Olvi Group’s Financial Statements January to December 2019

27.02.2020 klo 09:00 Olvi Group’s Financial Statements January to December 2019

OLVI PLC                FINANCIAL STATEMENTS BULLETIN 27 FEB 2020 at 9:00 am

OLVI GROUP’S FINANCIAL STATEMENTS JANUARY TO DECEMBER 2019

FINANCIAL PERFORMANCE IN BRIEF

Olvi Group’s business developed favourably in 2019. The Group’s sales volume, net sales and operating profit improved for the fourth year in a row. The Group’s financial standing and overall market position improved further. The Board proposes a dividend of 1.00 (0.90) euro per share.

Near-term outlook

Olvi’s operating profit for fiscal year 2020 is expected to remain on the previous year’s good level.

CONSOLIDATED KEY RATIOS

  10-12/ 2019 10-12/ 2018 Change % /
pp 1-12/ 2019 1-12/ 2018 Change % / pp Sales volume, Mltr 159.3 150.3 6.0 718.3 701.3 2.4 Net sales, MEUR 93.6 86.2 8.5 408.7 384.3 6.4 Gross margin, MEUR 14.3 11.2 27.7 76.7 70.8 8.4 % of net sales 15.2 12.9   18.8 18.4   Operating profit, MEUR 7.6 5.7 32.9 52.5 50.1 4.7 % of net sales 8.1 6.6   12.8 13.0   Net profit for the period, MEUR 6.9 5.1 35.3 42.2 41.1 2.7 % of net sales 7.4 5.9   10.3 10.7   Earnings per share, EUR 0.33 0.25 32.0 2.02 1.97 2.5 Capital expenditure, MEUR 6.9 10.0 -31.4 31.0 34.2 -9.5 Equity per share, EUR       12.58 11.31 11.2 Equity to total assets, %       66.4 64.9 1.5 Gearing, %       -11.6 -6.0 5.6

BUSINESS DEVELOPMENT
LASSE AHO, MANAGING DIRECTOR:

Olvi Group’s full-year business development continued on a good track. Net sales increased by 6.4 percent and operating profit reached 52.5 million euro, an increase of 4.7 percent. Good development is attributable to strong market shares in the operating countries, innovative product development resulting in successful product launches, as well as continuous development of operational efficiency. With regard to core business, growth and business development were successful. The Group also focused on future growth, making investments in the water business, capacity increases and development efforts within the acquired operations in Finland.

Fourth-quarter performance improved clearly on the previous year. Net sales increased in all operating countries, totalling 8.5 percent more than in the previous year. Strong demand for the Group’s products continued and was boosted by new product launches in the autumn. The Group’s operating profit improved by 32.9 percent on the previous year. Olvi Group has been able to improve its profitability also in the low-season months.

Business in Finland developed favourably during the entire year. Sales volume, net sales and operating profit have increased on the previous year. The demand for mild alcoholic beverages in particular has remained strong, and as a result, the market position strengthened further. Fourth-quarter sales volume and net sales developed favourably. Operating profit fell short of the previous year because the figure for the comparison

period included a one-off insurance compensation of 0.8 million euro. Furthermore, the beverage industry’s common recycling scheme failed to pay refunds of recycling fees in 2019; in the comparison period, these amounted to 0.7 million euro. The parent company continued investments in capacity increases and improving delivery reliability, and decided on new investments for 2020, including the installation of a new filling line. 

In Estonia, full-year business development was positively affected by the tax cut on mild alcoholic beverages effective from the beginning of July. The tax change boosted domestic demand as cross-border sales from Latvia shifted back to Estonia. Cross-border sales between Finland and Estonia have also picked up. Net sales increased by 4.4 percent in the second half of the year, after a 12.4 percent decline in the first half. Operating profit improved by 17.5 percent in the second half. Thanks to this, the full-year earnings for 2019 ended up 2.2 percent higher than in the previous year. The A. Le Coq brand continued to develop strongly, and the company is the market leader in most product categories. A. Le Coq is clearly the largest seller of beverages in Estonia. At the end of the year, the company also received the recognition “Most valuable company in Estonia” to complement many other awards. 

