OLVI PLC FINANCIAL STATEMENTS BULLETIN
26 FEB 2004 AT 9:00 PAGE 1 OF 9
OLVI GROUP’S NET SALES AND OPERATING PROFIT ON THE RISE, WITH
STRONG GROWTH IN THE BALTIC STATES
The Olvi Group’s consolidated net sales increased to 114.6 (110.2)
million euro and the operating profit increased to 8.0 (7.6)
million euro, amounting to 7.0% (6.9%) of net sales. The parent
company’s operating profit was 5.2 (6.0) million euro, and the
aggregate operating profit of the subsidiaries in the Baltic
states was 2.8 (1.6) million euro. Earnings per share amounted to
1.00 (0.95) euro. The Board of Directors’ dividend proposal is
0.70 (0.625) euro. The equity to total assets ratio was 47.0%
(48.5%) and net investments totalled 12.4 (15.2) million euro.
The parent company Olvi plc increased its market share in beers
and mineral waters in 2003
Olvi plc’s total sales amounted to 97.0 (102.0) million litres,
which was 4.9% less than a year earlier. The decrease in Olvi’s
total sales was mainly due to the company’s choice of not engaging
in price competition in the domestic soft drinks market. Olvi’s
soft drink sales decreased to 11.2 (16.5) million litres in 2003.
Finnish sales accounted for 85.5 (90.3) million litres of the
total, followed by 11.6 (11.7) million litres of tax-free and
export sales. Olvi is the third largest company in the Finnish
brewing industry.
Among its three main product groups, Olvi increased its market
share in beers to 12.8 (12.5) percent and in mineral waters to
26.6 (25.0) percent. The market share in ciders decreased slightly
to 11.0 (11.8) percent. Olvi’s sales are focused on the retail
trade sector, which is the most important distribution channel for
beers, mineral waters and ciders. Olvi’s market share of beers
sold in retail outlets increased to 13.9% (13.2%) and in state-
owned Alko alcohol outlets to 21.9% (21.6%) The retail market
share in ciders was 12.4% (13.2%). In mineral waters, Olvi has a
strong grip of the second place in the retail market with a market
share of more than 30 percent. These market shares are based on
statistics compiled by the member companies of the Federation of
the Brewing and Soft Drinks Industry and therefore do not include
imports or any other sales outside the scope of the statistics.
Subsidiaries in the Baltic states increased their market shares
The Estonian AS Tartu Õlletehas increased its total sales by 9.1
percent in 2003, from 55.9 million litres to 61.0 million litres.
AS 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
Tartu Õlletehas’s beer sales decreased by 4.2 percent, from 35.7
million litres to 34.2 million litres. The market share of the
company’s beers decreased by 3.5 percentage points to 35.9 percent
in 2003 when comparing the Estonian manufacturers.
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During the summer season, AS Tartu Õlletehas’s beer production
capacity was fully utilised. AS Tartu Õlletehas’s exports amounted
to 6.6 million litres. Latvia and Lithuania accounted for the
majority of the company's exports, some of which were directed to
Finland as well.
The total sales of AS Ösel Foods, the November 2003 acquisition
that manufactures juices, mineral waters and vitaminised soft
drinks in Estonia, amounted to 26.9 (19.8) million litres in 2003,
representing an increase of 35.9 percent on the previous year. The
company’s market shares in 2003 stood at 18 percent in soft
drinks, 14 percent in mineral waters and 26 percent in juices. The
figures of AS Ösel Foods have been consolidated with Olvi Group’s
figures in November and December 2003.
The sales of the Latvian A/S Cesu Alus company totalled 18.7
(11.4) million litres in 2003. This represents a 64.0 percent
increase on the previous year. The market share of the company’s
beers was 12.8 (7.8) percent in 2003. During the year 2003, the
company has established its position as the second largest seller
of beer in the Latvian market. During the summer months, the
brewery’s beer production capacity was fully utilised. A/S Cesu
Alus also produces and sells soft drinks, ciders and long drink
products, which accounted for 14.0% (10.5%) of the company’s total
sales in 2003.
The sales of the Lithuanian AB Ragutis company totalled 24.7
(23.6) million litres in 2003. This represents a 4.7 percent
increase on the previous year. The market share of the company’s
beers was 9.5 (8.0) percent in 2003. During the summer months, the
brewery’s beer production capacity was fully utilised. The company
is the Lithuanian market leader in ciders with a market share of
44.0 (47.7) percent. Ciders and long drinks made up 6.4 (3.9)
percent of the company’s total sales in 2003. AB Ragutis is the
fourth largest company in the Lithuanian brewing industry.
