OLVI PLC FINANCIAL STATEMENTS BULLETIN
24 FEB 2004 AT 9:00 PAGE 1 OF 9
OLVI GROUP’S NET SALES INCREASED, OPERATING PROFIT ALMOST
UNCHANGED, STRONG GROWTH IN THE BALTIC STATES
Consolidated net sales increased to 128.9 (114.6) MEUR. Operating
profit remained almost unchanged at 7.9 (8.0) MEUR, which is 6.1%
(7.0%) of net sales. The parent company’s operating profit was 3.3
(5.2) MEUR, and the aggregate operating profit of the subsidiaries
in the Baltic states was 4.6 (2.8) MEUR. Earnings per share
amounted to 0.59 (0.86) euro. The Board of Directors’ dividend
proposal is 0.65 (0.70) euro. The equity to total assets ratio was
45.3% (47.0%). Net investments totalled 17.4 (12.4) MEUR.
The parent company Olvi plc increased its market share in beers
and mineral waters in 2004
Olvi plc’s total sales increased slightly on the previous year’s
level to 97.5 (97.0) million litres. Finnish sales accounted for
87.8 (85.5) million litres of the total, followed by 9.7 (11.6)
million litres of tax-free and export sales. The parent company
Olvi plc’s operating profit in the period under review amounted to
3.28 (5.24) million euro. Olvi’s sales are focused on the retail
trade sector, which is the most important distribution channel for
beers, mineral waters and ciders. Growth in total sales was held
back by poor weather in the summer season in comparison with the
previous year. The growth of volume outperformed the market in
beers, which is the primary product group.
Subsidiaries in the Baltic states increased their volumes and
market shares
The Estonian AS A.Le Coq Tartu Õlletehas increased its total sales
by 65.0 percent from 61.0 million litres to 100.6 million litres
in 2004. 27.4 million euro of the increase is attributable to the
sales of AS Ösel Foods products. The company was acquired by Olvi
Group in November 2003. AS A.Le Coq Tartu Õlletehas is the largest
seller of beverages in Estonia if all the product groups are taken
into account; this includes beers, long drinks, ciders, soft
drinks and mineral waters. AS A.Le Coq Tartu Õlletehas’s beer
sales grew by 14.6 percent, from 34.2 million litres to 39.2
million litres. During the summer season, the beer production
capacity was fully utilised. Exports amounted to 17.6 million
litres, which includes intra-Group sales to Latvia and Lithuania.
The sales of the Latvian A/S Cesu Alus company totalled 29.5
(18.7) million litres in 2004. This represents a 57.8 percent
increase on the previous year. A/S Cesu Alus is now the second
largest brewery in Latvia. The brewery’s beer production capacity
was fully utilised during the summer months. A/S Cesu Alus also
produces and sells soft drinks, ciders, juices and long drink
products. These product groups accounted for 13.7 (14.0) percent
of the company’s total sales in 2004.
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The sales of the Lithuanian AB Ragutis company totalled 29.8
(24.7) million litres in 2004. This represents a 20.5 percent
increase on the previous year. During the summer months, the
brewery’s beer production capacity was fully utilised. Ciders and
long drinks made up 10.6 (6.4) percent of the company’s total
sales in 2004. AB Ragutis is the third largest company in the
Lithuanian brewing industry.
The Group’s net sales increased to 128.9 million euro
The Olvi Group’s net sales for 2004 totalled 128.9 million euro.
This was 14.34 million euro, or 12.5 percent, more than a year
earlier. The parent company Olvi plc’s net sales were down 1.4
percent at 69.3 (70.3) million euro. The parent company’s sales to
its subsidiaries amounted to 2.6 (2.3) million euro. The aggregate
net sales of the subsidiaries in the Baltic states amounted to
62.2 million euro in 2004. This represents an increase of 15.7
million euro or 33.7 percent.
