TINE_Annual Report 2010

Transcription

2010 Annual Report
TINE annual report 2010
RENEWAL IS OUR TRADITION
TINE SA Dronning Eufemias gate 6, NO–0191 OSLO
P.O. Box 25, NO-0051 OSLO Telephone +47 77 66 30 80
www.tine.no
The annual report is
compiled by TINE
Communication, TINE SA
EDITORS
Kari Raunedokken,
Director of Information
Bjørn Malm,
Manager social
responsibility
DESIGN
Itera Gazette
PHOTOGRAPHY
TINE: pg. 1, 13, 16, 25,
45, back cover
Bo Mathisen: front cover,
inside, pg. 6-7, 11, 14-15,
17, 19, 23, 24-25
Rennomé: pg. 9
Jonny Engelsvoll: pg. 18
Try: pg. 10
Yvonne Holth: pg. 3, 43, 44
TRANSLATION
TranslatørXpress, Oslo
Contents
TINE GROUP
2 CEO
Renewal is our tradition
7 The brand
Close to the consumer
15 The industrial player
A competitive cooperative society
25 The corporate citizen
Environment, animals and people
45 Annual report from the Group board
FINANCIAL STATEMENTS
47 Income statement
48 Balance sheet
50 Cash flow statement
51 Accounting principles
54 Notes
75 Auditor’s report
76 Subsidiaries
78 Addresses
PRINTING
TINE SA
CIRCULATION
300
2010 Annual Report
TINE SA Dronning Eufemias gate 6, NO–0191 OSLO
P.O. Box 25, NO-0051 OSLO Telephone +47 77 66 30 80
www.tine.no
The annual report is
compiled by TINE
Communication, TINE SA
EDITORS
Kari Raunedokken,
Director of Information
Bjørn Malm,
Manager social
responsibility
DESIGN
Itera Gazette
PHOTOGRAPHY
TINE: pg. 1, 13, 16, 25,
45, back cover
Bo Mathisen: front cover,
inside, pg. 6-7, 11, 14-15,
17, 19, 23, 24-25
Rennomé: pg. 9
Jonny Engelsvoll: pg. 18
Try: pg. 10
Yvonne Holth: pg. 3, 43, 44
TRANSLATION
TranslatørXpress, Oslo
Contents
TINE GROUP
2 CEO
Renewal is our tradition
7 The brand
15 The industrial player
A competitive cooperative society
25 The corporate citizen
Environment, animals and people
45 Annual report from the Group board
FINANCIAL STATEMENTS
47 Income statement
48 Balance sheet
50 Cash flow statement
51 Accounting principles
54 Notes
75 Auditor’s report
76 Subsidiaries
78 Addresses
PRINTING
TINE SA
CIRCULATION
300
TINE
TINE will be a leading
supplier of food and drink
brands with a main focus
on dairy products
SALES LIQUID PRODUCTS
SALES SOLID PRODUCTS
Figures in 1000 litres
Figures in tonnes
White cheese
45 391
Brown cheese
10 095
Processed cheese
904
Butter
8 222
TINE MIlk
(all types)
433 556
TINE Cream
26 137
TINE Sour cream 15 625
Yoghurt
45 590
Fruit drinks
46 027
Ice cream
28 793
COWS’ AND GOATS’ MILK DELIVERED
TO TINE
CONSUMPTION PER CAPITA (TINE)
Litres/kg
Million litres, 2010
83.7
1435.5
Milk
Cows’ milk
10.1
20.0
Cheese (brown, white,
import and processed)
Goats’ milk
Key figures 2010
TINE GROUP TOTAL
Calculation model
Revenues
NOK million
18 854
Operating profit
NOK million
1 189
911
619
Net profit margin
Operating income/result
6.3
4.9
3.5
3.7
Profit before tax
NOK million
1 085
848
513
570
Net profit for the year
NOK million
910
Assets
NOK million
11 254
Equity
Percentage
Net interest-bearing debt /EBITDA
Percentage
Investments
Working capital
2010
2009
2008
2007
18 712*
17 892**
16 016**
589
674
375
485
9 999*
9 640**
8 767**
45.0
46.3
45.4
48.7
0.92
0.86
1.27
0.88
NOK million
1 766
1 040
893
592
NOK million
1 734
1 457
922
1 015
*
See paragraph regarding reclassifications, page 79
**
Not reclassified
Environment/HSE figures
EMPLOYEES
Number of employees, TINE Group
Number
Absence due to illness, TINE Group
Percentage
LTI rate, TINE Group
2010
2009
2008
2007
5 496
5 675
5 734
5 540
6.8
7.1
7.3
7.5
12.7
13.5
13.5
15.9
ENVIRONMENT
Gross energy consumption
GWh
Packaging consumption
tonnes
465
467
477
468
29 204
29 132
29 469
28 905
Emissions of CO2 equivalents from dairy
tonnes
29 292
22 475
24 871
23 475
Emissions of CO2 equivalents from transport
tonnes
53 135
52 712
51 493
52 421
Transport
km/1000 litres raw milk
37.2
36.9
36.1
35.6
The past year
JANUARY
• TINE purchases a lot in Bergen
FEBRUARY
• One million YT products sold
MARCH
• Nyt Norge brand on TineMelk cartons
• TINE accompanies Red Cross to Rwanda
• TINE Tretten focuses on bio-energy
APRIL
• Trond Reierstad new chair of TINE
• Record number of recipients of Sølvtine
• YT is nominated for an innovation award
• New group structure is adopted
MAY
• TINE is ranked number five on RepTrak
• 500 TINE employees participate in the
Holmenkollen relay
JUNE
• Large international dairy conference in
Tromsø
• Rabobank ranks TINE as the 20th largest
dairy company in the world
OCTOBER
• TINE appeals the chain negotiation issue
to the Supreme Court
• TINE is named best supplier to
kiosk/gasoline/service trade (KBS)
JULY
• National Geographical visits Vik to view
the production of gamalost
• The farmer’s milk price for the second
half of the year is up NOK 0.13
NOVEMBER
• TINEs Omega 3 is introduced in India
• Hanne Refsholt is named HR manager of
the year
AUGUST
• TINE awarded second place in
Synovate’s profile survey
• New online ordering system for school
milk
SEPTEMBER
• Piano Dessert sauces are introduced
TINE over 130 years
1856 Rausjødalen Meieri is established with
40 shareholders.
1881 The Norwegian Dairy Association
is founded.
1920 Dairy associations – Norske Meieriprodusenters
Landsforbund (the Norwegian Milk Producers
National) (NML) is founded.
1925 First quality label – Firkløvermerket – is established.
1928 Norske Meieriers Eksportlag (the Norwegian Dairy
Export Association) is founded.
1978 Product development intensifies. Central research
and development unit (R&D) is established.
1992 TINE label introduced.
1997 New market scheme for milk introduced.
1998 Licence production of Jarlsberg in the US.
1999 The Norwegian Milk Producers National (NML)
and Norske Meieriers Salgssentral (NMS) merge to
form TINE Norske Meierier (TINE Norwegian
Dairies).
2002 Upon consolidation, the name is changed to TINE.
Five subsidiaries established.
2004 TINE Milk Supplies (TINE Råvare) established.
2010 The cooperative society TINE becomes one
company – TINE SA.
DECEMBER
• Litago twitters its way to the top
Norwegian
culinary
traditions are
alive and well
because we
never stop
moving
forward.
TINE ANNUAL REPORT 2010
CEO
This is TINE
The brand
The Industrial player
The corporate citizen
Annual report from the Group board
Income statement
Balance sheet
Statement of cash flows
Accounting principles
Notes
Auditor’s report
CEO
Renewal
is our tradition
If you want innovation, you have
to take a few chances. Cross
borders. Imagine, for example,
a brown cheese with raisins and
cardamom. A Christmas brown
cheese with the traditional brown
cheese taste – topped with raisins
and spices. Now that would be
innovative.
Challenge accepted. Before Christmas, TINE introduced the Christmas edition of Gudbrandsdalen with raisins (Julebrunost). The brown
cheese quickly became popular and sold out.
At the same time, news headlines claimed that
the cheese was made in England, and you could
get the impression that it was not Norwegian.
But it was. Made with our best raw materials,
but at a dairy in England owned by TINE.
Instead of gambling with large investments
in new equipment – before we knew how the
cheese would be received – we chose production in England. We just did not have the
equipment here at home. Yet we still wanted
to connect innovation and renewal with tradition and history. This is the stuff of TINE
Julebrunost.
Through a daring experiment, both as regards
content, production and delivery, we linked
the Norwegian tradition with something
new. Then we are left with the assessment of
whether TINE Julebrunost was a success we
should continue.
2
and a good result place large demands on all
sections of the value chain.
A good year means good financial results,
which relates to cost-effectiveness, the ability
to shift the portfolio, sound management, and
employees who contribute in important efforts.
COMPETITION BREEDS OPPORTUNITY
We face challenges in a growing number of
areas, but increased competition and a changing consumption pattern also provides many
opportunities. Not least for innovation, and
TINE has a tradition of meeting trends with
new products.
The international situation in the dairy and
trade sector has a significant impact on what
happens here at home. TINE feels the increasing competition from both national and international players. New forms of cooperation
and changes in ownership pose continuous
challenges.
For TINE, as a keeper of tradition in arenas
with ever stronger competition, innovation in
both products and organisation is essential in
moving forward.
In addition, we experience that the supermarkets’ own labels (private labels) are increasingly challenging us as a supplier. This makes
the focus on our solid brands even more important, and we are happy to report that they
are alive and well.
But looking back, 2010 was a good year for
TINE. The course seems right, and we have
a strong Group in good dialogue with owners
and employees, customers and consumers. At
the same time, we know that good operations
A new Group strategy is in place. It will be key
in a competitive situation that has come to
stay. We will focus on streamlining and innovation. TINE will also create success in cooperation with our customers. This will contrib-
Statistics
Subsidiaries
Addresses
“TINE will promote
culinary culture and
create good
experiences, with
unflagging attention
to the requirement
for safe food.”
Hanne Refsholt
ute to growth, profitability, satisfied customers and strengthened competitiveness.
Framework conditions that facilitate healthy
operations and development are, of course,
necessary. But the responsibility for TINE’s
development is primarily our own. While
some might find competition irritating, TINE’s
attitude is that it is mostly stimulating.
QUALITY AND SAFETY
While the ability to adapt quickly is a necessity, it still does not change the basics: TINE
will promote culinary culture and create good
experiences, with unflagging attention to the
requirement for safe food. This means quality
and safety based on considerable expertise and
experience throughout the value chain. Safety
must be the foundation of everything we do.
All products carrying the TINE brand must
be safe in relation to health, both as regards
raw materials and production processes. This
safety includes everyone and everything;
consumers, customers, authorities, owners
and employees – TINE takes responsibility
from the pen to the table.
With 15 000 milk producers as owners of
TINE, safety also means that the consideration
for animal health and welfare has the highest
priority. Therefore, we aspire to the best preparedness and the best possible preventive
work. Safe food has always been part of our
tradition – and so it will remain.
As a major industrial player, TINE will act responsibly as regards the environment and
important social issues ranging from environmentally friendly transport, transport in
general or the development of more environmentally friendly packaging. And for TINE,
sustainable resource utilisation is key. In other
words, an optimal exploitation of raw materials throughout the value chain. A new strategy
for corporate social responsibility is included
in TINE’s new Group strategy, while continuing the tradition of environmental reporting.
For TINE, it is important to combine environmental and social challenges with own profitability, and many of the Group’s measures have
a positive impact on the operating economy. At
the same time, the authorities must facilitate
environmentally friendly efforts. For when environmentally friendly measures and profitability join forces, it will be easier for Norwegian
industry and commerce to continue measures
and work actively on this over time.
These are important challenges that concern
our shared future, regardless of competition
and which team we are on. It is simply about
the importance of taking responsibility, because we are now shaping the future.
Read more on tine.no
HANNE REFSHOLT
CEO
3
THIS IS THE TINE GROUP
Our products
TINE is one of Norway’s largest and most important brand builders. Goal-oriented focus on product development has yielded TINE
a unique position with Norwegian consumers. Today, TINE has a
diverse portfolio that provides Norwegians with good and healthier
food through more than 500 products and 1300 article numbers.
norvegia was one of the ten
strongest brands in 2010.
the “nå” products have seen a nice revenue growth in 2010.
4
See an overview of all products on tine.no
yt was introduced in 2010 and is a series
of workout foods and drinks based on healthy
raw materials. YT was developed by TINE in
cooperation with Olympiatoppen.
salma has made high-quality Norwegian salmon available to Norwegian consumers.
5
butter, cream, sour cream and
crème fraîche from TINE are products that inspire Norwegians to cook
from scratch. They have all had a
positive growth in volume and value
in 2010.
See page 9
The brand
TINE faces a number of challenges in a
market characterised by rising competition.
We meet these challenges by listening carefully to the consumer, who demands quality
and a solid link to the love of good food
found in the Norwegian culinary tradition.
jarlsberg is tine’s largest export
item. 60 per cent of the total production of 18 500 tonnes goes to export.
In the US, the cheese is sold in nine
out of ten supermarkets.
norvegia was one of Norway’s ten
strongest brands in 2010. With the
new communication concept “Some
relationships last a lifetime”, we
struck a chord with the Norwegian
people.
See page 13
See page 12
CEO
This is TINE
The brand
The industry player
Income statement
Balance sheet
Notes
Auditor’s report
THE BRAND
Proximity to the Norwegian
consumer and thorough insight
into motives, needs and habits is
TINE’s most important advantage
in the role as leading brand and
category developer.
The preferences of the Norwegian people are the indicators
for TINE’s comprehensive and
continuous innovation efforts.
SEGMENT SHARE (GROCERY CHAINS),
VOLUME*
Percentage
Sales of milk-based drinks from Norwegian
supermarkets showed a small volume decline
in 2010, but a value increase of 4.3* per cent.
The growth within flavoured milk drinks does
not fully make up for the decline in both fresh
milk and cultured milk. Fresh milk fell slightly,
by 1.0 * per cent compared with 2009. After
several years of growth, the cultured milk segment showed a volume decline of 3.0 * per cent.
TineMelk maintained its segment share in
fresh milk by volume compared with 2009,
with 84.7* per cent. Within the cultured milk
segment, Biola strengthened its position, but
CHEESE UP
Cheese is one of the grocery retail trade’s
largest categories, with a turnover out of shop
of more than NOK 6.4* billion. Norwegians’
consumption of cheese continues to show
growth, measured both in value, with a 4.7*
per cent increase from 2009, and in volume,
with a 2.6* per cent increase.
Overall, TINE’s portfolio represents 61.1* per
cent of the traded value and 63.3* per cent
of the volume out of the shops. Firm white
cheese is by far the largest segment, and this
is where TINE can show the most marked volume increase, with 4.2* per cent in 2010. The
corresponding increase the previous year was
1.3* per cent. Norvegia and Jarlsberg are the
main brands driving this growth.
94,2
99
98,8
With its diverse product portfolio, TINE is a
significant player in the drinks category. The
emphasis is on milk and milk-based drinks,
while juice and juice-based drinks also make
a strong contribution.
63,9
63,5
60
MORE MILK-BASED DRINKS
TINE’s total segment share declined somewhat due to weaker sales of Cultura. In the
flavoured milk segment, the volume in 2010
was 14.0 * per cent higher than in 2009. In particular, Litago has consolidated its position as
a strong brand, for example through the use
of social media.
87,8
85,6
75,9
73,2
85
85,3
80
2009
93,8
2010
100
With a good mix of established brands and
products along with successful relaunches
in the supermarkets, TINE contributed to category growth for the industry in 2010.
40
PRICE-CONSCIOUS
CONSUMERS
8
Cream
Butter
Cheese spread
Brown cheese
White cheese (firm)
Yoghurt
0
Milk
7
8
20
*)
there is strong and increasing competition in
Norwegian grocery retailers. The discount chains are
gaining ground and account
for more than half of total
sales. Rema 1000 and Kiwi are driving most of the
growth in the discount segment. The supermarket
segment declined in value share. Even though Norway
has not been hit hard by the financial crisis, Norwegian consumers have become more price-minded in
their purchases.
: 20110124-LAL. Nielsen ScanTrack, Groceries, Miscellaneous product groups, value and volume share, percentage point
change, 2009 and 2010 as of 2 January 2011. Desserts is a collection of the basic categories desserts cooled, dessert sides, desserts dry/wet
as well as cake cream and filling.
source
Statistics
Subsidiaries
Addresses
WHAT WE HAVE DONE IN 2010
Increased competitiveness
through 2010
The brown cheese segment had a total volume decline out of shops of 0.6* per cent in
2010, but TINE’s position is still strengthened
through a growth of 1.9 * per cent.
POPULAR COOKING INGREDIENTS
The trend towards increased interest in food
made from scratch yielded a considerable
boost in turnover for TINE’s typical cooking
ingredients. Butter sales have grown considerably in recent years, and in 2010, TINE’s sales
of butter increased by a total of 10.6* per cent
measured by volume. The other dairy-based
cooking ingredients also show good volume
development – TINE sour cream with 1.7* per
cent, TINE cream with 1.9 * per cent and TINE
crème fraîche with 12.3* per cent.
Through market activities, TINE has developed the category of cooking ingredients
and strengthened its position as the category
leader.
YOGHURT UP 14.6* PER CENT IN VALUE
TINE is the largest yoghurt player in the Norwegian grocery retail trade and an important
contributor to category growth. In 2010, the
launch of the YT series in particular, TINE’s
largest ever, together with other launches in
the Go’Morgen series, contributed to growth
in the yoghurt category. A high level of ac-
*)
tivity from other players also contributed to
robust growth within the yoghurt category
as a whole. General yoghurt sales in Norway
have been on the rise for several years, also in
2010. It is likely that the growth will continue,
and that Norwegians’ yoghurt consumption
will reach the levels of comparable European
countries.
In 2010, the yoghurt category grew by 14.6 *
per cent measured in value and 5.7* per cent
by volume.
POPULAR DESSERTS, DOUGHS AND BATTERS
TINE’s Nå series of ready-to-use doughs and
batters, which was introduced in 2007, has
been a significant contributor to the formidable increase in sales of this type of product.
Measured out of shops, the overall increase
for the category has been 47.1* per cent in value. For TINE products, the growth has been
45.9 * per cent.
“ 2010 strengthened TINE’s
competitiveness. Volume was
maintained and profitability
improved, especially in the
largest product groups. TINE
also introduced several new
products. In addition, TINE
established a completely new
category through the introduction of YT. YT is a series of
natural food and drink tailored for use before, during
and after exercise. The series
has been developed in close
collaboration with Norway’s
top expertise on exercise nutrition at Olympiatoppen.
WHAT WE WILL WE DO IN 2011
More in-depth knowledge
about the consumer
“ TINE works to create growth
and profitability for our customers and the Group, founded on solid and comprehensive understanding of
consumer needs. In 2011,
TINE will further strengthen
the way it acquires and utilises consumer insight. This will
boost the innovation work
and further develop market
communication.
Piano, which is TINE’s dessert brand, leads
the category within several of the dessert segments. TINE’s share of the dessert category
was challenged in 2010, but still amounts to
56.3* per cent in value, a decline of 2.6 * per
cent. The increased focus on good and healthier culinary experiences will probably characterise the consumers’ choices also in 2011.
source
9
GOOD GROWTH CONDITIONS FOR GOOD IDEAS
innovaton is one of
TINE’s main focus areas.
Every year, TINE introduces between 50 and
80 new product lines.
TINE has a strong desire
to be a dynamic and
proactive developer in
the categories where we
are represented, while at
the same time developing new, attractive categories.
Examples of
launches in 2010
• YT
• Nå pizza dough,
wholemeal and Italian
• Relaunch of Jarlsberg
• Cubed cheese (Jarlsberg and Norvegia),
with and without marinade
• Biola with fibre
• TINE Yoghurt Nyt with
black currants/cherries
• TineYoghurt Alltid with
coconut
• Go’Morgen Blueberry
and Go’Morgen Cappuccino with nuts
• 1-litre Litago Milkshake
• Litago Banansplitt
• IsKaffe Brazil
CEO
This is TINE
The brand
The industry player
TINE promotes and spreads
the love of good food
TINE’s cooking ingredients make Norwegians make more food from
scratch. TINE cream, TINE sour cream, TINE crème fraîche and TINE
butter, all showed positive volume and value growth in 2010.
TINE’s cooking ingredients make Norwegians
make more food from scratch. TINE cream,
TINE sour cream, TINE crème fraîche and TINE
butter, all showed positive volume and value
growth in 2010.
TINE’s sales out of shops of TINE cream, TINE
sour cream and TINE butter exceeds NOK 2.0 *
billion. This corresponds to an increase of 6.6*
per cent compared with the previous year.
GREATER INTEREST IN FOOD
The positive sales development for TINE
cream, TINE sour cream, TINE crème fraîche
and TINE real dairy butter follows the trend of
Norwegian consumers who want real and natural raw materials. The consumers want to be
in control of what they’re eating, which makes
the choice of raw materials important. There
is also reason to believe that more cooking
programs on TV and more coverage of food
in the newspapers contribute to the increase
in sales.
WHITE GOLD BUILDS
A NEW PROFILE
“tine – possibly the
world’s finest milk”, is
the slogan that will highlight the milk, the farmer, good husbandry – and
TINE’s brands.
August 2010 marked the
start of TINE’s major
profiling campaign directed towards the Norwegian consumer. The objective is to create an understanding of TINE’s activities
and priorities in a highly competitive workday. The
*)
10
Income statement
Balance sheet
Notes
Auditor’s report
As a major player, TINE takes responsibility for
further developing the categories we are present in and for creating additional growth for
the retail trade. Thorough consumer insight
does its part to ensure that launches meet relevant consumer needs, new trends and food
habits.
WEAKER KITCHEN SKILLS
Even though more and more people are cooking from scratch, general cooking knowledge
is still declining. This is a challenge that TINE
takes seriously. To help consumers, TINE
launched a new communication concept in
2010 for dairy-based cooking ingredients:
“The little things often make a big difference”.
The concept aims to provide the consumers
with knowledge regarding how the different
products can be used, as well as provide tips
and ideas that inspire them to cook themselves. The packaging is also actively used to
give the consumers tips and ideas.
campaign will strengthen Norwegians’ loyalty to TINE
and TINE’s products. The basis is the very foundation
of TINE’s business: The white gold – TINE’s milk.
Important positioning
The profiling campaign directs attention to the good
milk quality in TINE’s raw milk materials, acquired
through some of world’s best natural conditions for
good dairy production, good husbandry with the
world’s possibly healthiest and happiest cows, and
good interaction between the farmer’s and TINE’s expertise.
source
Statistics
Subsidiaries
Addresses
our vision
We will be Norway’s
most important generator of value.
our business idea
The TINE Group creates
value in close interaction
with nature, agriculture
and the market.
The TINE Group processes pure and natural
commodities into good
and healthy food, which
is preferred by the consumers and is the country’s leading food supplier.
The TINE Group is
owned by Norwegian
dairy farmers in a cooperative society.
Tougher efforts in a tougher market
TINE is encountering increased competition from several directions. Most
competitors are backed by substantial capital and are good brand builders.
Most are Norwegian and international food and drink producers, but the
supermarkets are also important challengers.
In addition to familiar national and international food producers, TINE is also encountering
rising competition from the four large grocery
retailers. These are also TINE’s most important customers. The chain is moving ever
closer to TINE’s competitive arena and are
challenging TINE’s business through activities
in more and more parts of the value chain, as
well as launching their own brands.
STRONG POSITION
AMONG NORWEGIAN CONSUMERS
TINE started developing strong brands early.
The combination of high-quality products,
goal-oriented efforts in innovation and conscious branding, has given TINE a strong position among Norwegian consumers. The TINE
products have become household staples
and enjoy a high degree of confidence among
our objectives
1. Give the owners the
best possible price for
their milk and an organisation with the
power to continue doing it in the future.
2. We will be an attractive employer by:
– giving the employees both professional
and personal development opportunities
– ensuring that employees feel they are
treated respectfully
and fairly.
3. Give customers and
consumers value for
money.
4. Give society a company that creates
growth in food production.
11
most Norwegians. TINE is proud of the position the TINE brand has achieved and the role
the products play in Norwegian homes. Therefore, strong roots in Norwegian tradition and
the Norwegian diet are a natural point of departure when TINE answers the competition.
With an in-depth understanding of Norwegian
consumers’ needs and preferences, TINE will
CEO
This is TINE
The brand
The industry player
Income statement
Balance sheet
Notes
Auditor’s report
develop new categories and further develop
existing categories where TINE already has
a presence. This will further strengthen the
company’s position in the future.
Looking to the future
TINE’s board and parts of the corporate management
have visited TINE’s subsidiary in the US. The visit was important for several reasons. It opens new horizons, provides in-person contact with key employees in the field
and greater insight into an important part of our business. And good operations definitely require good insight
into all parts of TINE’s business. Including abroad.
The visit included shops, a visit with our cutter & packer
partners, as well as a meeting with senior management
and employees at Norseland’s head office. This kind
of personal contact offers important opportunities for
exchanging experience and opinions. It gives room for
necessary exploration of the current situation and allows
us to delve into important strategic questions regarding
the road ahead, both abroad and at home – because it’s
all connected. What we do in one location, may have an
impact on what we do in other locations. Learning and
experience in one field can be important building blocks
in another.
The good work that has been done in the US is very
gratifying and opens the door to many future opportunities. Norseland has impressed us with growth in a market
characterised by stiff competition. In fact, a magnificent
growth over the ten years that have passed since we
started commercial production of Jarlsberg in Ohio.
12
Sales have more than doubled, and you can hardly help
being proud, as you walk through shops in the US as a
TINE employee and owner: Jarlsberg has plenty of market
exposure, and it can be found in 90 per cent of supermarkets. And the shop employees warmly welcome our
colleagues at Norseland. The good relations are quite
apparent and show how Norseland has a culture, a sense
of unity and a team spirit worthy of respect. Jarlsberg is
TINE’s international flagship – and so it will remain.
Our good foundation in the US, and a free trade agreement for dairy products between the US and Australia,
have also made it possible for us to grow in the Australian market. Picking the right partner, good teamwork and
strict Norwegian follow-up on quality have contributed
to securing a solid foothold «down under». Everyone has
worked hard to succeed.
This is how we use lessons learned from various arenas.