The Group’s net sales increased to 114.6 million euro
The Olvi Group’s net sales for 2003 totalled 114.6 million euro.
This was 4.4 million euro, or 4.0 percent, more than a year
earlier. The parent company Olvi plc’s net sales were down 1.3
percent at 70.3 million euro. The aggregate net sales of the
subsidiaries in the Baltic states amounted to 47.7 million euro in
2003. This represents an increase of 5.1 million euro or 12.0
percent.
AS Tartu Õlletehas’s net sales amounted to 26.6 million euro,
representing an increase of 0.6 million euro or 2.3 percent. A/S
Cesu Alus’s net sales totalled 7.4 million euro, which was 1.9
million euro, or 34.5 percent, more than in 2002. At 11.8 million
euro, AB Ragutis’s net sales in 2003 were 0.6 million euro, or 5.4
percent, higher than in 2002.
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AS Ösel Foods has been included in the consolidated financial
statements since the beginning of November 2003. Its net sales in
November and December amounted to 1.9 million euro.
Net sales by Group company (million euro)
2003 2002
Parent company Olvi plc 70.3 71.2
Subsidiaries:
AS Tartu Õlletehas 26.6 26.0
A/S Cesu Alus 7.4 5.5
AB Ragutis 11.8 11.2
AS Ösel Foods (Nov-Dec) 1.9 -
Eliminations -3.4 -3,6
Olvi Group total 114.6 110.2
Olvi plc’s exports grew by 14.9 percent to 8.5 million euro in
2003. The Group’s internal exports accounted for 3.4 (2.4) million
euro of the total. The net sales generated by the exports of the
Olvi Group as a whole totalled 5.1 (5.1) million euro in 2003.
Exports of the parent company Olvi plc accounted for 93.3 percent
of the total. Exports accounted for 4.5 percent of Group net
sales.
The Group's operating profit improved slightly on the previous
year
The Olvi Group's operating profit for 2003 stood at 8.0 million
euro, or 7.0 percent of net sales. Compared to the previous year,
the operating profit was up 0.4 million euro, or 4.9 percent.
Breakdown of operating profit (million euro)
2003 2002
Parent company Olvi plc 5.2 6.0
Subsidiaries in
Baltic states 3.9 2.4
Total eliminations -1.1 -0.8
Olvi Group total 8.0 7.6
Operating profit as a
percentage of net sales 7.0 6.9
The operating profit of the parent company Olvi plc amounted to
5.2 million euro, which was 0.7 million euro less than in the
previous year. The profit represented 7.5 percent of net sales,
compared to 8.4 percent of net sales a year earlier.
The parent company’s result for 2003 includes 2.0 million euro of
expenses on the scrapping of beverage packages. The corresponding
figure booked for 2002 was 0.8 million euro.
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Planned depreciation in the Olvi Group decreased by 0.3 million
euro to 11.5 million euro in 2003. The five-year depreciation
period of the FIZZ brand ended in August 2003, which caused a
decrease of 0.6 million euro in the amount of total depreciation
compared to the previous year. When the above factors are taken
into account, the parent company Olvi plc’s comparable operating
profit in 2003 remained at the level of 2002.
The aggregate operating profit of the subsidiaries operating in
the Baltic states, adjusted by eliminations, increased by 1.2
million euro compared to the year 2002, amounting to 2.8 million
euro. AS Tartu Õlletehas posted a good result in 2003. Even though
the operating profits of both A/S Cesu Alus and AB Ragutis
improved on the previous year, both companies remained in the
negative. The losses of both companies are attributable to
increased depreciation due to substantial investment programmes in
the recent years, as well as continued intense price competition
in Latvia and Lithuania.
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 2.3 million euro
higher than the depreciation applied in taxation.
The Olvi Group’s direct taxes amounted to 2.1 million euro.
The Olvi Group’s net profit for the fiscal year was 4.2 million
euro, or 3.6 percent of net sales. The profit was 0.2 million euro
higher than a year earlier.