AS A.Le Coq Tartu Õlletehas’s net sales amounted to 42.9 million
euro, representing an increase of 16.2 million euro or 60.8
percent. 11.1 million euro of the increase is attributable to the
sales of AS Ösel Foods products. The company was acquired by Olvi
Group in November 2003. A/S Cesu Alus’s net sales totalled 11.3
million euro, which was 3.9 million euro, or 53.1 percent, more
than in 2003. At 12.5 million euro, AB Ragutis's net sales in 2004
were 0.7 million euro, or 5.8 percent, higher than in 2003.
Net sales by Group company (million euro)
2004 2003
Parent company Olvi plc 69.3 70.3
Subsidiaries:
AS A.Le Coq Tartu Õlletehas 42.9 26.6
A/S Cesu Alus 11.3 7.4
AB Ragutis 12.5 11.8
AS Ösel Foods 8.8 1.9
Eliminations -15.9 -3.4
Olvi Group total 128.9 114.6
The net sales generated by the exports of the Olvi Group as a
whole totalled 3.2 (4.8) million euro in 2004. Exports of the
parent company Olvi plc accounted for 93.0 percent of the total.
Exports accounted for 2.5 percent of consolidated net sales.
Consolidated operating profit almost at par with the previous year
The Olvi Group’s operating profit for 2004 stood at 7.9 million
euro, or 6.1 percent of net sales. Compared to the year 2003, the
operating profit decreased by 0.1 million euro.
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Breakdown of operating profit (million euro)
2004 2003
Parent company Olvi plc 3.3 5.2
Subsidiaries in Baltic states 6.3 3.9
Total eliminations -1.6 -1.1
Olvi Group total 7.9 8.0
Operating profit as a
percentage of net sales 6.1 7.0
The operating profit of the parent company Olvi plc amounted to
3.3 million euro, which was 2.0 million euro less than in the
previous year. The profit represented 4.7 percent of net sales,
compared to 7.5 percent of net sales a year earlier. The parent
company’s result for 2004 includes 1.7 million euro of expenses on
the scrapping of beverage packages. The corresponding figure
booked for 2003 was 2.0 million euro.
The aggregate operating profit of the subsidiaries operating in
the Baltic states, adjusted by eliminations, increased by 1.9
million euro compared to the previous year, amounting to 4.6
million euro. AS A.Le Coq Tartu Õlletehas posted a good result in
2004. A/S Cesu Alus and AB Ragutis improved their operating
profits by 1.4 million euro but remained slightly in the red.
The parent company’s depreciation was booked in full for the
maximum and additional amounts as permitted under business tax
legislation. Depreciation according to plan was 1.3 million euro
higher than the depreciation applied in taxation.
Planned depreciation in the Olvi Group increased by 0.2 million
euro to 11.7 million euro in 2004.
The Olvi Group’s direct taxes amounted to 1.5 million euro.
The parent company Olvi plc’s net profit for fiscal 2004 was 4.9
(6.6) million euro or 7.1 (9.3) percent of net sales.
The Olvi Group’s net profit for the fiscal year was 2.9 million
euro, or 2.3 percent of net sales. The net profit was 1.2 million
euro less than a year earlier. The Olvi Group’s earnings per share
decreased from 0.86 euro to 0.59 euro compared to the previous
year. An exchange rate loss of 2.3 million euro burdened the
earnings for the fiscal year.
Gross capital expenditure 18.4 million euro
The Olvi Group’s gross capital expenditure amounted to 18.4
million euro and disposals of fixed assets to 0.9 million euro.
The gross capital expenditure includes 5.7 million euro on the
acquisition of A/S Cesu Alus shares by AS A. Le Coq Group in June
2004, representing a 5.2 percent holding in A/S Cesu Alus. As a
result AS A. Le Coq Group’s ownership in the company rose to 96.1
percent.
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The parent company Olvi plc’s gross capital expenditure amounted
to 4.7 million euro and disposals of fixed assets to 0.03 million
euro. The investments constituted normal repair and maintenance
investments.
AS A.Le Coq Tartu Õlletehas’s gross capital expenditure in 2004
amounted to 3.8 million euro.