In Latvia, business was substantially affected by various changes in alcohol taxes both domestically and in the neighbouring Estonia. Domestic alcohol taxation became more favourable to strong beverages, which caused a decline of 13 percent in the overall beer market for the year. As a consequence of the Estonian tax cut, cross-border sales from Latvia were cut in half. These changes caused a slight decline in Cēsu Alus’s sales volume. On the other hand, the company was successful in increasing the value of domestic sales through a premium product portfolio; thus, total net sales declined by just 2.4 percent. Measured by value of sales, the company is number one in the Latvian beverage industry. Earnings were also challenged by the tax changes that will become effective in 2020, as well as tightened competition in strong mixed drinks. In these circumstances, it can be considered an achievement that operating profit in euros remained almost on a par with the previous year, and even improved when considering the figure in relation to net sales.

In Lithuania, the Group managed to gain a good market position in 2019 and strengthened its market shares in all product categories. Volfas Engelman has grown to be the second largest player in the Lithuanian beverage industry within the beverage categories it represents. Exports have also developed well, showing growth of 30 percent. The main export markets are Russia and South Korea. The company was able to develop its product portfolio towards premium products, particularly with regard to specialty beers. All in all, sales volume increased by almost 13 percent and net sales by 14,5 percent. Operating profit was on a par with the previous year, even though the new water business was launched. The start-up of water production and launch of a new brand had a profitability impact of approximately half a million euro. This is an important investment in increasing the share of non-alcoholic beverages in the product portfolio and starting the company’s own water business.

In Belarus, the year was good for business. Sales volume increased by 2.2 percent. Thanks to good sales management and product portfolio development, net sales increased by more than 10 percent and operating profit improved by 23.8 percent on the previous year. The profit percentage also increased from 12.6 to 14.1 percent. Performance improved in domestic sales as well as exports. The company has succeeded in keeping the development of production costs reasonable as production efficiency has improved. The currency exchange rate has remained relatively steady during the year, which helped earnings development also when measured in euro.

Olvi Group has continued strong investments in developing its future business. Investments for the year totalled 31 million euro. The most important of these were capacity increases in beer production in Finland and juice production in Estonia, as well as the start-up of a natural mineral water plant in Lithuania. 

SEASONAL NATURE OF THE OPERATIONS

The Group’s business operations are characterised by seasonal variation. The net sales and operating profit from the reported geographical segments do not accumulate evenly but vary according to the time of the year and the characteristics of each season.

SALES DEVELOPMENT 
 
Olvi Group’s sales volume in 2019 reached its all-time high at 718.3 (701.3) million litres. This represents an increase of 17.0 million litres or 2.4 percent on the previous year.

The Group’s sales volume increased in Belarus and Finland, but the largest change was in Lithuania as domestic market shares increased and the development of exports was strong.

The Group’s fourth-quarter sales volume increased by 6.0 percent, in line with the full-year trend. 

Sales volume, million litres 10-12/ 2019 10-12/ 2018 Change % 1-12/ 2019 1-12/ 2018 Change % Finland 53.3 51.4 3.8 219.3 213.2 2.8 Estonia 23.3 23.4 -0.4 109.5 110.7 -1.1 Latvia 14.9 15.2 -2.0 70.9 75.6 -6.2 Lithuania 25.3 20.4 24.2 107.6 95.4 12.8 Belarus 47.0 43.9 7.2 233.1 228.2 2.2 Eliminations -4.6 -3.9   -22.0 -21.8   Total 159.3 150.3 6.0 718.3 701.3 2.4

The Group’s full-year net sales increased by 6.4 percent and amounted to 408.7 (384.3) million euro. Net sales increased in almost all geographical segments except Latvia.

The Group’s net sales growth strengthened in the fourth quarter, particularly thanks to good business development in Lithuania and Belarus. However, it can be positively noted that all operating countries were able to improve their net sales.

Net sales, million euro 10-12/ 2019 10-12/ 2018 Change % 1-12/ 2019 1-12/ 2018 Change % Finland 41.2 39.5 4.3 169.1 159.3 6.2 Estonia 15.2 14.7 2.8 71.3 70.4 1.3 Latvia 8.2 8.1 1.2 38.9 39.8 -2.4 Lithuania 11.6 9.4 24.2 49.3 43.1 14.5 Belarus 19.7 17.2 15.0 90.8 82.1 10.6 Eliminations -2.3 -2.7   -10.6 -10.3   Total 93.6 86.2 8.5 408.7 384.3 6.4

EARNINGS DEVELOPMENT

The Group’s operating profit for January-December increased by 4.7 percent and amounted to 52.5 (50.1) million euro, or 12.8 (13.0) percent of net sales. With the exception of Latvia, operating profit improved across all countries.