The parent company Olvi plc’s net profit for fiscal 2003 was 6.6
million euro or 9.3 (9.0) percent of net sales. The Olvi Group’s
earnings per share improved from 0.95 euro to 1.00 euro compared
to the previous year.
Gross capital expenditure 13.5 million euro
The Olvi Group’s gross capital expenditure amounted to 13.5
million euro and disposals of fixed assets to 1.1 million euro.
The gross capital expenditure includes the shares in the Estonian
company OÜ Finelin acquired by AS A. Le Coq in November 2003 (6.1
million euro). OÜ Finelin holds the entire stock of the Estonian
company AS Ösel Foods, which manufactures juices, mineral waters
and vitaminised soft drinks.
The parent company Olvi plc’s gross capital expenditure amounted
to 2.8 million euro and disposals of fixed assets to 0.03 million
euro. The largest investments included machinery and equipment for
the beverage packaging lines, as well as a new enterprise resource
planning system.
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AS Tartu Õlletehas’s gross capital expenditure in 2003 amounted to
2.3 million euro. The largest investments included an extension of
the storehouse, a new enterprise resource planning system, as well
as machinery and equipment for the manufacture of beverages.
A/S Cesu Alus’s gross capital expenditure in 2003 amounted to 1.2
million euro. The largest investments included an extension of the
vertical tank cellar, as well as machinery and equipment related
to the improvement of product quality.
AB Ragutis’s gross capital expenditure in 2003 amounted to 1.0
million euro. The largest investments included machinery and
equipment related to beverage packaging lines and the improvement
of quality.
Financing
The Olvi Group’s free cash flow totalled 14.7 million euro in
2003. This was 12.8 percent of net sales. The amount of free cash
flow was 0.4 million euro lower than a year earlier. The Group’s
net liabilities increased by 5.2 million euro. The Olvi Group’s
net financial expenses amounted to 2.1 million euro in 2003. This
was 0.5 million euro more than a year earlier.
The Group’s financial position remained good. The equity to total
assets ratio stood at 47.0% (48.5%) at the end of 2003.
Personnel
The number of personnel employed by the Group was 994, or 117 more
than a year earlier. The parent company Olvi plc employed 341
people on average in 2003, representing a decrease of 9 people on
the previous year. AS Tartu Õlletehas’s personnel increased by 17
employees to 256 during 2003.
A/S Cesu Alus’s average number of personnel during 2003 was 125,
or 18 more than a year earlier. AB Ragutis’s average number of
personnel during 2003 was 181, unchanged since the previous year.
The average number of personnel employed by AS Ösel Foods in 2003
was 91. AS Ösel Foods became a subsidiary of the Olvi Group in the
beginning of November 2003.
Own shares
Olvi plc did not hold any of its own shares during the fiscal
year.
In accordance with the Board of Directors’ proposal, Olvi plc’s
Annual General Meeting of shareholders decided on 13 April 2000 to
authorise the Board to acquire up to 110,000 of the company’s own
A shares. The company has not acquired any of its own shares on
the basis of this decision. On 9 April 2003 Olvi plc’s Annual
General Meeting of shareholders authorised the Board of Directors
to decide on the transfer of any A shares acquired on the
company’s own account, up to a maximum of 110,000 shares.
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The transfer authorisation is valid for one year, or up to 9 April
2004. 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
On 9 April 2003 Olvi plc’s Annual General Meeting decided to
double the company’s share capital by means of a bonus issue. This
affected both A and K shares. The bonus issue increased the share
capital of Olvi plc from 4,834,104 euro to 9,668,208 euro.
A total of 142,398 A shares in Olvi plc were subscribed during
2003 using the warrants associated with the 1999 bond with
warrants. The corresponding total amount of increases in share
capital was 108,396 euro. Share capital increases of 96,400 euro
were pending registration as of the balance sheet date.
Olvi plc’s registered share capital was 9,776,604.00 euro on 31
December 2003. The share capital was divided into 933,064 K shares
and 3,955,238 A shares. The share’s nominal value is 2 euro. The
share capital registered in the Trade Register stood at 9,873,004
euro as of 30 January 2004.
The Olvi plc A share is quoted on the Main List maintained by the
Helsinki Exchanges. A total of 1,320,230 Olvi plc shares changed
hands from January to December 2003, totalling 16.0 million euro
in trading volume. The traded shares represented 33.0 percent of
the total number of A shares. The average share price was 12.09
euro, with a low of 10.00 euro quoted in April and a high of 14.40
euro quoted in November and December. The last trading price of
the year 2003 was 13.25 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.