We have built something that can be copied in a number of
markets. And with this knowledge and strength as a foundation, we are also working hard in Sweden and the UK.
Our faith in the future is strengthened by venturing beyond our own borders. By looking and learning together,
we are building joint insight, pride and expertise. This
makes us better equipped to tackle important strategic
tasks related to TINE’s international business.
Statistics
Subsidiaries
Addresses
JARLSBERG
Norwegian rising superstar
jarlsberg further solidified its position in
the international market in 2010
market. The US remains the area with
the largest sales of Jarlsberg outside
Norway. There, the cheese is sold in
nine out of ten supermarkets. Jarlsberg
is the most familiar and popular specialty cheese within its category in the
US. The sales of Jarlsberg wheels in the
US market developed far better than
expected in 2010.
In the UK, the competitive picture is
more challenging, but Jarlsberg can also
show a positive development here in
2010.
Jarlsberg has planted the flag in important international markets and can be
found on breakfast, lunch and dinner
tables from Skjåk to Sydney. The holey
veteran is one of Norway’s leading international brands. Internationally, the
Jarlsberg brand further strengthened its
market position in 2010.
TINE’s ambition is for an increasingly
larger share of the company’s growth
to take place outside Norway. With this
objective, TINE’s subsidiaries and part-
ners have e.g. increased the focus on
strengthening Jarlsberg as a brand. Significant resources have been devoted to
implement the international positioning.
Largest in the US
Jarlsberg is currently TINE’s largest
export article. Around 60 per cent of
the total production of 18 500 tonnes
in Norway goes to export. In addition,
about 7500 tonnes of Jarlsberg are
produced at the dairies in the US and
Ireland for sale on the international
In Sweden, TINE carried out a major
campaign for Jarlsberg wheels in 2010.
The campaign received massive attention, which led to increased brand
recognition and very positive sales
development.
Over several years of systematic branding, TINE’s partner in Australia has built
a very strong position in the supermarkets in the Australian market. They can
boast excellent results for 2010.
Read more on jarlsberg.com
13
the new
w tine dairy that will be
completed
ed at Jæren in the autumn will
provide improved productivity and
profitability,
ility, while also reducing CO²
emissions
ns by 38 per cent.
See page
ge 17–18
The Industrial
player
Maintaining and strengthening
competitiveness in a large, nationwide
cooperative society like TINE requires each
link in the entire complex value chain to be
well-oiled and characterised by expertise and
innovation – without losing local character.
tine had more than 1300 articles on
the market in 2010 – and the innovative pressure is considerable. This entails large investments in production
equipment and further specialisation
in the 41 different dairies.
See page 18
the production of jarlsberg
requires a skilled cheesemaker. The
cheesemaker taps the cheese and
listens to the sound it produces. This
will reveal whether the bacteria have
created the right quantity of holes in
the cheese, or whether it needs to
age a bit more before it is ready.
See page 19
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
THE INDUSTRIAL PLAYER
Future-oriented production
strengthens competitiveness
TINE will refine the milk to products
the consumers prefer. Quality
takes centre stage in everything
we do. The consumers must have
confidence in TINE. To strengthen
competitiveness, TINE must
operate efficiently while at the
same time providing the consumer
with products that are – and are
perceived as – safe.
SAFE FOOD
tine connects goals for
safe food with the number of cases of documented illness caused by
product errors, the number of positive samples in
internal pathogen control
and the number of product recalls. In 2010, there
were no recalls of TINE
products, and there were
no registered issues involving documented illness caused by product
errors.
16
The products must be safe as regards health,
they must be produced with safe raw materials, they must be produced using safe processes and they must be part of a secure value
chain. Consumers, customers and authorities
must have confidence in TINE products.
STRINGENT REQUIREMENTS
FOR BRAND QUALITY
As a food supplier, TINE must naturally comply with all requirements stipulated by public
authorities. The dairies have a good dialogue
with the Norwegian Food Safety Authority and
carry out regular audits. Beyond this, TINE
sets its own stringent requirements for quality. The products must be safe to eat, and they
must have the correct, consistent quality every time. The fact that the consumer gets what
he or she expects every time is exactly what
characterises brand quality. To ensure brand
quality, all the dairies follow clearly defined
control procedures. Here, product samples
are compared with defined chemical, microbial, and not least, sensory requirements (taste).
tine r&d centres are found
in two locations: In connection with TINE’s dairy at
Kalbakken in Oslo and in
Måltidets Hus (MH) in Stavanger. MH is part of the Innovation Park in Stavanger
and is a research and innovation centre with a total of
about 120 full-time equivalents related to food across
RESEARCH
COOPERATION WITHIN
INDUSTRIAL
GASTRONOMY
This means that all the dairies have their own
taste panels that, by smelling and tasting the
products, ensure that they are in accordance
with the specification. Since several products
are produced at multiple dairies, the controls
must be coordinated so that everyone assesses the products on an equal basis. This
is ensured for example through good training
and good cooperation between judges.
The technical equipment we use also has a
significant impact on the quality of the products. TINE sets strict requirements for the
equipment’s technical hygienic standard. This
standard is used as a basis when purchasing
new equipment. Technical audits are also
carried out at the dairies on the basis of this
standard.
Even though we have stringent requirements
for quality, accidents can still happen. TINE’s
preparedness management is founded on
extensive experience. The purpose of preparedness work in TINE is to prevent the con-
industries. The environment has been awarded the status of “Norwegian Center of Expertise” within so-called
industrial gastronomy. The cooperation is developing
well. TINE also cooperates with the Norwegian University of Life Sciences at Ås, the Norwegian Institute of
Food, Fisheries and Aquaculture Research (Nofima),
the University of Oslo, Akershus University College and
others regarding projects across the value chain.
Statistics
Subsidiaries
Addresses
WHAT WE HAVE DONE IN 2010
“Focus on product quality, especially white cheese.
“Focus on HSE – particularly to
reduce incidents with injuries.
“Improving the efficiency of
our internal operations
through implementation of
Lean.
“Reviewed the routines in our
emergency preparedness
work.
“Research and innovation within solid and liquid products.
WHAT WE WILL WE DO IN 2011
“Focus on safe and stable
delivery to customers and
consumers.
“Continue work towards a
more efficient dairy structure.
the dairies follow strict procedures to ensure safe food for the consumers.
“Reduce waste and increase
exploitation of raw milk
materials.
“Improve milk quality from
farm cooler to processing.
sequences of incidents and safeguard crisis
situations in an efficient, comprehensive and
professional manner. We have a preparedness
organisation that covers TINE’s entire value
chain.
and Meierigata (“dairy road” and “dairy
street”) – because this is where the dairy was
located in the past. TINE takes active part in
creating new business and industry activity in
the local community when we withdraw from
communities.
TINE will continue to be a competitive player
in the future. It is important to ensure a broad
diversity of products. Several of our products
have a traditional and artisan character. These
are values TINE will preserve.
In the almost 130 years the dairy cooperative
has existed, the dairies have been an important part of the communities. Currently, TINE
has 41 dairies across the country. Several
places in Norway we can still find Meieriveien
“Focus especially on the quality
of white cheese.
“Fulfil TINE’s environmental
objectives.
“The HSE work will still be key.
STRUCTURAL STREAMLINING
AND IMPROVING EFFICIENCY
“Quality focus in TINE Dairies
TINE had 238 dairies in 1970, 178 in 1980 and
120 in 1990. The adopted structural changes
entail closure of seven dairies. Organisation
and planning of production takes place jointly
for the entire country.
Consumer trends are changing, and this entails a shift towards more processed products
and specialty products and fewer traditional
standard products. This places new demands
on the industry and TINE feels it can be challenging to maintain sufficient production
17
Environmentally
friendly at Jæren
TINE is building a dairy
in an industrial park that
currently has five food
companies. They wanted
joint energy solutions,
and TINE took responsibility by building an energy centre that forms
the heart of the energy
cooperation. A green
nursery buys waste heat
and CO2 as plant food.
Warm water from TINE
runs through pipes to
the same green nursery
and then back to TINE,
which can use the same
water in its processes.
TINE will also deliver
low temperature district
heating to Jæren Fjernvarme.
18
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
capacity for some specialty products, while
the capacity for standard products must be
reduced.
A major development and modernising of the
dairy in Oslo is underway. Warehouses will be
built for convenience products, packaging and
factor inputs. The new building will have a high
degree of automation.
BUILDING A FUTURE-ORIENTED INDUSTRY
Decisions have been made regarding large investments in TINE’s industrial output. In 2008,
a decision was made to build a new dairy at
Jæren. Construction work is underway, and
the plan is for the new dairy to be complete in
the autumn of 2011. The dairy will be modern,
environmentally friendly and future-oriented.
A 34 per cent reduction is expected in energy
consumption, along with a 38 per cent reduction in CO2 emissions, compared to the current situation. The new dairy will give TINE
higher productivity and profitability.
The dairy in Verdal is being developed into a
modern production facility for white cheese,
whey refining and fat processing. The dairy
will be built in stages and will be complete in
2012.
LARGE DIVERSITY IN THE INDUSTRY
The new dairy at Jæren will be Norway’s largest cheese plant. By gathering the production
of cheese, butter, margarine, prim and whey
products, we can ensure good exploitation
of production lines and by-products from the
various products.
TINE’s smallest dairy is in Setesdal. With its
ten employees, it is important for production
of Kviteseid butter and other niche products.
The dairy in Vik produces the traditional Gamalost, the dairy in Trysil makes the familiar
pultost and the dairy in Selbu specialises in
various kinds of blue cheese.
Statistics
Subsidiaries
Addresses
EFFICIENCY AND IMPROVEMENT
In addition to structural changes in the industry, TINE must also seek out efficiency gains
across the value chain. TINE will prioritise
the introduction of Lean as a management
tool throughout all parts of the Group. The
introduction of Lean will extract potentials for
improvement and provide increased productivity. TINE will build an improvement culture
in all parts of the value chain through the way
we lead, the way we think and the way we get
people involved.
INNOVATION AT EVERY TURN
Innovation is very important for TINE and several new products are introduced every year.
But innovation is more than new products.
With the decision to build two new large and
modern dairies for processing whey, TINE is
facilitating the refining of whey into new nutrition products that are attractive on the world
market. This will enable us to use parts of the
whey that were previously used as animal feed
for human consumption. This is both good
economics for TINE and good resource exploitation for society. New production methods
are also a type of innovation that can improve
profitability.
Want to know more? See tine.no
JARLSBERG
You can hear when
the cheese is ready
Brand quality means that the
consumer gets what he or
she expects from TINE every
time. To ensure brand quality, all dairies follow clearly
described procedures and
control schemes. This means
that the dairies have their own
the cheesemaker’s job is to
product judges who inspect
help the bacteria do theirs. This
the products to ensure that
demands solid craftsmanship.
they live up to the specifications. Since several products
are produced at multiple TINE
plants, it is necessary to coordinate the controls so that
everyone assesses the products equally.
Cheese is a living product, and the bacteria culture
we add to the milk do most of the work of making the
cheese. TINE’s own bacteria culture creates the characteristic flavour and holes in the Jarlsberg cheese. The
cheesemaker’s job is to help the bacteria do theirs. To
know when the holes are just right, the cheesemaker
checks on the cheeses every day.
DEVELOPMENT IN THE NUMBER
OF DAIRY PLANTS
250
238
200
178
150
120
100
62
50
0
41
1970
1980
1990
2000
First, he notices that the cheese starts to bulge, and when
it approaches the right shape, he turns the cheese on its
side and knocks on it with his fist. The drumming he hears
tells him whether there are enough holes in the cheese,
or if it needs to stay for another day or two. This requires
experience, and the cheesemaker also slices some cheeses in half just to make sure that his eyes and ears are not
deceiving him.
2010
tine has dairies across the country, but the number
has decreased substantially.
19
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
A NATIONAL PLAYER WITH LOCAL ROOTS
Dairy production
TINE is present all over Norway
with 41 dairies, two central warehouses and four terminals. In 2010,
the dairies processed a total of 1.25
billion litres cows’ and goats’ milk
from the milk farmers, the members
of TINE SA. At the dairies, the milk
was refined into 385 million litres
of fresh milk and 70 700 tonnes
of cheese. At the terminals, the
products are stored and repacked
before delivery to the customers.
TINE NORTH
2010
2009
members (owners)
delivery cows’ milk (million litres)
delivery goats’ milk (million litres)
1,640
152.4
7.8
1,660
154.7
7.8
investments and
expansions in 2010
•TINE Meieriet Harstad
took over supermarket
packaging for all shops in
Northern Norway
•New filling machines with
screw cap applicators
installed in Harstad and
Sandnessjøen
TINE CENTRAL NORWAY
2010
2009
members (owners)
3,969
425.0
0.2
4,019
420.0
0.3
investments and
expansions in 2010
Development of the new
automated warehouse at
Tunga and construction of
new tank truck hall, technical centre and the butter
factory in Verdal are the
largest investments in
2010
20
plans for the future
•TINE Meieriet
Storsteinnes will utilise
new technology to ensure
future-oriented
application of goats’ milk
•Strengthen coordination
measures between goat
farmers and industry
•Strengthen quality work
in the producer
environments
In 2011, construction
starts on the production
plant for whey powder in
Verdal.
Another important task will
be to take good care of
the employees when
operations at the plants at
Ørlandet and Meldal are
discontinued
Statistics
Subsidiaries
Addresses
TINE’S BUSINESS ORGANISATION
TINE WEST
2010
2009
members (owners)
3,108
236.0
6.3
3,173
237.0
6.4
investments and
expansions in 2010
•Purchased a lot for the
new dairy at Flesland
•Replacement of filling
machines in Bergen and
Byrkjelo
•New container fillers in
Bergen Plans for the
future
TINE
•Start planning new dairy
at Flesland
•Clarify the structure for
fresh milk plants BergenTrondheim
•Decision regarding
brown cheese structure
affects production at
Byrkjelo and Ørsta
TINE EAST
2010
2009
members (owners)
3,645
354.5
3.5
3,694
352.5
3.4
investments and
expansions in 2010
•Expansion of TINE Meieriet Oslo with optimal operation during the construction period
•Improvement through
Lean/TPM
•Preparation for transition
to steam from biomass at
Brumunddal and Tretten
•Improving the efficiency
of filling plants and postpackaging equipment
•Carry out calculations of
consumption structure
East
•Plan start-up of
expansion of the Oslo
plant in 2012 and 2013
•Achieve additional
improvement in quality,
supply security and cost
control
•Expanded work on Lean
TINE SOUTH
2010
2009
members (owners)
2,479
267.0
2.2
2,538
272.0
2.1
investments and
expansions in 2010
•Replacement of filling
machines in Kristiansand
•Treatment facility at
Vikeså and in Setesdal
•Ventilation and ceiling at
the production premises
at Sola
•New packing machine
for Chèvre at Haukeli
Joint functions
Regions
Wholly and partly-owned
subsidiaries
TINE International activities
TINE R&D
TINE ICT
TINE Ingredients
TINE Purchasing
TINE Communication
TINE Supplies
TINE Marketing
TINE Active Members
TINE HR and expertise
TINE Policy and community
TINE Advice
TINE Sales (domestic)
TINE Corporate governance
TINE Economy and finance
TINE East
TINE South
TINE West
TINE Central Norway
TINE North
Diplom-Is AS
FellesJuice AS
Maritex AS
Norseland Inc (US)
OsteCompagniet AS
Wernersson Ost AB
Norseland Ltd. (UK)
Fjordland AS
Salmon Brands AS
TINE Milk Supplies*
*) Distinct department that is separate as
regards accounting and administration
•Transition from four dairies at Jæren to one new
one
•Commissioning of Tine
Meieriet Jæren
•Competition for milk
producers
•Follow up quality of convenience products
•Improve quality management and introduce ISO
22000 at two dairies
21
Income statement
Balance sheet
Notes
Auditor’s report
CEO
This is TINE
The brand
THE COOPERATIVE PRINCIPLES
The owners are ensured control further along the value chain
TRADITIONAL BUSINESS STRUCTURE
Cooperatives
In Norway, we find the cooperative
structure especially on the consumer
side, fisheries, housing and agriculture. There is no official international
definition of the term “cooperative
society”.
The cooperative principles have been
changed and adjusted over time, but
have roots back to the cooperative
movement’s start with the weavers
in Rochdale, UK in 1844. As of
today, there are seven cooperative
principles, see the model on the
right.
Until 2008, the cooperative as a
business structure had no separate
legal framework in this country.
Because the cooperative society
represents such an important and
necessary alternative to the other
business organisations, the Storting
(Norwegian Parliament) adopted the
“Cooperative Societies Act” on 29
June 2007. The Cooperative Societies
Act is founded on the same principles
as the Limited Liability Companies
Act, but is adapted to the cooperative societies’ special needs.
22
DEMOCRATIC
MEMBER CONTROL
Active participation
in stipulating guidelines
and decisions.
VOLUNTARY AND
OPEN MEMBERSHIP
Everyone who accepts
the responsibility that
follows membership can
use the cooperative’s
services.
AUTONOMY
AND INDEPENDENCE
Cooperative societies
are autonomous organisations with the purpose
of helping one help
oneself.
Kr
Kr
Kr
THE MEMBERS’
FINANCIAL
PARTICIPATION
The members
contribute equally
to the cooperative society’s
capital and receive
dividends based
EDUCATION,
on their turnover
TRAINING
with the coop.
AND INFORMATION
ensure education and
training of employees,
members and employee
representatives.
SOCIAL
RESPONSIBILITY
work for sustainable
social development
through guidelines
approved by
the members.
COOPERATIVES
COOPERATING
A cooperative best
serves its members by
cooperating through local,
regional, national and
international
organisations.
Statistics
Subsidiaries
Addresses
What is a cooperative?
COOPERATIVES
AROUND THE WORLD
In a cooperative, the objective is to achieve results through the
business the enterprise carries out. The owners take part in the profit
in the cooperative society through the turnover they have with the
enterprise, not through return on contributed capital.
In Norway, cooperatives are currently popular
within retail, agriculture, housing associations
and fisheries, but are also found within daycare centres, power companies, taxi companies and other transport. The wide range of
applications for cooperatives show that this
is a business structure that is suitable for efficient organisation of business activity, consumer interests or the general good of the
local community.
ness structure both in Norway and many other
places around the world. On 29 June 2007, the
Storting passed the Act relating to cooperative
societies. The Act came into force on 1 January
2008. The Cooperative Societies Act reads “By
a cooperative society is meant a group whose
main objective is to promote the economic interests of its members by the members taking
part in the society as purchasers, suppliers or
in some other similar way”.
Through organising its business in a cooperative society, the owners are ensured control
further along the value chain. The profit is
returned to the owners, such as through increased milk price, lower housing costs or
better day-care services. This has made cooperatives an efficient and competitive busi-
TINE adapted its bylaws to the Cooperative
Societies Act’s requirements and was registered as a cooperative society in June 2010.
The Cooperative Societies Act is founded on
the same principles as the Limited Liability
Companies Act, but adapted to the cooperative societies’ special needs.
examples of cooperatives can be found in
practically every country. Globally, there are
more than 750 000 cooperative societies with
a total of more than 800
million members and
more than 100 million
employees.
did you know
• In the US, 4 of 10 people are members of a
cooperative. For example, large energy
companies are organised as cooperatives
• In the UK, the largest
independent travel
agency is a cooperative
• The Crédit Agricole
cooperative is one of
the largest financial
groups in France
• In Denmark, the consumers’ cooperative
society has a market
share of about 37 per
cent of the grocery retail trade
• In Belgium, pharmacies organised as cooperatives have a market share of 19.5 per
cent
• In Japan, 1 of 3 families is a members of a
cooperative,
• In Colombia, cooperatives provide health
services to 25 per cent
of the population,
• In Brazil, agricultural
cooperatives export
for more than USD 1
billion per year
the cooperative model has a long, solid tradition in Norway and several other countries. Good dialogue
and efficient interaction throughout the value chain is important.
23
in 2010 tine entered into a cooperation with Volvo regarding four
distribution vehicles in the Oslo area
running on biogas. This is the start
of a conversion to more environmentally friendly fuels in all our
transport.
See page 26
The
corporate
citizen
TINE’s presence in Norway is of such
a scope that people expect something from
us. And we expect something of ourselves.
Our corporate citizenship is therefore very
comprehensive and involves several aspects
related to the environment, animals
and people.
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
THE CORPORATE CITIZEN
A broad commitment
to social responsibility
“TINE will create values for both
owners and society at large by
taking corporate responsibility
throughout its value chain, with
particular emphasis on Norwegian
milk, sustainable resource utilisation and nutrition”. These are the
key elements of TINE’s strategy for
corporate responsibility.
EMISSIONS TO AIR
Tonnes of CO2 equivalents
60 000
50 000
40 000
30 000
20 000
10 000
0
2007
CO2 from dairies
CO2 from transport
2008
2009
2010
Emissions of cooling medium
Employee air travel
emissions from the dairies are calculated based on
oil and gas consumption and the Climate and Pollution
Agency’s (Klif’s) conversion factors for CO2 emissions.
For transport, the emissions are calculated based on
the recorded number of kilometres driven. Factors for
calculation of fuel consumption per kilometre are based
on the basic standard numbers from Klif. In addition,
CO2 emissions from employee air travel in connection
with business are calculated by TINE’s travel agency. Indirect greenhouse gas emissions from electricity and
district heating are not included.
26
Over several years, the milk producers and
dairies have worked together to develop Norwegian milk into what is possibly the world’s
finest. Caring and respect for both nature and
animals are important in this work. Today, the
Norwegian agriculture sector manages one of
Norway’s most important natural resources.
TINE takes part in this management through
its business and contributes to healthy and
sustainable nature and resource management.
THE TRIPARTITE BOTTOM LINE
In 2010, TINE has used the term “the tripartite
bottom line”. One part is the financial results
measured in NOK. The other includes the environment and shows results of measures to
reduce impact on the external environment,
such as emissions to air and discharges to water in transport and industry, use of recyclable
material and environmentally friendly packaging solutions. The third part addresses the
results achieved through an ethical approach,
through cooperation with communities, employees and other groups.
The objective is to create excellent results, financially, environmentally and socially. For example, a reduction of food waste would yield
an environmental benefit and financial gain.
More efficient transport results in lower emissions, less resource use and financial gain.
COMPETITIVENESS, VALUE CREATION AND
SUSTAINABILITY
In 2010, the corporate social responsibility
strategy was anchored in TINE’s paramount
Group strategy through a decision in the
Group board in December. The strategy is an
important tool in TINE’s work to increase the
company’s competitiveness, contribute to financial value creation and strengthen sustainable development.
Three strategic focus areas have been chosen
where TINE will take special responsibility.
The three focus areas are:
• Norwegian milk
• Sustainable resource exploitation
• Correct nutrition
The focus areas are a result of interviews with
employees, opinion-makers, organisations,
students and experts. They have given clear
advice regarding what TINE can and should
take more responsibility for.
By asking various groups for advice, TINE is
signalling that its strategy for corporate social
responsibility entails interaction with target
groups in the community, and that the measures must be visible.
COMPETITIVENESS AND ENVIRONMENTAL
CONSIDERATIONS
TINE’s milk producers deliver perhaps the
world’s finest milk based on Norwegian natural resources. Good milk quality and a milk
volume in accordance with market needs provide TINE as an industry and market player
with a unique basis for creating financial value.
Statistics
Subsidiaries
Addresses
No
TINE’S ENVIRONMENTAL OBJECTIVES
Environmental objectives 2010
Discharges to water
All dairies will comply with the terms
and conditions of the licence
It is important for TINE to contribute to profitability for its producers, for example by being an
efficient and profitable business in its own right
as well as influencing the industry’s framework conditions to make this possible. It must
be attractive to be a TINE milk supplier. TINE
will strengthen sustainable development in
dairy production by promoting good liWestock
health as well as environmentally friendly technology and solutions in Norwegian agriculture.
TINE is currently present in large parts of
Norway. This presence extends from the
many milk farmers through comprehensive
transport activity and production plants to a
distribution that makes the products available
throughout the country. TINE’s presence has
created a strong connection to the local community and TINE has contributed jobs and activities for many years. Such proximity creates
expectations for TINE to continue contributing
to such a social development. A sustainable
industry structure is the best security for the
milk producers’ business and for safe jobs.
TINE renewed its environmental ambition in
2008. In 2010, it was included in an environmental programme. The environmental programme contains measures that build on the
focus area of sustainable resource exploitation
within transport, packaging, food waste and
environmentally friendly energy consumption.
TINE itself will select climate-friendly transport materials and fuel. The objective is for
such solutions to also be used by partners.
Partial
Result
Achievement
20 dairies do not comply
with the terms and conditions
of the licence
Kjølemedium i gårdstank
Refrigerants in farm tanks
All CFC must be phased out. Phase-out of
HCFC will follow the authorities’ requirements
CFC as a refrigerant has been phased out.
Percentage of HCFC as a refrigerant is
6.0% (7.4% in 2009)
Waste
Residual waste will amount to no more than
20% of the total waste volume
Residual waste; 27% of the total waste
volume
Energy
Reduce net energy consumption by 12% per
tonne produced goods compared with 2003
(corrected for product mix)
Packaging
Improve utilisation of D-pak and pallets
Inbound transport/distribution:
70% of drivers on regular assignments must
have attended a course in environmentally
friendly and economical driving
Reduced net energy consumption by 6.6%
compared with 2003
Identified the potential of the 25 largest
wholesale product lines
65% of drivers have completed the course
Environmental programme
An environmental programme must be
established
An environmental programme has been
established
Environmental objectives 2011
Measure
Wastage reduction
Reduce wastage from fresh milk dairies
by 0.5 percentage points
Transport
70% of drivers on regular assignments must
have attended a course in environmentally
friendly and economical driving 70% av sjåfører
i faste oppdrag skal være kurset i miljøvennlig og
økonomisk kjøring
Transport
Start testing of dual fuel technology
(biogas) in distribution
Energy
Reduce net energy consumption by 12% per
tonne produced goods compared with 2003
(corrected for product mix)
Packaging
Optimization across the value chain. Maintain
good product protection with the lowest possible use of resources/environmental impact and
highest possible material/energy recovery
Internal insight and visibility
Establish and distribute environmental reports in
the reporting and analysis tool TINE Innsikt
Yes
Improving the efficiency of product recipes.
