to 63, 75 % from age 63 to
64, 70 % from age 64 to 65 and 66 % from age 65 to 67. From the age
of 67 they are included in the operations pension plan for employees
with salaries exceeding 12 G, which the TINE Group board approved in
June 2011. Other Group managers are included in the same operation
pension plan. The agreement enters into force at the age of 62 and the
pension is 66 % of salaries above 12 G.
TINE annual report 2015 | 59
TINE ANNUAL REPORT 2015
NOTES/OTHER INFORMATION
Off balance sheet lease liabilities
NOTE 27
Amounts in NOK 1000
TINE SA and subsidiaries have rental relationships and contracts concerning lease of office premises, warehouses, cold storage, production machines, transport equipment, computers and office equipment and freezers. The table below shows the annual lease payments and the lease duration.
THE TINE GROUP
TINE SA
2014 Rent object
2015
Agreement duration
2015
2014
53 316
44 634
89 790
76 101 Office premises
3-10 years
26 204
26 636 Warehouse and cold storage
0-10 years
–
–
30 245
31 604 Production machines
3-7 years
29 834
30 401
18 152
14 474 Transport equipment
2-5 years
2 659
2 080
21 508
16 921 Computers and office equipment
3 years
21 404
16 836
199 Freezers
804
4-5 years
165 935 Total off-balance sheet lease liabilities
186 703
–
–
107 213
93 951
Transactions with related parties
NOTE 28
Amounts in NOK 1000
TINE SA
Transactions with subsidiaries
Sale of convenience products and services
Purchase of convenience products and services
Acquisition of business
1)
2015
2014
2 016 201
2 059 964
23 709
27 759
–
13 400
Transactions with joint ventures and associated companies
Sale of convenience products and services
Purchase of convenience products and services
1)
14 567
10 261
705 496
566 163
Acquisition of the business in Sunniva Drikker AS. Refers to note 14.
We define related parties as our owners, senior employees, all subsidiaries, joint ventures and associated companies of TINE SA and MP Pensjon.
Concerning transactions with our owners, reference is made to note 31
that specify transactions linked to subsequent payment and purchase of
raw cow and goat milk from milk producers, and note 22 that specify balance with owners linked to loan scheme. Transactions with MP Pensjon
regarding payment of pension premiums is described in note 8 Pensions
and pension obligations. Remuneration for senior management is described in note 26.
Receivables and liabilities from group companies are presented in separate lines in the income statement and in the balance sheet and in note 14.
Outstanding amount with joint ventures and associated companies are described in note 16. TINE SA’s ownership in subsidiaries, joint ventures and
associated companies are presented in note 14. Convenience products
are bought and sold at the same prices and terms used for external third
parties transactions. Transactions related to services to related parties are
sold at cost price added an estimated profit at commercial terms. The profit added depends on the type of service delivered.
Pledges
NOTE 29
Amounts in NOK 1000
THE TINE GROUP
31.12.2015
31.12.2014
66 518
44 755
Buildings and land
–
14 316
Machines - movable property
–
1 406
221 026
148 212
Booked value of debt secured by pledge
Carrying amounts of assets pledged as security for this debt
Inventories
Trade receivables
176 493
182 201
Total pledged assets
397 519
346 134
A limited part of the long-term and short-term debt at the TINE Group level is secured by pledge. This pledge security was provided to TINE SA subsidiaries before TINE SA entered into the existing long-term and short-term loans in the TINE Group. TINE SA has made a commitment to not take up new loans
with pledge security in the TINE Group’s assets without the lender’s consent.
NOTE 30
Environmental issues
The TINE Group has adopted targets in the areas of greenhouse gas emissions (CO2), waste, energy consumption, fuel consumption and emissions
to water and waste. There are both operating expenses, wage costs and investments connected to reaching these objectives. TINE SA pays environmental taxes in connection with the discharge of water and delivery of various types of waste. There are further environmental taxes on several
types of packaging materials. TINE SA has invested to reduce the environmental impacts of our activities, for example by building and upgrading of
treatment plants and to conserve energy, fuel and water and equipment for waste sorting. Furthermore invested in technology that contributes to
reduced wastage and increased use of renewable resources related to production and transport. For further information please refer to the separate
review in the annual report and TINE SA digital annual report on www.tine.no.