A/S Cesu Alus’s gross capital expenditure in 2004 amounted to 3.0
million euro.
AB Ragutis’s gross capital expenditure in 2004 amounted to 0.8
million euro.
Financing
The Olvi Group’s free cash flow totalled 13.8 million euro in
2004. This was 10.7 percent of net sales. The amount of free cash
flow was 0.9 million euro lower than a year earlier. The Group’s
interest-bearing debt increased by 1.6 million euro. Olvi Group’s
net financial expenses amounted to 3.7 (2.1) million euro in 2004,
including 2.3 (0.4) million euro of exchange rate losses.
The Group’s financial position remained good. The equity to total
assets ratio stood at 45.3% (47.0%) at the end of 2004.
Personnel
The number of personnel employed by the Group was 1,032, or 38
more than a year earlier. The parent company Olvi plc employed 334
people on average in 2004, representing a decrease of 7 people on
the previous year. AS A.Le Coq Tartu Õlletehas’s personnel
increased by 32 employees to 288 during 2004. A/S Cesu Alus’s
average number of personnel during 2004 was 164, or 39 more than a
year earlier. AB Ragutis’s average number of personnel during 2004
was 180, almost unchanged on the previous year. AS Ösel Foods’s
average number of personnel during 2004 was 66, or 25 less than a
year earlier.
Own shares
The company does not hold any of its own shares, and the company’s
Board of Directors has not exercised its authorisation to sell the
company’s shares.
Shares and shareholders
A total of 77,600 Olvi plc A shares have been subscribed in 2004
using the warrants associated with the 1999 bond with warrants.
Share capital increases of 37,800 euro were pending registration
on the balance sheet date.
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Olvi plc’s registered share capital was 9,990,404.00 euro on 31
December 2004. The share capital was divided into 933,064 K shares
and 4,062,138 A shares. The share’s nominal value is 2 euro. The
share capital registered in the Trade Register stood at 10,028,204
euro as of 19 January 2005.
The Olvi plc A share is quoted on the Main List maintained by the
Helsinki Exchanges. A total of 1,767,881 Olvi plc shares changed
hands from January to December 2004, totalling 22.6 million euro
in trading volume. The traded shares represented 43.3 percent of
the total number of A shares. The average share price was 12.81
euro, with a low of 11.56 euro quoted in August 2004 and a high of
14.18 euro quoted in April 2004. The last trading price of the
year 2004 was 13.17 euro.
Quoting of the share warrants issued by Olvi plc in 1999 to the
company’s personnel and to the members of the parent company’s
Board of Directors began on 10 May 2001 on the Main List
maintained by the Helsinki Exchanges. The issue comprises a total
of 500,000 warrants, and the 250,000 A warrants entitle the
holders to subscribe for Olvi plc A shares between 1 April 2001
and 30 April 2005 under the terms and conditions of the issue. The
subscription period for the 250,000 B warrants started on 1 April
2003 and will end on 30 April 2005.
On 4 April 2002, the Annual General Meeting decided that new stock
options be issued to the Olvi Group’s key personnel and to a
wholly owned subsidiary of Olvi plc. The subscription period for
the stock options 2002A starts on 1 April 2005, and for the stock
options 2002B on 1 April 2007. The subscription period for both
stock options ends on 30 April 2008. A maximum of 200,000 A shares
in Olvi plc can be subscribed for using the stock options. The
exercise price of the stock options is the average quote weighted
by trade volume of the Olvi plc A share on the Helsinki Stock
Exchange from 1 July to 31 December 2002. The exercise price of
the stock options will be reduced by the amount of any dividends
distributed after the price-setting period has started and before
the shares are subscribed. The exercise price of the stock options
must be equal to or greater than the nominal value of the share.
Olvi plc’s Board of Directors has decided to allocate all the
stock options issued by the Annual General Meeting on 4 April 2002
to Olvin Juomaa Oy, a wholly owned subsidiary of Olvi plc. Olvi
plc’s Board of Directors will decide on the eventual distribution
of the stock options allocated to Olvin Juomaa Oy to current or
future key personnel of the Olvi Group.
