Iisalmi, 2011-02-24 12:39 CET (GLOBE NEWSWIRE) -- OLVI PLC                 FINANCIAL STATEMENTS BULLETIN 24 FEB 2011

OLVI GROUP FINANCIAL STATEMENTS JANUARY TO DECEMBER 2010

Olvi Group’s performance and growth were excellent. The sales volume, net sales and comparable operating profit increased in all of the Group’s geographical areas.

January-December in brief:

• Olvi Group’s sales volume increased by 12.6 percent to 472 (419) million litres
• Consolidated net sales increased by 9.6 percent to 267.5 (244.2) million euro
• Consolidated operating profit increased by 9.8 percent to 30.5 (27.8) million euro
• The business in Belarus has developed well. The investment programme has begun as planned.
• Olvi Group’s earnings per share amounted to 2.41 (2.15) euro, and the Board proposes a dividend of 1.00 (0.80) euro per share
• The equity to total assets ratio increased to 54.7 (47.3) percent

KEY RATIOS

Lasse Aho, Managing Director of Olvi plc, says the following with regard to the financial statements: “Olvi Group’s performance and growth in 2010 were excellent. Our overall market position strengthened across our entire operating area, and Olvi Group’s financial position and liquidity improved further. Comparable operating profit improved substantially. This was attributable to good reliability of deliveries made possible by more efficient production operations, successful new products launched in profitable product groups during the year, as well as the exceptionally good weather last summer, which had a particular effect on sales growth in mineral waters, soft drinks, juices and cider.”  

OLVI GROUP’S SALES VOLUME, NET SALES AND EARNINGS
 

January to December 2010

Olvi Group’s sales volume in January-December 2010 amounted to 472 (419) million litres. This represents an increase of 53 million litres or 12.6 percent. The sales volume increased in all operating areas and made the all-time high

In January-December, sales in Finland increased by 7 million, in the Baltic states by 29 million, and in Belarus by 24 million litres.

The Group’s net sales from January to December amounted to 267.5 (244.2) million euro. This represents an increase of 23.3 million euro or 9.6 percent. Net sales increased in all of Olvi Group’s operating areas thanks to the good development in sales volume.

Net sales in Finland amounted to 111.0 (104.5) million euro. Net sales of the Baltic subsidiaries amounted to 127.8 (119.9) million euro, while net sales in Belarus amounted to 40.8 (30.3) million euro. The increase in net sales was 6.5 million euro or 6.2 percent in Finland, 7.9 million euro or 6.6 percent in the Baltic states, and 10.5 million euro or 34.6 percent in Belarus.

Olvi Group’s operating profit for January-December stood at 30.5 (27.8) million euro, or 11.4 (11.4) percent of net sales. The operating profit improved by 2.7 million euro or 9.8 percent. The previous year’s consolidated operating profit included 3.2 million euro of non-recurring income arising from the recognition of OAO Lidskoe Pivo’s prescribed debts. The comparable consolidated operating profit in 2010 improved by 5.9 million euro or 24.3 percent. All Olvi Group companies posted a clearly better comparable operating profit in relation to 2009.

Operating profit in Finland increased by 2.1 million euro to 11.7 (9.6) million euro. The operating profit in Finland includes 0.6 million euro of sales gains on decommissioned production equipment and 0.6 million euro of costs due to the scrapping of non-marketable packaging materials.

Operating profit in the Baltic states increased by 2.9 million euro to 15.0 (12.1) million euro. Operating profit in Belarus diminished by 1.4 million euro to 4.4 (5.8) million euro. Comparable operating profit in Belarus between January and December 2009, excluding non-recurring gains from the recognition of prescribed debts, amounted to 2.6 million euro. This means that the accumulated operating profit for the year 2010 in Belarus improved by 1.8 million euro in relation to the comparable operating profit in 2009.

The Group’s profit after taxes in the period under review was 25.3 (23.0) million euro. Earnings per share calculated from the profit belonging to parent company shareholders was 2.41 (2.15) euro in January-December.

October to December 2010

The sales volume in October-December was 107 (93) million litres. This represents an increase of 14 million litres or 14.6 percent. The sales volume increased across all of Olvi Group’s operating areas.