60 | TINE annual report 2015
TINE ANNUAL REPORT 2015
NOTES
TINE MILK SUPPLY AND MARKETING REGULATION
NOTE 31
TINE Milk Supply
TINE Milk Supply is a separate administrative and accounting unit, departed from other operations in TINE SA, established by an agreement
signed on December 19, 2003 between the government and TINE SA
regarding a clear distinction between economic handling of raw milk and
further processing in TINE SA.
TINE Milk Supply submits their own audited financial statements with
their own annual report sent to the Norwegian Agriculture Agency by
June 1 each year. This procedure to prove that TINE comply with its obligations under the agreement. The audit of TINE Milk Supply is performed
by the same auditing company that audits the annual and consolidated
accounts for TINE SA.
The different items in the income statement and the balance sheet for
TINE Milk Supply are also included in the respective accounts and balances in the company accounts for TINE SA. It is only the net result in TINE
Milk Supply that is eliminated from the result in TINE SA. Profit or loss in
TINE Milk Supply is settled against the milk producers by transfering the
amount to the new fiscal year as a part of the basis for determining the
base price of the following year.
TINE Milk Supply perform all activities related to the handling of milk
as raw material from the milk producers until the milk is delivered and
invoiced the individual participants in the market scheme for milk. All
actors, including TINE SA as a processing industry, are buying raw milk
to the current quoted price at the time the milk is supplied by TINE Milk
Supply. This is reported to and monitored by the Norwegian Agriculture
Agency.
In order to fulfil the responsibilities of TINE Milk Supply, they purchase
services from different functional areas in TINE SA based on clearly defined service instructions. There will be regular reviews by the service
providers to clarify TINE Milk Supplies autonomous and independent
function and ensure that the implementation takes place in accordance
with approved plans and objectives.
The instructions are based on an agreement developed and quality assured by the Norwegian Institute for Bioeconomy (NIBIO), and is approved
by the Norwegian Agriculture Agency. Any change in the service instructions must be approved by corporate management in TINE SA until submitted to the Norwegian Agriculture Agency.
Please also refer to a separate section about TINE Milk Supply in the annual report of the board of directors.
Amounts in NOK 1000
ACCOUNTS FOR TINE MILK SUPPLY
2015
2014
Sales of raw cow and goat milk
7 785 372
7 462 195
Cost of raw cow and goat milk
-7 423 441
-7 044 947
Gross profit
361 931
417 248
Producer functions
148 295
159 372
Coordination towards farmers
21 874
21 717
127 244
128 738
Raw milk control
44 395
44 355
Collection and inbound transport (net)
13 983
26 470
Own costs in TINE Milk Supply
13 891
23 381
Administration and infrastructure
28 332
12 809
Interest on working capital
-5 916
-6 343
Farm tanks
Membership fee
–
-9 517
Total expenses
392 099
400 983
TINE Milk Supply result before transfer of profit/loss form previous year
-30 168
16 265
Profit/loss carried forward from last year
Profit/loss TINE Milk Supply to carry forward
19 865
3 600
-10 303
19 865
The accounts for TINE Milk Supply for 2015 shows a loss of MNOK 30,2 before adjustment of last years profit. Loss to be carried foreward at 31.12.2015
is MNOK 10,3, and will be offset against milk producers the following year. The amount is included in the basis price paid to the producer (base price) the
next year.