A total of 93,365 warrants changed hands from January to December
2004, totalling 0.99 million euro in trading volume. The average
price of the warrants was 10.58 euro, with a low of 8.00 euro
quoted in August and a high of 13.40 euro quoted in November and
December. The year’s last trading price was 13.00 euro.
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According to the Finnish Central Securities Depository Ltd, the
company had 4,515 shareholders on 25 January 2005. Non-Finnish
shareholding accounted for 3.5 percent of the shares and 2.6
percent of the votes.
Research and development
Olvi’s research and development efforts range from product design
and development within the framework of ordinary quality control
to extensive product development projects. The R&D costs are
treated as annual expenses.
Environmental protection principles
The parent company’s environmental policy comprises the
environmental policy of the Finnish brewing and soft drinks
industry and the company’s values, which include responsibility
for the environment. Olvi plc’s operations are in compliance with
the environmental permit granted by the North Savo Regional
Environment Centre on 30 September 2003, which is valid until
2014.
The Baltic subsidiaries of the Olvi Group observe the applicable
environmental legislation in each jurisdiction.
Introduction of International Financial Reporting Standards (IFRS)
Olvi plc will start to use International Financial Reporting
Standards (IFRS) as the basis of its reporting as of 1 January
2005. Before the introduction of IFRS standards, Olvi’s financial
statements were based on Finnish Accounting Standards (FAS).
The table below summarises the effects of the IFRS transition on
the Group’s retained earnings.
Figures in million euro 31 Dec 2003
Shareholders’ equity under FAS 59.8
IAS 19 Employee benefits -0.6
(pensions)
IAS 2 Inventories -0.8
IAS 21 The effects of changes in -1.7
foreign exchange rates
IAS 12 Income taxes 0.1
Other IFRS changes -0.2
Total IFRS adjustments -3.3
Shareholders’ equity under IFRS 56.4
Employee benefits (pensions)
The majority of Olvi Group’s pension schemes is categorised as
defined contribution plans. The disability pension part of the
Finnish TEL scheme is a special exception. During the transition
project it was generally interpreted as a defined benefit plan and
is treated as such on the balance sheet for the transition date 1
January 2004.
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The Ministry of Social Affairs and Health approved certain changes
in the calculation criteria for TEL disability pension liabilities
in December 2004. The changes will enter into force on 1 January
2006, after which the TEL disability pension part will be treated
as a defined contribution plan in IFRS financial statements. As a
consequence of this, most of the liability recorded as reducing
shareholders’ equity on the transition date’s balance sheet was
recognised as income in 2004.
Inventories
Changes in inventories are first of all due to the fact that
contrary to previous practice, the value of inventories includes a
proportion of the fixed overheads of manufacturing. Furthermore,
valuation principles have been unified within the Group, resulting
in the valuation of certain inventories in foreign subsidiaries at
a net realisable value lower than acquisition cost.
Goodwill
Business combinations have been treated on the basis of original
valuations and allocations as allowed by IFRS 1. According to IFRS
3, consolidation goodwill shall not be regularly amortised but
subjected to annual impairment testing under IAS 36.
Effects of exchange rate changes
Exchange rate differences on intra-Group long-term loans have been
accrued over the loan period in accordance with the practice
allowed by Finnish Accounting Standards. According to IAS 21,
these items must be recognised as affecting earnings in the period
during which they originate, with the exception of items
considered as net investment in a foreign unit. All previously
accrued exchange rate differences have been recognised as expenses
during 2004 in the FAS financial statements as well.
Income taxes
Changes in accounting principles upon the transition to IFRS
standards resulted in an increase in deferred (net) tax assets on
1 January 2004. The most significant change is due to an increase
in deferred tax assets caused by the recognition of pension
liabilities.