The Group’s fourth-quarter operating profit amounted to 7.6 (5.7) million euro. All operating countries were able to clearly improve their performance, with the exception of Finland, where operating profit for the comparison year included a non-recurring amount of 0.8 million euro attributable to an insurance compensation.

Operating profit, million euro 10-12/ 2019 10-12/ 2018 Change % 1-12/ 2019 1-12/ 2018 Change % Finland 2.5 3.2 -23.6 18.7 18.5 0.8 Estonia 2.5 1.8 36.2 14.3 14.0 2.2 Latvia 0.5 0.2 133.5 4.3 4.3 -1.6 Lithuania 0.6 0.2 182.1 3.7 3.7 0.9 Belarus 1.9 0.7 166.8 12.8 10.3 23.8 Eliminations -0.4 -0.5   -1.2 -0.7   Total 7.6 5.7 32.9 52.5 50.1 4.7

The Group’s net profit for 2019 increased by 2.7 percent and amounted to 42.2 (41.1) million euro. The Group’s fourth-quarter net profit was 6.9 (5.1) million euro. In comparison to the previous year, net profit was hampered by increased taxes of approximately 1.6 million euro attributable to higher intra-Group distribution of dividends.

Earnings per share calculated from the profit belonging to parent company shareholders increased in January-December and stood at 2.02 (1.97) euro. Fourth-quarter earnings per share amounted to 0.33 (0.25) euro.

BALANCE SHEET, FINANCING AND INVESTMENTS

Olvi Group’s balance sheet total at the end of December 2019 was 397.4 (365.4) million euro. Equity per share at the end of 2019 stood at 12.58 (11.31) euro. The equity ratio was 66.4 (64.9) percent and the gearing ratio was -11.6 (-6.0) percent. The current ratio, which represents the Group’s liquidity, was 1.3 (1.1). The Group’s financial position has improved further.

The Group’s cash flow from operations increased on the previous year, amounting to 67.3 (63.0) million euro. Cash flow from operations became stronger and investments fell short of the previous year by the amount spent on acquisitions.

Olvi Group’s capital expenditure on extensions and replacements in 2019 amounted to 31.0 (34.2) million euro. The companies in Finland accounted for 14.2 million euro, the Baltic subsidiaries for 12.9 million euro and Lidskoe Pivo in Belarus for 3.9 million euro of the total. Olvi Group has invested in increasing and diversifying its production capacity, as well as the modernisation of production facilities.

IFRS 16 LEASES

Olvi has adopted IFRS 16 Leases as of 1 January 2019 without making adjustments to the comparison periods. As a consequence of the adoption, a total of 941 thousand euro of leased property, plant and equipment items were capitalised on the balance sheet as of 1 January 2019, along with a corresponding increase in lease liabilities. Due to the adoption of the standard, other operating expenses were 741 thousand euro lower and depreciation was 700 thousand euro higher in 2019. The change has a positive effect on cash flow from operations, as a part of payments associated with leases is now presented in cash flow from financing, as repayment of lease liabilities.

PERSONNEL

Olvi Group’s average number of personnel in January-December was 1,837 (1,797). The Group’s average number of personnel increased by 2.2 percent.

Olvi Group’s average number of personnel by country:

  10-12/ 2019 10-12/ 2018 Change % 1-12/ 2019 1-12/ 2018 Change % Finland 365 367 -0.5 386 371 4.0 Estonia 305 291 4.8 311 301 3.3 Latvia 183 184 -0.5 195 194 0.5 Lithuania 226 220 2.7 230 215 7.0 Belarus 719 707 1.7 715 716 -0.1 Total 1,798 1,769 1.6 1,837 1,797 2.2

BOARD OF DIRECTORS AND MANAGEMENT

There have been no changes in Olvi plc’s Board of Directors or management during the review period.

OTHER EVENTS IN THE REVIEW PERIOD

Annual General Meeting

Olvi plc’s Annual General Meeting of 16 April 2019 adopted the financial statements and granted discharge from liability to the members of the Board of Directors and Managing Director for the accounting period that ended on 31 December 2018. In accordance with the Board’s proposal, the General Meeting decided that a dividend of 0.90 (0.80) euro be paid on each A and K share for the accounting period 2018. The dividend was paid in two instalments on 9 May 2019 and 9 September 2019.

All decisions made at the General Meeting can be found in the bulletin released on 16 April 2019.

Changes in corporate structure

There were no substantial changes in Olvi’s holdings in subsidiaries in 2019.