TINE annual report 2015 | 61
TINE ANNUAL REPORT 2015
NOTES/TINE MILK SUPPLY AND MARKET REGULATION
NOTE 32
Purchase of raw cow and goat milk from the milk producers
Amounts in NOK 1000
TINE SA
Specification of consumption of raw cow and goat milk
Total purchase of raw cow and goat milk, see specification below
Changes in inventories of raw cow and goat milk
2015
2014
7 370 579
7 038 957
-804
-1 457
7 369 775
7 037 500
Purchase of raw cow milk including addition due to quality
7 240 385
6 926 714
Purchase of raw goat milk including addition due to quality
130 194
112 243
7 370 579
7 038 957
Consumption of raw cow and goat milk
Specification of purchases of raw cow and goat milk from the milk producers
Total purchase of raw cow and goat milk
Allocations of profit/loss in TINE Milk Supply
Profit/loss carried forward from last year
19 865
3 600
Profit/loss payable next year
10 303
-19 865
7 400 746
7 022 693
Total paid to the milk producers by TINE Milk Supply
Allocated to subsequent payment from TINE SA to the milk producers
Total paid to the milk producers by TINE
870 029
622 981
8 270 775
7 645 674
1 454 383
1 430 240
Settled raw cow and goat milk in 1000 litres
Cow milk including organic milk
Goat milk
Total offset raw cow and goat milk in 1000 litres
Total milk price expressed in NOK/litre
20 242
18 553
1 474 625
1 448 793
5,61
5,28
We also refer to note 31 for a description of TINE Milk Supply.
NOTE 33
Outstanding accounts with the Norwegian Agriculture Agency – the market regulation and subsidy schemes
The market schemes for milk consist of:
1) The quota scheme for milk, which is one of the regulation
measures to adjust milk production to market demand.
2) The market regulation, which TINE SA handles on behalf of all
the milk producers in Norway.
3) The subsidy schemes for milk producers: basic and district subsidies.
4) The price compensation scheme, which equalises various milk
applications and geographic differences.
5) The import tariffs.
Outstanding accounts included in this note consist of market regulation
(2), subsidy schemes (3) which are agreed upon in the agricultural agreement and where TINE handles payment to its owners, as well as the
price compensation scheme (4).
The market regulation
The Sales and Marketing Council (Omsetningsrådet) is responsible for
the market regulation in Norway. The Sales and Marketing Council also
manages the use of the funds. The Norwegian Agricultural Authority
is the secretariat for the Sales and Marketing Council. The Norwegian
Agriculture and Authority considers applications and proposals from the
market regulator and presents recommendations for decisions at the Sales and Marketing Council.
TINE SA ensures the market regulation in the dairy sector on behalf of
all the milk producers in Norway. The purpose is to implement different
regulatory measures for:
• on the one hand to ensure all the milk producers sale of their
products at agreed target prices, and
• on the other hand, TINE Milk Supply shall ensure satisfactory
supplies of raw milk on equal terms to all participants in the market
scheme for milk.
Allocated funds to market regulation activities handled by TINE SA in
2015 was MNOK 134,3. Total expenditures for market regulation in TINE
SA in 2015 was MNOK 128,1. Corresponding figures for 2014 were respectively MNOK 131,9 and MNOK 119,9.
Sales initiatives within the market regulation consists of price impairment export, price impairment domestic and other initiatives. In addition funds are allocated for the scheme of school-milk, professional
initiatives directed towards quality- and breeding work at diary farms
and information activities undertaken by the Information Office for
Dairy Products (melk.no). In addition costs for the administration in
TINE SA and administration of the scheme in the Norwegian Agricultural Authority and the Sales and Marketing Council are also incurred.
Statements for market regulation initiatives and subsidy applications
are processed by the Sales and Marketing Council in April the following
year. Adjustments may therefore occur after the balance sheet date. The
final settlement of balance with the Norwegian Agriculture Agency is
carried out in the first half of the following year.