Courses in emission and discharge reductions. Testing of emission/discharge reducing technology
Continue courses
Delivery of four distribution vehicles
Follow-up action plans for energy reduction. Increase knowledge regarding energy
conservation
Container optimisation. Material reduction
(300/500 ml cups). Assumed raw material
savings, about 45 tonnes annually
Designate environmental coordinators in
each region
27
CO2 EMISSIONS FROM
DAIRIES COULD INCREASE
the prognosis for
greenhouse gas
emissions from TINE’s
core activities shows
that the discharges are
expected to decline by 9
per cent in 2013, compared with the reference
year 2007. However, it
is uncertain to what extent dairies may need to
use fossil fuel due to
power shortages. In
2009, the Norwegian
Water Resources and
Energy Directorate
(NVE) adopted a change
in the regulations where
the scheme regarding interruptible power will be
phased out from the
summer of 2012. TINE
could then face a situation where it is more
profitable to use fossil
fuel than electricity for
heat production, which
will result in increased
CO2 emissions. Calculations show that the CO2
emissions from dairy operations could increase
by about 28 000 tonnes
of CO2 annually, compared with 2007 levels,
if the most profitable alternative is selected.
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
As early as 1997, TINE introduced biodiesel
in some of its distribution vehicles. However,
in 2010, increased taxes on biodiesel forced
TINE to innovate in order to reach its environmental ambitions. The 23 vehicles that had so
far used 100 per cent biodiesel, returned to
the conventional diesel.
tomers’ and consumers’ ability to reduce their
amounts of food waste. In order to reduce food
waste, TINE is working to reduce product wastage in its own value chain, utilising suitable
food waste for liWestock feed and channelling
residual food waste to energy production.
In 2010, TINE entered into cooperation with
Volvo regarding purchase of four distribution vehicles running on biogas. Transnova
supports the project and contributes NOK 2
million. The vehicles will be used in the Oslo
area. The measure marks the start of a conversion to using environmentally friendly fuel
in all transport. This is how TINE will take
responsibility for reducing greenhouse gas
emissions from its transport activities.
TINE cooperates with Norsk Returkartong and
Grønt Punkt Norge (GPN) on measures that
will increase collection of beverage cartons in
Norway. The collection is increasing in scope,
thereby reducing the government packaging
fee. TINE is working on developing a packaging strategy where recyclability is an important element in selecting packaging. TINE aims
to be an initiator in developing environmentally friendly solutions and encounters challenges every year in the choice of solutions.
FROM PROBLEM TO RESOURCE
As a major producer of food, it is important
that TINE takes responsibility for reducing and
handling food waste, as well as facilitating cus-
The large dairies have implemented programs
that have already yielded excellent results.
TINE’s new, large dairies at Jæren, in Oslo and
Verdal have extensive environmental plans in
this field.
FOCUS ON WHOLESOMENESS AND HEALTH
The western world has a health problem.
Obesity and lifestyle have led to increases in
cardiovascular diseases and diabetes. Much
of this can be explained by unhealthy diet
and lifestyle. Through developing healthier
products, TINE plays a role in contributing to
better health among young people, adults and
senior citizens. In 2010, the exercise products
YT were an example of product development
related to wholesomeness and health.
TINE will take even more responsibility for
facilitating products adapted to different
population groups. Through traditional and
new communication channels, TINE will continue the work on being an active driver for
a healthier diet as well as providing good
and fact-based knowledge regarding TINE
products.
GRI-BASED REPORTING
tine has chosen to develop its reporting regarding
corporate social responsibility based on the Global
Reporting Initiative’s (GRI’s) guidelines. This is the
most widespread and leading standard for such re-
28
porting. TINE is of the opinion that the company’s reporting practice is principally in accordance with GRI’s
reporting principles, and that the reporting satisfies
level B in accordance with the guidelines.
Statistics
Subsidiaries
Addresses
GOALS MET FOR
OZONE PROTECTION
ETHICAL TRADE INITIATIVES
Increased focus on ethical trade
TINE became a member of the Ethical
Trade Initiative Norway (IEH) in March
2006 following a decision in the Group
board.
In 2000, the international media exposed the awful pay and working conditions of Mexican orange pickers on
farms in the US. TINE did not want to
be associated with such injustices, and
a binding participation regarding good,
ethical conduct in world trade was
established in FellesJuice and in TINE
Innkjøp.
Ethical trade in TINE was developed
through a group that submitted a report
that encouraged IEH members and others to take specific actions. TINE will
follow up the principles through TINE
Innkjøp, anchoring ethical trade in employees and milk producers.
IEH in Norway now has more than 120
members and the member increase
confirms the importance of the work on
ethical trade.
Involvement is also increasing in TINE.
In 2010, IEH has been passionate about
strengthening this work. Employees
from TINE Innkjøp, Diplom-Is and Agrikjøp have completed courses aimed at
intensifying the work on ethical trade. In
the future, a closer cooperation will be
developed between TINE and IEH.
TINE purchases goods such as cocoa
and sugar. There are challenges related
to ethical trade in these areas. Also in
purchasing profiling products that will
strengthen the TINE brand, for example,
sweaters for TineStafetten, it is important to set requirements for compliance
with ethical trade principles. TINE works
actively on contributing to suppliers taking responsibility in their supply chain,
and IEH’s guidelines for ethical trade
are incorporated in TINE’s purchase
agreements.
the Montréal protocol from 1987 pointed
out the need for measures to avoid
depletion of the ozone
layer in the upper atmosphere. The aim was to reduce use of chlorofluorocarbons (CFCs) or R-12.
In 1994, TINE started retrofitting farm tanks using
CFCs as refrigerant. At
the time, there were approximately 25 000 farm
tanks at the milk producers. The costs associated
with the retrofit were calculated at approx. NOK
23 000 per tank. In 2010,
the project was completed by retrofitting the last
tank with CFCs. This took
place in Kautokeino in
November.
The phase-out of farm
tanks with hydrochlorofluorocarbons (HCFCs)
follows the authorities’
regulations and objectives. As of 2010, only
topping off/maintenance
of used/reclaimed HCFC
is allowed until 2015. At
the end of 2010, the
share of farm tanks with
HCFC as a refrigerant was
down to 6 per cent, a decline from 7.4 per cent
from the preceding year.
29
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
ANNUAL REPORT FROM THE BOARD OF DIRECTORS 2010
Good operations
strengthen TINE’s earnings
TINE´s business
TINE is a food manufacturing
group that uses pure, natural raw
materials to make good, healthy
food. The parent company, TINE
SA, is a cooperative society
owned by its suppliers, the milk
producers who deliver milk to
the company. This allows TINE
to create values in a fine-tuned
interaction between the
Norwegian natural environment,
agriculture and the market.
OPERATING RESULT
by business segment
Million NOK
2010
2009
Tine’s domestic dairy
1,144
977
42
43
Tine’s international dairy
Other business activities*
14
-79
Group eliminations
-11
-30
1,189
911
TINE
* Excluding goodwill and amortisation
30
TINE’s paramount goal is to ensure that the
owners achieve the best possible milk price
over time. TINE’s products must represent
value for its consumers and customers, while
also ensuring sustainable food production for
the greater community.
TINE primarily sells its products in Norway,
but the Group is also growing internationally.
TINE’s business activities are represented
throughout Norway, with headquarters in
Oslo. Most of the international activities take
place in the US, Canada, Sweden, Denmark
and the UK.
TINE’s business consists of domestic dairy
operations, international dairy operations and
other business activities.
TINE’s development in 2010 was satisfactory.
The Group’s operating income was NOK 18.9
billion, an increase of NOK 142 million from
2009. The operating profit was NOK 1189
million, an increase of NOK 278 million from
2009.
The operating result is influenced by a positive
non-recurring effect of NOK 78 million related
to changes in the rules for contractual pension
(AFP). Furthermore, the accounts have been
charged with NOK 39 million for write-down
of fixed assets related to production of marine
oils and the decision to phase out cheese pro-
duction in Ørland in South-Trøndelag County.
The 2009 accounts were charged with approximately NOK 80 million in non-recurring
items, mainly related to write-down of assets
in the Swedish ice cream business, as well as
fixed assets related to the Norwegian dairy
operations.
TINE´s domestic
dairy operations
TINE’s domestic dairy operations are carried out in 41 dairy companies, two central
warehouse facilities and four terminals spread
throughout the country; all organised under
the TINE SA umbrella. TINE processed a total
of 1.25 billion litres of milk in 2010 (1.25 billion litres in 2009). The largest product groups
were fresh milk with 385 million litres (388
million litres in 2009) and cheese with 70 700
tonnes (70 100 tonnes in 2009).
Revenues in TINE’s domestic dairy operations
grew by about 3.5 per cent, to NOK 15.7 billion. During the past year, TINE experienced
good growth development in both established
products and new product launches.
The operating profit for domestic dairy operations was NOK 1 114 million, an improvement
of NOK 168 million from 2009. The main reason for the improvement lies in better utilisation of milk and reduced operating expenses.
After record high pension costs in 2009, costs
Statistics
Subsidiaries
Addresses
returned to a more normal level in 2010. In
addition, purchasing costs for other factor
inputs were somewhat lower in the first half
of the year, while the price of milk as a commodity increased by 3.2 per cent from 2009
to 2010.
The most important product areas for TINE’s
domestic dairy operations are fresh milk,
white cheese and cooking ingredients.
Yoghurt is also becoming an increasingly
important area. The work to create growth in
these areas therefore has high priority.
Measured in volume, there was a slight decline in retail sales of milk-based beverages
compared with 2009. Although flavoured milk
beverages experienced growth in 2010, this
cannot offset the decline within fresh and cultured milk.
There has been an increase in the number
of manufacturers offering white cheeses in
Norway in recent years, including private labels. In spite of this, TINE’s cheese sales have
shown positive development in 2010. Both
Norvegia and Jarlsberg have further strengthened their positions.
Yoghurt sales in Norway have been rising
in recent years, and this trend continued in
2010. There are a number of yoghurt brands
offered in the Norwegian market, including
several foreign players, and yoghurt imports
have increased during the course of the year.
Sales development for TINE’s yoghurts in
2010 has been weaker than expected.
2010 was a very positive year for dairy-based
cooking ingredients. The trend toward more
interest in “food made from scratch” resulted
in a significant boost for traditional cooking
ingredients such as butter, sour cream and
cream.
TINE’s sales of brown cheese also showed
positive development in 2010. Sales of TINE’s
brown whey cheese accounted for the biggest contribution to the positive develop-
ment. However, there are challenges related
to the supply/demand balance in the market
for goat’s milk. The availability of milk is currently greater than the demand. In 2010, TINE
worked to draw up a new strategy for goat’s
milk, addressing the entire value chain from
raw material to sales and marketing. TINE’s
final strategy for goat’s milk will be adopted
in 2011.
TINE wants to offer a wide range of organic
dairy products while ensuring profitable, sustainable production. Toward this objective,
TINE aims for six per cent of the received milk
to be organic by 2015. However, the Norwegian market for organic products has stagnated. TINE’s sales of organic products have
been lower than expected. TINE wants to ensure profitable and sustainable production of
organic products both for primary producers
and industry.
Structural changes and streamlining
The Group board works continuously to ensure that TINE is a competitive player within
its core areas. TINE depends on efficient,
streamlined operations to strengthen future
competitiveness. A key trend in today’s food
industry is toward consolidation into larger
units. This also applies to TINE.
The comprehensive investment program
adopted by TINE is now being implemented.
The program includes building a new dairy
plant at Jæren, expansion of the Oslo dairy
plant, as well as construction of a fat processing plant in Verdal. The comprehensive
investments in plants mean an increased need
for financing, which is being secured through
increased borrowed capital and retained earnings. The progress of all three projects lies
within the adopted time and cost frameworks.
The plan calls for completion of the new dairy
at Jæren in the autumn of 2011. The dairy
will mainly produce white cheese, butter and
margarine, and will also refine whey. The four
dairies at Voll, Klepp, Nærbø and Vikeså will
be phased out as a result of the new plant. For
GOOD OPERATIONS
STRENGTHEN TINE’S EARNINGS
“ Several good market activities
helped strengthen TINE’s position within several categories in
2010. Norvegia, Go’Morgen and
TINE’s cooking ingredient products such as cream, sour cream
and butter made especially
strong contributions to TINE’s
improved performance.
“ The new line of workout food
and beverages, YT, has been
well-received by consumers interested in fitness. During the
course of the year, the YT product line has carved out a position among athletes and other
consumers.
“ TINE’s competitiveness depends
on efficient and streamlined operations. The continuous focus
on reducing costs contributed
to TINE’s improved financial
performance.
“ The balance between milk production and milk employed in
the industry has been satisfactory in 2010.
“ TINE’s ownership form and corporate structure were adapted
to the new Cooperative Societies Act during the course of the
year. TINE BA was re-registered
as TINE SA.
“ The Group’s corporate structure
was streamlined by the merger
of the five regional dairy companies with TINE BA to become
TINE SA.
” The wholly-owned subsidiary
Diplom-Is AS sold the Swedish
and Danish ice cream business
during the course of 2010. This
also contributed to the improved 2010 result.
31
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
this reason, an agreement has been signed in
2010 for sale of the Voll and Klepp dairies.
Jarlsberg is currently TINE’s largest export
article. About 60 per cent of the Jarlsberg produced in Norway is exported. Jarlsberg is also
produced in the US and Ireland for sale in the
international market. Processing, refining and
packaging of other cheese also take place at
TINE plants in the UK and in Sweden.
The new fat processing plant in Verdal is expected to be complete in 2011. The new whey
refining plant is an important element in the
realisation of TINE’s strategy. The whey will
mainly be dried and utilised in food products.
The expansion of the Oslo dairy plant entails
a new warehouse for convenience products,
packaging and factor inputs. Expected completion of the plant is scheduled for the summer of 2012.
To ensure future competitiveness, TINE depends on continuous focus on efficient and
streamlined operations. New and previously
initiated cost reductions in 2010 contributed
to performance improvement in the Group.
Introduction of a voice-controlled picking
system at several of TINE’s distribution warehouses, as well as increased use of electronic
orders, are examples of specific measures that
contributed to more efficient operations.
TINE’s international
dairy operations
TINE’s goal is for an increasingly larger share
of revenues to come from dairy operations
and sale of specialty cheeses in markets outside Norway. On this basis, TINE has subsidiaries in Sweden, Denmark, the UK and the US
that work actively to achieve this objective.
BRAND EXPORT
Tine’s international dairy operations had a 6.5
per cent decrease in operating income, from
NOK 2.0 billion to NOK 1.8 billion. The operating profit in 2010 was NOK 42 million, excluding goodwill and amortisation of excess value,
a decline of NOK 1 million from 2009.
The US and Canada
Norseland Inc. is a wholly-owned subsidiary
of TINE located in the US. The company sells
TINE’s cheeses in the US and Canada, and
also distributes cheese from Ilchester Cheese
Company Ltd. and other speciality cheeses in
the US market. The sale of Jarlsberg wheels
(whole, round cheese) in the US market has
developed much better than expected, and
the Jarlsberg brand has further consolidated
its position in 2010. Sales of TINE’s cheeses
showed a positive trend in 2010, while the
sale of cheese sold by Norseland on behalf of
other manufacturers has declined somewhat.
The UK
Norseland Ltd. is a wholly-owned subsidiary
of TINE located in the UK. Norseland produces, markets and distributes Ilchester brand
products and TINE specialty cheeses in retail
grocery chains in the UK. Throughout 2010,
the company strengthened TINE’s position
and sales from TINE´s international dairy
Brand export
Total sales
Figures in tonnes
2010
2009
2010
2009
USA
6,978
7,080
17,302
18,008
Australia
1,735
1,725
2,225
2,028
Canada
1,412
1,399
1,563
1,542
Storbritannia
898
793
6,369
5,868
Sweden / Denmark
747
552
12,420
12,014
Other markets
Totals
780
755
1,287
1,208
12,551
12,303
41,165
40,667
Brand export consists of sales out of Norway and total sales are sales to the consumer/end market of all brands
32
Statistics
Subsidiaries
Addresses
in the UK cheese market, including improved
market access for Jarlsberg. Nevertheless,
the UK business did not perform as expected
in 2010 in a market characterised by tough
competition. In spite of this, sales of Jarlsberg
showed positive development and exports
of Ilchester products increased during the
course of the year.
Scandinavia
Wernersson Cheese AB is a wholly-owned
subsidiary of TINE with offices in Sweden and
Denmark. The company specialises in maturing and processing cheese. Wernersson
Cheese contributes to strengthening TINE’s
position in the Scandinavian cheese market,
mainly through sales and marketing of Jarlsberg and TINE Gudbrandsdalsost. In 2010,
marketing campaigns were carried out for
Jarlsberg in connection with a relaunch of the
Jarlsberg wheel in the Swedish market. This
led to increased brand recognition and positive sales development.
Other markets
Other exports of TINE’s products, mainly
Jarlsberg, take place through independent
distributors and partners in countries such as
Australia, Russia and Germany.
Other business
activities
TINE’s other business activity primarily includes production and sale of food products
such as juice, ice cream, fresh ready-to-eat
dinners and marine products. Most of these
activities take place in wholly-owned or
partly-owned subsidiaries such as FellesJuice
AS, Diplom-Is AS, Fjordland AS and Salmon
Brands AS.
Other business activity reduced the operating
income from NOK 3.3 billion to NOK 3.2 billion in 2010. Sale of the ice cream business in
Sweden and Denmark was the most important
reason for the decline in operating income,
while both Fjordland and Salmon Brands saw
growth in their revenues.
Operating profit for other business activity
was NOK 14 million, excluding goodwill and
amortisation of excess value, an improvement
of NOK 94 million from 2009.
Diplom-Is is a wholly-owned subsidiary of
TINE. During the course of 2010, Diplom-Is
sold the Swedish and Danish ice cream business. The most important accounting effects
of the sale of the Swedish business were included in the 2009 accounts, while the remainder is included in the 2010 accounts. As
part of improving the efficiency of the operation, in 2010 Diplom-Is also shut down or decided to shut down five of its own warehouses
in Norway. The domestic market for ice cream
has been weak, but Diplom-Is has maintained
its position in the market. A focus on cost
reduction and more efficient operations has
yielded positive results in 2010.
INCOME IN THE TINE
GROUP 2010
Percentage
Liquid dairy products
44.8%
Solid dairy products
36.5%
Ice cream and desserts
7.8%
Juice, fruit drinks and water 4.7%
Convenience products
3.4%
Other products
2.8%
FellesJuice is a wholly-owned subsidiary of
TINE. The company sells juice and other
non-milk-based beverages. The most familiar
brand is Sunniva. The total juice market declined somewhat in 2010 and Sunniva’s share
was reduced in a market characterised by
stiff competition from Norwegian and foreign
players. The operating profit also declined
somewhat compared with 2009.
TINE owns 51 per cent of Fjordland. In 2010,
the company saw revenue growth, but a reduction in operating income compared with
2009. The main reason was reduced margins
on the sale of fresh convenience food. In
2010, to meet the steadily increasing competition, several new product concepts were
introduced within fresh convenience food and
dairy.
TINE owns 51 per cent of Salmon Brands.
Salmon Brands sells SALMA, fresh salmon
fillets, and the company is in the process of
building Norway’s first brand within fresh
fish. In 2010, the company achieved nationwide distribution of SALMA. The growth in
33
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
volume in 2010 was considerable, with Norwegian grocery retailers accounting for most
of the increased sales. For the first time, the
business shows a positive contribution to the
operating profit on an annual basis. SALMA
is also distributed in Sweden, France and
Germany.
Balance sheet
As of 31 December 2010, TINE’s balance
sheet shows an increase of nearly NOK 1.3
billion from the end of 2009.
Finances and
capital structure
Financial result and tax
Net financial items increased from NOK 63
million in 2009 to NOK 104 million in 2010.
Net interest cost was reduced from 2009 to
2010 in spite of an increase in net interestbearing debt. This is due to a lower interest
rate level and capitalisation of NOK 26 million
in interest related to the ongoing development
projects.
TINE uses currency hedging for parts of factor input imports, mainly purchases in EUR, as
well as part of the currency revenues, mainly
denominated in USD. In 2009, this resulted in
a net currency gain of NOK 38 million, while in
2010, it resulted in a currency loss of NOK 24
million. The increase in other financial expenses can mainly be explained by the realisation
of forward rates with negative market value.
Tax costs for 2010 were NOK 176 million. In
the autumn of 2010, Diplom-Is in Norway was
successful in a tax dispute that resulted in a
reversal of NOK 20 million in previously allocated tax. In addition, the sale of the Swedish
ice cream business resulted in losses without
a tax-reducing effect being considerably reduced in 2010. These two matters were the
main causes for reducing the effective tax rate
from 20.5 per cent in 2009 to 16.2 per cent
in 2010.
TINE’s annual profit after tax amounted to
NOK 910 million, an improvement of NOK 236
million from 2009.
34
TINE is undergoing a period of several large
investments related to production and distribution. In 2010, TINE has inWested for a total
of NOK 1.7 billion. Throughout the year, work
has been done on financing for the adopted
structural investments, and a total of NOK 900
million in new long-term loans was raised in
2010. The remainder of the bond loan from
2005 was repaid over the course of 2010 with
NOK 219 million. At the same time, the drawing facility was reduced by NOK 750 million.
Cash flow
Cash flow from operations contributed NOK
1 734 million, an increase of NOK 277 million from 2009. This improvement was largely
due to the strengthened operating result and
an improvement in working capital through
reduction of accounts receivable and inventories. Net cash flow to inWestment activities
was NOK 1 685 million, an increase of NOK
698 million from 2009. This was entirely related to the significant investments carried
out by TINE. Disbursed subsequent payment
in 2010 was NOK 422 million, an increase of
NOK 246 million compared with 2009.
Together, this resulted in an increase in net
interest-bearing debt (interest-bearing debt
reduced by bank deposits, cash in hand and
money market funds) of about NOK 335 million from the end of 2009.
Other matters
The assessments made in the consolidated
and company accounts for 2010 are based
on the expectations for future earnings and
business structure that existed at the time the
financial statements were submitted. If these
expectations change, value estimates and assessments may also have to be changed.
No circumstances have arisen after the end
of the accounting year that are of importance
Statistics
Subsidiaries
Addresses
for the assessment of TINE SA or TINE beyond
those that appear in the financial statements
and associated notes.
The Group board confirms that the financial
statements have been prepared on the basis
of the going concern assumption, and that the
conditions for this are in place.
The retail chain negotiation case
In 2005, the Norwegian Competition Authority notified TINE SA (then TINE BA) regarding an administrative fine of up to NOK 45
million for violation of the Competition Act.
The assertion was that TINE SA had abused
a dominant position. The final decision from
the Norwegian Competition Authority came in
February 2007 and was in line with the prior
notification.
In 2007, TINE SA brought action against the
State, represented by the Norwegian Competition Authority, asserting that the decision should be repealed. Oslo District Court
found in favour of TINE SA in the spring of
2009. The Norwegian Competition Authority
appealed the decision to Borgarting Court of
Appeal, asserting that the original decision
should be upheld. Borgarting Court of Appeal
found in favour of TINE SA in the autumn of
2010 in two of the Norwegian Competition
Authority’s allegations regarding violation of
the Competition Act, while the Court found in
favour of the Norwegian Competition Authority in one of the allegations concerning abuse
of a dominant position. At the same time, the
Court of Appeal reduced the administrative
fine to NOK 30 million. Parts of the Court of
Appeal’s decision have been appealed to the
Supreme Court of Norway, as TINE SA believes no proof has been furnished regarding
violation of the Competition Act. As a result
of the appeal hearing and awaiting the final
decision, no accounting provisions have been
made for this matter.
Financial risk
TINE’s financial risk is related to uncertainty
regarding changes in interest rates, exchange
rates, share prices and liquidity. Our objective is to reduce financial risk. A financial policy has been prepared for TINE that provides
guidelines for how this type of risk must be
handled. TINE SA handles this task on behalf
of the entire Group.
PRICE TO MILK PRODUCERS
NOK/litre
5.0
0.27
4.5
0.25
0.16
4.0
0.07
0.10
0.17
3.5
3.51
3.54
3.55
3.66
3.75
2004
2005
2006
2007
2008
0.33
4.07
4.20
2009
2010
3.0
2.5
TINE is exposed to changes in exchange rates,
particularly vis-à-vis EUR, USD, SEK and GBP.
Through its international business, TINE receives net payments in USD, while import
of various factor inputs and purchase of machines and equipment entails net disbursements in EUR. Increased international activity
with sales across national borders contributes
to increasing this exposure. However, TINE SA
has entered into forward contracts and other
agreements in order to reduce the Group’s
currency risk.
2.0
1.5
1.0
0.5
0.0
TINE Milk Supplies
Backpayment
TINE is exposed to changes in the interest
rate level, since the Group’s debt consists of
a combination of loans with floating and fixed
interest rates. TINE SA manages the Group’s
interest risk through the use of various interest rate hedging instruments.
A credit item has been included in TINE’s accounts for pension assets through the pension
fund MP Pensjon. The assets in the pension
fund are inWested in shares and bonds, and
our accounts are therefore also exposed to
risk linked to fluctuations in the share and
bond markets.
TINE’s customers are wholesalers and individual customers in all customer segments.
Their financial capacity is regarded as good,
which is apparent from the low level of losses
on receivables over many years. TINE has not
found it necessary to insure against losses on
its outstanding receivables.
TINE’s liquidity is considered to be good. The
loan potential is not fully utilised. The previously mentioned inWestment program will
increase TINE’s interest-bearing debt in the
years ahead.
35
TARGET PRICE DEVELOPMENT DURING
THE VARIOUS AGREEMENT PERIODS
Per litre
4.7
4.5
4.3
4.1
3.9
3.7
0
1. 4
h.
0
2. 5
h.
0
1. 5
h.
06
2.
h.
0
1. 6
h.
0
2. 7
h.
07
1.
h.
0
2. 8
h.
08
1.
h.
0
2. 9
h.
09
1.
h.
1
2. 0
h.
10
h.
2.
1.
h.
04
3.5
4.54 < -Target price
Target price increase during the period 04.10 NOK 0.77
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
Overall, TINE’s financial risk is considered
moderate.
