OLVI PLC PRESS RELEASE 27 APR 2006 at 09:00 1 of 9
OLVI GROUP’S INTERIM REPORT, 1 JANUARY TO 31 MARCH 2006 (3 MONTHS)
Olvi Group’s profitability improved substantially in comparison with
the corresponding period last year. Olvi Group’s net sales amounted to
31.9 (30.1) million euro, an increase of 5.9%. Operating profit in the
period under review amounted to 2.0 (0.8) million euro, an increase of
1.2 million euro. The Group’s gross capital expenditure amounted to
6.1 (6.4) million euro, and its equity to total assets ratio stood at
48.4 percent (44.4%). Earnings per share amounted to 0.25 (0.05) euro.
OLVI GROUP’S KEY INDICATORS
1-3/2006 1-3/2005 1-12/2005
Net sales, MEUR 31.9 30.1 147.5
Operating profit, MEUR 2.0 0.8 13.0
Gross capital
expenditure, MEUR 6.1 6.4 17.4
Equity to total assets, % 48.4 44.4 47.9
Earnings per share, EUR 0.25 0.05 1.84
Gearing-% 58.6 73.8 49.6
IFRS REPORTING
Olvi plc adopted the International Financial Reporting Standards
(IFRS) as of 1 January 2005. This interim report has been prepared in
accordance with IFRS recognition and measurement principles. The
interim report has not been prepared in compliance with all of the
requirements in the standard IAS 34, Interim Financial Reporting. The
accounting policies used for the preparation of this interim report
are the same as those used for the annual financial statements 2005.
The interim report is unaudited.
NET SALES AND EARNINGS
Olvi Group’s sales from January to March amounted to 57.2 (55.6)
million litres, representing an increase of 1.6 million litres or 2.9
percent on the previous year. In the Baltic states, the sales volumes
of Olvi Group’s subsidiaries continued on a strong growth track
(+16.7%), while the sales of the Finnish parent company fell short of
last year. The increase in sales volumes in the Baltic states was made
possible by investments carried out to increase capacity in the
subsidiaries, as well as beverage markets that are still developing.
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Sales volumes by market area (million litres):
1-3/2006 1-3/2005 1-12/2005
Olvi Group total 57.2 55.6 272.0
Finland 21.1 24.9 106.4
Estonia 25.0 21.9 113.7
Latvia 6.6 5.6 31.5
Lithuania 8.0 6.4 36.4
Sales between segments -3.5 -3.2 -16.0
Consolidated net sales from January to March amounted to 31.9 (30.1)
million euro, representing an increase of 1.8 million euro or 5.9
percent on the previous year. Net sales in the Baltic states increased
by a total of 19.6 percent while net sales in Finland declined by some
five percent.
Net sales by geographical segments (million euro):
1-3/2006 1-3/2005 1-12/2005
Olvi Group total 31.89 30.12 147.52
Finland 15.90 16.70 73.51
Estonia 11.34 9.30 50.77
Latvia 2.73 2.18 13.40
Lithuania 3.17 2.75 15.04
Net sales between segments -1.25 -0.81 -5.20
Consolidated operating profit amounted to 2.0 (0.8) million euro,
representing an increase of 1.2 million euro on the corresponding
period last year. Above all, the increase in operating profit was due
to substantial improvement in the parent company Olvi plc’s earnings.
In the period under review, earnings after taxes improved by 1.0
million euro to 1.3 (0.3) million euro.
Operating profit by geographical segments (million euro):
1-3/2006 1-3/2005 1-12/2005
Olvi Group total 2.02 0.80 12.96
Finland 1.06 0.07 4.72
Estonia 1.55 1.29 7.72
Latvia -0.34 -0.34 0.15
Lithuania -0.19 -0.17 -0.87
Eliminations -0.06 -0.05 1.24
Parent company Olvi plc
The parent company Olvi plc’s total sales in the period under review
amounted to 21.1 (24.9) million litres. Net sales from January to
March 2006 amounted to 15.90 (16.70) million euro. However, the
decline in net sales was clearly smaller than the decline in sales
volumes.