Sales in Finland increased by 3 million litres to 34 (31) million litres, and sales in the Baltic states increased by 6 million litres to 53 (47) million litres. Sales in Belarus improved substantially, showing an increase of 6 million litres and arriving at 24 (18) million litres. Intra-Group sales declined by 2 million litres in the fourth quarter.

Olvi Group’s net sales in October-December amounted to 61.4 (52.5) million euro. Net sales improved by 8.9 million euro or 17.0 percent. Net sales in Finland improved by 2.5 million euro to 27.1 (24.6) million euro, an increase of 10.3 percent. Net sales in the Baltic states amounted to 26.9 (23.8) million euro, an increase of 3.1 million euro or 13.2 percent. Net sales in Belarus improved substantially thanks to the growth in sales volume. Net sales in Belarus amounted to 9.6 (5.5) million euro, representing an increase of 4.1 million euro or 73.3 percent.

Consolidated operating profit in the fourth quarter stood at 2.8 (3.2) million euro, which was 4.6 (6.2) percent of net sales. The operating profit diminished by 0.4 million euro or 13.7 percent. The previous year’s fourth-quarter operating profit included 2.1 million euro of non-recurring income arising from the recognition of OAO Lidskoe Pivo’s prescribed debts. In relation to the previous year’s comparable operating profit, the operating profit for October-December 2010 increased by 1.6 million euro. 

The operating profit in Finland declined by 0.1 million euro. The operating profit for the period under review included 0.6 million euro of costs arising from the scrapping of non-marketable packaging materials. The operating profit in the Baltic states improved by 1.4 million euro. The operating profit in Belarus amounted to -0.1 (1.6) million euro, representing a decrease of 1.7 million euro. In relation to the comparable operating profit for 2009, the operating profit in Belarus improved by 0.3 million euro.

SALES VOLUME, NET SALES AND EARNINGS BY GEOGRAPHICAL SEGMENTS

Seasonal nature of the operations

The Group’s business is characterised by seasonal variation. The net sales and operating profit from the reporting geographical segments are not accumulated evenly but vary by seasons, prevailing weather and environmental conditions and the individual characteristics of each segment.

PARENT COMPANY OLVI PLC (Olvi)

January to December 2010

According to statistics by the Federation of the Brewing and Soft Drinks Industry, the Finnish beverage market diminished by approximately 3 percent in January-December compared to the previous year. The sales decline was –5.7 percent in beers and –5.4 percent in ciders. In long drinks, the decline was –2.3 percent, and in soft drinks –1.5 percent. Thanks to the record-breaking warm summer weather, the sales of mineral waters increased by more than 10 percent. The statistics by the Federation of the Brewing and Soft Drinks Industry only include data for the largest brewing companies. They do not include the sales of private label products nor imports from abroad, which means that the statistical data is imperfect in this sense.

With the exception of soft drinks, Olvi’s sales improved in all product groups. Olvi’s sales volume in January-December was 137 (130) million litres. This represents an increase of 7 million litres or 5.5 percent.

In 2010, the sales of ciders improved by 30 percent and the sales of long drinks by 18 percent. The sales of ciders were boosted by the Olvi brand ciders that were well-received in the market. Olvi Cranberry Long Drink and Olvi Gold Long Drink continue to enjoy great success in the market.

The sales of beers increased by 4 percent and the sales of mineral waters by 21 percent, while the sales of soft drinks declined on the previous year. The sales of mineral waters increased particularly thanks to the warm and sunny weather extending to the late summer and autumn.

According to the statistics by the Federation of the Brewing and Soft Drinks Industry, Olvi’s overall market share increased during 2010. At the end of the period under review, Olvi’s market share in beers was 24 (22) percent. In ciders and long drinks, it was 23 (19) percent, in mineral waters 23 (18) percent and in soft drinks 4 (5) percent on average.

Olvi’s exports and tax-free sales in 2010 amounted to 4 (5) million litres.

Thanks to the increase in sales volumes, Olvi’s net sales in 2010 increased to 111.0 (104.5) million euro, an increase of 6.5 million euro or 6.2 percent.  

Olvi’s operating profit improved substantially. Operating profit in January-December stood at 11.7 (9.6) million euro, which was 10.5 (9.2) percent of net sales. The operating profit improved by 2.1 million euro or 22.0 percent. The improved profitability was enabled by more efficient operations, increased production capacity, cost efficiency and successful novel products in the beer, long drink and cider segments. The operating profit includes 0.6 million euro of sales gains on decommissioned production equipment and 1.2 million euro of costs due to the scrapping of non-marketable packaging materials.