The Annual General Meeting on 4 April 2002, that stock options be
issued to key personnel of Olvi plc and its subsidiaries and to a
subsidiary owned on a 100 percent basis by 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.
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The exercise price of the stock options will be decreased 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.
A total of 123,012 warrants changed hands from January to December
2003, totalling 0.96 million euro in trading volume. The average
price of the warrants was 7.81 euro, with a low of 4.00 euro
quoted in June and a high of 12.80 euro quoted in October. The
year’s last trading price was 11.30 euro.
According to the Finnish Central Securities Depository Ltd, the
company had 4,451 shareholders on 5 February 2004. Non-Finnish
shareholding accounted for 3.0 percent of the shares and 2.5
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 approved 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 Accounting Standards/International
Financial Reporting Standards (IAS/IFRS)
Olvi plc will prepare its consolidated financial statements in
accordance with the International Accounting Standards and
International Financial Reporting Standards starting from the year
2005. The transition to IAS/IFRS will be carried out in accordance
with a plan prepared in advance.
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.
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The parent company’s distributable shareholders’ equity is 38.8
(35.2) million euro. Profit for the year represents 6.6 (6.4)
million euro of this total. The Group’s distributable
shareholders’ equity amounts to 32.4 (29.1) million euro.
The company’s Board of Directors will propose to the Annual
General Meeting of shareholders that a dividend of 0.70 euro shall
be paid for 2003 on each K and A share, representing 70.0 percent
of the Olvi Group’s earnings per share. The proposed dividend
payment totals 3.5 million euro. In the previous year, the company
paid a dividend of 1.25 euro for each K and A share, which
included 0.35 euro of Olvi plc’s 125th anniversary dividend. The
total amount of dividends paid in the previous year was 3.0
million euro or 76.2 percent of the Group’s earnings per share.
Comparable dividend paid in 2002, adjusted for the effect of the
bonus issue in the spring of 2003, amounts to 0.625 euro for each
K and A share.
Change of Managing Director
As of 1 May 2004, Markku Rönkkö, the Managing Director of Olvi
plc, will transfer to the post of Managing Director at Atro Oyj,
which is a consolidated group in the energy sector based in
Kuopio. He will continue as the Managing Director of Olvi plc
until the end of April 2004. The Board of Directors initiated the
process for selecting a new Managing Director in the end of
January 2004.
Outlook for the year 2004
The Olvi Group’s earnings depend on the volume and price
developments of the overall markets in Finland as well as in the
Baltic states. The year 2004 will bring substantial changes to the
Finnish brewing industry’s operating environment, and the impact
on the parent company Olvi plc’s business is very difficult to
estimate.
The Baltic states, Estonia, Latvia and Lithuania, will become
members of the EU as of 1 May 2004, but this is not expected to
cause any immediate major changes in the Group’s business.
However, the low level of alcohol duties in Estonia compared to
Finland will result in substantial tourist imports of alcoholic
beverages between the two countries. The Group companies have
prepared for the changes in tourist imports.
The information in this report is unaudited.
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The Olvi Group’s annual report for the year 2003 will be released
during the week beginning on 22 March 2004. The Annual General
Meeting of the shareholders of Olvi Plc will be held in Iisalmi,
Finland, on 14 April 2004.
OLVI PLC
Board of Directors
Markku Rönkkö
Managing Director
For further information, please contact:
Markku Rönkkö, Managing Director
Phone +358 17 838 5200 or +358 50 65 851
or
Heikki Hortling, Chairman of the Board
Phone +358 17 838 5500 or +358 500 273 058
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 2003 was 6.6 million euro. The Group’s distributable
shareholders’ equity as of 31 December 2003 was 32,4 million euro.
Olvi plc’s Board of Directors will propose to the Annual General
Meeting of shareholders that a dividend of 0.70 euro shall be paid
for 2003 on each K and A share, representing 70.0 percent of the
Olvi Group's earnings per share. The proposed dividend payment
totals 3.5 million euro.
The proposal calls for the payment of dividends in April 2004.