Note 33 continues on the following page
62 | TINE annual report 2015
TINE ANNUAL REPORT 2015
NOTES/TINE MILK SUPPLY AND MARKET REGULATION
Note 33 continued
Amounts in NOK 1000
2015
2014
12 059
32 454
AVAILABLE FUNDS TO THE MARKET REGULATION
Balances with the Norwegian Agriculture Agency related to the market regulation at 01.01
Adjustments for previous years
1 939
-3 983
Settlement of balance with the Norwegian Agriculture Agency previous year
-13 998
-28 471
Funds to market regulation activities handled by TINE SA
134 333
131 940
Allocated to professional measures and information activities
Total allocated funds to the market regulation
36 670
39 716
171 003
171 656
USED FUNDS TO THE MARKET REGULATION
The price impairment export
5 930
–
The price impairment domestic, excluding the school milk scheme
16 027
19 899
Other initiatives, excluding administration and interest
75 936
62 563
The school milk scheme
20 416
27 186
9 785
10 233
Administration cost TINE SA
Professional initiatives and information activities
Total used funds in the market regulation
Balances with the Norwegian Agriculture Agency related to the market regulation at 31.12
36 670
39 716
164 765
159 597
6 238
12 059
All milk producers pay sales fee and overproduction fee. The fees are reduced from the amount paid out to milk producers in the monthly milk settlements. In 2015 the sales fee was NOK 0,06 per litre for the first half year and NOK 0,05 per litre for the second half year. Corresponding figures for
2014 were respectively NOK 0,08 for both the first half year and the second half year. Fee for overproduction was NOK 3,20 per litre for 2014 and
2015. Additionally research fee is collected from TINE SA and other actors and paid to the Norwegian Agriculture Agency. TINEs collection of fees
are on behalf of the Norwegian Agriculture Agency.
Amounts in NOK 1000
The table below specify the accumulated fees collected by TINE Milk Supply.
2015
2014
COLLECTED FEES
Collected sales fee
81 523
115 903
Collected over-production fee
55 028
74 996
Collected research fee
27 047
25 915
THE SUBSIDY SCHEMES
TINE SA pays basic and district subsidies to the milk producers on behalf of the Norwegian Agriculture Authority. The level of this subsidy is negotiated in the agricultural agreement and will vary dependent of production capacity and geographical location. The subsidy is transferred from the
Norwegian Agriculture Agency to TINE SA and paid to the milk producers in the milk producers settlement.
The table below specify the subsidy paid by TINE Milk Supply.
Amounts in NOK 1000
2015
2014
BASIC AND DISTRICT SUBSIDIES
Basic subsidy
District subsidy
65 061
59 834
529 148
519 090
Note 33 continues on the following page
TINE annual report 2015 | 63
TINE ANNUAL REPORT 2015
NOTES/TINE MILK SUPPLY AND MARKET REGULATION
Note 33 continued
THE SUBSIDY SCHEMES
TINE SA pays basic and district subsidies to the milk producers on behalf of the Norwegian Agriculture Authority. The level of this subsidy is negotiated in the agricultural agreement and will vary dependent of production capacity and geographical location. The subsidy is transferred from the
Norwegian Agriculture Agency to TINE SA and paid to the milk producers in the milk producers settlement.
The table below specify the subsidy paid by TINE Milk Supply.
Amounts in NOK 1000
Adjustment, in-freight and distribution fee/subsidy
In-freight addition
Distribution addition
2015
2014
481 610
-464 167
9 919
-10 122
Total in-freight and distribution fee
491 529
-474 288
Main milk- and byproduct application
-522 917
572 606
Settlement main milk and by-product application previous years
Net adjustment fee/subsidy and transport subsidy
6 716
2 462
-24 672
100 780
In-freight addition and distribution addition are recognised in the income statement under other operating expenses, see note 10.
Main milk and by-product application are charged as commodity cost.
The table bellow specify the outstanding amounts between the Norwegian Agriculture Agency and TINE SA linked to the arrangements described above.
Amounts in NOK 1000
31.12.2015
31.12.2014
-57 088
-37 085
BALANCE BETWEEN NORWEGIAN AGRICULTURE AGENCY AND TINE SA
Liability collected fees
Liability /claim (+) subsidy arrangements
Liability price compensation
64 | TINE annual report 2015
-2 409
127
-34 132
-23 489
DECLARATION FROM THE GROUP BOARD AND CEO
The Group board and CEO today processed and stipulated the annual accounts for TINE SA and the TINE Group for the period from
January 1 to December 31, 2015.