TINE Råvare
(TINE Milk Supplies)
Allocation of net profit for 2010
Considerable disbursements in the inWestment program related to new plant structure
continued in 2010 and are expected to peak
in 2011. This entails increased tied-up capital
in the Group, which is financed both through
increased loan financing and through retained
profits. On this basis, the Group board has
adopted a subsequent payment policy where
the goal is for between 50 and 65 per cent
of the annual profit to be allocated for subsequent payment. The annual allocation will be
affected by the level of future years’ investments. The goal for at least 40 per cent equity
will be prioritised ahead of the subsequent
payment policy.
The annual result for the parent company TINE
SA shows a net profit of NOK 894 million.
The Group board suggests the following allocation (NOK million):
Subsequent payment to milk producers
480.3
Allocated to subsequent payment
340.0
Allocated to other equity
73.4
Total allocated amount
893.7
This gives a total subsequent payment of NOK
0.33 per litre of milk received. An allocation to
the subsequent payment requires a decision
to amend the articles of association in the
2011 annual meeting. The board’s proposal is
contingent upon such a decision.
Price paid to the milk producer
The development in price to milk producers
has been as follows:
NOK/LITRE
2010
2009
2008
from tine råvare
4.20
4.07
3.75
subsequent payment
0.33
0.27
0.16
total
4.53
4.34
3.91
*)
36
Since 2004, TINE’s raw material handling activities have been organised in TINE Råvare,
which in terms of administration and accounting, is separate from the other parts of
TINE. TINE Råvare is responsible for activities
related to raw material handling from farm
cooler to the quoting point where the milk is
invoiced to the raw milk customer that has ordered milk. The main tasks include advisory
services, transport to the dairies and quality
control of the milk, payment to the producer
and invoicing of the raw milk customers. TINE
Råvare prepares its own accounts and reports, which are submitted to the Norwegian
Agricultural Authority (NAA).
During 2010, TINE Råvare received 1.46 billion litres (1.46 billion litres in 2009) of cow’s
milk and goat’s milk from its suppliers. Of
this, 210 (199) million litres were sold to
other raw milk customers. The target price
for the 2010/2011 agreement year has been
stipulated at NOK 4.54 per litre of milk, an increase from NOK 4.41 per litre of milk for the
2009/2010 agreement year. In recent years,
the target price has shown a positive development. This is the result of the annual pricing in
the Agricultural Agreement.
In 2010, the receipt of goat’s milk has somewhat exceeded the demand.
Framework conditions
It is important for TINE that there are stable
framework conditions for dairy production
and dairy operation in Norway. A good dialogue with national authorities is necessary in
order to take part in shaping and predicting
future framework conditions. Furthermore,
it is important to have insight in international
processes. More intensive negotiations have
: 20110124-LAL. Nielsen ScanTrack, Dagligvare, Diverse varegrupper, verdi og volumandel, Percentagepoengs endring, 2009
og 2010 per 02.01.2011. Desserter er en sammenstilling av basene desserter kjølte, desserttilbehør, desserter tørre/våte samt kakekrem og
-fyll.
source
Statistics
Subsidiaries
Addresses
been indicated for the purpose of finalising the
ongoing 2011 WTO negotiations.
The Agricultural Agreement
The target price for milk was increased by
NOK 0.13 from 1 July 2010. Furthermore, a decision was made to introduce an import duty
percentage on consumer milk, effective from
1 January 2011. Further, a new Storting white
paper is planned in the spring of 2011 regarding the Norwegian agriculture and food policy.
The market scheme for milk
No significant changes were made to the market scheme for milk in 2010. New regulations
relating to milk quotas have been submitted
for consultation and will likely be stipulated by
1 July 2011.
International
There has been little progress in the negotiations in the World Trade Organisation (WTO)
regarding a new multilateral agreement. Norway has negotiated with the EU under the
EEA Agreement regarding expanded trade of
agriculture products. The result of the negotiations was that the import quota for cheese
from the EU was increased by 2 700 tonnes
to 7 200 tonnes, while the export quota for
cheese to the EU was increased by 3 200
tonnes to 7 200 tonnes. The quota increase
is expected to take effect over the course of
2011. The total import of cheese from the EU
to Norway in 2010 was 9 500 tonnes (gross),
while the total cheese market in Norway in
2010 was 63 200 tonnes*. It is expected that
the increased import quotas will lead to increased competition from foreign players.
Innovation, research
and development
Research and development is strategically important for TINE. The work is essential for innovation and growth, and for efficient and responsible production. The effort is directed towards
building knowledge, providing insight and developing product solutions in areas where innovation can contribute to driving TINE forward.
In 2010, TINE prioritised developing and implementing new technology that increases milk utilisation. TINE works along the entire value chain
with innovation, asset development and quality
assurance. TINE will make increasing use of research to further enhance the extent of innovation and provide the consumer with the option
of choosing a correct and healthy diet.
TINE has a large research and development
environment, in which 20 employees hold
doctorates. This makes TINE an important
partner for other research communities in
Norway. TINE participates in more than 30 research projects with external partners.
DISTRIBUTION women/men
Employees
2010
Management
Women
Men
Total
Women
Men
Total
TINE East
297
1,025
1,322
5
14
19
TINE South
258
383
641
6
11
17
TINE West
195
478
673
2
9
11
Tine Central Norway
235
558
793
4
11
15
85
230
315
4
9
13
TINE North
TINE Joint operations
TINE SA
Subsidiaries
TINE total
548
360
908
16
27
43
1,618
3,034
4,652
37
81
118
332
512
844
14
27
41
1,950
3,546
5,496
51
108
159
The number of senior managers in TINE joint operations are executive vice presidents and senior managers who report to a
senior vice president
37
WORK INJURIES
Lost-time accidents
140
136
80
60
40
20
2008
2009
2010
WORK INJURIES
Accidents – Lost time injury (LTI) rate
13.5
13.4
12.7
12
10
8
6
4
2
0
TINE as
a corporate citizen
gests relevant climate measures vis-à-vis the
milk producers.
124
100
14
Income statement
Balance sheet
Notes
Auditor’s report
135
120
0
CEO
This is TINE
The brand
2008
2009
2010
LTI rate is calculated as follows:
The number of injuries causing absence per million
hours worked
Corporate social responsibility
TINE has an impact on social development
and wants to contribute to welfare and value
creation where the Group operates. By taking an active responsibility for its social and
environmental surroundings, TINE will be able
to increase value creation. In 2010, a strategy
was prepared for carrying out TINE’s corporate social responsibility. TINE will create
values for both owners and society at large
by exercising corporate social responsibility
throughout the value chain, with particular
emphasis on Norwegian milk, sustainable resource utilisation and correct nutrition. The
strategy will increase the company’s competitiveness, contribute to financial value creation
and support sustainable development.
Environment
To reach its goals, TINE depends on high quality agricultural products. Therefore, TINE must
help ensure a clean environment and sustainable use of nature’s resources. TINE will seek to
minimise the use of non-renewable resources
and focus on recycling and optimal resource
utilisation.
TINE has a vision that a future increase in
Norwegian dairy production will take place
without an increase in emissions of greenhouse gases per kilo of produced milk. With
its expertise and advisory service, TINE sugABSENCE DUE TO ILLNESS,
TINE’s influence on the external environment
is primarily related to its transport activity
and to energy consumption in the production
process. TINE’s goal is to reduce emissions
of greenhouse gases by 30 per cent from the
2007 emissions level by 2020. At the end of
2010, the emissions had increased by 7 per
cent (compared with 2007). The increase in
2010 is mainly due to increased use of fossil
oil for heat production at the dairies. In turn,
this can be related to TINE’s agreements regarding interruptible power. A conversion to
bioenergy and district heating in the production process as well as the introduction of biofuels in transport will be important measures
for TINE to reach its environmental objectives.
In 2009, the Norwegian Water Resources and
Energy Directorate (NVE) adopted a change
in the regulations whereby the interruptible
power scheme will be phased out from the
summer of 2012. It must be expected that the
costs related to heat production at the dairies
will increase as a result of this change.
Reference is also made to page 25 (The corporate citizen) for further information regarding
TINE’s environment work and environmental
impact.
Organisation and people
One of TINE’s paramount goals is to be an
attractive employer by providing employees
staff turnover and lost-time injuries in TINE group
Absence due to
illness (%)
Turnover (%)
LTI rate*
TINE East
8.36
2.23
15.97
TINE South
6.51
2.91
15.09
TINE West
7.72
2.50
16.00
Tine Central Norway
7.24
1.86
9.91
TINE North
6.80
4.09
10.30
TINE Joint functions
4.85
1.72
1.39
All TINE dairies
7.05
2.33
11.78
Other subsidiaries
5.82
7.64
17.17
TINE total
6.83
3.14
12.71
* The number of injuries leading to absence per million hours worked
38
Statistics
Subsidiaries
Addresses
with both professional and personal opportunities for development. Furthermore, the
employees must feel that they are treated with
respect and fairness.
TINE relies on motivated and enthusiastic employees with correct expertise to achieve its
business ambitions. Therefore, development
of expertise is one of the Group’s focus areas.
TINE must expect increased competition as
regards attracting labour in the years ahead.
At the end of 2010, TINE had 5 496 employees, while TINE SA had 4 652. There have
been no changes in corporate management
in 2010. Comparable figures for 2009 include
the merged dairy companies.
35.5 per cent of TINE’s employees are women. The percentage of women in management
positions in TINE was 32.1, while the percentage of women in management positions in the
regions was 28.0. The percentage of women in
Group management in 2010 was 37.5.
Management and employee cooperation
The HR strategy towards 2020 includes the
interaction between management, employees
and employee representatives. TINE will maintain a good, inclusive dialogue with employees and base the cooperation on respect for
their role and for the basic agreements, and
with considerable emphasis on developing
expertise.
Mobility and retraining
TINE has a good model for retraining as well
as a scheme to ensure fair treatment of the
employees who have been identified for retraining. A review of this scheme as well as the
retraining model has been initiated in 2010.
In 2010, a new agreement has been signed
between TINE and the employees regarding
organisation of employee representatives in
the Norwegian part of the Group. The agreement describes organisation of the management/employee cooperation, including the
role of the working environment committees
(AMUs). TINE’s management meets with employee representatives in the Group’s works
council.
Equality
TINE’s Code of Conduct directs us to reject
any form of harassment or discrimination
based on gender, religion, race, national or
ethnic origin, cultural background, social affiliation, disability, sexual orientation, marital
status, age or political views.
Furthermore, Group employee representatives attend the Group management meeting
for discussion of certain issues, while regional
employee representatives meet with the regional management teams. Employees are
also represented in management teams affiliated with operations and supply.
TINE practises equal wages between genders
and has in 2010 also carried out a number of
analyses to ensure compliance with this principle. Significant differences have not been
identified, but somewhat higher wages for
men compared with women in most position
levels were, however, noted throughout. TINE
has an equality contact person who deals with
e.g. gender equality. Equality in TINE also concerns diversity and the belief that representation of both genders, ethnic and age groups
and disabled persons results in an improved
ability to promote innovation and earnings.
In 2010, TINE’s annual employee survey, TINE
Trivsel (job satisfaction), was carried out for
the seventh time. The survey shows that there
is a positive atmosphere in the organisation
and that the relationship between management and employees is generally good.
See also the summary on page 21, TINE’s business organisation.
Approximately 80 per cent of the employees
in TINE SA are organised in a trade union.
Through such membership, representatives
have been elected to the board. The employees
are represented by four members on the board.
None of the employees in TINE’s subsidiaries
in the US or the UK are currently organised in
a trade union.
Ethics
TINE’s Code of Conduct highlights the attitudes and conduct which TINE expects from
each employee with regard to respect, integrity and loyalty. In 2010, TINE employees have
also worked actively on TINE’s values and the
enterprise’s ethical guidelines.
Based on our Code of Conduct, TINE has
also adopted guidelines for whistle-blowing
and appointed a special contact person for
whistleblowers, the notification officer. Important principles in the notification rules
are non-discrimination, anti-corruption, good
business ethics and the duty and right to
speak up about breaches of the law and the
TINE Code of Conduct.
Health, safety and the environment
Healthy and stable employees in a good working environment are a precondition if TINE is to
have efficient production and the right quality
in all parts of our value chain. The work must
be organised such that our employees are not
exposed to harmful physical or psychological
strains, and so that no one is injured or becomes ill because of their work. TINE’s vision
is that injuries that lead to absence must be
reduced to zero. It is the Group management’s
responsibility to determine overall targets and
priorities for the HSE work and to follow them
up. One of the requirements TINE must abide by
is the provision in the Working Environment Act
concerning facilitation of physical activity for
our employees. TINE cares about its employees’ physical and mental health and is continually expanding its physical activity programs.
TINE has well-developed support tools. The
communication and interaction between management, safety delegates and employee representatives is generally good.
Absence due to illness
There is a positive trend in absence due to ill-
39
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
ness in TINE, but it is still too high. In 2010, it
was 6.8 per cent, which is a decline from 7.1
per cent in 2009.
Work accidents
TINE’s overall target is zero work accidents.
In 2010, 124 lost-time injuries were registered
(lost time injury (LTI) rate: 12.7) compared
with 135 registered injuries in 2009 (LTI rate:
13.5). There has been a reduction in the number of injuries in recent years, however. There
are still too many incidents.
Long-term sick leave accounts for about twothirds of absence due to illness. Statistics also
show that 15-20 per cent of TINE’s employees
account for about 80 per cent of the overall
absence.
In 2010, absence due to illness in TINE SA was
7.1 per cent (7.4 per cent in 2009).
The work on reducing absence due to illness
requires a long-term perspective. Work is
constantly underway to strengthen cooperation with the Norwegian Labour and Welfare
Administration (NAV) and the occupational
health service. We are also working purposefully to enhance our managers’ and employees’ knowledge about preventive measures,
such as more stringent compliance with the
regulations and follow-up of people on sick
leave, in line with the national regulations for
a more inclusive working life.
In 2010, the regional working environment
committees (RAMUs) were replaced by a
Group working environment committee (KAMU), which is a result of the changed corporate structure.
Improvements require stringent practice of
the regulations and clear consequences in
the event of breaches. Therefore, TINE emphasises training in correct use of protective
equipment and other safety devices. All units
in TINE have HSE on the agenda in their management meetings, all accidents resulting in
absence must be inWestigated and employees
must be notified of accidents through internal
information channels. A comprehensive and
correct registration of near-misses is an important precondition for reducing the number
of working accidents. Measures have been
implemented that will increase registration of
near-misses, which has contributed positively
in 2010.
In 2010, 95 lost-time injuries were registered
in TINE SA (LTI rate: 11.8) compared with 108
in 2009 (LTI rate: 13.4).
TINE´s OWNERSHIP ORGANISATION
Member societies (239)
Regional meetings (5)
Annual Meeting
TINE SA
Control committee
Council
Group board
Regional boards
TINE East, TINE South,
TINE West, TINE Central
Norway, TINE North
40
Statistics
Subsidiaries
Addresses
Corporate governance
At the end of 2010, TINE SA had 14 841 members affiliated with 239 member societies.
Within the framework of agricultural policy
and markets, TINE will seek to achieve the target price on milk stipulated in the Agricultural
Agreement. The Group board emphasises that
the company must be administered and managed according to good paramount principles.
For TINE, corporate governance concerns
how TINE, through constructive dialogue, will
achieve value development for owners, create
trust with other stakeholders as well as ensure
that the Group board receives sufficient information on the activities. An important part
of corporate governance regards establishing
and maintaining systems and procedures that
ensure compliance with regulations, standards and our own ethical guidelines.
The Norwegian Code of Practice for Corporate Governance (NUES) stipulates principles
and guidelines that contribute to clarifying
responsibilities and authority in larger companies. The recommendation has been drawn
up for companies that are listed in regulated
markets in Norway, but the Group board decided in 2010 that TINE will follow the principles of this recommendation insofar as they
are suitable for TINE’s business organisation
and ownership.
The cooperative as
an ownership form
Through the cooperative organisation, TINE’s
owners gain access to markets and are ensured
their products will be sold. The organisational
structure has a long tradition, both in Norway
and internationally. It provides the owners with
a long-term perspective and stability.
As a result of the new Cooperative Societies
Act, the annual meeting agreed in 2010 to
re-register TINE BA as a cooperative society
(SA) and adapt the bylaws in accordance with
the guidelines stipulated by the Cooperative
Societies Act. The Act permits alternative financing solutions for a cooperative, where
individualised equity from the owners and the
establishment of a subsequent payment fund
are also permitted. The board has initiated
a process with the objective of considering
proposals regarding the establishment of a
subsequent payment fund at the 2011 annual
meeting.
The general meetings in the five regional dairy
companies and TINE BA’s annual meeting voted unanimously to merge the dairy companies
and continue the activities in TINE SA with five
regional departments. In the new group structure, the regional boards are part of TINE’s
owner organisation. They are nominated by
and report to the Group board, with the exception of the employee-elected members,
who are elected by the employees in separate
elections.
Changing business
environment
Over the next few years, a number of market
and political processes will have significant
impact on TINE’s business.
In later years, price differences on dairy products between the international and Norwegian
market have grown. This has resulted in prices
in the Norwegian market that are attractive for
foreign players. In recent years, large international players have established themselves in
the Norwegian market. This is a challenge for
TINE, which is operating in a high-cost country like Norway, with demanding natural conditions for food production and an ambitious
Norwegian agricultural policy with the objective of promoting agriculture throughout the
country.
TINE faces increased competition from the
four large players within the grocery trade,
which are also important customers. They
have moved into TINE’s product areas and
pose a challenge through vertical integration and launching their own private labels.
The grocery retailers are adding ever more
alternative products to choose between and
expect important suppliers such as TINE
to take greater responsibility for category
development.
Changing framework conditions in Europe
and particularly the phasing out of the EU’s
milk quota system from 2015, will most likely
lead to increased European dairy production
in areas with favourable natural conditions.
This could contribute to a European market
that will experience extensive fluctuations in
the price of milk. An international market with
extensive fluctuations could also challenge the
Norwegian framework conditions. Norwegian
agricultural policy is currently under review,
and several clarifications as regards future
framework conditions are expected over the
course of 2011.
In the consumer market, there has been a
change in demand, from standard products to
an increased focus on low price and/or quality. More and more customers are moving
away from standard products to a more differentiated product range with a diversity of
low price and premium products.
Global and national environmental challenges
impact TINE’s business. New national and international environmental measures and regulations must be expected to affect the framework conditions for TINE’s owners’ dairy
production as well as TINE’s industrial production. It must be expected that the costs connected with energy, environmental emissions
and pollution will increase. Businesses that
succeed in reducing their emissions will thus
improve their competitiveness. A constantly
growing global population in combination with
environmental challenges could limit the opportunities for the world’s production of food.
This could result in geographical changes in
the world’s arable areas and increase the importance of national self-sufficiency.
41
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
THE GROUP BOARD
Outlook
In principle, the market cycles have little impact on the food industry. Historically, it has
experienced relatively stable growth in demand in comparison with other industries.
In line with the ongoing capital investments,
TINE’s funding needs will grow over the next
two to three years. There are plans for meeting this funding need, both through increased
borrowing and by retaining some of the
profits.
For TINE, it is important to have balanced access to the milk raw materials that can meet
the demand. The mapping of expected future
Norwegian dairy production shows that sufficient access to raw materials is likely towards
2015. However, there is greater uncertainty
associated with the further development. To
meet these challenges, it is important that
TINE contributes to profitability for its producers, for example by being an efficient and profitable business in its own right.
TINE’s strong position and good development
in Norway in 2010 gives the company a good
starting point for 2011 and the next few years.
Our activity is based on capable employees,
innovative product development, broad market communication, focused and efficient operations as well as significant investments for
the future.
TINE’s environment is changing. The new
Group strategy lays the foundation for meeting a demanding and increasingly competitive
future. Ambitious goals are set for financial
results and growth, both nationally and internationally. TINE will be a leading supplier
of brands within food and beverages with a
main focus on dairy products. This entails that
42
TINE makes a conscious choice to direct its
business to an even greater degree towards
strong brands and solutions that add value,
and that the core activities are brands within
dairy operations.
1
Chairman
2
TINE’s portfolio features some of Norway’s
strongest brands, and TINE currently holds a
strong position in all of the large dairy-based
product areas. In an increasingly intense competitive situation, TINE will take active responsibility for driving growth in the categories
where TINE has a presence.
TINE’s future competitiveness is affected by
how TINE provides customers with growth
and profitability. TINE will contribute to longterm growth and profitability for its customers
by helping to develop the categories.
Innovation will contribute to creating profitable growth. TINE has a long tradition within
innovation in relation to individual products.
The competition and the market are changing,
placing greater demands on innovation. To
achieve sufficient long-term competitiveness,
TINE will think in terms of unified market concepts and solutions that reach both consumers and customers.
As an international brand, Jarlsberg represents
a unique asset for TINE. Therefore, there will
be active efforts towards positioning Jarlsberg
further as a brand in selected countries. The
international effort will, insofar as possible, be
based on Norwegian milk. However, TINE understands that increased demand for Jarlsberg
abroad will entail an increase in the foreign
production.
TROND REIERSTAD
INGUNN SOGNNES
Deputy chairman
3
JAN OVE TRYGGESTAD
4
HELGA THORVIK ULVEN
5
BODIL MANNSVERK
6
HEIDI HYLLAND
7
NINA KOLLTVEIT SÆTER
8
EINAR KRISTIANSEN
9
OLE MAGNAR UNDHEIM
10
LARS IVER WIIG
11
SVEIN FØRDE
12
INGRID HAUG
13
EGIL TORLAND
14
PER HERINGSTAD
15
BORGHILD REENSKAUG
Chairman of the council
16
HANNE REFSHOLT
CEO
Oslo, February 16, 2011
Statistics
Subsidiaries
Addresses
9
14
6
1
15
11
13
5
10
4
16
7
2
12
8
3
43
Income statement
Balance sheet
Notes
Auditor’s report
CEO
This is TINE
The brand
GROUP MANAGEMENT
44
HANNE REFSHOLT
STEIN ØIOM
ELISABETH MORTHEN
CEO
Deputy CEO, responsible for logistics, operations, purchasing, HSE and TINE Milk Supplies
Group director, communication, policy and community contact, advice and active members
HEGE HOLTER BREKKE
JOHN OLE SKEIDE
JØRN SPAKRUD
Group director, marketing
and marine operations
Group director, sales (domestic)
Group director, economy and finance, ICT
STEIN AASGAARD
EIRIK SELMER-OLSEN
Group director, HR and expertise,
international activities, ingredients
Director, R&D
Accounting
principles
45
Notes
NOTE 1
NOTE 2
NOTE 3
NOTE 4
NOTE 5
NOTE 6
NOTE 7
NOTE 8
NOTE 9
NOTE 10
NOTE 11
NOTE 12
NOTE 13
NOTE 14
NOTE 15
NOTE 16
NOTE 17
NOTE 18
NOTE 19
NOTE 20
NOTE 21
NOTE 22
NOTE 23
NOTE 24
NOTE 25
NOTE 26
NOTE 27
NOTE 28
NOTE 29
NOTE 30
NOTE 31
NOTE 32
NOTE 33
NOTE 34
NOTE 35
NOTE 36
NOTE 37
NOTE 38
NOTE 39
NOTE 40
NOTE 41
46
Segment information
Revenue from convenience products
by geographical area
Other operating income
Cost of materials and changes in inventory
Purchase of raw milk and farm butter
from milk producer
Employee benefit expenses and number
of full-time equivalents
Pensions and pension obligations
Related parties and senior management
Intangible assets
Tangible fixed assets
Auditor’s renumeration
Other operating expenses
Income from investments in subsidiaries
Investments in subsidiaries
and associated companies
Change in market value
of financial current assets
Write-down of financial fixed assets
Financial risk and derivatives
Taxes
Equity
Obligations related to financial leasing
Long-term intercompany receivables
Other long-term liabilities
Inventories
Trade receivables and accounts payable
to associated companies
Other short-term receivables
Bank deposits, cash
and money market securities
Minority interests
Long-term loans
Short-term interest-bearing liabilities
Other short-term liabilities
Mortgages
Loans and guarantees
Outstanding accounts with
the Norwegian Agricultural Authority
– market regulation and subsidy schemes
TINE Råvare
Business combinations
and changes in ownership interests
Provisions
Other off balance sheet liabilities
and contingent liabilities
Environmental issues
Major individual transactions
Government grants
Discontinuation and divestment of business
54
54
55
55
55
55
56
57
58
58
60
60
60
61
62
62
62
64
66
66
67
67
67
67
68
68
68
68
69
69
69
70
70
72
72
72
73
73
73
74
74
Statistics
Subsidiaries
Addresses
Income statement
Amounts in NOK 1000
THE TINE GROUP
2010
TINE SA
2009
Note
2010
2009
REVENUES AND OTHER OPERATING INCOME
1, 2 Sales revenues, convenience products
17 616 630
17 506 792
14 470 274
14 042 482
915 373
890 379
1 Sales revenues, raw materials
915 373
890 379
321 972
315 249
3 Other operating income
300 201
327 496
18 853 975
18 712 420
15 685 848
15 260 357
10 948 937
10 897 063
9 117 275
8 819 670
3 092 341
3 301 831
2 538 631
2 711 954
720 894
708 346
586 673
564 054
38 882
76 722
2 863 871
2 817 684
17 664 925
17 801 646
1 189 050
910 774
–
–
19 050
14 224
–
–
2 603
5 778
-182
-33
-101 506
-121 240
-23 529
38 240
-103 564
-63 031
1 085 486
847 743
175 891
174 030
909 595
673 713
Total revenues and other operating income
OPERATING EXPENSES
4, 5 Cost of materials and changes in inventory
6, 7, 8 Employee benefit expenses
9, 10 Ordinary depreciation and amortisation
9, 10 Write-down tangible fixed assets and intangible assets
26 126
26 623
11, 12 Other operating expenses
2 277 910
2 162 878
Total operating expenses
14 546 615
14 285 179
1 139 233
975 178
13 Income from investments in subsidiaries
25 343
31 861
14 Result of investments in associated companies
21 024
2 533
18 301
11 161
Operating profit
FINANCIAL INCOME AND EXPENSES
Interest income from Group companies
15 Change in market value of market-based financial current assets
2 603
5 778
16 Write-down of long-term financial assets
-10 180
-49 025
17 Net other financial income and expenses
-98 064
-105 935
17 Net realised and unrealised gain and loss on currency
-26 032
16 338
-67 005
-87 289
1 072 228
887 889
178 534
161 482
893 694
726 407
19 Payments to milk producers
-480 315
-393 355
19 Allocated to subsequent payment fund
-340 000
–
-73 379
-333 052
-893 694
-726 407
18 866
70 807
Total financial income and expenses
Profit before tax
18 Income tax expense
Net profit for the year
3 135
1 545
19 Minority share of profits
906 460
672 168
19 Majority share of profits
Allocations:
19 Allocated to other equity
Total allocations
Net Group contributions to subsidiaries
47
CEO
This is TINE
The brand
Income statement
Balance sheet
Statement of cash flows
Notes
Auditor’s report
Balance sheet
Amounts in NOK 1000
THE TINE GROUP
2010
TINE SA
2009
Note
2010
2009
–
–
–
–
ASSETS
Fixed assets
Intangible assets
18 Deferred tax assets
16 526
20 003
132 674
149 073
9 Goodwill
81 055
101 276
9 Other intangible assets
201
–
230 255
270 352
Total intangible assets
201
–
2 416 774
1 669 148
2 171 038
1 486 836
2 845 110
2 656 192
5 261 884
4 325 340
Total tangible fixed assets
–
–
–
–
126 469
125 816
11 315
10 548
1 678 228
1 415 732
Tangible fixed assets
9, 10 Land, buildings and other real property
10, 20 Plant and machinery, transport means
2 542 332
2 317 473
4 713 370
3 804 309
14 Investments in subsidiaries
852 235
711 792
21 Accounts receivable from Group companies
179 970
181 353
25 773
29 418
Financial fixed assets
14 Investments in associated companies
Other shares and interests
7 Pension plan assets
8 473
8 592
1 580 503
1 340 265
55 103
67 986
22 Other long-term receivables
50 131
52 230
1 871 115
1 620 082
Total financial fixed assets
2 697 085
2 323 650
7 363 254
6 215 774
Total fixed assets
7 410 656
6 127 959
1 537 426
1 577 814
23 Inventories
1 211 483
1 249 581
1 298 567
1 351 856
24 Trade receivables
1 020 932
1 040 736
–
–
417 772
709 161
476 096
430 586
25 Other short-term receivables
415 856
397 488
1 774 663
1 782 442
Total short-term receivables
1 854 560
2 147 385
Current assets
Short-term receivables
48
Accounts receivable from Group companies
15 Unit trust funds and listed shares
22 011
28 402
556 884
394 243
3 890 984
3 782 901
Total current assets
11 254 238
9 998 675
Total assets
26 Bank deposits, cash and money market securities
22 011
28 402
466 150
236 988
3 554 204
3 662 356
10 964 860
9 790 315
Statistics
Subsidiaries
Addresses
Amounts in NOK 1000
THE TINE GROUP
2010
TINE SA
Note
2009
2010
2009
EQUITY AND LIABILITIES
Equity
Paid-in equity
9 689
10 932
19 Cooperative share capital
9 689
10 932
9 689
10 932
Total paid-in equity
9 689
10 932
340 000
–
4 656 266
4 562 593
4 996 266
4 562 593
Retained earnings
53 273
57 400
5 059 228
4 630 925
19 Subsequent payment fund
340 000
19 Other equity
Total retained earnings
27 Minority share
Total equity
4 807 392
4 728 189
5 147 392
4 728 189
–
–
5 157 081
4 739 121
98 184
183 677
Long-term liabilities
Provisions
120 055
212 217
22 391
988
449 357
350 354
591 803
563 559
1 332 785
415 826
880 000
1 099 000
7 Pension liabilities
Long-term financial liabilities
8 161
393
18 Deferred tax liabilities
389 707
298 845
Total provisions
496 052
482 915
2 581
3 024
2 215 366
1 517 850
2 807 169
2 081 409
Long-term debt to financial institutions
Bond issue
Other interest-bearing long-term liabilities
28 Total other long-term liabilities
Total long-term liabilities
1 277 715
321 468
880 000
1 099 000
232
232
2 157 947
1 420 700
2 653 999
1 903 615
1 179 745
1 153 259
157 684
261 589
Short-term liabilities
Accounts payable
Short-term debt to milk producers
1 179 746
1 153 259
–
–
1 034 103
784 299
2 213 849
1 937 558
133 823
334 000
29 Short-term interest-bearing debt
87 157
152 953
18 Tax payable
151 679
139 491
–
–
801 333
722 339
1 173 992
1 348 783
3 387 841
3 286 341
11 254 238
9 998 675
Short-term debt to Group companies
24 Accounts payable
Total accounts payable
799 626
528 354
2 137 055
1 943 202
Other short-term debt
Public duties payable, etc.
