OLVI PLC FINANCIAL STATEMENTS BULLETIN 28 FEB 2019 at 9:00 am
OLVI GROUP’S FINANCIAL STATEMENTS JANUARY TO DECEMBER 2018
FINANCIAL PERFORMANCE IN BRIEF
Full year 2018:
- Olvi Group’s sales volume increased by 9.1 percent to 701.3 (643.0) million litres.
- The Group’s net sales increased by 11.3 percent and amounted to 384.3 (345.2) million euro
- The Group’s operating profit increased by 12.1 percent and amounted to 50.1 (44.7) million euro
- Net profit for the period increased by 13.9 percent to 41.1 (36.1) million euro.
- Olvi Group’s earnings per share stood at 1.97 (1.73) euro per share
- The equity to total assets ratio was 64.9 (64.1) percent.
October to December 2018:
- Olvi Group’s sales volume increased by 5.5 percent to 150.3 (142.5) million litres.
- The Group’s net sales increased by 14.1 percent and amounted to 86.2 (75.6) million euro
- The Group’s operating profit stood at 5.7 (4.4) million euro, improving by 30.2 percent
- Net profit for the period stood at 5.1 (4.1) million euro, improving by 25.3 percent
- Olvi Group’s earnings per share stood at 0.25 (0.20) euro per share
The Board proposes a dividend of 0.90 (0.80) euro per share.
Olvi’s earnings for fiscal 2019 are expected to remain on the previous year’s good level.
CONSOLIDATED KEY RATIOS
| 10-12/ 2018 | 10-12/ 2017 | Change % | 1-12/ 2018 | 1-12/ 2017 | Change % / pp | |
| Sales volume, Mltr | 150.3 | 142.5 | 5.5 | 701.3 | 643.0 | 9.1 |
| Net sales, MEUR | 86.2 | 75.6 | 14.1 | 384.3 | 345.2 | 11.3 |
| Gross margin, MEUR | 11.2 | 10.5 | 6.1 | 70.8 | 65.5 | 8.0 |
| % of net sales | 12.9 | 13.9 | 18.4 | 19.0 | ||
| Operating profit, MEUR | 5.7 | 4.4 | 30.2 | 50.1 | 44.7 | 12.1 |
| % of net sales | 6.6 | 5.8 | 13.0 | 13.0 | ||
| Net profit for the period | 5.1 | 4.1 | 25.3 | 41.1 | 36.1 | 13.9 |
| % of net sales | 5.9 | 5.4 | 10.7 | 10.5 | ||
| Earnings per share, EUR | 0.25 | 0.20 | 25.0 | 1.97 | 1.73 | 13.9 |
| Capital expenditure, MEUR | 10.0 | 6.4 | 56.3 | 34.2 | 21.7 | 57.7 |
| Equity per share, EUR | 11.31 | 10.41 | 8.6 | |||
| Equity to total assets, % | 64.9 | 64.1 | 0.8 | |||
| Gearing, % | -6.0 | -7.1 | -1.1 |
BUSINESS DEVELOPMENT
LASSE AHO, MANAGING DIRECTOR:
Boosted by the great summer weather, Olvi Group’s sales volume exceeded 700 million litres for the first time in the company’s history. At the same time, the company’s profitability developed favourably, and the operating profit and net profit for 2018 improved clearly on the previous year. In addition to earnings, the Group’s balance sheet is strong.
Good sales development continued also in the fourth quarter, and the Group’s net sales and earnings increased on the previous year.
Deviating from the previous year, as a result of corporate acquisitions in 2018, the operations in Finland now include the business of Servaali Oy and The Helsinki Distilling Company in addition to Olvi plc. The sales volume in Finland has increased by 6.8 percent. The figure adjusted for comparability is 3.1 percent. Olvi plc made an all-time high by exceeding 200 million litres of production in December. Net sales increased by 21.2 percent, with the comparable figure being 7.0 percent. Factors behind the comparable growth include, among others, an increased share of strong beers after legislative changes. Good net sales development combined with cost-effective operations is also reflected as positive development of operating profit. Operating profit increased by 45.0 percent on the previous year, mostly attributable to the parent company.