OLVI GROUP TABLES APPENDIX 2
INCOME STATEMENT
1 Jan - 1 Jan -
31 Dec 2003 31 Dec 2002
1,000 euro % 1,000 euro %
NET SALES 114,554 100.0 110,184 100.0
Increase (+)/decrease (-)
in inventories of
finished and unfinished
products 710 0.6 -667 -0.6
Manufacture for own use 33 0.0 19 0.0
Other operating income 444 0.4 359 0.3
Materials and services -37,946 -33.1 -34,873 -31.6
Personnel expenses -17,863 -15.6 -16,737 -15.2
Depreciation and write-offs-11,501 -10.0 -11,798 -10.7
Other operating expenses -40,417 -35.3 -38,844 -35.3
OPERATING PROFIT 8,014 7.0 7,643 6.9
Financial income
and expenses -2,062 -1.8 - 1,635 -1.5
PROFIT BEFORE EXTRAORDINARY
ITEMS 5,952 5.2 6,008 5.5
PROFIT BEFORE APPROPRIATIONS
AND TAXES 5,952 5.2 6,008 5.4
Taxes for the year -2,087 -1.8 -2,357 -2.1
Minority interest 294 0.3 306 0.3
NET PROFIT FOR THE YEAR 4,159 3.6 3,957 3.6
OLVI GROUP TABLES APPENDIX 3
BALANCE SHEET
ASSETS 31 Dec 2003 31 Dec 2002
1,000 euro 1,000 euro
FIXED ASSETS
Intangible assets 3,239 2,147
Group consolidation goodwil 8,706 4,629
Tangible assets 68,819 71,404
Other investments 257 257
TOTAL FIXED ASSETS 81,021 78,437
CURRENT ASSETS
Inventories 19,299 19,288
Long-term receivables 43 20
Short-term receivables 24,303 19,253
Cash in hand and at bank 3,691 2,427
TOTAL CURRENT ASSETS 47,336 40,988
TOTAL ASSETS 128,356 119,425
LIABILITIES 31 Dec 2003 31 Dec 2002
SHAREHOLDERS’ EQUITY
Share capital 9,873 4,834
Share premium account 10,097 14,353
Capital reserve 127 127
Other reserves 143 143
Retained profit 35,364 33,765
Net profit for the year 4,159 3,957
TOTAL SHAREHOLDERS’ EQUITY 59,764 57,179
MINORITY INTEREST 496 791
DEBT
Deferred tax liability 2,196 2,860
Long-term debt 30,988 27,545
Short-term debt 34,913 31,050
TOTAL DEBT 68,097 61,455
TOTAL LIABILITIES 128,356 119,425
OLVI GROUP TABLES APPENDIX 4
KEY FINANCIAL RATIOS
2003 2002
Gross capital expenditure in
fixed assets, million euro 13.5 16.3
Average number of personnel:
Olvi plc, Finland 341 350
AS Tartu Õlletehas, Estonia 256 239
A/S Cesu Alus, Latvia 125 107
AB Ragutis, Lithuania 181 181
AS Ösel Foods, Estonia 91
Total 994 877
*) Earnings per share (EPS), euro 1.00 0.95
*) Earnings per share
adjusted for dilution
from warrants, euro 0.97 0.94
*) Equity per share, euro 12.11 11.83
Equity to total assets, % 47.00 48.50
*) 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
2003 2002
Debts for which assets have
been pledged as collateral:
Loans from financial institutions 9,320 11,007
Assets pledged as collateral:
Mortgages on land and buildings 1,135 1,942
Leasing liabilities:
due next year 1,705 1,357
due later 1,920 2,003
Total leasing liabilities 3,625 3,361
DERIVATIVES CONTRACTS, 1,000 euro
31 Dec 2003 Nominal value Market value Book value
Derivatives 16955 16885 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 2003 1 Jan – 31 Dec 2002
Profit before
extraordinary items 5952 6008
Depreciation according to
plan and other adjustments 13520 13446
Change in net
working capital -390 -1057
Net financial expenses
and taxes paid -4256 -3882
Cash flow
from operations(A) 11826 16629
Investments -12062 -12653
Disposals of fixed assets 234 1055
Cash flow
from investments(B) -11828 -11599
Change in debt capital and
other financial items 2750 -3138
Dividends paid -3021 -2175
Cash flow from financing(C) -271 -5313
Increase (+)/decrease (-)
in liquid assets (A+B+C) -273 -283
Liquid assets 1 January 3964 2709
Liquid assets 31 December 3691 2427
Change in liquid assets -273 - 283