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In particular, the extent of promotional sales of beer during the
period under review was smaller than in the corresponding period last
year. The volumes were proportioned to optimal production capacity
planned for the period. Furthermore, Easter, which is a significant
sales season, was in April this year but in March last year.
According to statistics published by the Finnish Federation of the
Brewing and Soft Drinks Industry, Olvi plc had an approximate market
share of 12.0 (14.0) percent in the domestic beverages market at the
end of March.
The parent company Olvi plc’s operating profit for the period under
review was 1.1 (0.1) million euro or 6.6 (0.4) percent of net sales.
The operating profit improved by 1.0 million euro on the previous
year. The increase in operating profit was attributable to more
balanced distribution of sales between product groups, improved
production efficiency and lower costs compared to the previous year.
AS A. Le Coq Tartu Õlletehas
In the January-March period, the total sales of the Estonian
subsidiary AS A. Le Coq Tartu Õlletehas increased to 25.0 (21.9)
million litres, which is 14.1 percent more than in the previous year.
Sales volumes increased in all product groups but the greatest
proportional growth was seen in ciders and long drinks in which AS
Tartu Õlletehas holds a total market share of approximately one half
in Estonia. The company’s market share in beers, soft drinks and
mineral waters is also continuing to increase.
Thanks to favourable development of the sales volume, AS A. Le Coq
Tartu Õlletehas’s net sales in the period under review increased to
11.3 (9.3) million euro, representing an increase of 2.0 million euro
or 22.0 percent on the previous year.
The Estonian subsidiary’s operating profit for the period under review
was 1.6 (1.3) million euro or 13.7 (13.9) percent of net sales. The
operating profit increased by 0.3 million euro or 20.2 percent
compared to the previous year.
A/S Cesu Alus
From January to March, the total sales of A/S Cesu Alus operating in
Latvia amounted to 6.6 (5.6) million litres, representing an increase
of 1.0 million litres (17.9 percent). Among the product groups, the
sales volume of beers increased by some nine percent, that of ciders
and long drinks by almost 40 percent, and that of soft drinks by
approximately 46 percent. The sales of juices also increased clearly
in comparison with the previous year. A/S Cesu Alus has a market share
of approximately 18 percent in the Latvian beer market.
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A/S Cesu Alus’s net sales from January to March increased by 24.9
percent to 2.7 (2.2) million euro. The company’s operating loss was on
a par with the previous year. The company continued its substantial
investments in marketing.
AB Ragutis
The total sales of AB Ragutis operating in Lithuania increased to 8.0
(6.4) million litres during the period under review. The aggregate
increase in sales amounted to 1.6 million litres or 24.5 percent
compared to the previous year. The greatest proportional increase of
sales was seen in ciders, long drinks and juices, in which the sales
volume has doubled. The sales of beers increased by seven percent. One
fourth of AB Ragutis’s beer sales has moved from strong beers to
medium-strength beer. The company has an approximate market share of
11 percent in the Lithuanian beer market and 56 percent in the cider
market.
In the period under review, AB Ragutis’s net sales increased by 0.4
million euro to 3.2 (2.7) million euro, representing an increase of
15.6 percent. However, due to a persistently low level of beer prices
in Lithuania, AB Ragutis’s operating result remained in the red.
FINANCING AND INVESTMENTS
Olvi Group’s balance sheet total at the end of the period under review
was 141.6 (135.1) million euro. Equity per share in January-March
stood at 13.21 (11.94) euro. The equity ratio improved from 44.4
percent to 48.4 percent. The amount of interest-bearing liabilities
was 43.1 (46.7) million euro, including current liabilities of 7.4
(15.9) million euro.
During the period under review, Olvi Group’s gross capital expenditure
amounted to 6.1 million euro (6.4 million euro). The parent company
Olvi plc accounted for 0.6 million euro and the subsidiaries in the
Baltic states for 5.5 million euro of the total. The largest
investments included the construction of a logistics centre at the
Estonian brewery, extensions to the tank cellars at the Latvian and
Lithuanian breweries, as well as extensions to the storehouse and
yeast cellar at the Latvian brewery. Olvi plc’s largest investments
concerned the can filling line.