Olvi’s holdings in subsidiaries are:

  31 Dec 2019 31 Dec 2018 Change AS A. Le Coq, Estonia 100.00 100.00 - A/S Cēsu Alus, Latvia 99.88 99.88 - AB Volfas Engelman, Lithuania 99.66 99.58 0.08 OAO Lidskoe Pivo, Belarus 96.36 95.87 0.49 Servaali Oy, Finland 80.00 80.00 - The Helsinki Distilling Company, Finland 67.00 67.00 -

Olvi plc holds 50 percent of Arctic Silence Oy. The company has not had any operating activities in 2019. In addition to these, Olvi plc’s subsidiaries have holdings in other companies. A. Le Coq has a 49.0 percent holding in AS Karme and 20.0 percent holding in Verska Mineraalvee OÜ in Estonia. AB Volfas Engelman has a 100 percent holding in UAB Lamate. OAO Lidskoe Pivo has a 100 percent holding in Trade House Lidskoe Pivo.

Share-based payments

At the beginning of the year, Olvi plc initiated a share-based incentive plan for key personnel, the performance period of which is from 1 February 2019 to 31 January 2021. Detailed information on the incentive plan is provided in Table 5, Section 4 of the tables attached to this financial statements bulletin.

BUSINESS RISKS AND THEIR MANAGEMENT

Risk management

Risk management is a part of Olvi Group’s everyday management and operations. The objective of risk management is to ensure the realisation of the company’s strategy and secure its financial development and the continuity of business. The task of risk management is to operate proactively and create operating conditions in which business risks are managed comprehensively and systematically in all of the Group companies and all levels of the organisation.

Business risks and uncertainties in the near term

The most substantial factor hampering the predictability of Olvi Group’s business relates to Belarus and its economic and political outlook for the next few years. Furthermore, changes in the Russian economy may impose challenges on the Belarusian operating environment.

Operations in Belarus involve foreign exchange risks arising from the cash flows of purchases and sales in foreign currency, as well as the investment in the Belarusian subsidiary and the conversion of its income statement and balance sheet items into euro. The Group’s other foreign exchange risks can be considered minor.

Other short-term risks and uncertainties are related to development of the general economic circumstances, changes in the competitive situation, as well as the impacts these may have on the company’s operations. In addition to the risks described above, there have been no significant changes in Olvi Group’s business risks. A more detailed description of the risks is provided in the Board of Directors’ report and the notes to the financial statements, as well as in the Investors/Corporate Governance/Internal Control section of the company’s Web site.

EVENTS AFTER THE REVIEW PERIOD

There have been no significant reportable changes after the review period.

NEAR-TERM OUTLOOK

Olvi’s operating profit for fiscal year 2020 is expected to remain on the previous year’s good level.

BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PROFIT

The parent company Olvi plc had 89.4 (70.3) million euro of distributable funds on 31 December 2019, of which profit for the period accounted for 37.7 (35.2) 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 (0.90) euro shall be paid for 2019 on each Series K and Series A share, totalling 20.7 (18.6) million euro. The dividend represents 49.6 (45.7) percent of Olvi Group’s earnings per share. The dividends will be paid in two instalments. The first instalment of 0.50 euro per share will be paid on 8 May 2020 to shareholders registered in the register of shareholders held by Euroclear Finland Ltd on the record date 14 April 2020. The second instalment of 0.50 euro per share will be paid on 8 September 2020 to shareholders registered in the register of shareholders held by Euroclear Finland Ltd on the record date 1 September 2020.

No dividend shall be paid on treasury shares.

2) 68.7 million euro shall be retained in the parent company’s non-restricted equity.

FINANCIAL REPORTS IN 2020

Olvi Group’s Annual Report will be published in week 12. The Annual Report will include the Board of Directors’ report and corporate responsibility report, the consolidated and the parent company’s financial statements and the auditors’ report for the financial year 1 January to 31 December 2019. At the same time, the company will issue its corporate governance statement and a report on wages, salaries and emoluments in fiscal year 2019.

The notice to convene Olvi plc’s Annual General Meeting, which will be held on 8 April 2020 in Iisalmi, will be published in week 12. The financial statements, Board of Directors’ 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 2020:

Interim Report for January-March on 30 April 2020, Interim Report for January-June on 18 August 2020 and Interim Report for January-September on 29 October 2020.