October to December 2010

Olvi’s sales in the fourth quarter amounted to 34 (31) million litres, representing an increase of 3 million litres or 11.4 percent. Net sales improved by 2.5 million euro or 10.3 percent to 27.1 (24.6) million euro.

Operating profit in October—December was almost on a par with the previous year at 0.9 (1.0) million euro. The costs of scrapping non-marketable packaging materials, 0.6 million euro, are allocated entirely in the last quarter of the year.

AS A. LE COQ (A. Le Coq)

January to December 2010

The Estonian subsidiary AS A. Le Coq’s sales in January-December amounted to 125 (113) million litres. This represents an increase of 11 million litres or 10.1 percent.

The sales of beers increased by 9 percent and the sales of long drinks by 6 percent, while the sales of cider remained almost at the previous year’s level.

A. Le Coq is the market leader in the Estonian beer market with an approximate market share of 40 (40) percent (market shares from AC Nielsen’s statistics for October-November 2010).

A. Le Coq’s market share in long drinks is 53 (60) percent and in ciders 47 (53) percent. A. Le Coq is the clear market leader in Estonia regarding both long drinks and ciders.

Thanks to the warm summer weather, the sales of soft drinks increased substantially by 18 percent, and the sales of ACE drinks increased by 12 percent. The sales of mineral waters were 3 percent higher than in the previous year. The sales of juices remained on the previous year’s level. The market share in soft drinks at the end of November 2010 was 29 percent, and in mineral waters 13 percent. A. Le Coq is the market leader in the sales of juices and juice-based drinks, with a 22 percent market share in tetrapacks and 44 percent in other packaging.

The company’s exports and tax-free sales increased by 32.3 percent on the previous year to 4 (3) million litres.

The company’s net sales in 2010 amounted to 69.9 (65.2) million euro, representing an increase of 4.7 million euro or 7.3 percent. 

The operating profit improved clearly by 1.7 million euro to 11.9 (10.2) million euro, an increase of 17.2 percent. The operating profit represented 17.0 (15.6) percent of net sales. The increase in net sales was enabled by cost-efficient production and the increase in sales volume.

October to December 2010

A. Le Coq’s sales in the fourth quarter amounted to 27 (24) million litres, an increase of 3 million litres or 9.9 percent on the previous year. Net sales from October to December amounted to 14.9 (13.6) million euro. Net sales improved by 1.3 million euro or 9.6 percent. 

The company’s fourth-quarter operating profit stood at 2.0 (1.3) million euro, representing an increase of 0.7 million euro or 57.1 percent.

A/S CESU ALUS (Cesu Alus)

January to December 2010

From January to December, the sales of A/S Cesu Alus operating in Latvia totalled 69 (59) million litres. This represents an increase of 10 million litres or 16.6 percent. The sales of beers increased by 17 percent and the sales of soft drinks by 49 percent. The sales of ciders and long drinks declined by 9 percent as the total market diminished.

Cesu Alus’s market share in the Latvian beer market is 32 (33) percent (AC Nielsen statistics for December 2010), in the cider market 56 (45) percent and in the long drink market 45 (41) percent (AC Nielsen statistics for October-November 2010). Cesu Alus is the clear market leader in ciders. In beers and long drinks, Cesu Alus has a strong hold on the number two position. The company’s market shares in ciders and long drinks strengthened in spite of the declined sales volume.

The company’s net sales from January to December amounted to 31.4 (30.0) million euro, representing an increase of 1.4 million euro or 4.7 percent. The increase in net sales fell clearly short of the increase in sales volume due to the decline in mean price contributing to net sales, which in turn was affected by the shift towards less expensive products due to the country’s financial depression.

The operating profit for 2010 stood at 1.7 (1.0) million euro, which was 5.5 (3.4) percent of net sales. The operating profit improved by 0.7 million euro. The improvement in operating profit was clearly attributable to the third quarter. The improvement in operating profit was enabled by increased sales volumes, improved operating efficiency and savings in the costs of materials, logistics and other operating expenses. 