PRODUCT DEVELOPMENT AND NEW PRODUCTS
Research and development includes projects to design and develop new
products and packages. The R&D costs have been recognised as expenses.
Olvi plc has launched new products to the market in the product groups
of ciders, flavoured mineral waters and soft drinks, among others. New
ciders include products such as FIZZ Orange Light, as well as FIZZ
Original Dry Apple and FIZZ Original Light Perry introduced into the
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growing segment of canned beverages. In early April, an entirely new
range of MAKU soft drinks was introduced. At the time of launch, the
range included the Lingonberry, Rhubarb-Strawberry and Salmiac-Cola
flavours. The mineral water range has been complemented with the
KevytOlo Sweet Pineapple and Sweet Lingonberry products sweetened with
fructose. The TEHO energy drink launched in spring last year has
established its position in the Finnish energy drink market. Its share
of the energy drink market is approximately 15.0 percent.
In the Baltic states, AS A. Le Coq Tartu Õlletehas’s product range was
expanded and diversified. A new ale-type top-fermented beer (English
Ale) was launched in the Baltic market during the period under review.
In Lithuania, AB Ragutis has made substantial investments in cider-
related competence and cider manufacturing.
PERSONNEL
The Group’s average number of personnel during the period under review
was 1,048 (1,010), 314 (318) of them in Finland, 368 (351) in Estonia,
180 (162) in Latvia and 186 (179) in Lithuania. At the end of the
period under review, the total number of personnel was 1,077 (1,038).
In comparison with the end of the corresponding period last year, the
number increased by 39 people or 3.8 percent.
Good sales growth in the Baltic companies increased the number of
personnel in those countries.
In January 2006, Olvi plc’s Board of Directors decided on a new share-
based incentive scheme for Olvi Group’s key personnel. Potential yield
of the scheme during the vesting period from 1 January 2006 to 31
December 2007 is based on Olvi Group’s net sales and operating profit
percentage.
The reward from the incentive scheme will be paid in 2008 to key
personnel included in the scheme, partially in the company’s Series A
shares and partially in cash. The cash portion will be used to pay
taxes and related official charges arising from the shares. The shares
carry a ban on transferring them within two years of reception.
The target group of the scheme includes the members of the management
groups of Olvi plc and its subsidiaries, 21 people in total.
CHANGES IN OLVI PLC’S CORPORATE STRUCTURE
The merger of AS Ösel Foods with AS A. Le Coq Tartu Õlletehas was
registered on 2 January 2006.
In March 2006, AS A. Le Coq Group, which is a fully-owned Estonian
subsidiary of Olvi plc, increased its holding in the Lithuanian
company AB Ragutis by 11.2 percentage points. AS A. Le Coq Group now
holds 94.31 percent of AB Ragutis.
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During the January-March period, AS A. Le Coq Group has also increased
its holding in the Latvian brewery A/S Cesu Alus from 96.89 percent to
97.34 percent.
On 31 December 2005, Olvi plc’s fully-owned subsidiaries Oluttehdas
Oiva Oy and Iisalmen Oluttehdas Osakeyhtiö Oy merged with Olvin Juomaa
Oy, another fully-owned subsidiary of Olvi plc.
OLVI PLC SHARES
Olvi plc’s registered share capital was 10,379,404.00 euro on 31 March
2006. The share capital is divided into 933,064 K shares and 4,256,638
A shares. The share’s nominal value is 2.00 euro.
A total of 983,095 Olvi plc A shares changed hands at Helsinki Stock
Exchange from January to March 2006, totalling 25.2 million euro in
trading volume. The traded shares represented 23.1 percent of the
total number of A shares. The average share price was 26.10 euro, with
a low of 21.00 euro quoted in January and a high of 31.01 euro quoted
in March.
ANNUAL GENERAL MEETING 4 APRIL 2006
At their Annual General Meeting held on 4 April 2006, the shareholders
of Olvi plc adopted the closing of the accounts for the year 2005 and
granted discharge from liability to the members of the Board of
Directors and Managing Director as regards the fiscal year 2005.