OLVI PLC
Board of Directors

Further information: Lasse Aho, Managing Director, Olvi plc, phone +358 290 00 1050 or +358 400 203 600

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 1           STATEMENT OF COMPREHENSIVE INCOME         EUR 1,000           10-12/
2019 10-12/
2018 1-12/
2019 1-12/
2018           Net sales 93,579 86,217 408,706 384,302 Other operating income 166 963 1,417 2,144 Operating expenses -79,490 -76,021 -333,423 -315,694 Depreciation and impairment -6,677 -5,456 -24,186 -20,602 Operating profit 7,578 5,703 52,514 50,150           Financial income 377 101 1488 432 Financial expenses -126 -184 -492 -1,429 Share of profit in associates 13 23 13 23           Earnings before tax 7,842 5,643 53,523 49,176 Income taxes *) -960 -557 -11,293 -8,039 NET PROFIT FOR THE PERIOD 6,882 5,086 42,230 41,137           Other comprehensive income items that
may be subsequently reclassified to profit and loss:             Translation differences related to foreign subsidiaries -2,774 -476 2,887 -2,844 Change in fair value, other investments 369 0 369 0 Taxes related to these items 67 23 -130 131 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 4,544 4,633 45,356 38,424           Distribution of profit:       - parent company shareholders 6,816 5,132 41,760 40,809 - non-controlling interests 66 -46 470 328           Distribution of comprehensive income:      - parent company shareholders 4,552 4,691 44,814 38,169  - non-controlling interests -8 -58 542 255           Earnings per share calculated from the profit belonging     to parent company shareholders, EUR         -  undiluted 0.33 0.25 2.02 1.97 -  diluted 0.33 0.25 2.02 1.97          

*) Income taxes calculated from the profit for the review period.

OLVI GROUP     TABLE 2         BALANCE SHEET       EUR 1,000   31 Dec 2019 31 Dec 2018 ASSETS       Non-current assets       Tangible assets   208,701 195,599 Goodwill   26,360 26,134 Other intangible assets   10,598 11,481 Shares in associates   1,016 1,016 Other investments   836 543 Loans receivable and other non-current receivables   967 235 Deferred tax receivables   475 558 Total non-current assets   248,953 235,566         Current assets       Inventories   43,056 39,882 Accounts receivable and other receivables   70,685 71,038 Income tax receivable   871 440 Liquid assets   33,832 18,520 Total current assets   148,444 129,880 TOTAL ASSETS   397,397 365,446         SHAREHOLDERS’ EQUITY AND LIABILITIES       Shareholders’ equity held by parent company shareholders   Share capital   20,759 20,759 Other reserves   1,387 1,092 Treasury shares   -503 -956 Translation differences   -43,987 -46,746 Retained earnings   282,895 259,864     260,551 234,013 Share belonging to non-controlling interests   3,318 3,165 Total shareholders’ equity   263,869 237,178         Non-current liabilities       Financial liabilities   2,337 1,167 Other liabilities   4,777 4,765 Deferred tax liabilities   7,859 8,085         Current liabilities       Financial liabilities   1,325 3,554 Accounts payable and other liabilities   117,100 110,222 Income tax liability   130 475 Total liabilities   133,528 128,268 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES   397,397 365,446


CHANGES IN SHAREHOLDERS’ EQUITY           EUR 1,000 Share
capital Other
reserves Treasury
shares
account Fair value reserve Translation
differences Retained
earnings Share of
non-controlling interests Total Shareholders’ equity
1 Jan 2018 20,759 1,092 -228  

0 -44,106 238,242 1,228 216,987 Comprehensive income:                   Net profit for the period         40,809 328 41,137   Other comprehensive income items:                 Translation differences       -2,640   -73 -2,713 Total comprehensive income for the period     -2,640 40,809 255 38,424 Transactions with shareholders:                 Payment of dividends           -16,574 -200 -16,774   Acquisition of treasury shares   -1,770         -1,770   Issue of treasury shares to employees  1,042     -1,042   0   Share-based incentives, value of work performed       391   391   Adjustment to previous periods       37 2 39 Total transactions with shareholders -728     -17,188 -198 -18,114 Changes in holdings in subsidiaries:             Obligation to redeem shares from non-controlling interests     -1,999   -1,999   Change in share belonging to non-controlling interests       1,880 1,880 Total changes in holdings in subsidiaries       -1,999 1,880 -119 Shareholders’ equity
31 Dec 2018 20,759 1,092 -956  