October to December 2010

Cesu Alus’s sales in the fourth quarter amounted to 14 (12) million litres, representing an increase of 2 million litres or 15.6 percent. Net sales improved by 0.8 million euro or 15.7 percent to 6.0 (5.2) million euro.

Compared to the previous year, the company’s operating profit improved by 0.2 million euro. 

AB RAGUTIS (Ragutis)

January to December 2010

The January-December sales volume of Ragutis operating in Lithuania increased by 7 million litres to 59 (52) million litres, an increase of 14.2 percent. The sales of beer and long drinks increased by 12 percent, while the sales of ciders increased by 7 percent on the previous year. The sales increase in soft drinks was as high as 21 percent, thanks to the warm summer weather and particularly to the good sales development of kvass, which belongs to the soft drinks segment.

The company’s overall position in the Lithuanian beverage market has strengthened. The company’s market share in beers is approximately 13 (10) percent. The company is a clear market leader in ciders and long drinks, with market shares of 48 (33) percent in ciders and 40 (42) percent in long drinks. The company is also a market leader in the kvass market with a market share of 34 (30) percent. (Market shares from AC Nielsen statistics for October-November 2010) 

The company’s net sales from January to December amounted to 26.4 (24.6) million euro, representing an increase of 1.8 million euro or 7.0 percent. Compared to the previous year, the increase in net sales fell short of the increase in sales volume due to a slightly lower average price.

The company’s operating profit in 2010 improved by 0.5 million euro. The operating profit stood at 1.4 (0.9) million euro, which was 5.4 (3.7) percent of net sales. The operating profit improved thanks to the increase in sales volume.

October to December 2010

Ragutis’s sales volume in October-December was 13 (11) million litres. This represents an increase of 2 million litres or 18.9 percent.

The company’s fourth-quarter 2010 net sales stood at 5.9 (4.9) million euro, representing an increase of 1.0 million euro or 20.6 percent.

The company’s operating profit declined by 0.4 million euro.

OAO LIDSKOE PIVO (Lidskoe Pivo)

January to December 2010

The operations of Lidskoe Pivo in Belarus developed very well in 2010

The company’s sales volume in 2010 amounted to 111 (87) million litres, representing an increase of 24 million litres or 27.3 percent. The sales of beers increased by 17 percent, soft drinks and kvass by 41 percent, mineral waters by 35 percent and long drinks by 4 percent. The sales of juices and juice-based drinks improved substantially during the year, by 65 percent.

Lidskoe Pivo is the Belarusian market leader in kvass with a market share of 59 (52) percent. The brewery’s market share has increased in both beers and long drinks. Lidskoe Pivo’s market share in beers in 2010 was 10 (8) percent, and in long drinks 29 (22) percent. The company’s market share in soft drinks was on a par with the previous year, 5 percent in soft drinks and 2 percent in waters. (Market shares according to AC Nielsen December 2010.)

The company’s exports increased by 3 million litres to 6 (3) million litres, an increase of 122.4 percent. 

The company’s net sales in 2010 increased substantially by 10.5 million euro or 34.6 percent to 40.8 (30.3) million euro. The growth in net sales was enabled by the good development of sales volumes and a slightly better average price compared to the previous year.

Lidskoe Pivo’s operating profit for January-December stood at 4.4 (5.8) million euro, or 10.9 (19.1) percent of net sales. The operating profit declined by 1.4 million euro or 23.3 percent compared to the previous year. In 2009, the company’s operating profit included non-recurring income of 3.2 million euro due to prescribed debts. In relation to the comparable operating profit for 2009, the operating profit for 2010 increased by 1.8 million euro or 69 percent.  

October to December 2010

Lidskoe Pivo’s sales in the fourth quarter amounted to 24 (18) million litres, representing an increase of 6 million litres or 29.9 percent.

The company’s net sales improved by 4.1 million euro or 73.3 percent to 9.6 (5.5) million euro.

Lidskoe Pivo’s operating result in October-December showed a loss of –0.1 (1.6) million euro, a decline of 1.7 million euro or 108.4 percent. Lidskoe Pivo’s fourth-quarter operating profit in 2009 included 2.1 million euro of non-recurring income arising from the recognition of prescribed debts. Comparable operating profit in October-December 2009 was –0.5 million euro. The operating profit in the fourth quarter of 2010 improved by 0.3 million euro or 71.9 percent in relation to the comparable operating profit in 2009.