Other short-term debt to subsidiaries
100 000
300 000
82 957
106 479
151 330
135 455
40 896
98 564
641 541
563 880
Total other short-term liabilities
1 016 724
1 204 378
Total short-term liabilities
3 153 780
3 147 580
Total equity and liabilities
10 964 860
9 790 315
30 Other short-term debt
oslo, 16 februarY 2011
heidi hylland
helga thorvik ulven
ole magnar undheim
egil torland
Nina kolltveit sæter
jan ove tryggestad
lars iver wiig
per heringstad
svein førde
bodil mannsverk
einar kristiansen
ingrid haug
ingunn sognnes
Deputy chairman
trond reierstad
Chairman of the board
hanne refsholt
CEO
49
CEO
This is TINE
The brand
ncome statement
Balance sheet
Notes
Auditor’s report
Amounts in NOK 1000
THE TINE GROUP
2010
TINE SA
2009
2010
2009
1 072 228
887 889
-106 820
-86 120
Cash flows from operating activities
1 085 486
-125 942
-12 837
759 776
-16 350
-5 728
–
847 742 Profit before tax
-97 210 Tax paid in the period
-5 153 Gain / loss and write-down on sale of fixed assets
785 068 Depreciation, amortisation and write-downs
-16 Gain/loss and write-down of financial fixed assets
17 436 Unrealised change in value of financial items
– Group contributions recognised, not received
-3 179
-5 126
612 799
590 677
-5 927
48 976
-5 728
17 436
-11 770
-11 209
-325 731
-29 028
–
–
Difference between pension charged as an expense and payments/disbursements in
-354 658
-775
2 089
40 388
10 521
276 288
75 310
–
1 733 624
-25 773 pension plans
-11 691 Difference between recognised and received dividend from associated companies
-6 486 Effect of changes in foreign currency rates and unrealised exchange gains
-50 672 Change in inventories
30 370 Change in trade receivables and other short-term receivables
63 552 Change in accounts payable
-90 464 Change in other short-term liabilities
– Change in intercompany balances from operational activities
1 456 703 Net cash flow from operating activities
–
–
38 098
-133 255
33 178
-58 511
210 801
43 291
94 484
24 221
201 886
145 143
1 804 319
1 434 383
Cash flows to investment activities
34 955
-1 765 783
16 726
20 355
–
9 096
–
-1 684 651
18 507 Payments received from sales of tangible fixed assets
-1 040 489 Payments made for purchase of tangible fixed assets
38 966 Change in long-term receivables
80 Payments received from the sale of financial fixed assets
-3 350 Payments to acquire financial fixed assets
6 493
14 308
-1 516 417
-922 925
5 943
27 741
17 548
20 080
-132 337
-3 350
– Payments received from the sale of financial current assets
9 096
–
– Net cash inflow on intercompany long-term receivables
1 383
17 728
-1 608 291
-846 418
975 560
1 168 141
-986 286 Net cash flow to investment activities
Cash flows to / from financing activities
975 560 -200 000
-238 295
100 000 Net payments received / made for loan certificates
-1 073 599 Repayment of long-term liabilities
-200 000
100 000
-232 602
-890 551
-25 550
–
-25 550 Repayment of short-term liabilities
–
–
232 Payments made by minorities
–
–
–
-475 068 Net change in bank overdraft
–
-492 122
-1 243
–
-312 Payments / disbursements of cooperative share capital
– Payments received / made of net Group contributions to offset receivables
-422 356
-175 876 Disbursed subsequent payment
113 666
-479 009 Net cash flow to / from financing activities
162 640
50
1 171 164 Raising new long-term liabilities
-8 592 Net change in bank deposits, cash and money market securities
-1 243
-312
-86 225
-153 442
-422 356
-175 876
33 134
-469 712
229 163
118 254
394 243
402 835 Bank deposits, cash in hand and money market securities at 1 January
236 988
118 734
556 884
394 243 Bank deposits, cash in hand and money market securities at 31 December
466 150
236 988
Statistics
Subsidiaries
Addresses
ACCOUNTING PRINCIPLES
REVENUES AND OTHER INCOME
The annual accounts are prepared in accordance with
the Accounting Act and generally accepted accounting
principles in Norway.
Revenues are presented net of value added tax,
rebates and other public charges. Revenues from the
sale of goods are recognised in the income statement
when delivery has been accomplished and most of
the risk and reward has been transferred. Services are
recognised as income as and when they are provided.
CONSOLIDATION
The Consolidated 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. Initially,
controlling influence is regarded as being present when
there is direct or indirect ownership of more than 50%
of the voting capital. Uniform accounting principles are
applied to all companies in the TINE Group.
All transactions between Group companies, outstanding accounts and unrealised internal gains in the Group
are eliminated in the Consolidated accounts.
Ownership interests in the subsidiaries are included in
the Consolidated accounts according to the acquisition
method. The difference between the cost price of the
shares and book value of net assets at the time of acquisition is analysed and allocated 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. Minority interests are included in the Group’s
equity. Changed ownership interests in subsidiaries are
treated as equity transactions in the Group and there is
thus no gain or loss in the Consolidated accounts.
Associated companies are companies where the Group
has significant influence, but not control, and where the
interest is of a long-term strategic nature. Significant
influence is normally present when the Group has an
ownership interest of between 20% and 50%. Associated companied are included according to the equity
method in the Consolidated accounts. Cost prices that
exceed the acquired share of book equity are recognised in the balance sheet as excess value and are
amortised in accordance with the underlying circumstances and expected economic life. The Group’s share
of the result in associated companies is based on the
result after tax in the associated company with the
deduction of any depreciation on excess values, as well
as gains and losses on realisation of interests. In the
income statement, the share of the result in associated companies is presented under financial items. In
the balance sheet, the ownership shares in associated
companies are presented under fixed assets. The share
of the loss in associated companies is not recognised
in the income statement if this entails that the value of
the investment recognised in the balance sheet is negative, unless the Group has undertaken an obligation or
provided guarantees for the associated company.
In the case of recognition of investments in subsidiaries 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 Company’s opening equity and the result for the
year are converted at a different exchange rate than
the closing equity, is recognised in the Group’s equity.
OPERATING EXPENSES
Costs are recognised in the income statement in
accordance with the matching principle.
SPECIAL ITEMS
Special items are significant items which are unusual
and/or irregular. Such items are specified on a separate
line, and the reason for presentation on a separate
line is given in a Note.
MAIN RULE FOR CLASSIFICATION OF ASSETS AND
LIABILITIES
Assets intended for permanent ownership or use are
classified as fixed 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. Fixed assets are recognised at acquisition cost with the deduction of depreciation and
impairment. Long-term and short term liabilities are
recognized at nominal value.
INTANGIBLE ASSETS
Goodwill
Goodwill is the difference between the acquisition
cost of the purchased business and the fair value
of the 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 a share
in associated companiesis included in the value of
investments in associated companies recognised in
the balance sheet. Goodwill is tested for impairment
and is recognised in the balance sheet at acquisition
cost with the deduction of accumulated amortisation
and impairment. The amortization period for goodwill
is five years unless there are special reasons for a
longer lifetime.
Research and product development costs and other
intangible assets
Own expenses for research and product development
are expensed on a continuous basis. Expenses for other
intangible assets are recognised in the balance sheet
to the extent a future financial benefit connected to
the development of an identifiable intangible asset has
been identified, and the expenses can be reliably measured. Intangible assets with a limited useful economic
life are amortised according to schedule. Intangible
assets are written down to fair value if the residual value
is lower than the total of the value recognised in the
balance sheet and any remaining production expenses.
FIXED ASSETS
Investments in production plants and other tangible
fixed assets are measured at the acquisition cost
with the deduction of accumulated depreciation and
impairments. Borrowing costs related to the construction period for substantial tangible fixed assets during
construction are recognised in the balance sheet as
part of the cost price. The acquisition cost for tangible
fixed assets with a limited useful economic life is
depreciated according to the straight-line 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 the recoverable amount of
the fixed asset is lower than the value recognised in
the balance sheet and the impairment is not expected
to be temporary, 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 value of the future cash flows which the
asset is expected to generate.
Lease agreements
Lease agreements are classified as financial or operational leases after a concrete evaluation of the individual agreement. Assets which are leased on conditions
which essentially transfer financial risk and control to
the Company (financial leasing), are recognised in the
balance sheet as tangible fixed assets and appurtenant
rental obligations are included in the balance 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
interest cost.
Shares and interests in associated companies and
subsidiaries
Investments in subsidiaries 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 write-downs.
Write-down 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. 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 fixed assets
Investments in long-term shareholdings and interests
where the Company 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 made on the basis of individual assessments. Interest income is recognised as
it is earned.
current assets
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
51
materials, direct wages as well as other direct and indirect production costs (based on normal production).
Acquisition costs are adjusted for price compensation
charges/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.
Receivables
Accounts receivable and other receivables are recognised at nominal value after the deduction of expected
losses. Allocation for loss is made on the basis of individual assessments of each receivable.
Unit trust funds and money market securities
Market-based financial instruments, including unit
trust funds and money market securities, which are
included in the trade portfolio are valued at fair value
on the balance sheet date. Other short-term investments are valued at the lowest of average acquisition
cost and fair value on the balance sheet date.
Bank deposits and cash
The accounting item bank deposits and cash includes
cash, bank deposits and other means of payment with a
due date that is less than three months from acquisition.
PENSION PLANS
The Company 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 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 on the
basis of assumptions regarding the number of service
years, discount rate, expected returns on plan assets,
future adjustment of wages, 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. The net pension obligation consists of gross pension obligation with the deduction
of fair value of the plan assets. Net pension obligations for under-financed 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 fixed assets if it
is probable that the net asset can be utilised. 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, the Company enters its share of the definedbenefit 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 defined-contribution plan.
Obligations within the new Fellesordningen for AFP
(joint plan for contractual pension) are a defined-benefit
52
CEO
This is TINE
The brand
ncome statement
Balance sheet
Notes
Auditor’s report
group plan, but this is recorded in the accounts a
deposit-based plan, as it is currently not measurable
and cannot be allocated between the participating
companies.
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.
Contribution plans are accrued according to the
matching principle. The contributions for the year to
contribution-based pension plans are recognised as
costs as they occur.
rate derivatives which are not hedging instruments are
recorded in accordance with the principle of lowest
value. Unrealised loss is entered as a financial cost.
Taxes
The tax cost is offset against profit before tax. Tax related to equity transactions is entered against equity.
The tax cost consists of tax payable on taxable income
and wealth as well as change in deferred tax liabilities.
Deferred tax liabilities are calculated on the basis of
temporary 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 Group presents net deferred tax liabilities for tax
positions related to companies that are part of the
same tax group.
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 utilised
in future years.
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.
CHANGE IN ACCOUNTING PRINCIPLES AND
COMPARATIVE FIGURES
Comparative figures for 2009 are adjusted as if the
merger of the dairy companies was effective from on
1 January 2009. Comparative figures are further adjusted in the event of a reclassification between accounting items. Some reclassifications have been undertaken. Reference is made to the specifications on the
following page for more details regarding the effect of
mergers and reclassifications.
NRS 1 Inventories and NRS 9 Merger, as well as NRS
(F) Business combinations and consolidated accounts
and NRS (F) Financial assets and obligations have
been implemented with effect from 1 January 2010.
Implementation of the standards has not resulted in
accounting effects for TINE.
FINANCIAL DERIVATIVES AND HEDGING
The accounting treatment of financial derivatives
follows the intention behind entering into the agreements. Derivatives are classified as long-term fixed
assets or long-term financial liabilities if the remaining
term is longer than one year.
Interest rate derivatives
TINE 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 is designated as a hedging instrument and, if applicable, the type of hedging. Interest
Currency derivatives
In order to hedge against fluctuations in the foreign
currency rates, TINE 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.
Hedging
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 and hedging of net investment
in foreign business activities.
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.
In the event of cash flow hedging for hedging of future
cash flows, the derivatives are recognised in the balance sheet 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.
Hedging of net investment in foreign currency is used
at the Group level. Derivatives are recorded in the
balance sheet at fair value as for cash flow hedging.
Unrealised gains and losses on derivatives are entered directly against the equity until the foreign business activity is sold.
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 which have a substantial effect on the
accounts are summarised below.
Depreciation and amortisation
Depreciation and amortisation of tangible fixed assets
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.
Impairment
TINE has considerable investments in tangible fixed
assets, intangible assets including goodwill, associated
companies and subsidiaries. These fixed 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. In the calculation of the recoverable amount, a range of estimates
must be undertaken concerning future cash flows
Statistics
Subsidiaries
Addresses
where the path of price movements, sales volumes and
useful life are among the most important factors.
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 is made to Note 7
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
forward 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. For all of the above
derivatives, fair value is confirmed by the financial institution with which the Company has contracts.
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 which are large 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, obsoleteness of goods and contingent loss which are probable and quantifiable,
including disputed circumstances and court cases.
CASH FLOW STATEMENT
The cash flow statement is prepared in accordance
with the indirect method. Cash and cash equivalents
include cash, bank deposits and other short-term
liquid placements.
Overview of equity changes in the acquiring company as of 1 January 2009:
Cooperative
share capital
Other
equity
Total
equity
11 244
4 106 096
4 117 340
–
344 390
344 390
11 244
4 450 486
4 461 730
Total equity
Other equity at 31.12.2008
Book value
in TINE BA at
31.12.2008
Continuity
difference
Equity 31 December 2008 TINE BA
Total continuity differences, cf. specification below
Adjusted equity 1 January 2009
Cooperative
share capital
Other paid-in
equity
TINE Meieriet Sør BA
150
250 067
102 248
352 465
241 863
110 602
TINE Meieriet Øst BA
150
415 110
89 740
505 000
415 260
89 740
TINE Meieriet Vest BA
150
224 694
58 197
283 041
224 844
58 197
TINE Meieriet Nord BA
150
246 347
11 123
257 620
229 712
27 908
TINE Midt-Norge BA
150
398 855
57 943
456 948
399 005
57 943
Total
750
1 535 073
319 251
1 855 074
1 510 684
344 390
The above statements bridge the gap between the equity of the acquiring company as of 1 January 2009 and
capital reserves from the transferred companies at the same date.
The net positive continuity difference has increased the acquiring company’s other equity.
RECLASSIFICATION: Comparative figures (2009) in the consolidated accounts have been adjusted as a result
of reclassifications and corrections. All reclassifications have been implemented as they are considered to better
reflect TINE’s business activities in the accounts. Below is a specification of the net impact of the reclassifications
and corrections on the income statement and balance sheet of the TINE Group:
Accounting line
2009
Annual Report
Comparative figures in
Annual Report
Change
17 638 483
17 506 792
-131 691
355 018
315 249
Operating income
Sales revenue, convenience products
Other operating income
Net
Cost of materials and changes in inventory
-39 769
-171 460
10 325 380
10 897 063
571 683
3 560 827
2 817 684
-743 143
Net
-171 460
Reclassifications in the income statement are mainly related to joint marketing, equalisation charges and transport income which are moved between income and cost lines. Corrections have also been made relating to
elimination of certain intercompany sales and discounts.
Accounting line
2009
Annual Report
Comparative figures in
Annual Report
Change
Receivables
MERGER OF DAIRY COMPANIES
TINE’s Annual Meeting in April 2010 decided to merge
all wholly-owned dairy companies in Norway with the
parent company.
The merger included the following companies:
TINE BA – acquiring company
TINE Meieriet Sør BA – transferred company
TINE Meieriet Øst BA – transferred company
TINE Meieriet Vest BA – transferred company
TINE Meieriet Nord BA – transferred company
TINE Midt-Norge BA – transferred company
•
•
•
•
•
•
The merger has been treated as a continuity, as this
is a reorganisation with unchanged ownership. NRS 9
Merger also includes amalgamations that are carried
out in a manner corresponding to that for mergers,
which is how this amalgamation has been implemented. The merger is carried out as regards accounting
according to the rules regarding group continuity in
NRS 9. Group continuity shall mean that assets and
obligations in the transferred company will be continued at the values they are recognised in the balance
sheet in the consolidated accounts of the acquiring
company. There is no excess value in the Group related
to the merged companies. All companies are whollyowned subsidiaries and there is thus no capital
increase. TINE has changed the comparative figures
for 2009 so they reflect a merged business activity as
if the merger had taken place on 1 January 2009.
.
291 159
403 586
139 427
Total short-term receivables
1 643 015
1 782 442
139 427
Total assets
9 859 248
9 998 675
139 427
1 099 000
-1 099 000
Bond issues
Long-term debt to financial institutions
48 928
415 826
-366 898
Other interest-bearing long-term liabilities
1 468 922
3 024
1 465 898
Total other long-term liabilities
1 517 850
1 517 850
–
Trade and other payables
Amounts owed to milk producers
1 013 860
1 153 259
139 399
Total trade and other payables
1 798 159
1 937 558
139 399
Public duties payable
406 366
139 491
-266 875
456 338
723 241
266 903
Total other short-term liabilities
1 349 657
1 349 685
28
Total short-term liabilities
3 147 816
3 287 243
139 427
Total equity and liabilities
9 859 248
9 998 675
139 427
Reclassifications in the balance sheet are mainly related to gross presentation of credit for milk producers which
is settled against backpayment, as well as reclassifications of bond issues and bank loans classified as long-term
liabilities in the accounts and reclassification of payable holiday pay classified in the accounts as short-term
liabilities.
53
Income statement
Balance sheet
Notes
Auditor’s report
CEO
This is TINE
The brand
Notes
note 1
Segment information Amounts in NOK 1000
2010
2009
Segment reporting
TINEs
Norwegian
dairy
operations
TINEs
international
dairy
operations
Liquid dairy products
7 700 293
Solid dairy products
Other
business
Other
activities
and
eliminations
–
184 897
–
4 309 877
1 832 145
291 461
–
–
828 568
2 063
–
598 261
Juice, fruit drinks and water
Convenience food
Total
TINEs
Norwegian
dairy
operations
TINEs
international
dairy
operations
Other
business
Other
activities
and
eliminations
Total
7 885 190
7 666 886
–
181 094
–
7 847 980
–
6 433 483
4 025 435
1 965 119
288 731
–
6 279 285
–
828 568
–
–
880 718
–
880 718
–
600 324
1 944
–
586 128
–
588 072
Ice cream and desserts
322 187
–
1 050 021
–
1 372 208
318 142
–
1 184 432
–
1 502 574
Other products
291 660
–
205 197
–
496 857
239 086
–
169 077
–
408 163
Revenue from external convenience
products
12 626 080
1 832 145
3 158 405
–
17 616 630
12 251 493
1 965 119
3 290 180
–
17 506 792
Revenue from external convenience
products
12 626 080
1 832 145
3 158 405
–
17 616 630
12 251 493
1 965 119
3 290 180
–
17 506 792
Revenue from internal convenience
products
1 858 296
1 100
–
-1 859 396
–
1 700 521
–
–
-1 700 521
–
17 506 792
Total revenue from convenience
products
14 484 376
1 833 245
3 158 405
-1 859 396
17 616 630
13 952 014
1 965 119
3 290 180
-1 700 521
Revenue, raw materials
915 373
–
–
–
915 373
890 379
–
–
–
890 379
Other income
300 201
8 358
46 998
-33 585
321 972
327 497
4 984
30 177
-47 410
315 249
15 699 950
1 841 603
3 205 403
-1 892 981
18 853 975
15 169 890
1 970 103
3 320 358
-1 747 931
18 712 420
Operating income
Depreciation, amortisation and
write-downs
Operating profit
Assets
-612 868
-15 156
-91 920
-39 833
-759 776
-590 791
-13 536
-138 382
-42 358
-785 068
-13 942 774
-1 784 274
-3 099 030
1 920 929
-16 905 149
-13 602 472
-1 913 807
-3 261 201
1 760 901
-17 016 578
1 144 308
42 173
14 452
-11 883
1 189 050
976 627
42 760
-79 225
-29 388
910 774
10 650 268
525 920
907 904
-829 855
11 254 238
9 441 473
542 967
1 033 282
-1 019 047
9 998 675
Debt, non-interest-bearing
3 250 235
319 597
340 217
-64 228
3 845 821
3 004 124
306 720
340 819
-135 764
3 515 900
Investments
1 525 195
28 826
145 288
–
1 699 309
998 045
9 149
100 590
–
1 107 784
Description of activity:
TINE’s domestic dairy operations consist of TINE SA and OsteCompagniet AS. TINE’s international dairy operations consist of Wernersson Ost AB, Norseland Inc. (US),
Norseland Ltd. (UK). Other business activities consist of Diplom-Is AS, FellesJuice AS, Fjordland AS, Salmon Brands AS, Maritex AS and TINE SA’s other subsidiaries
(see Note 14). Other activities and eliminations include depreciation of goodwill and other excess values in Fjordland, Wernersson Ost and Norseland in the UK.
note 2
Revenue from convenience products by geographical area Amounts in NOK 1000
The tine group
2010
15 384 370
1 058 748
1 724
1 063 084
3 030
105 675
17 616 630
54
TINE SA
2009 Geographical area
15 004 161 Norway
1 192 159 Other Europe
1 718 Africa
1 212 065 America
2 790 Asia
93 900 Oceania
17 506 792
Revenue, convenience products
2010
2009
13 859 612
13 484 470
180 340
135 974
234
187
344 439
340 393
1 016
1 296
84 633
80 161
14 470 274
14 042 482
Statistics
Subsidiaries
Addresses
note 3
Other operating income Amounts in NOK 1000
THE TINE GROUP
2010
96 295
212 110
13 567
321 972
note 4
TINE SA
2009 Income groups
2010
2009
111 736 Transport income
118 264
142 520
195 874 Other income
175 965
178 783
7 639 Gains on sale of fixed assets
315 249
Total other operating income
5 972
6 193
300 201
327 496
Cost of materials and changes in inventory Amounts in NOK 1000
THE TINE GROUP
2010
10 917 512
31 425
10 948 937
note 5
TINE SA
2009 Cost category
10 932 128 Consumption of raw materials and goods purchased for resale
-35 065 Changes in inventories in production and convenience products
10 897 063 Total consumption of materials and changes in inventory
2010
2009
9 088 140
8 937 308
29 135
-117 648
9 117 275
8 819 670
Purchase of raw milk and farm butter from milk producers Amounts in NOK 1000
THE TINE GROUP
2010
6 160 099
TINE SA
2009
5 950 658
-23 658
-15 606
6 136 441
5 935 051
6 059 918
5 852 654
100 181
92 924
–
5 080
6 160 099
5 950 658
Total purchase of raw milk and farm butter, see specification below
Changes in inventories of raw milk
2010
2009
6 160 099
5 950 658
-217
-780
6 159 882
5 949 877
Purchase of cows' milk including quality addition
6 059 918
5 852 654
Purchase of goats' milk including quality addition
100 181
92 924
Consumption of raw milk and farm butter
Specification of purchase of raw milk and farm butter
Purchase of farm butter
–
5 080
6 160 099
5 950 658
Transfered from previous year
-26 378
-52 658
Transferred to next year
-16 291
26 378
6 117 430
5 924 378
Total purchase of raw milk and farm butter from milk producers
Allocations in TINE Milk supplies:
Total paid by TINE Milk Supplies
Allocated for backpayment from TINE SA
Total paid to milk producers by TINE
Total milk price expressed in NOK/litre
480 315
393 355
6 597 745
6 317 733
4.53
4.34
Reference is also made to Note 34
note 6
Employee benefit expenses and number of full-time equivalents Amounts in NOK 1000
THE TINE GROUP
2010
2 437 484
TINE SA
2009
2 411 788 Wages and salaries, holiday pay and costs for temporary staff
331 270
327 664 Social security tax
109 814
389 274 Net pension costs including social security tax, cf. Note 7
213 773
3 092 341
5 399
173 105 Other personnel costs
3 301 831 Total employee benefit expenses
5 569 Average number of employees calculated in full-time equivalents
2010
2009
2 042 874
1 984 944
268 633
265 576
75 803
331 715
151 321
129 719
2 538 631
2 711 954
4 406
4 453
55
note 7
Income statement
Balance sheet
Notes
Auditor’s report
CEO
This is TINE
The brand
Pensions and pension obligations
TINE SA and the Norwegian subsidiaries have a group
pension plan in MP Pensjon in accordance with the
Companies Pension Act. The plan satisfies the rules
for Mandatory Occupational Pensions (Norwegian
abbreviation - OTP). The group pension plan defines
Amount in NOK 1000
the level of future benefits and the plan is recognised
in the accounts as a defined-benefit pension plan. The
benefits are mainly dependent on the number of years
in service and the wage level at pension age. The service pension is in addition to the National Insurance
pension and is independent of National Insurance
benefits. The pension plan in MP Pensjon gives the
following benefits with a full service period (30 years
or more):
Pension
Basis for calculation
Pension benefit
Retirement pension
Up to 6G
20% of the pension basis
From 6G to 12G
48% of the pension basis
Survivor pension spouse/cohabitant
Calculated retirement pension
55% of the calculated retirement pension
Survivor pension children
Pension basis
First child 10% and thereafter 5% for each child, up to six children
TINE SA and most of the Norwegian subsidiaries are
covered under the agreement between the Norwegian
Confederation of Trade Unions (LO) and the Confederation of Norwegian Enterprise (NHO). Based on this, employees in the companies can apply for an early retirement pension from the age of 62 (AFP). The new AFP
Subsidy Act was adopted in February 2010, but does
not apply to anyone who retires with AFP before 2011.