In accordance with the Board’s proposal, the shareholders’ meeting
decided that a dividend of 0.85 euro be paid on each K and A share for
fiscal 2005. The dividend according to the decision represented 45.8
percent of earnings per share. The dividend payout totals 4.4 million
euro. The dividend was paid on 18 April 2006 to all shareholders
recorded in the company’s register of shareholders maintained by the
Finnish Central Securities Depository Ltd on the record date 7 April
2006 at the latest. The payment of dividends will expire on 18 April
2011.
Board members and auditors
The Annual General Meeting re-elected the current members of the
Board: Mr. Heikki Hortling, Chairman of the Board, M.Sc. (Econ),
Iisalmi, Mr. Esa Lager, CFO, LL.M., M.Sc. (Econ), Kauniainen, Dr.
Hannele Ranta-Lassila, Department Manager, LL.D., M.Sc. (Econ),
Helsinki, Mr. Lauri Ratia, Managing Director, M.Sc. (Eng), Espoo, and
Mr. Heikki Sinnemaa, LL.M., Member of the Bar, Iisalmi.
The Annual General Meeting appointed Mr. Pekka Loikkanen, Authorised
Public Accountant, Kuopio, as the company’s auditor.
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PricewaterhouseCoopers Ltd, Authorised Public Accountants, were
appointed as deputy auditors, with Ms. Silja Komulainen, Authorised
Public Accountant, Sotkamo, as the auditor in charge.
Organisation of the Board of Directors
At its organising meeting held on 4 April 2006, the Board elected Mr.
Heikki Hortling as the Chairman of the Board and Mr. Esa Lager as the
Vice Chairman of the Board.
Decision regarding the acquisition of own A shares
In accordance with the Board of Directors’ proposal, the Annual
General Meeting decided to revoke all existing unused authorisations
to acquire own shares and authorise the Board of Directors to decide
on the acquisition of the company’s own shares using distributable
funds. The authorisation is valid for one year starting from the
Annual General Meeting and covers a maximum of 245,000 A shares. The
Board of Directors may also decide that any shares acquired on the
company’s own account be cancelled by reducing the share capital.
The authorisation allows the Board of Directors to acquire the
company’s own shares for use as consideration in case of any upcoming
corporate acquisitions, for the funding of investments, for use within
an incentive and commitment scheme for key personnel or for
cancellation.
The Board of Directors did not exercise the authorisation during
January-March 2006, and the company does not hold any of its own
shares (treasury shares).
Decision regarding the transfer of own shares
In accordance with the Board of Directors’ proposal, the Annual
General Meeting decided to revoke all existing unused authorisations
for the transfer of own shares and authorise the Board of Directors to
decide on the transfer of any A shares acquired on the company’s own
account within one year of the Annual General Meeting. The
authorisation comprises the transfer of all shares purchased on the
basis of acquisition authorisations granted to the Board of Directors.
The authorisation grants the Board of Directors with the power to
decide to whom and in what order the shares held by the company shall
be transferred. The Board of Directors can transfer the company’s own
shares for use as consideration in case of any upcoming corporate
acquisitions, for the funding of investments or for use within an
incentive and commitment scheme for key personnel. The Board of
Directors is authorised to decide on the transfer price of the
company’s own shares and on the bases for determining the transfer
price. The Board of Directors did not exercise the authorisation
during January-March.
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Decision to increase the share capital by means of a bonus issue
In accordance with the Board of Directors’ proposal, the Annual
General Meeting decided to increase the company’s share capital by
means of a bonus issue in which all shareholders will receive one (1)
new A share per each one (1) existing A share and one (1) new K share
per each one (1) existing K share free of charge. The bonus issue
comprised 933,064 new K shares and 4,256,638 new A shares. The share’s
nominal value is two (2) euro. The increase in share capital,
10,379,404 euro, was recorded in the Trade Register on 7 April 2006.
Olvi plc’s share capital is currently 20,758,808 euro, and the total
number of shares is 10,379,404. The new shares have been traded
together with the old shares since 10 April 2006. The new shares
entitle to full dividend for the financial period that started on 1
January 2006, and to all other rights associated with the share since
7 April 2006.
Each Series K share carries 20 votes and each Series A share carries
one vote at General Meetings of Shareholders. The shares entitle to
equal dividends. Olvi plc’s Articles of Association include a
redemption clause concerning Series K shares.