FINANCING AND INVESTMENTS

Olvi Group’s balance sheet total at the end of December 2010 was 236.1 (237.2) million euro. Equity per share at the end of 2010 stood at 12.25 (10.56) euro, an increase of 1.69 euro per share or 16.0 percent. The equity to total assets ratio outperformed Olvi Group’s long-term target of 50 percent. The actual figure at the end of December was 54.7 (47.3) percent, a substantial improvement of 7.4 percentage points compared to the previous year. The gearing ratio also declined from 48.0 percent to 29.5 percent. The current ratio, representing liquidity, was 1.3 (1.1).

The amount of interest-bearing liabilities at the end of 2010 was 46.1 (62.3) million euro, including current liabilities of 8.7 (26.2) million euro.

Olvi Group’s gross capital expenditure in 2010 amounted to 24.5 (48.4) million euro. 4.8 million euro of the capital expenditure was attributable to the parent company Olvi, in addition to which the company spent 0.5 million euro on increasing its holding in Lidskoe Pivo. 4.2 million euro was attributable to the Baltic subsidiaries and 15.0 million euro to OAO Lidskoe Pivo. The capital expenditure was spent on increasing production and storage capacity.

The largest investments in Finland in 2010 were the labelling, cardboard packaging and wrapping machines and the development of logistics within the warehouse. The largest investments in the Baltic states were the new glass and PET bottle formats, a yeast separator and a screw-cap machine for the tetrapack line at A. Le Coq, a new filling, labelling and capping machine, a new bottle format and an air compressor for Cesu Alus, extensions to the fermentation tank and waste yeast cellars as well as water treatment systems for the boiling room at Ragutis. In Belarus, the construction of a new warehouse and filling lines was started, as well as extensions to the tank cellar and filtering section. Cooling equipment was also modernised. The projects will be completed during the spring of 2011.

PRODUCT DEVELOPMENT AND NEW PRODUCTS

Research and development includes projects to design and develop new products, packages, processes and production methods, as well as further development of existing products and packages. The R&D costs have been recognised as expenses. The main objective of Olvi Group’s product development is to create new products for profitable and growing beverage segments. 

Finland, parent company Olvi

OLVI Lonkero is the best-selling brand of long drinks in retail sales (Nielsen HomeScan). In January 2011, OLVI Lonkero also entered the mild long drink segment with OLVI Mild Grapefruit in 0.5 L bottles (alc. 2.6% vol.).

Subsidiaries

The Estonian A. Le Coq launched the main product of the Belarusian Lidskoe Pivo brewery, Lidskoe Premium, in 0.5-litre cans. Mixers became a totally new category for Olvi Group. A. Le Coq created a new brand called Royal Club. Royal Club Tonic, Bitter Lemon, Soda Water and Ginger Ale are packaged in 0.33-litre cans. The market-leading juice brand Aura was expanded with new 2-litre packages.

In January, Cesu Alus of Latvia launched the Cesu 14 Red Russian ready-to-drink alcoholic cocktail in 0.28-litre bottles. The soft drink Lemonade was launched in 0.33-litre cans. Latvia’s best-selling energy drink Dynamite will be supplemented by Dynami:t Blue, a version with more coffeine, in 0.5-litre plastic bottles in February.

Ragutis of Lithuania will launch the main product of the Belarusian Lidskoe Pivo brewery, Lidskoe Premium, in 0.5-litre cans in February 2011.

The Belarusian brewery Lidskoe Pivo launched the FIZZ cider brand. The product is available as apple and pear versions in 1-litre and 1.5-litre plastic bottles. Until this, there was only one brand of cider available in the Belarusian market, so excellent growth and demand can be expected for FIZZ.

PERSONNEL

Olvi Group’s personnel in January-December averaged 2,051 (2,076) people. The Group’s average number of personnel decreased by 25 people or 1.2 percent. The total number of personnel at the end of December 2010 was 1,973 (1,997).

Olvi Group’s average number of personnel by country

Finland                  378 (377)

Estonia                  312 (337)

Latvia                   207 (206)  

Lithuania                195 (195)

Belarus                  959 (961)

Total                   2,051(2,076)

CHANGES IN CORPORATE STRUCTURE IN 2010

In July 2010, Olvi increased its holding in the Belarusian brewery Lidskoe Pivo from 87.84 percent to 91.58 percent. During the year, Olvi’s holding in the Latvian company Cesu Alus increased from 99.30 percent to 99.37 percent. Olvi’s holding in A. Le Coq is 100.00 percent and in Ragutis 99.57 percent. 