The old AFP scheme was terminated as of 31 December
2010, and this termination has been recorded as cur-
tailment in the accounts. The new AFP scheme is a
defined-benefit group plan, like the old AFP scheme in
the LO/NHO area. As regards accounting, the new AFP
scheme is considered a new scheme, not as a change
of the existing scheme. The curtailment effect of the old
scheme is recognised in the 2010 accounts. The remaining liability recognised in the accounts from the old
scheme after 2010 is related to payment of AFP pensioners who retired before 2011 (25% deductible as well as
an estimated share of undercoverage in the old scheme.
The undercoverage will be covered through premium
payments until 2015). The companies that are within the
LO/NHO agreement area have an actual financial obligations as a result of the new AFP scheme agreement.
However, in 2010, there is insufficient information
available to enable inclusion of the new obligations in
the annual accounts. This entails that no obligations
for the new scheme is recognised in the balance sheet
for 2010.
As of 31 December 2010, the various plans include the following number of people for TINE SA and the TINE Group:
THE TINE GROUP
Employees
5 142
5
32
–
TINE SA
Pensioners
3 996 Defined benefit plans in MP Pensjon
29 Unfunded defined benefit plans
– Defined contribution plans
328 AFP (early retirement), old plan
Employees
Pensioners
4 581
3 705
4
8
–
–
–
284
Unfunded schemes primarily relate to a gift pension for employees who have previously fallen outside the group pension plan in MP Pensjon and the early retirement agreement
for managing directors in the companies and Group senior management in TINE SA, based on individual employment contracts. Reference is made to Note 8 concerning benefits
for senior management.
THE TINE GROUP
2010
276 932
316 102
-489 269
TINE SA
2009 Pension costs
308 330 Current year service cost
291 934 Interest cost on pension obligations
-373 573 Expected net return on pension plan assets
2010
2009
239 550
267 743
284 920
264 700
-443 556
-340 829
35 237
95 977 Recognised actuarial loss / gain (-)
30 310
88 168
1 238
– Recognised plan amendment effect
–
–
-107 613
37 681
39 506
109 814
– Recognised curtailment effect (AFP)
-98 078
–
36 129 Social security tax charged as an expense
32 487
30 578
30 477 Other pension costs (including premium for AFP and defined contribution plans)
389 274 Net pension costs
30 170
21 355
75 803
331 715
Reconciliation of the pension plan’s financial status as of 31 December with the amounts in the balance sheet:
THE TINE GROUP
2010
-7 790 085
10 977 597
3 187 512
-1 509 284
1 678 228
-145 719
30 997
-114 722
6 865
-12 198
-120 055
TINE SA
2009 Pension obligations and plan assets
-7 162 888 Accrued pension obligations as of 31 December
9 326 812 Pension plan assets (at market value) as of 31 December
2 163 924 Net pension obligations as of 31 December excluding social security tax
-748 192 Unrecognised actuarial gains / losses
1 415 732 Net pension plan assets as of 31 December
-227 039 Pension obligations as of 31 December
4 165 Pension plan assets (at market value) as of 31 December
-222 874 Net pension obligations as of 31 December excluding social security tax
2010
2009
-7 145 584
-6 493 788
10 148 896
8 494 454
3 003 312
2 000 666
-1 422 809
-660 401
1 580 503
1 340 265
-98 226
-193 498
2 385
2 910
-95 841
-190 588
39 632 Unrecognised actuarial gains / losses
10 338
32 305
-28 975 Social security tax
-12 681
-25 394
-98 184
-183 677
-212 217 Net underfinanced pension liabilities as of 31 December
Note 7 continues on following page
56
Statistics
Subsidiaries
Addresses
Note 7 continued
The following assumptions are applied in Norway for the TINE Group and TINE SA.
Economic assumptions
31.12.10
Discount rate
31.12.09
3.70 - 4.00 %
4.40 %
Adjustment of the National Insurance basic amount (G)
3.75 %
4.00 %
Expected increase in salaries
4.00 %
4.25 %
Expected increase in pensions
2.60 %
2.80 %
Expected return on pension plan assets
5.40 %
5.40 %
Demographical assumptions
Applied mortality table
K2005
K2005
Applied disability tariff
Strengthened KU
Strengthened KU
–
35 % from age 62
Expected tendency to take early retirement (AFP)
Expected voluntary turnover (all ages):
Reduced from 8 % in age group 20 - 24 and down to 0 % for age 51 and older.
THE TINE GROUP
TINE SA
2009 Actual return on major categories of pension plan assets:
2010
16.6 %
35.1 % Actual return on pension plan assets in the Group pension plan
2010
2009
16.6 %
35,1 %
Major categories of pension plan assets in the MP Pensjon company pension
31.12.10
31.12.09 plan:
31.12.10
52.30 %
50.40 % Shares
52.30 %
50.40 %
46.80 %
48.50 % Bonds
46.80 %
48.50 %
0.90 %
1.10 %
0.90 %
note 8
1.10 % Lendings
Related parties and senior management
31.12.09
Amounts in NOK 1000
We have defined the Group board, Council, Control Committee and Group senior management to be related parties and management personnel in TINE.
Group board
Board of remuneration TINE SA 1)
Board of remuneration, other companies
Trond Reierstad
762 500
–
Other remuneration
12 441
Ingunn Sognnes
257 720
27 500
167 231
Ole Magnar Undheim
280 990
27 500
206 388
Torstein Grane
253 733
–
61 600
Bodil Mannsverk
199 220
13 283
149 944
Jan Ove Tryggestad
280 990
36 500
1 400
Einar Kristiansen
280 991
16 500
168 865
Nina Kolltveit Sæter
190 860
–
123 200
Helga Thorvik Ulven
291 990
11 000
193 602
Heidi Hylland
174 140
16 500
152 150
Lars Iver Wiig
123 740
–
–
Egil Torland
174 140
–
–
Ingrid Haug
119 560
–
–
Svein Førde
174 140
–
–
133 950
–
130 250
25 980
–
–
Deputy members owners
Per Heringstad
Employee-elected deputy members
Ottar Råd
Council
Remuneration TINE SA
Remuneration, other companies
Other remuneration
Borghild Reenskaug
148 020
–
154 368
Control Committee
Other remuneration
Terje Amundsen
65 100
–
32 850
Helge Sommerseth
54 710
–
27 450
Anna Stangeland
54 710
–
29 441
Other remuneration
10 860
–
48 100
Chair Group election committee
Ragnhild Aashaug
1)
Inclusive remuneration from internal regional boards.
57
Income statement
Balance sheet
Notes
Auditor’s report
CEO
This is TINE
The brand
Note 8 continued.
Total expenses for salaries
Board remuneration
subsidiaries
Pension costs
Other remuneration
Hanne Refsholt
2 154 183
63 754
503 372
136 392
Stein Øiom
1 623 097
33 000
237 666
118 753
Elisabeth Morthen
1 256 322
27 500
274 412
138 342
Stein Aasgaard
1 490 323
136 565
152 649
103 088
Eirik Selmer-Olsen
1 101 644
–
181 444
103 596
Hege Holter Brekke
1 280 215
86 500
262 276
145 910
Jørn Spakrud
1 575 269
27 500
444 753
135 984
John Ole Skeide
1 518 827
–
258 855
134 542
Group senior management
Employees in TINE SA
The Board remuneration is related to board positions
in TINE SA and subsidiaries which are consolidated
in the TINE Group. Neither the chair of the board,
other members of the Group board or the CEO receive
bonuses, options or have agreements on profit sharing.
Expenses/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
note 9
senior management personnel have loans or guarantees in TINE.
The following senior management personnel have
pension agreements which come into force upon
attaining age 62: Hanne Refsholt, Stein Aasgaard and
Stein Øiom. 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. The pension agreements
cease at age 67. Normal pension terms applicable to
other employees will then apply. Jørn Spakrud has a
pension agreement which comes into force from age
65. The agreement entails an annual service cost
equivalent to 25 % of salary exceeding 12G which is
allocated annually. The provision accrues an annual
return.
Intangible assets
Amounts in NOK 1000
THE TINE GROUP
R&D
Patents
Brand
Customers
Other rights
Goodwill
Total 2010
Total 2009
Acquisition cost at 1 January
Acquisitions (+) and disposals (-) during
the year
Exchange differences
3 429
11 788
84 574
67 967
3 677
366 174
537 609
569 270
-150
1 143
-4 360
–
190
-42 509
-45 686
7 348
–
74
3 413
2 460
235
11 925
18 107
-39 009
Acquisition cost at 31 December
Accumulated depreciation and write-downs
at 31 December
Book value as at 31 December
3 279
13 005
83 626
70 427
4 102
335 589
510 029
537 609
-1 866
-1 338
-25 325
-61 040
-3 816
-202 915
-296 300
-287 260
1 413
11 667
58 301
9 387
287
132 674
213 729
250 349
-572
-369
-6 495
-15 530
-921
-21 070
-44 957
-47 017
5-10 years
4-15 years
10-20 years
3 years
5 years
5-10 years
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
31.12.2010
31.12.2009
Depreciation and write-downs for the year
Estimated useful life
Depreciation plan
Import licence in Norseland Inc., classified as patents, is evaluated to have indefinite liftetime and is not amortised.
Goodwill relates to:
Salmon Brands AS
Wernersson Ost AB
Fjordland AS
Norseland Ltd.
Total goodwill
An impairment test has been performed for goodwill
and other intangible assets where there are indications
of a decline in value. The evaluations are based on
calculation of residual value with a time horizon
of five years and a further five years with constant
figures for the remaining life of the assets. A moderate
annual increase is expected in the sales and contribution margin ratio for the first five years. A discount
TINE SA
5 415
7 554
79 185
84 881
1 584
2 772
46 490
53 865
132 674
149 073
factor of 12 % before tax has been applied. On this
basis, no write-down has been undertaken in the
consolidated accounts.
Patents
Total 2010
Total 2009
–
–
–
Acquisitions (+) and disposals (-) during the year
250
250
–
250
250
–
Accumulated depreciation and write-downs 31 December
-49
-49
–
201
201
–
Depreciation and write-downs for the year
-49
-49
–
Depreciation schedule
5 years
Straight-line
58
Statistics
Subsidiaries
Addresses
Note 9 continued
THE TINE GROUP
2010
43 045
TINE SA
2009 Expensed research and product development
50 579 Research
2010
2009
43 045
50 579
21 542
22 709 Product development
17 357
17 808
64 587
73 288 Total expensed research and product development
60 402
68 387
It is assumed that the total expected income from
R&D work in progress corresponds to expenses incurred. A considerable part of the on-going research
and development work is connected to our priority
areas within the dairy sector, particularly within health
and wholesomeness. In addition, we have research
note 10
and development work within the marine sector and
future innovative products. Research and development which is expected to be of lasting and substantial
value is not recognised as asset in the balance sheet as
future economic benefits cannot be demonstrated and
a less clear division between the different activities.
Future economic benefits can only be demonstrated
when the product has been on the market for a period
of time. It must be demonstrated that there is a profitable market for the products.
Amounts in NOK 1000
Land/buildings/
other real
property
Buildings/
installations
Machinery/
furniture and
fixtures
Transport means
Total 2010
Total 2009
122 020
3 543 629
7 404 547
1 054 650
12 124 846
12 200 516
Acquisitions (+) during the year
92 189
805 019
733 980
68 121
1 699 309
1 100 436
Disposals (-) during the year
-2 360
-45 404
-235 534
-69 900
- 353 198
-223 748
144
2 290
2 614
-112
4 937
-40 837
211 993
4 305 534
7 905 607
1 052 759
13 475 893
13 036 367
THE TINE GROUP
Exchange differences
Accumulated depreciation and write-downs at 31 Dec.
Depreciation for the year
Write-down for the year
-1 059
-2 099 693
-5 338 461
-774 795
-8 214 009
-8 711 027
210 933
2 205 841
2 567 146
277 964
5 261 884
4 325 340
-542
-126 173
-473 949
-75 728
-676 393
-661 329
–
–
-38 426
–
-38 426
-76 722
20-25 years
3-10 years
5-10 years
Straight-line
Depreciation plan
Straight-line
Straight-line
1 012
4 150
3 085
4 590
12 837
5 153
Operating leases
158
78 864
51 078
14 659
144 759
259 147
Book value at 31 Dec. of lease agreements recognised
in the balance sheet
216
–
67 466
42
67 724
91 724
Current year depreciation of leased assets
-37
–
-24 128
-19
-24 184
-26 963
Land/buildings/
other real
property
Buildings/
installations
Machinery/
furniture and
fixtures
Transport means
Total 2010
Total 2009
99 727
3 196 689
6 316 028
909 796
10 522 240
10 653 195
7 000
794 270
664 917
58 938
1 525 125
975 865
-724
-744
-51 254
-29 381
-82 103
-195 299
Gain / loss (-) on sale of tangible fixed assets
TINE SA
Acquisitions (+) during the year
Disposals (-) during the year
Accumulated depreciation and write-downs at 31 Dec.
Depreciation for the year
Write-down for the year
106 003
3 990 215
6 929 691
939 353
11 965 262
11 433 761
-647
-1 924 533
-4 651 173
-675 539
-7 251 892
-7 629 452
105 356
2 065 682
2 278 518
263 814
4 713 370
3 804 309
-508
-115 819
-400 359
-69 938
-586 624
-564 054
–
–
-26 126
–
-26 126
-26 623
20-25 years
3-10 years
5-10 years
Straight-line
Depreciation plan
Straight-line
Straight-line
1 012
50
354
4 093
5 509
4 735
Operating leases
–
51 214
46 840
2 350
100 404
202 648
Book value at 31 Dec. of lease agreements recognised
in the balance sheet
–
–
45 690
–
45 690
50 336
Current year depreciation of leased assets
–
–
-13 604
–
-13 604
-10 037
Gain / loss (-) on sale of tangible fixed assets
Buildings and installations consist of own production
premises, warehouses and administration buildings for
use in own dairy activity and production of ice cream
and marine products. Rental to external tenants is
insignificant. Tangible fixed assets where there were
indications of a decline in value are tested for impairment. Write-down to recoverable amount of tangible
fixed assets is carried out as a result of decisions on
future closing of plants, re-organisation of operations
and projects which have been less profitable than
expected.
59
note 11
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
Auditor’s renumeration
Amounts in NOK 1000
THE TINE GROUP
TINE SA
2010
2009 Remuneration to elected auditor - Deloitte AS
2010
2009
6 082
7 538 Statutory audit services
3 890
5 192
1 016 Renumeration for other attestation services
935
1 005
1 040
1 166 Renumeration for tax advisory service
545
483
1 135
1 191 Renumeration for other services
831
644
6 201
7 324
958
9 215
10 911 Total renumeration auditing and consultancy services
Renumerations for other services applies to assistance with environmental audits, hosting courses, assistance in connection with conversion from BA to SA and merger
of dairy companies as well as other matters. Renumerations for other certification services are mainly connected to the certification services towards the Norwegian
Agricultural Authority and other governmental agencies. Renumerations to the auditors are expensed in the year in which they are incurred.
THE TINE GROUP
2010
1 069
248
13
1 330
2009 Renumeration to other auditors
909 Statutory audit services
308 Renumeration for tax advisory service
11 Renumeration for other services
1 228 Total renumeration auditing and consultancy services
Renumeration to other auditors for 2010 includes the companies Norseland Inc., Salmon Brands AS and Bunes Fryselager AL. note 12
Amounts in NOK 1000
THE TINE GROUP
2010
1 001 183
925 789
-452 708
1 378 799
589
10 219
2 863 871
1)
TINE SA
2009 Cost category
974 538 Indirect production and operation costs
935 709 Transport costs
-428 649 Feed transport subsidy income (transport supplement and distribution supplement) 1)
1 327 181 Administration and sales costs
2 486 Loss on sale of tangible fixed assets
6 419 Loss on receivables and contracts
2 817 684 Total other operating costs
2010
2009
857 476
811 301
877 434
879 289
-452 708
-428 649
993 457
896 715
397
1 458
1 854
2 764
2 277 910
2 162 878
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.
note 13
Income from investments in subsidiaries
Amounts in NOK 1000
TINE SA
Group contribution
60
2010
2009
11 770
11 209
Dividend
13 573
20 652
Total income from investments in subsidiaries
25 343
31 861
Statistics
Subsidiaries
Addresses
note 14
Investments in subsidiaries and associated companies
Amounts in NOK 1000
Ownership
interest/voting
shares
Share of equity in the
company at
31 December 2010
Book value in TINE SA
at 31 December 2010
Book value in TINE SA at
31 December 2009
422 046
Registered offices
Acquisition
date
Diplom-Is AS
Nittedal
1991 1)
100 %
208 605
462 874
Fjordland AS
Oslo
1985
51 %
29 112
25 489
25 489
Wernersson Ost Holding AB
Ulricehamn, Sweden
2007
100 %
64 137
118 041
95 023
Floren Eiendom AS
Oslo
2002
100 %
1 692
1 692
1 692
FellesJuice AS
Oslo
2002
100 %
10 078
12 426
12 426
OsteCompagniet AS
Oslo
2001
100 %
3 278
3 053
3 053
Maritex AS
Sortland
2001
100 %
28 158
28 551
38 551
Næringsmiddelproduksjon AS
Oslo
2001
100 %
1 000
1 000
1 000
Gastronom AS
Bergen
2002
100 %
100
128
122
Salmon Brands AS
Fitjar
2004
51 %
7 344
16 398
16 398
Tine Eiendom Espehaugen AS
Bergen
2010
100 %
36 417
86 576
–
Norseland Inc.
Stamford, USA
1978
100 %
75 699
3 153
3 153
Norseland Holdings Ltd.
Ilchester, UK
2004 2)
100 %
26 403
92 422
92 422
Landbrukets Ferskvaredistribusjon AS
Oslo
1994
100 %
320
337
322
Bunes Fryselager AL
Porsgrunn
1975 3)
19 %
2 520
95
95
494 863
852 235
711 792
Subsidiaries
Companies directly owned by TINE SA
Total
Companies owned by subsidiaries
Bunes Fryselager AL
Porsgrunn
1975 3)
Norsk Iskrem AS
Nittedal
1989
100 %
Diplom-Is HB
Gothenburg, Sweden
1998 4)
100 %
Diplom-Is Danmark I/S
Brøndby, Denmark
1999 4)
100 %
Diplom-Is Sverige AB
Gothenburg, Sweden
2003/04/06 4)
100 %
Wernersson Ost AB
Ulricehamn, Sweden
2007
100 %
Wernersson Ferskvarugruppen AB
Jønkøping, Sweden
2007
100 %
Wernersson Tølløse Ost AS
Roskilde, Denmark
2007
Norseland Ltd.
Ilchester, UK
2008 5), 6)
100 %
Ilchester Holdings Ltd.
Ilchester, UK
2008 6)
100 %
Phonefood Ltd.
Ilchester, UK
2008 6)
100 %
Lentorn Holdings Ltd.
Ilchester, UK
2008 6)
100 %
40 %
80 %
Time of establishment of a legal entity
Previously Norseland Ltd
Total ownership interest in Bunes Fryselager AL for TINE SA and Diplom-Is AS amounts to 59%. The TINE Group’s total percentage of equity in the company amounts to NOK 7 825 000
4)
The entities were sold in 2010
5)
Formerly Ilchester Cheese Company Ltd.
6) Owned by Norseland Holding Ltd.
1)
2)
3)
Associated companies
THE TINE GROUP
TINE SA
Share of
result 2010
Share of
equity at
31 Dec.
2010
13 590 014
-7 779
26 103
669
33 882
15 337
12 457
11 097
71 583
8 693
65 738
779
779
21.54 %
4 000
2 357
15 293
1 977
14 336
5 600
5 600
1994
41.29 %
192 004
11 140
–
1 945
6 409
–
3 645
2010
50.00 %
50
Ownership
interest/
voting shares
No. of
shares/
units
2000
28.52 %
1948
49.83 %
Varhaug
1996
Lofotprodukt AS 1)
Leknes
Skånemeierier
Storhushåll AB 2)
Malmö,
Sweden
Registered
offices
Acquisition
year
TUN Media AS
Oslo
Landteknikk AL
Oslo
Fjordkjøkken AS
Share of
result 2009
Share of
equity at
31 Dec.
2009
Book value
at 31 Dec.
2010
Book value
at 31 Dec.
2009
15 337
1 671
8 175
–
–
–
–
Other associated companies
564
5 315
940
5 451
4 057
4 057
Total associated companies
19 050
126 469
14 224
125 816
25 773
29 418
The shares in Lofotprodukt AS were sold in February 2010. The gain from the sale, NOK 11 155 000, is included in the share of 2010 result
Skånemeierier Storhushåll AB is an associated company in the Wernersson group. Skånemeierier Storhushåll AB was founded in 2010 with 50/50 from Wernesson Ost AB and Skånemeierier Storhushåll AB, respectively. Goodwill is included in the percentage of equity with NOK 5 990 000, and in the share of result with NOK 413 000 in depreciation of goodwill.
1)
2) 61
note 15
Income statement
Balance sheet
Notes
Auditor’s report
CEO
This is TINE
The brand
Change in market value of financial current assets
Amounts in NOK 1000
Unit trust fund and listed shares
2010
2009
31 111
31 111
÷ disposals during the year
-6 393
–
24 718
31 111
Accumulated value adjustment at 31 December
-2 707
-2 709
Book value at 31 December
22 011
28 402
The changes in value for the year recognised in the accounts
2 603
5 778
Accounting gain upon realisation
2 607
–
note 16
Write-down of financial fixed assets Amounts in NOK 1000
THE TINE GROUP
TINE SA
2010
2009
–
– Subsidiaries
182
33 Other companies and receivables
182
33 Total write-down of financial fixed assets
2010
2009
10 000
49 000
180
25
10 180
49 025
Write-down of subsidiaries of TINE SA relates to Maritex AS. This is based on an evaluation of future earnings in the company and the company’s equity situation. Write-down
of subsidiaries in TINE SA for 2009 is related to Maritex AS and OsteCompagniet AS.
note 17
Financial risk and derivatives
TINE operates in a business that entails risk in many
areas. Risk management is not about removing risk,
but taking correct risk, based on the Group’s risk ability
and willingness to assume risk, expertise, solidity and
development plans. The purpose of risk management
is to identify threats to and opportunities for the company, and to manage risk towards an acceptable level
so as to provide reasonable security for achieving the
company’s objectives.
TINE has a unified 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 utilises interest rate and currency derivatives as part
of managing the Group’s currency and interest rate exposure. Interest rate swaps, forward currency exchange
contracts and currency options are entered into in the
interest of achieving the desired interest rate structure
for the lending portfolio as well as to hedge cash flows in
foreign currency that will affect the milk price.