The year 2018 in the Baltic states was characterised by the effects of Estonian excise tax hikes on cross-border trade between Estonia and Latvia, as well as harbour and on-board sales in Estonia. In the first half of the year, sales volumes declined substantially in Estonia but also in Latvia. In the second half of the year, sales volumes outperformed the previous year all across the Baltic states, thanks to good seasonal sales, successful launches of new products and increased exports. These factors and adaptation measures resulted in improved profitability as well. In full-year figures, only the net sales in Estonia fell short of the previous year. Lithuania was able to substantially improve earnings through increased sales volume.
Operations in Belarus continued on a growth track. The market position and purchasing power of consumers in the domestic market have improved. The sales volume made an all-time high of 228 million litres, representing an increase of 16.2 percent on the previous year. The company’s operating profit improved by 9.4 percent. Measured in the local currency, the accumulated net sales increased by as much as 19.6 percent and operating profit by 20.2 percent.
During 2018, Olvi made substantial investments in its competitive ability for the future. Investments amounted to 50.3 million euro, including corporate acquisitions. One of the most significant investments is an energy plant utilising renewable energy that was commissioned in Finland in the turn of the year 2017-2018. This reduces the environmental impact while also achieving cost savings. Measures to improve the efficiency of production and logistics continued across the Group. A new production investment completed at the end of the year was a single-use glass bottle line at Iisalmi.
We believe in moderate growth in 2019. We will continue to develop our product range and make it more versatile, and invest in improving production efficiency. Even though Olvi Group has a strong market position in all of its main market areas, weather conditions in the high season are of great importance with regard to achieving the full-year sales volume targets. The two first quarters are expected to be most challenging for earnings development; higher prices of raw materials will become effective at the beginning of the year but sales prices will be increased during the spring.
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 2018 made an all-time high of 701.3 (643.0) million litres. This represents an increase of 58.3 million litres or 9.1 percent.
The increase in the Group’s sales volume originated mainly from Finnish and Belarusian operations. Aggregate sales volume in the Baltic states increased by 2.6 percent, which is attributable to Lithuania.
The Group’s fourth-quarter sales volume increased by 5.5 percent, with all segments outperforming their previous year.
| Sales volume, million litres | 10-12/ 2018 | 10-12/ 2017 | Change % | 1-12/ 2018 | 1-12/ 2017 | Change % |
| Finland | 51.4 | 48.4 | 6.1 | 213.2 | 199.7 | 6.8 |
| Estonia | 23.4 | 21.5 | 8.6 | 110.7 | 112.8 | -1.8 |
| Latvia | 15.2 | 14.9 | 1.8 | 75.6 | 76.3 | -1.0 |
| Lithuania | 20.4 | 19.2 | 5.9 | 95.4 | 85.4 | 11.7 |
| Belarus | 43.9 | 42.3 | 3.7 | 228.2 | 196.4 | 16.2 |
| Eliminations | -3.9 | -3.9 | -21.8 | -27.6 | ||
| Total | 150.3 | 142.5 | 5.5 | 701.3 | 643.0 | 9.1 |
The Group’s net sales in 2018 increased by 11.3 percent and amounted to 384.3 (345.2) million euro. Net sales improved particularly in Finland, Lithuania and Belarus.
The Group’s net sales continued to grow also in the fourth quarter.
| Net sales, million euro | 10-12/ 2018 | 10-12/ 2017 | Change % | 1-12/ 2018 | 1-12/ 2017 | Change % |
| Finland | 39.5 | 32.2 | 22.8 | 159.3 | 131.5 | 21.2 |
| Estonia | 14.7 | 13.6 | 8.1 | 70.4 | 73.8 | -4.6 |
| Latvia | 8.1 | 7.3 | 11.7 | 39.8 | 37.5 | 6.2 |
| Lithuania | 9.4 | 8.7 | 7.3 | 43.1 | 39.2 | 9.9 |
| Belarus | 17.2 | 15.5 | 10.6 | 82.1 | 75.4 | 8.8 |
| Eliminations | -2.7 | -1.7 | -10.3 | -12.1 | ||
| Total | 86.2 | 75.6 | 14.1 | 384.3 | 345.2 | 11.3 |
EARNINGS DEVELOPMENT
The Group’s operating profit for January-December increased by 12.1 percent and amounted to 50.1 (44.7) million euro, or 13.0 (13.0) percent of net sales. With the exception of Estonia and Latvia, operating profit improved across all units.