0 -46,746 259,864 3,165 237,178 EUR 1,000 Share
capital Other
reserves Treasury
shares
account Fair value reserve Translation
differences Retained
earnings Share of
non-controlling interests Total Shareholders’ equity
1 Jan 2019 20,759 1,092 -956  

0 -46,746 259,864 3,165 237,178 Comprehensive income:                   Net profit for the period         41,760 470 42,230   Other comprehensive income items:                 Translation differences       2,759   72 2,831   Change in fair value, other investments   295       295 Total comprehensive income for the period   295 2,759 41,760 542 45,356 Transactions with shareholders:                 Payment of dividends           -18,640 -137 -18,777   Acquisition of treasury shares   -726         -726   Sales of treasury shares to employees  1,179         1,179   Share-based incentives, value of work performed       539   539   Adjustment to previous periods       -667   -667 Total transactions with shareholders 453     -18,768 -137 -18,452 Changes in holdings in subsidiaries:                 Acquisition of shares from non-controlling interests     -213   -213   Change in share belonging to non-controlling interests     252 -252 0 Total changes in holdings in subsidiaries       39 -252 -213 Shareholders’ equity
31 Dec 2019 20,759 1,092 -503  

295 -43,987 282,895 3,318 263,869


Other reserves include the share premium account, legal reserve and other reserves.

OLVI GROUP   TABLE 4   CASH FLOW STATEMENT     EUR 1,000       1-12/2019 1-12/2018       Net profit for the period 42,230 41,137 Adjustments to profit for the period 34,859 31,061 Change in net working capital 1,548 1,409 Interest paid -288 -603 Interest received 258 440 Dividends received 3 123 Taxes paid -11,298 -10,525 Cash flow from operations (A) 67,312 63,042       Investments in tangible and intangible assets -31,347 -32,315 Sales gains from tangible and intangible assets 1,815 1,796 Acquisition of shares from non-controlling interests -213 0 Acquired shares in subsidiaries and associates -50 -16,059 Dividends received 63 0 Cash flow from investments (B) -29,732 -46,578       Withdrawals of loans 2,445 13,543 Repayments of loans -6,522 -21,641 Acquisition of treasury shares -726 -1,770 Sales of treasury shares to employees 1,179 0 Dividends paid -18,787 -16,587 Increase (-) / decrease (+) in current interest-   bearing business receivables -1 316 Cash flow from financing (C) -22,412 -26,139       Increase (+)/decrease (-) in liquid assets (A+B+C) 15,168 -9,675       Liquid assets 1 January 18,520 28,625 Effect of exchange rate changes 144 -430 Liquid assets 31 December 33,832 18,520

OLVI GROUP                                                                                         TABLE 5

NOTES TO THE FINANCIAL STATEMENTS

The financial statements for 1 January to 31 December 2019 have been prepared in compliance with the International Financial Reporting Standards (IFRS), including IFRS 16 Leases, observing the IAS and IFRS standards as well as the official SIC and IFRIC interpretations valid on 31 December 2019.

Preparation of financial statements in accordance with the IFRS standards requires the company's management to make estimates and assumptions that have an effect on the amount of assets and liabilities on the balance sheet at the closing date as well as the amounts of income and expenses for the accounting period. In addition, the management must exercise its judgment regarding the application of accounting policies. Since the estimates and assumptions are based on the views on the date of the financial statements, they include risks and uncertainties. Actual results may differ from the estimates and assumptions.

The accounting policies used for the preparation of this financial statements bulletin are the same as those used for the annual financial statements 2018, with the exception of IFRS 16 Leases. IFRS 16 Leases has been applied as of 1 January 2019 without making adjustments to the comparison periods. The accounting policies are presented in the Annual Report 2018, which was published on 22 March 2019.

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 amounts in euros. The information disclosed in the financial statements bulletin is unaudited.

 

1.  SEGMENT INFORMATION        

NET SALES BY SEGMENT 1-12/2019       EUR 1,000  

Finland  

Estonia  

Latvia  

Lithuania  

Belarus Elimi-
nations  

Group                 INCOME               External sales 167,579 67,297 37,014 46,266 90,550 0 408,706   Beverage sales 165,965 67,297 37,014 46,266 90,550 0 407,092   Equipment
   services 1,614 0 0 0 0 0 1,614 Internal sales 1,523 3,990 1,867 3,014 222 -10,616 0 Total net sales  