The doubled number of shares in the company resulted in the market
price being cut in half. The increased number of shares is expected to
enhance share liquidity in the market and promote the functionality of
the stock market. The bonus issue will not affect the proportional
holdings of the company’s shareholders.
Decision to amend Articles 3 and 7 in the Articles of Association
The Annual General Meeting decided to amend Article 3 in the Articles
of Association so that the company’s minimum share capital is
15,000,000 euro and the maximum share capital is 60,000,000 euro. The
minimum number of Series K shares is 1,500,000 and the maximum number
is 6,000,000. The maximum number of Series A shares is 24,000,000, and
the minimum aggregate number of Series K and Series A shares is
7,500,000.
Furthermore, the Annual General Meeting decided to amend Article 7 in
the Articles of Association so that authorisation to sign for the
company is granted to the Managing Director and the Chairman of the
Board each singly, as well as any two Members of the Board jointly.
The Board of Directors will decide on any rights of procuration. A
right of procuration may only be granted so that two holders of
procuration sign for the company jointly or a holder of procuration
signs for the company jointly with a Member of the Board.
Olvi plc stock options 2002
In accordance with the Board of Directors’ proposal, the Annual
General Meeting decided to annul the stock options 2002 issued by the
Annual General Meeting on 4 April 2002. The annulment was recorded in
the Trade Register on 7 April 2006.
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SHAREHOLDERS
At the end of the period under review, Olvi had a total of 4,473
(4,465) shareholders, 81.5 percent of whom were Finnish (share of
votes 94.0%). Nominee-registered holdings accounted for 13.2 percent
of the shares (3.0% of the votes), while registered foreign holdings
amounted to 5.3 percent of the shares (3.0% of the votes).
One flagging announcement in accordance with Chapter 2, Section 9 of
the Securities Markets Act was submitted to the company during the
January-March period; the holding of East Capital Baltic Fund managed
by East Capital Asset Management AB dropped to 3.27 percent of Olvi
plc’s share capital and 0.74 percent of the votes.
OUTLOOK
Olvi Group continues to focus on improving the Group’s profitability.
Substantial investments in increasing the capacity of Group companies
provide good preconditions for the efficient use of capacity.
We expect Olvi Group’s full-year operating profit to be slightly
better than last year.
Further information:
Lasse Aho, Managing Director
Phone +358 17 838 5200 or +358 400 203 600
OLVI PLC
Board of Directors
APPENDICES
- Balance sheet, Appendix 1
- Income statement, Appendix 2
- Changes in shareholders’ equity, Appendix 3
- Cash flow statement, Appendix 4
- Number of shares, personnel and contingent liabilities,
Appendix 5
DISTRIBUTION
Hex Plc
Key media
www.olvi.fi
OLVI GROUP APPENDIX 1
BALANCE SHEET
EUR 1000
31.3.2006 31.3.2005 31.12.2005
ASSETS
Non-current assets
Tangible assets 75633 73974 73679
Goodwill 10488 8706 8706
Intangible assets 2303 2757 2439
Financial assets available
for sale 254 253 253
Other non-current assets
held for trading 63 86 94
Receivables 44 13 44
Deferred tax receivables 34 0 47
Total non-current assets 88819 85789 85262
Current assets
Inventories 25033 23312 21424
Receivables 25254 24129 27273
Liquid assets 2467 1863 6437
Total current assets 52754 49304 55134
TOTAL ASSETS 141573 135093 140396
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity belonging
to parent company shareholders
Share capital 10379 10028 10379
Other reserves 11507 10752 11507
Accrued earnings 45361 38799 35568
Net profit for the period 1295 269 9808
68542 59848 67262
Minority interest 0 181 0
Total shareholders’ equity 68542 60029 67262
Non-current liabilities
Interest-bearing liabilities 35691 30725 33359
Deferred tax liabilities 1495 1545 1559
Current liabilities
Interest-bearing liabilities 7403 15943 6872
Interest-free liabilities 28442 26851 31344
Total liabilities 73031 75064 73134
TOTAL SHAREHOLDERS’ EQUITY
AND LIABILITIES 141573 135093 140396
OLVI GROUP APPENDIX 2
INCOME STATEMENT
EUR 1000
1-3/2006 1-3/2005 1-12/2005
Net sales 31893 30119 147519
Other operating income 127 101 519
Operating expenses -27274 -26802 -123269
Depreciation and impairment -2731 -2616 -11807
Operating profit 2015 802 12962
Financial income 47 26 159
Financial expenses -321 -502 -1885
Earnings before tax 1741 326 11236
Taxes*) -446 -136 -1688
Minority interest 0 79 260
Profit/loss for the period 1295 269 9808
Distribution:
- parent company shareholders 1295 190 9548
- minority 0 79 260
Ratios calculated from earnings
belonging to parent company shareholders:
- earnings per share, euro 0.25 0.05 1.86
- earnings per share
adjusted for dilution
from warrants, euro 0.25 0.05 1.84
*) Taxes are calculated on earnings for the period under review.