The Group’s fourth-quarter operating profit amounted to 5.7 (4.4) million euro. The operating profit included a non-recurring amount of 0.8 million euro attributable to an insurance compensation.
| Operating profit, million euro | 10-12/ 2018 | 10-12/ 2017 | Change % | 1-12/ 2018 | 1-12/ 2017 | Change % |
| Finland | 3.2 | 1.2 | 176.9 | 18.5 | 12.8 | 45.0 |
| Estonia | 1.8 | 1.5 | 18.8 | 14.0 | 14.7 | -4.9 |
| Latvia | 0.2 | 0.4 | -46.9 | 4.3 | 4.4 | -2.4 |
| Lithuania | 0.2 | 0.3 | -32.1 | 3.7 | 3.4 | 8.7 |
| Belarus | 0.7 | 0.9 | -21.4 | 10.3 | 9.4 | 9.4 |
| Eliminations | -0.5 | 0.1 | -0.7 | 0.0 | ||
| Total | 5.7 | 4.4 | 30.2 | 50.1 | 44.7 | 12.1 |
The Group’s net profit for 2018 increased by 13.9 percent and amounted to 41.1 (36.1) million euro. The Group’s fourth-quarter net profit was 5.1 (4.1) million euro.
Earnings per share calculated from the profit belonging to parent company shareholders increased in January-December and stood at 1.97 (1.73) euro. Fourth-quarter earnings per share amounted to 0.25 (0.20) euro.
BALANCE SHEET, FINANCING AND INVESTMENTS
Olvi Group’s balance sheet total at the end of December 2018 was 365.4 (338.6) million euro. Equity per share at the end of 2018 stood at 11.31 (10.41) euro. The equity to total assets ratio was 64.9 (64.1) percent. The Group’s interest-bearing net liabilities decreased by 1.2 million euro during 2018 and amounted to -14.2 million euro at year-end (-15.4). The gearing ratio declined during 2018 and stood at -6.0 (-7.1) percent. Cash flow from operations totalled 63.0 (57.1) million euro. The current ratio, which represents the Group’s liquidity, was 1.1 (1.2).
Olvi Group’s capital expenditure on extensions and replacements in 2018 amounted to 34.2 (21.7) million euro. The parent company Olvi accounted for 13.4 million euro, the Baltic subsidiaries for 14.1 million euro and Lidskoe Pivo in Belarus for 6.7 million euro of the total. The largest individual investment was an energy plant utilising renewable energy in Finland.
PRODUCT DEVELOPMENT AND NEW PRODUCTS
Research and development includes projects to design and develop new products, packages, processes and production methods, as well as further development of existing products and packages. The R&D costs have mostly been recognised as expenses. The main objective of Olvi Group’s product development is to create new products for profitable and growing beverage segments.
Several new products were launched during 2018 both in Finland and by the subsidiaries. New products have been presented in interim reports released during the accounting period, as well as on each company’s Web site.
PERSONNEL
Olvi Group’s average number of personnel in January-December was 1,797 (1,783). The Group’s average number of personnel increased by 0.8 percent.
The average number decreased in the Baltic states but increased in Finland and Belarus. The increase in Finland is mainly attributable to corporate acquisitions.
Olvi Group’s average number of personnel by country:
| 10-12/ 2018 | 10-12/ 2017 | Change % | 1-12/ 2018 | 1-12/ 2017 | Change % | |
| Finland | 367 | 321 | 14.3 | 371 | 337 | 10.1 |
| Estonia | 291 | 309 | -5.8 | 301 | 327 | -8.0 |
| Latvia | 184 | 172 | 7.0 | 194 | 196 | -1.0 |
| Lithuania | 220 | 226 | -2.7 | 215 | 228 | -5.7 |
| Belarus | 707 | 692 | 2.2 | 716 | 695 | 3.0 |
| Total | 1769 | 1720 | 2.8 | 1797 | 1783 | 0.8 |
MANAGEMENT AND AUDITORS
The company’s Board of Directors consists of Chairman Pentti Hakkarainen, M.Sc. (Econ), LL.M., Vice Chairperson Nora Hortling, M.Sc. (Econ), as well as other members Lasse Heinonen, M.Sc. (Econ), Elisa Markula, M.Sc. (Econ), Päivi Paltola, M.Sc. (Econ) and Heikki Sirviö, M.Sc. (Engineering), Honorary Industrial Counsellor.