THE OLVI SERIES A SHARE AND MARKET

Olvi’s share capital at the end of December 2010 was 20.8 million euro. The total number of shares was 10,379,404. Of the total, 8,513,276 shares or 82.0 percent belonged to Series A, while 1,866,128 shares or 18.0 percent belonged to Series K. Each Series A share carries one (1) vote, while each Series K share carries twenty (20) votes. The Series A and Series K shares have an equal right to dividends.

The trading price for Olvi A shares on Nasdaq OMX Helsinki (Helsinki Exchange) at the end of 2010 was 30.70 euro (26.49 at the end of 2009). The highest quote for Series A shares in January-December 2010 was 31.45 euro and the lowest quote was 24.01 euro. The average price was 28.05 euro (19.29 in 2009).

At the end of 2010, the market value of Series A shares was 261.4 (225.5) million euro, and the market value of all shares was 318.6 (275.0) million euro. The trading volume of Series A shares in January-December 2010 was 1,628,258 (2,223,423) shares.

Olvi had 8,089 shareholders at the end of December 2010. The amount of foreign holdings plus foreign and Finnish nominee-registered holdings was 18.9 percent of the total number of book entries and 6.4 percent of total votes.

Foreign and nominee-registered holdings are accounted for in Table 7, Note 9 of the tables attached to this financial statements bulletin, and the largest shareholders are listed in Table 7, Note 10.

SHARE-BASED INCENTIVE SCHEMES

Olvi’s Board of Directors has decided on a share-based incentive scheme for Olvi Group’s key personnel on 26 January 2006. A detailed description of the scheme can be found in Table 5, Note 5.

TREASURY SHARES

There were no changes in the number of treasury shares held by Olvi during 2010. At the end of December 2010, Olvi held 12,400 Series A shares as treasury shares. Treasury shares held by Olvi plc are reported in the tables section of the financial statements bulletin, in Table 5, Note 6.  

STOCK EXCHANGE RELEASES AND FLAGGING NOTICES ISSUED IN 2010

In addition to the regular financial statements bulletin and interim reports, Olvi issued a stock exchange release on 24 September 2010, upgrading its earnings outlook for 2010. Olvi estimated that its full-year 2010 comparable operating profit will be clearly better than in the previous year. The comparable operating profit in 2009 amounted to 24.5 million euro. The company previously estimated that the comparable operating profit for 2010 would be on a par with 2009.

Olvi received no flagging notices in 2010.

RISK MANAGEMENT

Olvi Group is exposed to risks that may be due to the operations of Group companies or changes in the business environment.  

The Group’s risk management is an essential part of business management and everyday operations. The objective of risk management is to ensure the fulfilment of corporate strategy and business continuity. Olvi Group identifies, assesses, manages, monitors and reports essential risks regularly. With regard to identified risks, the effects, extent and probability of the realisation of risk are assessed together with means to eliminate or reduce the risk.

In addition to this, risk management aims to identify and exploit opportunities arising in business operations.  

Olvi operates internationally, and its business involves risks due to exchange rate fluctuations arising from the cash flows of purchases and sales, as well as the conversion of balance sheet items in foreign subsidiaries into euro. Olvi Group’s parent company manages financing and exchange rate risks centrally in accordance with guidelines from the Board of Directors.

Olvi’s operations are dependent on the reliability of materials management, production facilities, logistics and IT systems. The Group aims to prevent the realisation of associated risks through continuous analysis and development of processes. Olvi Group companies are prepared for property losses and business interruptions through insurance policies, the coverage of which is reviewed annually.  

BUSINESS RISKS AND UNCERTAINTIES IN THE NEAR TERM

The upturn in the Baltic states’ economy may change to a new decline, which would contribute the decline in the overall beverage market in these countries. Weakened consumer purchasing power would result in a decrease in demand for more expensive products and guide it to a lower price bracket, which would mean a decline in the net sales and profitability of companies operating in the area.  