169,102  

71,287 38,881 49,280 90,772 -10,616 408,706  

NET SALES BY SEGMENT 1-12/2018       EUR 1,000  

Finland  

Estonia  

Latvia  

Lithuania  

Belarus Elimi-
nations  

Group                 INCOME               External sales 158,397 65,626 37,630 40,862 81,787 0 384,302   Beverage sales 156,733 65,626 37,630 40,862 81,787 0 382,638   Equipment
   services 1,664 0 0 0 0 0 1,664 Internal sales 899 4,751 2,201 2,189 306 -10,346 0 Total net sales  

159,296  

70,377 39,831 43,051 82,093 -10,346 384,302


2.  RELATED PARTY TRANSACTIONS                     Employee benefits to management   Salaries and other short-term employee benefits to the Board of Directors and Managing Director EUR 1,000          1-12/2019  1-12/2018           Managing Director 766 823   Chairman of the Board 71 71    

Other members of the Board 171 164   Total 1,008 1,058  

  Olvi Group has no other substantial related party transactions.

 

3. SHARES AND SHARE CAPITAL       31 Dec 2019   %       Number of A shares 16,989,976 82.0 Number of K shares 3,732,256 18.0 Total 20,722,232 100.0       Total votes carried by A shares 16,989,976 18.5 Total votes carried by K shares 74,645,120 81.5 Total number of votes 91,635,096 100.0       Votes per Series A share 1   Votes per Series K share 20  

The registered share capital on 31 December 2019 totalled 20,759 thousand euro.

Olvi plc’s shares received a dividend of 0.90 euro per share for 2018 (0.80 euro per share for 2017), totalling 18.6 (16.6) million euro. The dividends were paid in two instalments. The first instalment of 0,45 euro per share was paid on 9 May 2019. The second instalment of 0,45 euro per share was paid on 9 September 2019. The Series K and Series A shares entitle to equal dividend. The Articles of Association include a redemption clause concerning Series K shares.           

4. SHARE-BASED PAYMENTS

The aim of Olvi plc’s share-based incentive plan is to combine the objectives of the shareholders and the key employees in order to increase the value of the company, to make the key employees committed to the company, and to offer them a competitive reward plan based on earning the company’s shares.

Olvi plc initiated a new share-based incentive plan for key personnel, the performance period of which is from 1 February 2019 to 31 January 2021. The plan is directed to approximately 60 people. In accordance with the share-based incentive plan, Olvi plc sold a total of 36,450 treasury shares to the target group members for a price of 1,179,330.37 euro. In 2019, costs associated with the plan were recognised for a total of 1,210.0 thousand euro. Olvi Group does not have any other share-based plans or option plans.


5. TREASURY SHARES       

At the beginning of January 2019, Olvi plc held 25,728 of its own shares as treasury shares. During January–December 2019, the following changes have occurred in treasury shares.

In the beginning of December 2018, the Board of Directors of Olvi plc decided to initiate a scheme of acquiring treasury shares based on the authorisation issued by the Annual General Meeting on 16 April 2018. On this basis, the Board will repurchase a maximum of 43,000 Series A shares. The acquired shares shall be used for the purpose of financing or executing any upcoming corporate acquisitions or other arrangements, implementing the company’s incentive schemes or for other purposes decided upon by the Board of Directors. The acquisition of shares started on 11 December 2018 and ended on 21 January 2019. At the start of the repurchase scheme, Olvi plc held 4,999 Series A shares as treasury shares. After the end of the scheme, Olvi plc held 47,999 Series A shares as treasury shares. The purchase price for treasury shares in January 2019 totalled 725,826.47 euro.

Olvi plc initiated a new share-based incentive plan for key personnel, the performance period of which is from 1 February 2019 to 31 January 2021. The plan is directed to approximately 60 people. In accordance with the share-based incentive plan, Olvi plc sold a total of 36,450 treasury shares to the target group members for a price of 1,179,330.37 euro. The number of Series A shares held by Olvi plc as treasury shares on 31 December 2019 is 11,549 and the total acquisition price up to the end of the year is 502,956.28 euro.                 