OLVI GROUP APPENDIX 3
CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY
EUR 1000
A B C D E F G H
Shareholders’ equity
1 Jan 2005 10028 10481 127 143 0 38828 260 59867
Change in
translation
difference -29 -29
Profit
for the period 269 269
Change in
minority
interest -79 -79
Shareholders’ equity
31 Mar 2005 10028 10481 127 143 -29 39097 181 60028
EUR 1000
A B C D E F G H
Shareholders’
equity
1 Jan 2006 10379 11236 127 143 0 45377 0 67262
Change in
translation
difference -15 -15
Profit
for the period 1295 1295
Change in
minority
interest 0 0
Shareholders’
equity
31 Mar 2006 10379 11236 127 143 -15 46672 0 68542
A = Share capital
B = Share premium account
C = Legal reserve
D = Other reserves
E = Translation differences
F = Accrued earnings
G = Minority interest
H = Total
OLVI GROUP APPENDIX 4
CASH FLOW STATEMENT
EUR 1000
1-3/2006 1-3/2005 1-12/2005
Net profit
for the period 1295 269 9808
Adjustments to
net profit 3260 3036 14389
Change in
working capital -4013 -309 1772
Interest paid -186 -313 -1732
Interest received 46 15 159
Taxes paid -1830 -629 -1763
Cash flow from
operations (A) -1428 -2069 22633
Capital expenditure -5375 -6594 -13988
Disposals of
fixed assets 0 8 122
Cash flow from
investments (B) -5375 -6586 -13866
Increase in
share capital 0 0 1106
Withdrawals of loans 4000 1944 4000
Repayments of loans -1167 0 -8613
Dividends paid 0 0 -3259
Cash flow from
financing (C) 2833 1944 -6766
Increase (+)/
decrease (-)
in liquid
assets (A+B+C) -3970 -2573 2001
Liquid assets 1 Jan 6437 4436 4436
Liquid assets
31 Mar/31 Dec 2467 1863 6437
OLVI GROUP APPENDIX 5
NUMBER OF SHARES
1-3/2006 1-3/2005 1-12/2005
- average 5189702 5014102 5146403
- at end of period 5189702 5014102 5189702
- average number of shares
adjusted for dilution
from warrants 5259543 5187216 5189089
AVERAGE NUMBER OF PERSONNEL
1-3/2006 1-3/2005 1-12/2005
Finland 314 318 333
Estonia 368 351 379
Latvia 180 162 180
Lithuania 186 179 182
Olvi Group total 1048 1010 1074
CONTINGENT LIABILITIES
EUR 1000
31.3.2006 31.3.2005 31.12.2005
Pledges and
contingent liabilities
- for own commitments 1135 1135 1135
- for others 1278 0 1278
Leasing liabilities:
- due within
one year 1276 1332 1240
- due within
1 to 5 years 1777 1648 1471
Total leasing liabilities 3053 2980 2711
Package liabilities 4685 2576 5442
Other liabilities 1988 2123 2016
Debts for which mortgages have been given as collateral
Loans from financial institutions
- for own commitments 3091 4636 3864
- for others 3361 5958 4125