A decline in the financial situation may affect customers’ solvency and the schedule of payments and lead to credit losses. The control of accounts receivable has been intensified to prevent credit loss risks. On the other hand, the risk of credit losses is reduced through the fact that Olvi Group’s customer base is wide and distributed across several countries.

Consumer confidence in economic development and the persistently low level of interest rates will stabilise the outlook for consumer demand in Finland. However, increases in all kinds of tax rates and increasing regulation of operations, together with the effects of potential disturbances in the financial market, create substantial uncertainty in financial development. 

The operations in Belarus involve country-based risks: The unforeseeable nature of government activities and rapid changes in laws, their interpretation and application may make business difficult and slow down the completion and utilisation of investments in the country. Also the economic situation of the country of Belarus may turn to the worse, which would weaken the growth opportunities of Lidskoe Pivo and impact its profitability.

NEAR-TERM OUTLOOK

Olvi Group has a good starting position for 2011. Profitability is estimated to remain at the healthy level of 2010. 

BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PROFIT

Olvi plc’s dividend policy is active and earnings-based.

The parent company Olvi plc had 39.7 (40.5) million euro of distributable funds on 31 December 2010, of which profit for the period accounted for 7.5 (6.0) million euro.

Olvi plc’s Board of Directors proposes to the Annual General Meeting that distributable funds be used as follows:

1) A dividend of 1.00 euro shall be paid for 2010 on each Series K and Series A share, totalling 10.4 (8.3) million euro. The dividend represents 41.5 (37.2) percent of Olvi Group’s earnings per share. Dividends shall be paid to shareholders registered in Olvi plc’s register of shareholders maintained by Euroclear Finland Oy on the record date of 12 April 2011. It is proposed that the dividend be paid on 19 April 2011.

2) 29.3 million euro shall be retained in the parent company’s non-restricted equity.

ANNUAL SUMMARY

An annual summary of disclosures made by the company in 2010 can be found at www.olvi.fi under “Financial reports”

FINANCIAL REPORTS IN 2011

Olvi Group’s financial statements, operating report and corporate governance statement for 2010 will be published on 17 March 2011. A notice to convene Olvi plc’s Annual General Meeting, which will be held on 7 April 2011 in Iisalmi, will be published on 17 March 2011. The financial statements, operating report and notice to convene the AGM will be available on Olvi plc’s Web site on the same day.

The following interim reports will be released in 2011:

• Interim Report for January-March on 28 April 2011
• Interim Report for January-June on 11 August 2011
• Interim Report for January-September on 27 October 2011

Further information:

Lasse Aho, Managing Director, phone +358 17 838 5200 or +358 400 203 600

OLVI PLC

Board of Directors

TABLES

- Statement of comprehensive income, Table 1

- Balance sheet, Table 2

- Changes in shareholders’ equity, Table 3

- Cash flow statement, Table 4

- Notes to the financial statements, Table 5

DISTRIBUTION:

NASDAQ OMX Helsinki Ltd

Key media

www.olvi.fi

OLVI GROUP                                                                                                                                           TABLE 5

NOTES TO THE FINANCIAL STATEMENTS                                                                                                                                            

The consolidated financial statements for 1 January to 31 December 2010 have been prepared in compliance with the International Financial Reporting Standards (IFRS), observing the IAS and IFRS standards as well as the official SIC and IFRIC interpretations valid on 31 December 2010.                                                                                                                                         

For its financial statements 2010, the company has observed the same accounting policies as for its annual financial statements 2009, with the exception of changes due to the following new and revised IFRS standards and IFRIC interpretations:                                                                                       

- IFRS 2 (Amendment) Share-based Payment – Group Cash-settled Share-based Payment Transactions and Application

- IFRS 5 (Amendment) Long-term Assets Held for Sale and Discontinued Operations       

- IFRS 8 (Amendment) Operating Segments                                   

- IAS 1 (Amendment) Presentation of Financial Statements                                          

- IAS 7 (Amendment) Statement of Cash Flows                                                       

- IAS 17 (Amendment) Leases                                                           

- IAS 18 (Amendment) Revenue                                              

- IAS 36 (Amendment) Impairment of Assets                                             

- IAS 38 (Amendment) Intangible Assets                                                

- IAS 39 (Amendment) Financial Instruments: Recognition and Measurement               

- IFRIC 9 (Amendment) Reassessment of Embedded Derivatives                

- IFRIC 16 (Amendment) Hedges of a Net Investment in a Foreign Operation                                                               

The above changes in standards and interpretations have no substantial effect on the income statement, balance sheet or notes.                                      