Amounts in NOK 1000
Currency risk
TINE’s currency risk arises from future trade transactions that are mainly related to sale of goods and
purchase of raw materials and packaging abroad as
well as investments in and dividend from subsidiaries
outside Norway. Balance sheet risk is related to ownership interests in foreign subsidiaries and associated
companies in Sweden, Denmark, the UK and the US
with functional currency other than NOK. TINE’s financial policy allows for entering into forward currency
exchange contracts and options, as well as taking up
loans in foreign currency in order to reduce risk as a
result of exchange rate fluctuations.
In order to reduce risk in connection with trade transactions in foreign currency, TINE has signed forward
currency exchange contracts and currency options
related to acquisitions and sales of the USD and EUR
currencies, where TINE has its main exposure. Most of
the derivatives in EUR are related to sales, while USD
is purchased. The TINE Group has also defined parts
of the external loans in SEK, USD and GBP as hedging
instruments for net investment in foreign subsidiaries.
Currency hedging related to entering into currency
derivatives is not reflected in TINE’s balance sheet. The
currency derivatives are evaluated in accordance with
Section 5-9 of the Norwegian Accounting Act at fair
value in the balance sheet. Realised gain and loss, as
well as unrealised changes in fair value are recognised
in the income statement.
Fair value on currency derivatives is calculated based
on valuation techniques where expected future cash
flows are discounted to current values. Calculation
of expected cash flows and discounting of these take
place using observed exchange rates for the various
currencies.
The table below specifies the fair value of currency derivatives entered into as of 31 December:
Currency derivatives
Forward rate agreements (acquisitions and sales)
Options (acquisitions and sales)
Currency
Nominal amount
Unrealised gain / loss (-)
at 31 December 2010
-8 855
EUR
65 000
USD
27 500
6 573
EUR
26 000
-3 935
USD
21 500
Total currency derivatives
As of 31 December 2010, positive currency derivatives amount to NOK 9.6 million and negative currency
derivatives amount to NOK 12.8 million. All contracts
mature by the end of March 2012. In 2010, changes
in unrealised value of currency derivatives recognised in the income statement amount to NOK -2.2
62
2 995
-3 221
million. The TINE Group has hedged a share of the
net investments in Wernersson Ost AB, Norseland
Ltd. and Norseland Inc. by earmarking respectively
SEK 37 million, GBP 6 million and USD 10 million
of drawing facilities as hedging instruments. As of
31 December 2010, the accumulated unrealised
change in value on the hedged part of the drawing facility amounts to NOK 1.1 million after tax. The
accumulated loss of NOK 1.1 million is included in
Other equity in the TINE Group. For more details
regarding the drawing facility, see Note 28.
Statistics
Subsidiaries
Addresses
Note 17 continued.
THE TINE GROUP
2010
60 419
-81 868
-2 081
-23 530
TINE SA
2009
158 206 Realised currency gain exchange
-123 615 Realised exchange profit loss on currency
3 649 Unrealised currency exchange gain and loss
38 240 Net realised and unrealised currency gain and loss
Interest rate risk
Most of TINE’s interest rate exposure is related to the
lending portfolio. TINE’s financial policy for managing
interest rate risk is established based on an objective
of achieving the most cost-efficient financing possible, linked with a desire for a certain stability and
predictability in finance costs.
In order to reduce risk related to future interest rate
payments as a result of fluctuations in market interest
rates, TINE has opened for entering into interest rate
swaps, FRAs (forward rate agreements) and interest
rate options. As of 31 December 2010, TINE only has
outstanding interest rate swaps. The accounting treatment of interest rate swaps that are directly related to
an underlying loan is as for cash flow hedging. Other
interest rate swaps are recognised in accordance with
Section 5-2 of the Accounting Act, at the lowest of
2010
2009
59 588
124 190
-83 539
-111 482
-2 081
3 630
-26 032
16 338
acquisition cost and fair value.
Fair value on interest rate swaps is calculated based on
valuation techniques where expected future cash flows
are discounted to the present value. Calculation of
expected cash flows and discounting of these takes
place using observed market interest rates.
The table below specifies the fair value of currency derivatives, by class, entered into as of 31 December:
Amount
Market value as
of 31 Dec. 2010
3.6700 %
80 000
-1 068
3.5500 %
100 000
-962
18/03/14
3.6425 %
100 000
-1 249
06/05/09
18/03/14
3.7200 %
100 000
-1 490
28/09/10
28/09/22
3.9400 %
250 000
4 993
Interest rate swaps
28/09/10
28/09/22
3.6150 %
250 000
11 008
Interest rate swaps
02/07/12
30/06/15
3.8075 %
200 000
957
Interest rate swaps
02/07/12
30/06/15
3.7900 %
200 000
1 071
1 280 000
13 259
Interest rate derivatives
Start date
End date
Fixed rate
Interest rate swaps
31/03/09
18/03/14
Interest rate swaps
31/03/09
18/03/14
Interest rate swaps
29/04/09
Interest rate swaps
Interest rate swaps
Interest rate derivatives included in cash flow hedging
Total interest rate derivatives where the change in value is charged to equity 1)
Interest rate derivatives not subject to hedge accounting
Interest rate swaps
16/11/11
18/11/19
4.8400 %
100 000
-3 640
Interest rate swaps
01/12/11
02/12/19
4.6990 %
100 000
-2 606
200 000
-6 246
1 480 000
7 014
Total interest rate derivatives recognised in accordance with the lower of
cost or market principle 2)
Total interest rate swaps
Market value as of 31 December 2010 excludes accrued interest.
1) Fair value of currency derivatives that are included in cash flow hedging, NOK 13.3 million, is entered into the balance sheet as other long-term receivables. The accumulated amount related to cash flow hedging included in Other equity as of 31 December 2010 is NOK 9.5 million, of which NOK 7.4 million is recognised directly against Other equity in the current year.
2)
The value of interest rate derivatives that are evaluated at the principle of lower cost or market, NOK -6.2 million, is recognised in the balance sheet as a long-term financial liability.
INTEREST SENSITIVITY ANALYSIS
The analysis illustrates the interest risk associated with to the Group’s interest-bearing debt and interest derivatives. This is an illustration of how an interest rate change of
2 % will affect equity and the result, respectively. Any effects on the market value of the interest rate derivatives as a result of changes in the future yield curve are not
included in the analysis. A nominal tax rate of 28 % has been used.
Net profit after taxes
Equity
Net
exposure
NOK million
+2 %
-2 %
+2 %
-2 %
Bond issues with fixed interest rates
500
–
–
–
–
Bond issues with variable interest rates
380
-5.5
5.5
–
–
1 335
-19.9
19.9
–
–
134
-1.9
1.9
–
–
1 480
21.3
-21.3
18.4
-18.4
-5.9
5.9
18.4
-18.4
THE TINE GROUP
Other long-term interest-bearing debt, variable interest rate
Short-term interest-bearing debt, variable interest rate
Interest rate swaps at fixed interest rates
Total
63
Income statement
Balance sheet
Notes
Auditor’s report
CEO
This is TINE
The brand
Note 17 continued
Net profit after taxes
Equity
Net
exposure
NOK million
+2 %
-2 %
+2 %
-2 %
Bond issues with fixed interest rates
500
–
–
–
–
Bond issues with variable interest rates
380
-5.5
5.5
–
–
1 278
-18.7
18.7
–
–
100
-1.4
1.4
–
–
1 480
21.3
-21.3
18.4
-18.4
-4.2
4.2
18.4
-18.4
TINE SA
Other long-term interest-bearing debt, variable interest rate
Short-term interest-bearing debt, variable interest rate
Interest rate swaps at fixed interest rates
Total
Credit risk
Credit risk is the risk of a party inflicting a financial loss
on the other party by not fulfilling its obligations. TINE
assumes counterparty risk in the sale of goods, in investment of surplus liquidity and in financial derivatives
trading.
TINE has established routines for credit rating of customers and establishment of credit limits in relation to the
company’s credit policy. These guidelines allow e.g for
reassessment of guarantees or demanding cash payment
for deliveries of goods. The TINE Group’s customers
are wholesalers and individual customers in several
segments. Their capacity to pay is regarded as good
and TINE’s losses on receivables have historically been
low. In connection with the change in the fundamental
conditions in the world economy, the follow-up of exposed customer groups has been strengthened. TINE SA
has also entered into an operating guarantee scheme
where TINE guarantees maximum 50% of outstanding
credit which 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 in liquid assets are reduced through selection of
counterparties with high credit ratings.
note 18
LIquidity risk
The liquidity risk is the risk that TINE will not be able
to service its financial liabilities as they mature. TINE
manages its liquidity risk by having sufficient liquid
reserves and overdraft facilities in agreed credit limits
with banks and by continuous monitoring future cash
flows from the Group’s financial assets and liabilities.
TINE’s liquidity is considered to be good. TINE has a
loan potential which has not been utilised, and the
available framework indicates that the liquidity risk
can be regarded as very low.
TINE is in an investment phase and the work on
planning future plant structures and financing is in
progress. During 2010, TINE has taken up two new
long-term loans totaling NOK 900 million, and also
repaid bond issues totaling NOK 219 million. Reference is made to Note 28 where a further description
is given of overdraft facilities and the financing
situation.
RAW MATERIALS RISK
Raw materials risk is risk related to price trends on
input factors. The price of milk on the world market as well as in our closest markets (Nordic region
and the EU) is rising. The price development during
the first half of 2010 was stable, but we have seen a
considerable increase in the price of milk during
the last half of 2010. The rapid growth in price on
the world market during the autumn of 2010, is due
inter alia to lower production of milk and increased
demand. For instance, China bought large amounts of
whole milk powder. The prices on the world market are
expected to rise somewhat during 2011. TINE’s risk
with regard to the price of milk is connected with the
negotiations within agriculture where the target price
of milk is accepted through the negotiation of an agricultural agreement. Import tariffs are the framework
for how much the prices of products and therefore
target prices can be increased. From 1 January 2011,
a percentage tariff was introduced on consumer milk,
which has resulted in much better tariff protection for
these products.
During 2010 the price of raw materials, factor inputs
and packaging has risen internationally. In particular,
sugar, juice and cocoa have experienced a substantial
increase in prices.
The Norwegian krone has become even stronger
throughout 2010. The effects of a strong price increase
on foreign input factors and packaging have thereby
been lessened for Norwegian importers because of a
steadily stronger Norwegian krone.
Taxes
Amounts in NOK 1000
THE TINE GROUP
2010
1 085 486
303 936
TINE SA
2009 Reconciliation from nominal to actual tax rate:
847 743 Profit before tax
237 368 Expected income tax according to nominal tax rates
2010
2009
1 072 228
887 889
300 224
248 609
Tax effect of the following items:
17 003
15 191 Non-deductible costs
13 361
26 877
-15 544
-14 636 Non-taxable income
-11 324
-11 579
3 673
-134 488
5 900
2 550
12 379
-19 518
175 891
16.2 %
3 851 Differences in tax rates in other countries
-110 139 Payments to milk producers
5 942 Amortisation of goodwill
26 106 Change in write-down of deferred tax assets
10 393 Wealth tax
-46 Other items
174 030 Income tax expense
20.5 % Effective tax rate
–
–
-134 488
-110 139
–
–
–
–
12 318
10 344
-1 557
-2 630
178 534
161 482
16.7 %
18.2 %
64
Statistics
Subsidiaries
Addresses
Note 18 continued
THE TINE GROUP
TINE SA
2010
2009 Deferred tax effect of items recognised directly against equity:
2010
2009
2 889
4 643 Change in value cash flow hedging
2 889
4 643
2 889
4 643 Deferred tax effect of items recognised directly in equity
2 889
4 643
THE TINE GROUP / NORWAY
2010
163 254
THE TINE GROUP / INTERNATIONAL
2009 Split of income tax expense between Norway and other countries:
158 168 Income tax expense
2010
2009
12 637
15 862
TINE KONSERN
TINE SA
2010
74 778
2009 Tax payable in the balance sheet:
142 560 Income tax
– Tax effect of disbursed group contribution
–
12 379
87 157
10 393 Wealth tax
152 953 Tax payable in the balance sheet
2010
2009
77 898
122 851
-7 259
-26 716
12 318
10 344
82 957
106 479
Assets
Liabilities
THE TINE GROUP
2010
Assets
Liabilities
51 215
–
–
18 773
6 410
–
–
447 086
–
45 881
26 287
–
–
13 099
–
5 134
2009
Specification of tax effect of temporary differences and loss carried forward:
Fixed assets
Excess values through acquisitions
Inventories
Deferred taxable gains / losses
44 592
–
–
24 428
61 932
–
–
405 350
–
35 384
1 752
–
14 853
–
–
5 193
108 750
–
Remuneration / loss carried forward
107 059
–
192 662
529 973
Total
230 188
470 355
-80 616
-80 616
Offsetting of tax assets / tax liabilities
-120 001
-120 001
112 046
449 357
Deferred tax assets / tax liabilities
110 187
350 354
-95 520
–
Unrecognised deferred tax asset
-90 184
–
16 526
449 357
Net deferred tax asset / tax liability in the balance sheet
20 003
350 354
Deferred tax assets is recognised based on future earnings. Losses carried forward have no time limit. NOK 11 474 000 of the tax effect of loss carried forward belong to
Norwegian subsidiaries owned less than 90%.
TINE SA
2010
Assets
Liabilities
45 317
–
–
447 086
2009
Specification of tax effect of temporary differences and loss carried forward:
Fixed assets
27 492
–
–
35 949
24 284
–
–
–
–
3 765
Inventories
Deferred taxable gains / losses
Assets
Liabilities
38 294
–
–
379 598
51 430
–
–
30 622
898
–
25 459
–
–
4 706
97 093
486 800
Total
116 081
414 926
-97 093
-97 093
Offsetting of tax assets / tax liabilities
-116 081
-116 081
–
389 707
Deferred tax assets / tax liability in the balance sheet
–
298 845
65
note 19
Income statement
Balance sheet
Notes
Auditor’s report
CEO
This is TINE
The brand
Equity
Amounts in NOK 1000
THE TINE GROUP
2010
Cooperative
share
Subsequent
payment
fund
Other
equity
Minorities
Total equity
10 932
–
4 562 593
57 400
4 630 925
2009
Cooperative
share
Equity at 1 January
Subsequent
payment
fund
11 244
Total equity
Minorities
4 300 754
62 483
4 374 481
Change in equity for the year
–
–
906 460
3 135
909 595
–
–
-480 315
–
-480 315
–
340 000
-340 000
–
–
Net profit for the year and minority interest
–
672 168
1 545
673 713
Allocated to milk producers
–
-393 355
–
-393 355
Allocated to subsequent payment fund 1)
–
–
–
–
-312
–
–
-312
–
11 940
–
11 940
-1 243
–
–
–
-1 243
Payments/disbursement of cooperative share
capital
–
–
7 417
–
7 417
Hedging of future cash flows
–
–
-1 118
–
-1 118
–
–
–
–
–
Equity hedging of foreign companies
–
–
–
–
Provided by minority interests
–
–
276
276
–
–
–
-7 357
-7 357
The minority's share of disbursed dividend
–
–
-6 844
-6 844
–
–
1 229
95
1 324
Conversion difference/miscellaneous
–
-28 914
-60
-28 974
9 689
340 000
4 656 266
53 273
5 059 228
10 932
4 562 593
57 400
4 630 925
Equity at 31 December
TINE SA
2010
Cooperative
share
Subsequent
payment fond
Other equity
Total equity
10 932
–
4 728 189
4 739 121
2009
Cooperative
share
Equity at 1 January
Other equity
11 244
Total equity
4 450 486
4 461 730
Change in equity for the year
1)
1)
–
–
893 694
893 694
–
–
-480 315
-480 315
–
340 000
-340 000
–
Net profit for the year
–
726 407
726 407
Allocated to milk producers
–
-393 355
-393 355
Allocated to subsequent payment fund 1)
–
–
–
-1 243
–
–
-1 243
Payments/disbursement of cooperative share
capital
-312
–
-312
–
–
7 417
7 417
Hedging of future cash flows
–
11 940
11 940
–
–
–
–
Group contribution paid 2)
–
-67 293
-67 293
–
–
-1 593
-1 593
Miscellaneous
–
4
4
9 689
340 000
4 807 392
5 157 081
10 932
4 728 189
4 739 121
Equity at 31 December
The establishment of a subsequent payment fund presumes a decision in the Annual Meeting in April 2011.
Concerns group contribution granted from TINE Meieriet Sør BA to Diplom-Is AS.
note 20
Obligations related to financial leasing
Amounts in NOK 1000
THE TINE GROUP
TINE SA
31.12.2010
31.12.2009
31.12.2010
31.12.2009
45 692
50 336
53 978
58 729
Present value of minimum
95 767 lease payments
63 202
104 160 Nominal value
75 148
Estimated minimum lease payments which fall due during one year, two to five years, and over five years respectively.
THE TINE GROUP
1 year
TINE SA
2 to 5 years
More than
5 years
Total
20 095
41 586
1 521
Present value of minimum
63 202 lease payments
24 638
48 959
1 552
75 148 Fair value
1 year
2 to 5 years
More than
5 years
Total
10 413
33 758
1 521
45 692
13 032
39 395
1 552
53 978
Book value of leased assets is specified in Note 10 Tangible fixed assets, on page 59.
Fixed assets that are leased on terms that essentially
transfer the financial rights and liabilities to Group
companies are capitalised at current value of the
lease (financial lease). The liability is included in the
66
long-term interest-bearing debt. The fixed assets are
depreciated according to plan, and the liability is
reduced by the leasing payment after the deduction
of calculated interest cost. For other leasing agree-
ments, the rental payment is an operating expense
which is distributed over the leasing period.
Statistics
Subsidiaries
Addresses
note 21
Amounts in NOK 1000
TINE SA
2010
2009
179 970
181 353
Total long-term intercompany receivables
179 970
181 353
Long-term intercompany receivables are loans TINE SA has issued to subsidiaries. The loans are exempt from repayment, but interest is charged on the principal.
For 2009, the average interest rate was 4.0% p.a. and for 2010 the average interest rate was 4.8% p.a.
note 22
Other long-term receivables
Amounts in NOK 1000
THE TINE GROUP
31.12.2010
note 23
TINE SA
31.12.2009 Other long-term receivables
31.12.2010
31.12.2009
14 172
10 328 Carrying amount of financial derivatives classified as long-term receivables, cf. Note 17
14 172
10 328
19 828
22 412 Loans to associated companies
19 828
22 412
21 103
35 246 Other long-term receivables
16 131
19 490
55 103
67 986 Total other long-term receivables
50 131
52 230
Inventories
Amounts in NOK 1000
THE TINE GROUP
TINE SA
31.12.2010
31.12.2009 Specification
31.12.2010
252 886
254 658 Raw materials
221 380
225 450
640 851
581 117 Goods in production
466 720
519 999
594 648
678 001 Convenience products
501 743
469 200
49 041
1 537 426
64 038 Goods for resale
1 577 814 Total inventories
21 640
34 932
1 211 483
1 249 581
THE TINE GROUP
31.12.2010
1 384 727
152 699
1 537 426
31.12.2009
TINE SA
31.12.2009 Value assessment
973 513 Valued at acquisition cost
604 301 Valued at fair value
1 577 814 Total inventories
31.12.2010
31.12.2009
1 058 784
645 281
152 699
604 301
1 211 483
1 249 581
The Group’s inventories have been written down by NOK 19.5 million as of 31 December 2010 due to obsolescence and downgrading as a result of changed market
conditions for the individual product segment. The equivalent figure for 2009 was NOK 29.1 million. note 24
Trade receivables and accounts payable to associated companies
Amounts in NOK 1000
THE TINE GROUP
31.12.2010
1 182
TINE SA
31.12.2009 Outstanding accounts with associated companies
1 336 Trade receivables and other short-term receivables
31.12.2010
31.12.2009
1 182
1 321
19 828
22 412 Other long-term receivables
19 828
22 412
21 010
23 748 Total short and long-term receivables from associated companies
21 010
23 733
33 864
22 461 Trade accounts payable and other short-term liabilities
33 206
12 176
33 864
22 461 Total short-term liabilities to associated companies
33 206
12 176
67
Income statement
Balance sheet
Notes
Auditor’s report
CEO
This is TINE
The brand
note 25
Amounts in NOK 1000
THE TINE GROUP
31.12.2010
TINE SA
31.12.2009 Other short-term receivables
31.12.2010
9 324 Value of financial derivatives classified as short-term receivables, cf. Note 17
12 066
21 267 Quota loans to milk producers
17 345
31.12.2009
12 066
9 324
17 345
21 267
250 348
301 135
283 446 Other short-term receivables
240 895
145 550
116 549 Credit to milk producers, settled towards backpayment
145 550
116 549
476 096
430 586 Total other short-term receivables
415 856
397 488
Bank deposits, cash and money market securities
note 26
Amounts in NOK 1000
THE TINE GROUP
31.12.2010
TINE SA
31.12.2009
556 884
31.12.2010
394 243 Bank deposits, cash and money market securities
31.12.2009
466 150
236 988
consisting of:
203 455
973 216
7 297 Restricted bank deposits
1 023 763 Unused part of overdraft facilities
200 000
–
850 000
920 000
TINE SA has a group account contract with Danske Bank, Fokus Bank for a total overdraft facility for the whole of the Group with the exception of Norseland Inc.,
Norseland Ltd., Salmon Brands AS and Fjordland AS, which have separate bank contracts and overdraft facilities.
note 27
Minority interests
Amounts in NOK 1000
Minorities represent external owners’ shares in subsidiaries
Minority interests are distributed as follows:
2010
2009
39 612
46 722
Salmon Brands AS
7 056
4 168
Bunes Fryselager AL
5 438
5 034
Wernersson Ost AB
1 167
1 476
53 273
57 400
Fjordland AS
Total minority interests
note 28
Long-term loans
Long-term loans in TINE SA include NOK 880 million
in bond issues and NOK 900 million in other loans,
as well as NOK 332 million in multi-currency drawing
rights, with a borrowing limit of NOK 750 million.
For TINE SA, financial leasing contracts with a due date
later than one year amount to NOK 46 million and for
the TINE Group NOK 63 million. In 2010, the financial market has been liquid with relatively stable low
Amounts in NOK 1000
interest rates throughout the year.
The average interest rate for interest-bearing loans for
2010 was 4.40 %. The corresponding average interest
rate was 4.55 % in 2009. This is somewhat higher than
for 2010, mainly due to outstanding bond issues with
relatively high margins, which matured in 2009, as well
as high borrowing in combination with high market
interest rates at the start of 2009.
Bond issues
TINE SA has two bond issues traded on ABM (Alternative Bond Market) with a total outstanding amount
of NOK 880 million as of 31 December 2010. Both
loans are based on contracts with Norsk Tillitsmann
ASA. The loans have a negative pledge clause and are
on the same footing as other interest-bearing loans.
Amounts in NOK million
Face value
Interest
Duration
Description
Bond issue
NOK 500 million
Fixed 6.05 %
03/18/14
Coupon
Bond issue
NOK 380 million
Variable
03/18/14
Coupon
Export finance
NOK 400 million
Variable
06/30/15
Coupon
The Nordic Investment Bank
NOK 500 million
Variable
09/30/22
Payments starting
year 6
Multi-currency drawing right
TINE SA has a contract with four banks regarding longterm multi-currency drawing rights of NOK 750 million.
The drawing facility amounted to NOK 1 500 million
until June 2010, and it was then reduced to NOK 750
million The remaining drawing facility falls due with
NOK 750 million in June 2012. As of 31 December
2010, NOK 257 million was drawn on the loan contract.
Loan terms
TINE’s loan contracts have negative pledge clauses.
The contracts limit the possibility of taking up new loans
secured by mortgage without the approval of the lenders.
Other important loan conditions are requirements for
a minimum equity-to-assets ratio in the TINE Group,
limitation on access to use financial leasing over
NOK 100 million in major subsidiaries and that the sale
of assets which are a substantial part of the activity
must be approved by the lenders.
68
Statistics
Subsidiaries
Addresses
Note 28 continued
The following tables show contractual repayments on loans per year:
THE TINE GROUP
Total
repayments
at 31 Dec. 2010
Total
repayments
at 31 Dec. 2009
–
880 000
1 099 000
900 000
900 000
–
–
–
332 022
257 253
39 380
51 719
7 866
6 141
63 964
95 999
887 866
906 141
2 215 366
1 503 971
2015
and later
Total
repayments
at 31 Dec. 2010
Total
repayments
at 31 Dec. 2009
1 099 000
Repayments in:
2011
2012
2013
2014
Bond issue
–
–
–
880 000
Other long-term interest-bearing debt
–
–
–
–
Multi-currency drawing rights
Bank loans
–
332 022
39 380
–
–
–
–
–
Other loans
20 856
18 399
10 702
Total repayments
60 236
350 421
10 702
Loan type
2015
and later
TINE SA
Repayments in:
2011
2012
2013
2014
Bond issue
–
–
–
880 000
–
880 000
Other long-term interest-bearing debt
–
–
–
–
900 000
900 000
–
Multi-currency drawing rights
Bank loans
–
332 022
–
–
–
–
332 022
257 253
Loan type
–
–
–
–
–
–
Other loans
10 645
10 571
10 702
7 866
6 141
45 925
50 568
Total repayments
10 645
342 593
10 702
887 866
906 141
2 157 947
1 406 821
note 29
Short-term interest-bearing liabilities
Amounts in NOK 1000
THE TINE GROUP
31.12.2010
TINE SA
31.12.2009 Short-term interest-bearing liabilities
300 000 Certificate loans
100 000
34 000 Overdraft facility
33 823
334 000 Total short-term interest-bearing liabilities
133 823
note 30
31.12.2010
100 000
–
100 000
300 000
Amounts in NOK 1000
THE TINE GROUP
TINE SA
31.12.2009 Other short-term liabilities
16 828 Carrying amount of financial derivatives classified as short-term liabilities, cf. Note 17
15 933
note 31
300 000
–
31.12.2010
31.12.2009
31.12.2010
31.12.2009
15 933
16 828
785 400
705 511 Other short-term liabilities
625 608
547 052
801 333
722 339 Total other short-term liabilities
641 541
563 880
Mortgages
Amounts in NOK 1000
THE TINE GROUP
31.12.2010
124 877
TINE SA
31.12.2009
31.12.2010
112 471 Debt secured by mortgage
Carrying amount of pledged assets
31.12.2009
–
–
–
–
137 666
146 012 Buildings and land
–
–
195 480
216 771 Machines - movable property
–
–
–
–
119 785 Trade receivables
–
–
540 551 Total mortgaged assets
–
–
78 292
84 299
495 737
57 983 Inventories
A limited part of the long-term debt at Group level is secured by mortgage. This mortgage was provided in TINE’s subsidiaries at the time TINE took up the existing longterm loans in the Group. Negative pledge security is given in the TINE Group’s assets in that the company has obligated itself towards the lenders not to take up new loans
secured by mortgage without the consent of the lenders.