We confirm to the best of our ability that:
- The 2015 annual accounts have been prepared in line with applicable accounting standards
- The information in the annual accounts provides a true and fair view of the company and Group’s assets, debt, financial position
and result overall.
- The annual report provides a true and fair view of the company and Group’s development, result and position.
- The annual report provides a description of the key risks and uncertainty faced by the company and Group.
OSLO, FEBRUARY 16, 2016
ANDERS JOHANSEN
HELGA THORVIK ULVEN
ASKILD EGGEBØ
CECILIE BJØRLO
TURID NÆSS
NORVALD DALSBØ
ROLF ØYVIND THUNE
MARIT HAUGEN
TOR ARNE JOHANSEN
SVEIN FØRDE
ELIN AARVIK
STEINAR KOEN
NILS ASLE DOLMSETH
Deputy Chariman
TROND REIERSTAD
Chariman
HANNE REFSHOLT
CEO
TINE annual report 2015 | 65
TO THE ANNUAL MEETING OF TINE SA
INDEPENDENT AUDITOR’S REPORT
Report on the Financial Statements
We have audited the accompanying financial statements of TINE SA, which comprise the financial
statements of the parent company, showing a profit of NOK 1.301.721.000, and the financial
statements of the group, showing a profit of NOK 1.423.722.000. The financial statements of
the parent company and the financial statements of the group comprise the balance sheet as at
December 31, 2015, and the income statement and cash flow statement for the year then ended,
and a summary of significant accounting policies and other explanatory information.
The Board of Directors and the Managing Director’s Responsibility for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation and fair
presentation of these financial statements in accordance with the Norwegian accounting act
and accounting standards and practices generally accepted in Norway, and for such internal
control as the Board of Directors and the Managing Director determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with laws, regulations, and auditing standards and practices
generally accepted in Norway, including International Standards on Auditing. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the entity’s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall presentation of
the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
66 | TINE årsrapport 2015
Opinion
In our opinion, the financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of TINE SA and of the group as at
December 31, 2015, and of its financial performance and its cash flows for the year then ended in
accordance with the Norwegian accounting act and accounting standards and practices generally
accepted in Norway.
Report on Other Legal and Regulatory Requirements
Opinion on the Board of Directors’ report and the statement on Corporate Governance and
Corporate Social Responsibility
Based on our audit of the financial statements as described above, it is our opinion that the
information presented in the Board of Directors report concerning the financial statements and in
the statement on Corporate Governance and Corporate Social Responsibility, the going concern
assumption and the proposal for the allocation of the profit is consistent with the financial
statements and complies with the law and regulations.
Opinion on Registration and Documentation
Based on our audit of the financial statements as described above, and control procedures
we have considered necessary in accordance with the International Standard on Assurance
Engagements (ISAE) 3000, «Assurance Engagements Other than Audits or Reviews of Historical
Financial Information», it is our opinion that management has fulfilled its duty to produce a proper
and clearly set out registration and documentation of the company’s accounting information in
accordance with the law and bookkeeping standards and practices generally accepted in Norway.
OSLO, FEBRUARY 16, 2016
DELOITTE AS
KJETIL NEVSTAD (SIGNED)
State Authorised Public Accountant (Norway)
TINE årsrapport 2015 | 67
TINE GROUP
– SUBSIDIARIES
DOMESTIC DAIRY OPERATIONS
OsteCompagniet AS
OsteCompagniet AS markets and sells speciality
cheese products from TINE and a few small-scale
producers, along with cheese from a number of
European countries. Norwegian products account for
most of its operating revenues, but cheese is
imported from other countries as a supplement to the
range available to consumers, thereby increasing
interest in cheese.
Key events in 2015
• Good development for Snøfrisk and Selbu Blå.