The information in the financial statements bulletin is presented in thousands of euros (EUR 1000). For the sake of presentation, individual figures and totals have been rounded to full thousands, which causes rounding differences in additions. The ratios are calculated from exact euro amounts.                                                                                        

The Series A and Series K shares received a dividend of 0.80 euro per share for 2009 (0.50 euro per share for 2008), totalling 8.3 (5.2) million euro. The dividends were paid on 20 April 2010.                                                                                       

Nominal value of A and K shares, euro           2.00                      

Votes per Series A share 1                       

Votes per Series K share 20         

The shares entitle to equal dividend. The Articles of Association include a redemption clause concerning Series K shares.        

5. SHARE-BASED PAYMENTS                          

Olvi plc’s Board of Directors decided on 26 January 2006 on a share-based incentive scheme for Olvi Group’s key personnel.              

The share-based bonus scheme is a part of the incentive and commitment scheme for the Group’s key personnel and its purpose is to combine the objectives of shareholders and key personnel to improve the company’s value.                                                                   

The scheme includes two vesting periods, the first one extending from 1 January 2006 to 31 December 2007 and the second one from 1 January 2008 to 31 December 2010. The amount of bonuses payable out of the scheme is linked to Olvi Group’s net sales and the operating profit percentage in relation to net sales.                                                                        

The bonuses are payable partially in Olvi plc’s Series A shares and partially in cash. The proportion payable in cash covers the taxes and other statutory fees arising from the share-based bonuses. The bonuses for the first vesting period were paid in April 2008. The shares carried a ban on transferring them within two years of reception.                                                             

The bonuses for the second vesting period will be paid in April 2011. 50 percent of the shares received as bonus for the second vesting period may be transferred after one year of reception, and 100 percent after two years of reception. The right to dividends begins when the shares are transferred to the key employees’ book-entry accounts.                                                               

On the basis of this incentive scheme, a total of 11,838 shares may become payable in 2011 for the second vesting period. If the targets were achieved in full, 48,000 Olvi plc Series A shares would have been paid out. In January-December 2010, a total of 385 (195 in 2009) thousand euro of costs related to the vesting period 2008-2010 were recognised as accrued expenses.                                                                     

The target group of the scheme currently includes 20 key employees.                               

This incentive scheme has no dilution effect. Olvi Group has no warrants or options.                          

6. TREASURY SHARES

Olvi plc held 12,400 of its own Series A shares on 1 January 2010. The total purchase price was 222 thousand euro.

Olvi plc has not acquired more treasury shares nor transferred them to other parties in January-December 2010, which means that the number of Series A shares held as treasury shares remains the same on 31 December 2010.

Series A shares held by Olvi plc as treasury shares represent 0.12 percent of the share capital and 0.03 percent of the aggregate number of votes. The treasury shares represent 0.15 percent of all Series A shares and associated votes.

On 8 April 2010, simultaneously cancelling any unused authorisations to acquire treasury shares, the General Meeting of Shareholders of Olvi plc decided to authorise the Board of Directors of Olvi plc to decide on the acquisition of the company’s own shares using distributable funds. The authorisation is valid for one year starting from the General Meeting and covers a maximum of 245,000 Series A shares.

The Annual General Meeting also decided to revoke all existing unused authorisations for the transfer of treasury shares and authorise the Board of Directors of Olvi plc to decide on the transfer of any Series A shares acquired on the company’s own account within one year of the Annual General Meeting.

The Board of Directors of Olvi plc has not exercised the authorisations of acquisition or transfer in January-December 2010.              

13. CALCULATION OF FINANCIAL RATIOS

Equity to total assets, % = (Shareholders’ equity held by parent company shareholders + minority interest)/100 * (balance sheet total – advances received)

Earnings per share = Profit belonging to parent company shareholders / Average number of shares during the period, adjusted for share issues 

Equity per share = Shareholders’ equity held by parent company shareholders / Number of shares at end of period, adjusted for share issues

Gearing, % = (Interest-bearing debt – cash in hand and at bank) / (Shareholders’ equity held by parent company shareholders + minority interest)