69
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
LOANS
As of 31 December 2010, loans to employees for
purchase of vehicles and PCs amount to NOK 6.4
million for the TINE Group and NOK 6.3 million for
TINE SA. As of 31 December 2009, total loans in this
connection were NOK 6.7 million for the TINE Group
and NOK 0.6 million for TINE SA, respectively.
The utilised limit as of 31 December 2010 is NOK 140
million, of which tax withholding guarantees amount
to NOK 119 million.
TINE SA stands surety towards Danske Bank, Fokus
Bank for NOK 178 million as security for that part
of the guarantee limit which is used by TINE’s subsidiaries.
has been granted to Norseland Ltd., where TINE SA
guarantees the company’s operation for the next 12
months.
GUARANTEES TINE SA:
Bank guarantees
Danske Bank, Fokus Bank has provided a total guarantee limit of NOK 300 million at the disposal of TINE
SA. The guarantee covers a tax withholding guarantee
for subsidiaries, guarantee to the Norwegian Agricultural Authority concerning import quotas of cheese,
transport licence guarantees, rental guarantees and
contract guarantees.
Other guarantees
NOK 148 million: TINE SA stands surety vis-a-vis
Danske Bank, Focus Bank as security for the signed
agreement regarding group allocation with majorityowned subsidiaries.
NOK 1.5 million: Parent company guarantee by
TINE SA to Toyota Material Handling Norway AS as
security for Diplom-Is AS’ liabilities relating to a signed
lease agreement.
note 32
note 33
Loans and guarantees
GBP 8 million: Parent company guarantee by TINE SA
to Danske Bank, Focus Bank as security for Norseland
Ltd.’s liabilities to the bank. A «Letter of Support»
In general, TINE SA covers maximum 50 % of the
current operating credits the milk producers have in
the Operating Credit Scheme for Agriculture.
Outstanding accounts with the Norwegian Agricultural Authority – market regulation and subsidy schemes
Market schemes for milk consist of:
1) The quota scheme for milk which is one of the
regulation measures to adjust milk production to
requirements.
2) Market regulation which TINE handles on behalf of
all the milk producers in the country.
3) Subsidy schemes for milk producers: Basic and
district subsidies.
4) Price compensation scheme which equalises
between milk applications and geographic diffe rences.
5) Import tariffs which are notified through the WTO
agreement.
Outstanding accounts here include market regulation,
(2) subsidy schemes (3) which are agreed in the agricultural agreement and where TINE also has the task
of payment to its owners, as well as the price compensation scheme (4).
Milk deliveries vary throughout the year and the
variation is different in different areas of the country,
while the domestic consumption is relatively steady.
The need for regulation therefore arises from the lack
of correlation between the supply of milk and consumption.
Market regulation
TINE SA ensures market regulation in the dairy sector on
behalf of all the milk producers in the country. The purpose is to implement different regulatory measures for:
on the one hand to ensure all milk producers sale of their products at agreed target prices, and
on the other hand, TINE Milk Supplies shall ensure satisfactory supplies of raw milk on equal terms to all players in the market scheme for milk.
The Sales and Marketing Council is responsible for
the regulations that set the terms for implementation
of market regulation, and the Sales and Marketing
Council manages the application of the funds. The
Norwegian Agricultural Authority is the secretariat
for the Sales and Marketing Council. The Authority
considers applications/proposals from the market
regulator and presents recommendations for decisions to the Council.
•
•
EUR 6 million: Parent company guarantee by TINE
SA to Danske Bank, Focus Bank as security for
Wernersson Ost AB’s liabilities to the bank.
The most important sales measures are regulatory
storage, regulated transport of milk, compensation for unused production capacity and regulatory
export. In addition, funds are used for professional
measures directed towards quality and breeding work
at dairy farms, information work undertaken by the
Information Office for Dairy Products (melk.no) and
price reduction of school milk. Administration costs
in TINE and costs for administration of the scheme
in the Norwegian Agricultural Authority/Sales and
Marketing Council are also incurred.
The budget for TINE’s costs including market adjustment in 2010 was NOK 109.9 million. Including professional measures and information activities, support to
KSL Matmerk and administration of market regulation
in the Norwegian Agricultural Authority and the
Norwegian Agricultural Marketing Board, the budget
totalled NOK 158.9 million. The cost of market regulation is covered by all the country’s milk producers
paying a sales tax of NOK 0.09 per litre for the first
half of the year and NOK 0.08 per litre for the second
half of the year. The cost coverage also includes paid
over-production tax and any income from extraordinary sale of quotas.
The market regulation section is responsible for ensuring that TINE SA receives coverage for its regulation
costs, as presented in the following table. TINE SA’s
costs for market regulation, including administration
of the scheme, are not included in the accounts for
TINE Milk Supplies.
Basic and district subsidies
This is a subsidy that TINE pays to its owners in
accordance with an agreement with the authorities.
The amount of the subsidies is negotiated in the agricultural agreement and varies based on the extent of
production and geographical location The money is
transferred from the Norwegian Agricultural Authority
and is paid to producers in the producer settlement.
70
Statistics
Subsidiaries
Addresses
Note 33 continued
Amounts in NOK 1000
2010
2009
Available funds
Outstanding accounts at 1 January
8 143
-11 619
Payments/disbursements
-23 891
17 319
Adjustments for previous years
15 748
-446
Received for professional measures and information activities
33 452
33 403
Sales tax funds
109 930
166 589
Total available funds
143 382
205 247
Price write-down export
12 368
40 419
Price write-down domestic, excluding school milk
10 025
17 313
Other measures, excluding administration and interest
38 174
60 149
School milk scheme
29 658
34 340
Administration TINE and interest
11 469
11 609
101 694
163 830
Expenditures
Sales measures, school milk, administration and interest:
Total expenditures excluding professional measures
Professional measures and information activities
Total expenditures
Outstanding sales measures at 31 December
33 452
33 403
135 146
197 233
8 236
8 014
Collected taxes
Collected sales tax
124 070
138 757
Collected over-production tax
47 360
59 350
Collected research tax
22 761
22 130
-13 057
-27 245
Outstanding accounts between the Norwegian Agricultural Authority and TINE SA at 31 December
Unpaid, collectable taxes
Receivable subsidy scheme
Payable compensation scheme
5 014
45 604
-51 229
-33 155
Basic and district subsidies
Basic subsidy
District subsidy
61 789
57 349
477 943
462 283
Basic and district subsidies disbursed from TINE SA to milk producers on behalf of the Norwegian Agricultural Authority (SLF).
COMPENSATION SETTLEMENT MARKET SCHEME
FOR MILK
The price compensation scheme for milk is intended
to regulate the price differentiation of milk as raw
material for different applications in accordance with
the agricultural agreement’s provisions by ensuring a
higher total market consumption and at the same time
enabling milk producers to receive equal milk prices
independent of milk applications and location of production. Another important premise for the scheme
Adjustment tax/addition and feed transport subsidy
In-freight addition
Distribution addition
Total in-freight addition and distribution addition (see Note 12)
Settlement in-freight addition and distribution addition previous years
Main milk/by-product application
Settlement main milk/by-product application previous years
Net adjustment tax/addition and feed transport subsidy
is to ensure equal competition conditions for the
players who are part of the scheme. The statutory
basis for the scheme is the Regulations relating to the
price compensation scheme for milk, laid down by
the Ministry of Agriculture on 4 December 2003.
2010
2009
-442 049
-417 782
-10 659
-10 867
-452 708
-428 649
37
-93
652 857
644 271
-24 213
6 276
175 973
221 805
In-freight addition and distribution addition are recognised in the income statement under other operating expenses, see Note 12. Main milk/by-product application is charged as commodity cost. 71
note 34
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
Norwegian Institute of Agricultural Financial Research
(NILF), and approved by the Norwegian Agricultural
Authority (SLF). Over the course of the seven years
that TINE Råvare has existed, the agreements have
been further developed and in 2010, as a result of the
merger, the agreements were converted to service
instructions applicable for TINE Råvare and the various joint areas within TINE SA. Formally, TINE Råvare
is included as a part of TINE’s annual accounts, but
through the contract between TINE SA and the
Government by SLF, any surplus/deficit in TINE Råvare
shall be settled against the milk producers. In addition, separate reporting shall be undertaken of the
accounts for TINE Råvare which documents that TINE
has met its obligations in relation to this contract.
The audit of TINE Råvare will be carried out by the
same audit firm that performs the audit of the company
accounts and consolidated accounts for TINE SA.
The 2010 accounts for TINE Råvare show a profit
of NOK 16.3 million. The profit as of 31 December
2010 will be settled towards the milk producers in the
next year and is therefore included in the basis for
stipulation of disbursement price to the producer (the
basic price) over the next year. The various income,
expense and balance sheet items for TINE Råvare
are included in the respective accounts and balance
sheet items in the company accounts for TINE SA. It
is only the net result in TINE Råvare which is eliminated from the net result in TINE SA. The accounts
for TINE Råvare are presented below.
TINE Råvare
TINE Råvare was established as a separate accounting and profit centre from 1 January 2004, based
on an agreement signed between the Government
and TINE SA (then TINE BA) stipulating that there
must be a clear administrative and accounting distinction between raw materials handling and processing
in TINE. TINE Råvare performs all tasks related to
handling of milk as raw material from the milk producers and up to the individual participants in the
market scheme for milk. All players, including TINE,
purchase raw milk at the same price from TINE Råvare. To carry out its tasks, TINE Råvare purchases
various services from the dairies or from other components of TINE SA. Separate contracts have been
entered into for these services which basically build
on a set-up developed and quality-assured by the
Amounts in NOK 1000
Accounts for TINE Milk Supplies
2010
2009
Sales of raw cow and goat milk
6 556 889
6 415 058
Cost of raw cow and goat milk
-6 160 336
-5 982 712
Gross profit
396 553
432 345
Producer functions
152 693
159 574
Coordination towards farmers
24 147
25 262
124 558
129 818
37 144
38 884
8 751
41 894
Own costs in TINE Milk Supplies
16 174
18 889
Administration and infrastructure
13 626
16 124
Farm tanks
Milk inspection
Collection and inbound transport (net)
Interest on working capital
-7 119
-8 244
Membership fee and Geno
-16 090
-16 134
353 885
406 066
Total costs
Gain / loss TINE Milk Supplies before carry-forward
42 669
26 279
Gain / loss carried forward from last year
-26 378
-52 658
Gain / loss TINE Milk Supplies to carry-forward
16 291
-26 378
note 35
Business combinations and changes in ownership interests
Tine SA purchased 100% of the shares in Tine Eiendom Espehaugen AS in February 2010. The company owns a lot that TINE plans to use for a future new dairy plant in
Bergen. The property is located at Espehaugen, near Flesland. Reference is made to Note 14.
note 36
Provisions
THE TINE GROUP
2010
2009
Reorganisation costs
10
18
Production contract for cheese abroad
29
33
Reorganisation costs include the final payment and costs of buying out of rental contracts. Reorganisation measures have been completed both in TINE SA’s dairy activity
and in Diplom-Is Sverige during both years. Production contract for cheese abroad, see comment under TINE SA, next page.
72
Statistics
Subsidiaries
Addresses
Note 36 continued
TINE SA
2010
2009
Agreement regarding minimum use of marine oils
13
10
Production contract for cheese abroad
17
0
Production contract for cheese abroad, onerous contract volume
29
33
TINE SA has entered into a binding contract with
Maritex AS for an annual minimum purchase of marine
oils. The provision represents the difference between
expected purchase and obligated minimum purchase
note 37
for 2010. TINE SA has entered into a licensing contract
with Dairygold Ltd. in Ireland concerning production
of Jarlsberg. The contract includes a volume of minimum 3 000 tonnes per year up to and including
Other off balance sheet liabilities and contingent liabilities
against the State, represented by the Norwegian
Competition Authority, asserting that the decision
should be repealed. Oslo District Court found in favour
of TINE SA in the spring of 2009. The Norwegian
Competition Authority appealed the decision to
Borgarting Court of Appeal, asserting that the original
decision should be upheld. Borgarting Court of Appeal
found in favour of TINE SA in the autumn of 2010 in
two of the Norwegian Competition Authority allegations
regarding violation of the Competition Act, while the
Court found in favour of the Norwegian Competition
Authority in one of the allegations concerning misuse
of a dominant position. At the same time, the Court of
Appeal reduced the administrative fine to NOK 30 million. Parts of the Court of Appeal’s decision have been
appealed to the Supreme Court of Norway, as TINE SA
believes no proof has been furnished regarding violation
of the Competition Act. As a result of the appeal hearing
and pending the final decision, no accounting provisions
have been made for this matter. Norseland Inc. has a
production contract with Alpine Cheese Company in the
US concerning production of Jarlsberg. The agreement
runs until 2013 with an automatic renewal for 10 years
unless one of the parties terminates the agreement.
Norseland Inc. is obligated to place a minimum of 907
tonnes of cheese with Alpine each year.
reaching these objectives. We pay taxes in connection
with discharge to water and delivery of different types of
waste. There are environmental taxes on several types
of packaging materials. Investments are being made to
reduce TINE’s environmental impact, e.g. by building
and upgrading of cleaning plants, equipment for saving
energy and water and equipment for source separation
of waste. For further information, reference is made to a
separate description in the annual report.
Subsidiaries in the TINE Group have rental relationships
and rental contracts concerning rental of external office
premises, rental of warehouse and refrigeration plants,
rental of bottling machines and other production machinery, rental of trucks and other means of transport,
rental of office machines and rental of computers. In
2005, the Norwegian Competition Authority notified
TINE SA (then TINE BA) of an administrative fine of up to
NOK 45 million for breach of the Competition Act. The
claim was that TINE had abused a dominant position.
The final decision from the Norwegian Competition
Authority came in February 2007 and was in line with
the prior notification in 2007, TINE SA brought action
note 38
Environmental issues
The TINE Group has adopted environmental objectives
within the areas of waste, discharge to water, phasing
out of refrigerants, energy consumption and optimising of packaging materials. There are both operating
expenses, wage costs and investments connected to
note 39
2014. The provision partly represents the difference
between expected minimum purchase and partly
expected loss on resale.
Major individual transactions
THE TINE GROUP
Balance sheet
2010
2009
Investments in larger new plants
1 069
254
Write-down of tangible fixed assets
39
77
Costs connected to reorganisation and closure
10
18
78
–
Cost
Income
Contractual pension (AFP)
For investments in larger new plants and write-down of tangible fixed assets, see comments under TINE SA. Write-down of tangible fixed assets are mainly related to discontinued products due to market development and reduced profitability, as well as structural streamlining. Cost due to reorganisation and discontinuations are mainly related to
TINE SA’s dairy activities and Diplom-Is in Sweden. As regards the effect of contractual pension (AFP), see comment under TINE SA.
TINE SA
Balance sheet
2010
2009
Investments in major new plants
1 069
254
Write-down of tangible fixed assets
26
27
Write-down of financial fixed assets
10
49
77
–
Cost
Income
Contractual pension (AFP)
Investments in major new plants for 2009 and 2010 apply to a new dairy plant at Jæren, expansion of the dairy plant at Verdal, and expansion of the terminal and warehouse in
Oslo. Write-down of tangible fixed assets are mainly related to discontinued products due to market development and reduced profitability. See Note 16 for further comments
concerning write-down of financial fixed assets. The result is influenced by a positive non-recurring effect related to changes in the rules for contractual pension (AFP).
73
note 40
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
Government grants
Amounts in NOK 1000
Regarding the TINE Group and TINE SA, innovation and other governmental and municipal grants have been received as shown in the following table. The grants are
presented net of costs incurred. THE TINE GROUP
note 41
TINE SA
2010
2009
2010
1 063
1 213 Tax-related incentive scheme
2 802
3 865
2009
516
207
1 044 Other governmental and municipal grants
2 802
1 044
2 257 Total government grants
3 318
1 251
Discontinuation and divestment of business
Diplom-Is’ ice cream activities in Sweden and Denmark
were sold in 2010. The business in Sweden was sold
with effect from 8 February 2010 and the business in
Denmark was sold with effect from 1 October 2010.
The ice cream businesses in Sweden and Denmark
are presented together with other businesses in the
Amounts in NOK 1000
income statement, balance sheet, cash flow statement and notes. The sale of the businesses yielded a
total accounting loss of NOK 7 604 000 in 2010.
The main figures from the annual accounts for the ice cream business in Sweden and Denmark are shown below.
The result of the business 2010
2009
256 623
Operating income
124 526
Operating expenses
153 575
359 309
Operating result
-29 049
-102 686
The assets and liabilities of the business
74
2010
12.31.2010
12.31.2009
Total assets
57 867
157 781
Debt
72 913
162 442
Statistics
Subsidiaries
Addresses
Translation from the original Norwegian version
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 for the parent company,
showing a profit of NOK 893 694 000, and the financial statements for the group, showing a profit of NOK 909 595 000. The financial
statements comprise the balance sheets as at 31 December 2010, income statements and cash flows statements 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 is 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 determines 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.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of TINE SA and of the group as at 31 December
2010, 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 allocation of the profit
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 the going concern assumption, and the proposal for the allocation of the profit, that presumes
decision of establishment of subsequent payment fund in the annual meeting, complies with the law and regulations and that the information
is consistent with the financial statements.
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 the company’s 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, 16 February 2011
Deloitte AS
Vidar Nilsen (signed)
State Authorised Public Accountant (Norway)
[Translation has been made for information purposes only]
75
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
highlights 2010
• The market has been characterised by declining
sales in the supermarkets and growth in discount
chains.
• The Company has had a challenging market situation, but through efficient sales and the right product choices, it has delivered a satisfactory result.
key figures (nok million)
THE TINE GROUP
Subsidiaries
Tine’s domestic dairy operations
OSTECOMPAGNIET AS
ostecompagniet as
markets and sells TINE’s
speciality cheeses, Norwegian farm cheese and
imported cheese from
large parts of Europe.
Ostecompagniet AS’ primary goal is to develop
the market for speciality
cheeses in Norway. Its
vision is “Bringing
cheese with character to
the people”.
turnover
operating profit
number of employees
2010
2009
265
5
13
260
1
13
Read more on ostecompagniet.no
Tine’s international dairy operations
NORSELAND INC
NORSELAND LTD.
WERNERSSON
OST AB
76
norseland inc ripens,
markets and distributes
specialty cheeses from
TINE and other producers to supermarkets and
the institutional household market in the US.
highlights 2010
• Norseland Inc delivered excellent results in spite of
difficult financial times in the US.
• The Company consolidated its position as category
leader in the Swiss type cheese category
• There has been robust growth in sales of Jarlsberg
wheels from Norway
norseland ltd. ripens,
markets and distributes
specialty cheeses from
TINE and Ilchester in the
grocery retail market in
England.
highlights 2010
• Good growth in sales of both TINE and Ilchester
brands in England, but stiff competition puts pressure on the margins.
• New slice line was installed and came online in
own production premises in Somerset.
• Good sales of Ilchester brands in for example the
US and Sweden through TINE’s own companies.
wernersson ost ab
ripens, markets and distributes a broad and international cheese selection for supermarkets
and the industrial household market in the
Northic region.
highlights 2010
• Large and successful Jarlsberg campaign on TV and
in social media.
• The company consolidated its position as Sweden’s
second largest cheese supplier.
• Cooperation with Skånemejerier in the industrial
household market with the establishment of a joint
company
key figures (usd million)
turnover
operating profit
number of employees
2010
2009
156
5
33
175
5
32
Read more on norseland.com
key figures (gbp million)
turnover
operating profit
number of employees
2010
2009
44
-1
162
43
-1
157
Read more on norseland.co.uk
key figures (sek million)
turnover
operating profit
number of employees
2010
2009
650
18
99
635
19
87
Read more on wernerssonost.se
Statistics
Subsidiaries
Addresses
Other business
DIPLOM-IS AS
FELLESJUICE AS
diplom-is manufactures
and markets ice cream
and frozen desserts.
fellesjuice as produces
and sells juice and other
non-dairy drinks, such as
iced tea and smoothies.
The best known brand
name is Sunniva
highlights 2010
• In Norway, ice cream sales were weak for all players, but Diplom-Is maintained its position in the
market.
• The company has a broad launch programme, especially within Royal one-litre ice cream.
• Diplom-Is has sold the Swedish and Danish part of
the business and laid a foundation for a focused effort in the Norwegian ice cream market in 2011.
highlights 2010
• FellesJuice worked hard on building Sunniva as
Norway’s most familiar brand of juice, which will
continue in 2011.
• Market surveys showed that Sunniva is in the process of establishing itself as a strong brand.
• The total market for juice declined somewhat.
turnover
operating profit
number of employees
2010
2009
1 022
-2
441
1 152
-87
584
Read more on diplom-is.no
2010
2009
194
4
9
224
7
8
2010
2009
1 130
13
75
1 002
21
79
turnover
operating profit
number of employees
Read more on sunniva.no
FJORDLAND AS
MARITEX AS
SALMON
BRANDS AS
fjordland as is a brand
name company that carries out development,
marketing and sale of
fresh convenience food,
margarines, yoghurt and
desserts in the Norwegian market.
highlights 2010
• Fjordland still inWests heavily in innovation and
category growth within fresh convenience food.
• 30 per cent of all Fjordland’s articles represent new
products or concepts.
• Additional focus on strengthened profitability in
2011 will ensure lasting innovation and competitiveness.
maritex as produces superior marine oils
(EPADHA) for use in dietary supplements and
nutritional products, on
both the domestic and
international markets.
highlights 2010
• First deliveries of EPADHA to the bread industry in
India.
• Broad distribution to Norwegian bread producers.
• Stable, high quality in the products from the production facility on Sortland.
salmon brands as
increases the creation of
value on fresh salmon
through innovation, processing and branding.
highlights 2010
• SALMA has consolidated its position as Norway’s
first brand of fresh fish.
• Continued robust growth in Norway, where the distribution over the course of the year became nationwide.
• Own branch office established in Sweden, which
together with France and Germany make up SALMA’s export markets.
turnover
operating profit
number of employees
Read more on fjordland.no
2010
2009
17
-11
12
20
-19
14
2010
2009
129
9
2
80
-4
-
turnover
operating profit
number of employees
Read more on maritex.com
turnover
operating profit
number of employees
Read more on salma.no
77
CEO
This is TINE
The brand
Income statement
Balance sheet
Notes
Auditor’s report
ADDRESSES
HEAD OFFICE
tine sa
P.O.Box 25,
NO-0051 OSLO
Norway
street adress
Dronning Eufemias
gate 6
Telephone
+47 75 66 30 80
Fax +47 22 96 72 05
fi[email protected]
TINE SA, REGIONS
tine East
P.O. Box 113
Kalbakken,
NO-0902 OSLO
Norway
street adress
Bedriftsveien 7
Telephone
+47 75 66 30 80
managing director
tine North
P.O. Box 1054,
NO-9480 HARSTAD
Norway
street adress
Skogveien 18
Telephone
+47 75 66 30 80
managing director
Clement Roaldsveit
WHOLLY-OWNED
SUBSIDIARIES
diplom-is as
P.O. Box 23,
NO-1483 SKYTTA
Norway
Bjørn Moldskred,
wernersson ost ab
Industrivägen 5,
SE-523 90 Ulricehamn,
Sweden
Telefon +46 321 261 50
Fax +46 321 261 59
managing director
Magnus Ekstrand
magnus.ekstrand@
wernerssonost.se
www.wernerssonost.se
bjorn.moldskred@
diplom-is.no
www.diplom-is.no
Kjell Sårheim
tine South
P.O. Box 8053
Postterminalen,
NO-4068 STAVANGER
Norway
street adress
Grannessletta 112
Telephone
+47 75 66 30 80
managing director
Kjetil Thu
tine West
P.O. Box 6030
Postterminalen,
NO-5892 BERGEN
Norway
street adress
Minde Allé 10
Telephone
+47 75 66 30 80
managing director
Leif Arne Berge
Tine Central Norway
Landbrukssenteret
Tunga,
NO-7005 TRONDHEIM
Norway
street adress
Bromstadvn. 68
Telephone
+47 75 66 30 80
managing director
Finn Bjørgo
fellesJuice as
P.O. Box 113
Kalbakken,
NO-0902 OSLO
Norway
managing director
André Gobel
[email protected]
www.fjordland.no
Bedriftsveien 7
norseland inc. (us)
1260 East Main Street,
Stamford, CT 06902
USA
Telephone
+1 203 324 5620
Fax +1 203 325 3189
salmon brands as
P.O.Box 25,
NO-0051 OSLO
Norway
Telephone
+47 75 66 30 80
general manager
president and ceo
general manager
Kjell Sårheim
[email protected]
From 1 May 2011
Siw D. Steen
www.sunniva.no
John J. Sullivan
[email protected]
www.norseland.com
Trym Eidem Gundersen
trym.eidem.gundersen@
tine.no
www.salma.no
Street address
maritex as
Havnegata 17
NO-8400 SORTLAND
Norway
Telephone
+47 76 11 06 00
norseland ltd. (uk)
Somerton Road,
Ilchester, Somerset
BA22 8JU, England
Telephone
+44 (0) 1935 842800
Fax
+44 (0) 20 8622 3247
general manager
ceo
Torill Monsen-Abelseth,
torill.monsen-abelseth@
maritex.com
www.maritex.com
Nigel Meadows
[email protected]
www.norseland.co.uk
ostecompagniet as
P.O.Box 6678
Etterstad,
NO-0609 OSLO
Norway
street adress
Tevlingveien 23
Telephone
+47 75 66 30 80
general manager
Rune B. Jenssen
[email protected]
www.ostecompagniet.no
www.tine.no
vd
PARTLY OWNED
SUBSIDIARIES
fjordland as
Brynsengveien 10
NO-0667 OSLO
Norway
Telephone
+47 22 97 49 00

TINE_Annual Report 2010

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