KEY FIGURES (NOK MILLIONS)
• Greater focus on the catering market via TINE
2015
2014
Operating
revenue
289
272
Operatin
profit
10
8
Number of
employees
10
10
Partner.
• Good sales development.
TINE’S INTERNATIONAL DAIRY OPERATIONS
Key events in 2015
• The low price of milk and a large cheese surplus
on the international markets on account of the
embargo in Russia have led to strong competition,
pressure on margins and lower sales of Jarlsberg®.
Norseland Inc.
Norseland Inc. produces, refines, markets and distributes speciality cheeses from TINE and other producers to
the retail and catering market in the US.
• Norseland Inc. reinforced its market position by
extending its portfolio of partners (Swiss Valley,
Couturier and Volpi). This has led to growth in
operating revenues and earnings in 2015 and will
strengthen Norseland Inc. still further in 2016.
Key events in 2015
• Stable customer base, good operation and lower
commodity prices (cheddar) have led to increases
in operating revenues and a record operating profit
for 2015.
Norseland Ltd.
Norseland Ltd. refines, markets and distributes speciality
cheeses from TINE and Ilchester to the retail market in
the UK.
• Emphasis on reinforcing Jarlsberg® as a premium
brand. Despite higher prices in a competitive market, Norseland Ltd. has maintained good distribution and demonstrated volume growth.
• Excellent development in export sales and profitability, and in new channels such as the catering
and restaurant market.
68 | TINE annual report 2015
KEY FIGURES (NOK MILLION | USD MILLION)
2015
Operating
revenue
Operatin
profit
Number of
employees
2014
1 655
205
1 270
202
34
4
23
4
87
87
KEY FIGURES (NOK MILLION | GBP MILLION)
2015
2014
Operating
revenue
568
46
494
48
Operatin
profit
43
3
15
1
Number of
employees
169
165
TINE GROUP
– SUBSIDIARIES
Wernersson Ost AB
Wernersson Ost AB refines, markets and distributes a
broad and international range of cheeses to the retail
and catering market in the Nordic region.
Key events in 2015
• This was a challenging year in the Swedish market,
the low price of milk and the Russian embargo
leading to a large supply of cheese, with instability
and subsequent strong pressure on margins.
• Good profit development at Wernersson Ost
Denmark and successful results in Sweden as well.
• Customised production and packing have
KEY FIGURES (NOK MILLION | SEK MILLION)
2015
2014
Operating
revenue
675
706
631
687
Operatin
profit
10
10
7
8
Number of
employees
89
110
increased significantly – more than half of the
volume sold is now customer-packed.
• Greater emphasis on reinforcing Jarlsberg® as a
premium brand has led to increased profitability
but lower sales volumes.
OTHER BUSINESS ACTIVITIES
Key events in 2015
• The Diplom-Is sales curve follows the summer
Diplom-Is AS
Diplom-Is AS is a brand company that produces and
markets ice cream and frozen desserts.
temperature. As a result, sales revenues – quite
naturally – fell in 2015, when we saw the coldest
summer for some time compared with the very hot
summer of 2014. In particular, individual ice cream
sales fell.
• The company began 2015 with just one plant, with
KEY FIGURES (NOK MILLION)
2015
2014
Operating
revenue
988
1 058
Operatin
profit
34
85
355
388
Number of
employees
all its production collected together in Gjelleråsen.
Making the transition from two factories to one
has presented a challenge and required additional
production input.
• Otherwise, the company is seeing positive effects
from the rationalisation and streamlining projects
implemented over the past few years.
Key events in 2015
KEY FIGURES (NOK MILLION)
• Good product launches, greater marketing and
Fjordland AS
Fjordland AS is a brand company that develops,
markets and sells fresh ready meals, margarines,
yoghurts and desserts in the Norwegian market.
campaign pressure and effective cost control
helped to bring about solid sales growth and a
good operating profit in 2015.
• Further development of Matvarehuset, in which
Fjordland has a 75 % holding. (Matvarehuset sells
and distributes ready-made food and beverage
solutions to municipalities, institutions and
households in Hordaland and the surrounding area.)