Corporate Governance
Olvi plc has implemented the Corporate Governance Recommendation
for Listed Companies as of 1 July 2004.
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Board of Directors’ proposal for the distribution of profit
Olvi plc continues to pursue an active and earnings-based dividend
policy. The aim is to distribute at least 40 percent of the annual
earnings as dividend to the shareholders.
The parent company’s distributable shareholders’ equity is 40.3
(38.8) million euro. Profit for the year represents 4.9 (6.6)
million euro of this total. The Group’s distributable
shareholders’ equity amounts to 33.5 (32.4) million euro.
The company’s Board of Directors will propose to the Annual
General Meeting of shareholders that a dividend of 0.65 euro shall
be paid for 2004 on each K and A share, representing 110.7 percent
of the Olvi Group’s earnings per share. The proposed dividend
payment totals 3.3 million euro. In the previous year, the company
paid a dividend of 0.70 euro for each K and A share.
Outlook for the year 2005
Olvi’s domestic market position in selected primary product groups
strengthened in 2004. We expect this to provide good foundations
for the development of sales volume and the overall market
position also in 2005.
The level of beer prices is anticipated to remain low due to
intense price competition and the role of beers as a product for
attracting customers to retail stores. Total consumption is
expected to increase slightly in 2005.
Improved growth in volumes and better production efficiency are
expected to increase the level of operating profit in Finland.
The profit-generating ability and market position of our
subsidiaries in the Baltic states strengthened in 2004. We expect
the favourable development in volumes and operating profits,
backed by production-related investments, to continue in 2005.
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The information in this report is unaudited.
The Olvi Group’s annual report for the year 2004 will be released
during the week beginning on 28 March 2005. The Annual General
Meeting of the shareholders of Olvi plc will be held in Iisalmi,
Finland, on 5 April 2005.
OLVI PLC
Board of Directors
Lasse Aho
Managing Director
For further information, please contact:
Lasse Aho, Managing Director
Phone +358 17 838 5200 or +358 400 203 600
DISTRIBUTION
Hex Plc
Key media
http://www.olvi.fi
APPENDICES
Income statement
Balance sheet
Tables 1 to 5
OLVI GROUP TABLES APPENDIX 1
PROPOSAL OF OLVI PLC’S BOARD OF DIRECTORS FOR THE DISTRIBUTION OF
PROFIT
Olvi plc’s profit for the fiscal year from 1 January to 31
December 2004 was 4.9 million euro. The Group’s distributable
shareholders’ equity as of 31 December 2004 was 33.5 million euro.
Olvi plc’s Board of Directors will propose to the Annual General
Meeting of shareholders that a dividend of 0.65 euro shall be paid
for 2004 on each K and A share, representing 110.7 percent of the
Olvi Group's earnings per share. The proposed dividend payment
totals 3.3 million euro.
The proposal calls for the payment of dividends in April 2005.