 

6. NUMBER OF SHARES *)  1-12/2019  1-12/2018         - average 20,708,204 20,711,397   - at end of period 20,710,683 20,696,504  

*) Treasury shares deducted.   7. TRADING OF SERIES A SHARES ON THE HELSINKI STOCK EXCHANGE            1-12/2019  1-12/2018  

Trading volume of Olvi A shares 1,575,876 1,741,051 Total trading volume, EUR 1,000 56,680 52,140 Traded shares in proportion to     all Series A shares, % 9.3 10.2       Average share price, EUR 36.01 29.95 Price on the closing date, EUR 41.20 31.50 Highest quote, EUR 42.60 34.00 Lowest quote, EUR 31.20 27.00

                                                                                                                                                       

8. FOREIGN AND NOMINEE-REGISTERED HOLDINGS ON 31 DECEMBER 2019     Book entries Votes Shareholders   qty % qty % qty % Finnish total 15,450,550 74.56 86,363,414 94.25 12,178 99.55 Foreign total 652,570 3.15 652,570 0.71 45 0.37 Nominee-registered (foreign) total 141,622 0.68 141,622 0.15 4 0.03 Nominee-registered (Finnish) total 4,477,490 21.61 4,477,490 4.89 6 0.05 Total 20,722,232 100.00 91,635,096 100.00 12,233 100.00


9. LARGEST SHAREHOLDERS ON 31 DECEMBER 2019                         Series K Series A Total % Votes % 1. Olvi Foundation  2,363,904 890,613 3,254,517 15.71 48,168,693 52.57 2. The Estate of Hortling Heikki *)  903,488 103,280 1,006,768 4.86 18,173,040 19.83 3. Hortling Timo Einari 212,600 49,257 261,857 1.26 4,301,257 4.69 4. Hortling-Rinne Marit  149,064 14,699 163,763 0.79 2,995,979 3.27 5. OP Custody Ltd, nominee register   2,318,825 2,318,825 11.19 2,318,825 2.53 6. Nordea Bank Abp, nominee register   1,672,458 1,672,458 8.07 1,672,458 1.83 7. Varma Mutual Pension Insurance Company 828,075 828,075 4.00 828,075 0.90 8. Ilmarinen Mutual Pension Insurance Company 750,000 750,000 3.62 750,000 0.82 9. Odin Norden   524,870 524,870 2.53 524,870 0.57 10. Hortling Pia Johanna 23,388 23,566 46,954 0.23 491,326 0.54 Others 79,812 9,814,333 9,894,145 47.74 11,410,573 12.45 Total 3,732,256 16,989,976 20,722,232 100.00 91,635,096 100.00  

*) The figures include the shareholder’s own holdings and shares held by parties in his control.

During 2019, Olvi plc has received one flagging notice in accordance with Chapter 2, Section 10 of the Securities Markets Act, from FMR LLC on 13 December 2019.

10. PROPERTY, PLANT AND EQUIPMENT EUR 1,000        1-12/2019   1-12/2018       Opening balance 195,599 188,155 Effect of IFRS 16 941 0 Additions 34,197 32,833 Deductions and transfers -2,286 -4,395 Depreciation -21,978 -18,922 Exchange rate differences 2,228 -2,072 Total 208,701 195,599



11. CONTINGENT LIABILITIES       EUR 1,000         31 Dec 2019 31 Dec 2018   Pledges and contingent liabilities       For own commitments 1,938 2,114           Leasing and rental liabilities:       Due within one year 804 1,129     Due within 1 to 5 years 306 805     Due in more than 5 years 0 2   Leasing and rental liabilities total 1,110 1,936   Other liabilities 60 57  

12. CALCULATION OF FINANCIAL RATIOS

In the summary of financial indicators (page 1), the Group presents figures directly derived from the consolidated income statement: net sales, operating profit and profit for the period, the corresponding percentages in proportion to net sales, as well as the earnings per share ratio. (Earnings per share = Profit belonging to parent company shareholders / Average number of shares during the period, adjusted for share issues.)

In addition to the consolidated financial statements prepared in accordance with IFRS, Olvi Group presents Alternative Performance Measures that describe the financial development of its business and provide a commensurate overall view of the company’s profitability, financial position and liquidity.

The Group has applied the ESMA (European Securities and Markets Authority) new guidelines on Alternative Performance Measures that entered into force on 3 July 2016 and defined APMs as described below.

As an APM supporting net sales, the Group presents sales volumes in millions of litres. Sales volume is an important indicator of the extent of operations generally used in the industry.

The definition of gross margin is operating profit plus depreciation and impairment.

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

Equity to total assets, % = 100 * (Shareholders’ equity held by parent company shareholders + non-controlling interests) / (Balance sheet total).

Gearing, % = 100 * (Interest-bearing debt – cash in hand and at bank) / (Shareholders’ equity held by parent company shareholders + non-controlling interests)     

Attachment

Financial statements bulletin Q4_2019

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