2015
2014
1 430
1 388
Operatin
profit
71
65
Number of
employees
88
87
Operating
revenue
• Fjordland is continuing its strong focus on product
development going forward and will use increased
market efforts to strengthen its position in a
market facing increasingly fierce competition.
TINE annual report 2015 | 69
CONTACT
INFORMATION
HEAD OFFICE
WHOLLY OWNED SUBSIDIARIES
PARTLY OWNED SUBSIDIARIES
TINE SA
DIPLOM-IS AS
WERNERSSON OST AB
FJORDLAND AS
Lakkegt. 23
NO-0187 Oslo
P.O.Box 25,
NO-0051 Oslo
www.tine.no
Central switchboard: + 47 75 66 30 80
[email protected]
P.O.Box 23
NO-1483 Hagan
Telephone + 47 51 37 16 04
Visiting address: Brennaveien 10
WERNERSSON OST AB
Industrivägen 5,
SE-523 90 Ulricehamn, Sweden
Telephone +46 321 261 50
Brynsengveien 10
NO-0667 Oslo
Telephone + 47 22 97 49 00
Managing Director
Rita Kristin Broch
[email protected]
www.diplom-is.no
Managing Director /CEO
Magnus Ekstrand
[email protected]
www.wernerssonost.se
OSTECOMPAGNIET AS
NORSELAND INC. (US)
P.O.Box 113 Kalbakken,
NO-0902 Oslo
Visiting address: Bedriftsveien 7
Telephone + 47 75 66 30 80
3 Parklands Drive
Suite 102
Darien, CT 06820
US
Telephone: + 1 203-324-5620
General Manager
Rune B. Jenssen
[email protected]
www.ostecompagniet.no
President and CEO
John J. Sullivan
[email protected]
www.norseland.com
NORSELAND LTD. (UK)
Somerton Road, Ilchester,
Somerset BA22 8JU, England
Telefon +44 (0) 1935 842800
CEO
Nigel Meadows
[email protected]
www.norseland.co.uk
This annual report has been prepared
by TINE Communication, TINE SA
Design
APELAND
Photo
Yvonne Holth pp. 7, 31, 32
Apeland/Katrine Lunke pp. 1, 16, 22, 27
TINE Media Base
70 | TINE annual report 2015
Translation:
GLOBALscandinavia AS
Printing
[email protected]
Circulation
200
Managing Director
André Gobel
[email protected]
www.fjordland.no
Photo: Tom Haga
TINE annual report 2015 | 71
TASTY GOATS MILK PRODUCTS
40,000 milk goats graze the many steep mountain sides in
Norway. Our rugged terrain is perfect for keeping goats, and
talented farmers deliver around 20 million litres of top quality
goats milk every year. Substantial quality efforts has been done
TINE Ekte Hvit Geitost has a mild,
delicate flavour. The cheese comes in
a square shape. You can slice it to put
in sandwiches or grate it to add extra
flavour to hot dishes.
TINE Ekte Geitost is a brown cheese
with a fairly sweet, caramelly flavour
with a clear hint of goats milk.
Kvitlin is a unique white cheese from
Ørsta in Sunnmøre. Made from milk
from local goats. A rich, slightly acidic
flavour.
TINE Stølstype Ekte Geitost dark, acidic
and almost has a slightly burnt flavour.
Tastes like real goat cheese made on the
summer farms.
by the goat milk farmers over the last few years.
The excellent quality of goats milk has made it possible for TINE
to make unique products, for which Norwegian consumers are
developing more and more enthusiasm.
TINE Meieriet Haukeli uses small
quantities of TINE Ekte Geitesmør
which are sold to restaurants and
speciality stores.
Snøfrisk Rødløk & Timian is
pleasantly acidic and so is an ideal
flavour enhancer when cooking.
Chevre fra Haukeli adds a whole
new dimension to food. Suitable
for use in dips, sauces and soups.
TINE Geitemelk is a 100 per cent
goats milk with a shelf life of
120 days.