OLVI GROUP TABLES APPENDIX 2
INCOME STATEMENT
1 Jan- 1 Jan-
31 Dec 2004 31 Dec 2003
1,000 euro % 1,000 euro %
NET SALES 128,894 100.0 114,554 100.0
Increase (+)/decrease (-)
in inventories of
finished and unfinished
products 684 0.5 710 0.6
Manufacture for own use 23 0.0 33 0.0
Other operating income 637 0.5 444 0.4
Materials and services -45,267 -35.1 -37,946 -33.1
Personnel expenses -19,375 -15.0 -17,863 -15.6
Depreciation and write-offs-11,727 -9.1 -11,501 -10.0
Other operating expenses -45,945 -35.6 -40,417 -35.3
OPERATING PROFIT 7,925 6.1 8,014 7.0
Financial income and expenses –3,703 -2.9 - 2,062 -1.8
PROFIT BEFORE EXTRAORDINARY
ITEMS 4,222 3.3 5,952 5.2
PROFIT BEFORE APPROPRIATIONS
AND TAXES 4,222 3.3 5,952 5.2
Taxes for the year -1,535 -1.2 -2,087 -1.8
Minority interest 225 0.2 294 0.3
NET PROFIT FOR THE YEAR 2,912 2.3 4,159 3.6
OLVI GROUP TABLES APPENDIX 3
BALANCE SHEET
ASSETS 31 Dec 2004 31 Dec 2003
1,000 euro 1,000 euro
FIXED ASSETS
Intangible assets 2,844 3,239
Group consolidation goodwill 7,304 8,706
Tangible assets 71,044 68,819
Other investments 253 257
TOTAL FIXED ASSETS 81,445 81,021
CURRENT ASSETS
Inventories 22,181 19,299
Long-term receivables 39 43
Short-term receivables 24,267 24,303
Cash in hand and at bank 4,436 3,691
TOTAL CURRENT ASSETS 50,924 47,336
TOTAL ASSETS 132,369 128,356
LIABILITIES 31 Dec 2004 31 Dec 2003
SHAREHOLDERS’ EQUITY
Share capital 10,028 9,873
Share premium account 10,481 10,097
Capital reserve 127 127
Other reserves 143 143
Retained profit 36,018 35,364
Net profit for the year 2,912 4,159
TOTAL SHAREHOLDERS’ EQUITY 59,710 59,764
MINORITY INTEREST 260 496
DEBT
Deferred tax liability 1,626 2,196
Long-term debt 35,394 30,988
Short-term debt 35,380 34,913
TOTAL DEBT 72,400 68,097
TOTAL LIABILITIES 132,369 128,356
OLVI GROUP TABLES APPENDIX 4
KEY FINANCIAL RATIOS
2004 2003
Gross capital expenditure in
fixed assets, million euro 18.4 13.5
Average number of personnel:
Olvi plc, Finland 334 341
AS A. Le Coq Tartu Õlletehas,
Estonia 288 256
A/S Cesu Alus, Latvia 164 125
AB Ragutis, Lithuania 180 181
AS Ösel Foods, Estonia 66 91
Total 1,032 994
*) Earnings per share (EPS), euro 0.59 0.86
*) Earnings per share
adjusted for dilution
from warrants, euro 0.57 0.84
*) Equity per share, euro 11.91 12.11
Equity to total assets, % 45.30 47.00
*) The comparison data for these ratios has been converted to
comparable format due to the bonus issue. The doubled amount of
shares after the bonus issue has been taken into account in the
comparison data.
CONTINGENT LIABILITIES, 1,000 euro
2004 2003
Debts for which assets have
been pledged as collateral:
Loans from financial institutions 12,132 9,320
Assets pledged as collateral:
Mortgages on land and buildings 1,135 1,135
Other off-balance sheet liabilities 1,980 1,980
Leasing liabilities:
due next year 1,696 1,705
due later 1,735 1,920
Total leasing liabilities 3,431 3,625
DERIVATIVES CONTRACTS, 1,000 euro
31 Dec 2004 Nominal value Market value Book value
Derivatives 13742 13652 0
The business significance of the derivatives contracts is minor.
The derivatives contracts are interest rate swaps on loans and
will reach maturity in 2007 and 2008.
APPENDIX 5
CASH FLOW STATEMENT, 1,000 euro
1 Jan-31 Dec 2004 1 Jan-31 Dec 2003
Profit before
extraordinary items 4222 5952
Depreciation according to
plan and other adjustments 14930 13520
Change in
net working capital -754 -3390
Net financial expenses
and taxes paid -4276 -4247
Cash flow from operations (A) 14124 11826
Investments -12646 -12062
Disposals of fixed assets 550 234
Shares purchased
in subsidiaries -5
Cash flow from investments (B) -12096 -11828
Change in debt capital and
other financial items 2124 2750
Dividends paid -3409 -3021
Cash flow from financing(C) -1285 -271
Increase (+)/decrease (-)
in liquid assets (A+B+C) 745 -273
Liquid assets 1 January 3691 3964
Liquid assets 31 December 4436 3691
Change in liquid assets 745 -273