The company’s auditor is the authorised public accounting firm PricewaterhouseCoopers Oy, with Juha Toppinen, Authorised Public Accountant, as auditor in charge.
MANAGEMENT
The Management Group of Olvi plc during the period under review consisted of Lasse Aho, Managing Director (Chairman), Ilkka Auvola, Sales Director, Olli Heikkilä, Marketing Director, Pia Hortling, Public Relations and Purchasing Director, Kati Kokkonen, Chief Financial Officer until 31 August 2018, replaced by Tiina-Liisa Liukkonen as of 1 September 2018, Lauri Multanen, Production Director, as well as Marjatta Rissanen, Customer Service and Administrative Director.
The Managing Directors of the subsidiaries are:
AS A. Le Coq, Tartu, Estonia - Tarmo Noop
AS Cēsu Alus, Cēsis, Latvia - Eva Sietiņsone
AB Volfas Engelman, Kaunas, Lithuania - Marius Horbačauskas
OAO Lidskoe Pivo, Lida, Belarus - Audrius Mikšys
Servaali Oy, Helsinki, Finland – Teemu Lehto (Chairman of the Board)
The Helsinki Distilling Company, Helsinki, Finland – Séamus Holohan
The Managing Directors of the subsidiaries report to Lasse Aho, the Managing Director of Olvi plc. The Boards of Directors of the subsidiaries in the Baltic states and Belarus consist of Lasse Aho (Chairman), Pia Hortling, Tiina-Liisa Liukkonen and Lauri Multanen. The Boards of Directors of the subsidiaries in Finland consist of executive managers from the parent company and minority shareholders. The Management Group of each subsidiary consists of the corresponding Managing Director and approximately four sector directors.
OTHER EVENTS DURING THE REVIEW PERIOD
Annual General Meeting
Olvi plc’s Annual General Meeting of 16 April 2018 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 2017. In accordance with the Board’s proposal, the General Meeting decided that a dividend of 0.80 (0.75) euro be paid on each A and K share for the accounting period 2017. The dividends were paid on 30 April 2018.
All decisions made at the General Meeting can be found in the bulletin released on 16 April 2018.
Changes in corporate structure
On 3 April 2018, Olvi plc acquired 80 percent of the stock of Servaali Oy, and since that date, the company has been consolidated with Olvi Group. Servaali Oy is one of Finland’s largest private importers of alcoholic beverages. With the acquisition, Olvi is expanding its product portfolio to wines, strengthening its market position in mild alcoholic beverages and responding actively to the potential for growth provided by the changing operating environment.
On 2 July 2018, Olvi plc acquired 67 percent of the stock of The Helsinki Distilling Company, and since that date, the company has been consolidated in Olvi Group. The Helsinki Distilling Company is a rapidly growing business established in 2013. The acquisition is a part of Olvi’s new growth strategy aimed at strengthening Olvi’s product portfolio both in the domestic alcoholic beverages market and in the international Premium Craft market.
In Olvi Group’s segment reporting, Servaali Oy’s and The Helsinki Distilling Company’s business operations are included in the figures for Finland. Detailed information on the acquisitions is presented in Note 13 to Table 5 in the tables section of the financial statements bulletin.
Furthermore, during the year, Olvi’s subsidiary AB Volfas Engelman acquired UAB Lamate, which owns an area of water and land in Lithuania.
Olvi’s holdings in the subsidiaries are:
| 31 Dec 2018 | 31 Dec 2017 | Change | |
| AS A. Le Coq, Estonia | 100.00 | 100.00 | - |
| A/S Cēsu Alus, Latvia | 99.88 | 99.88 | - |
| AB Volfas Engelman, Lithuania | 99.58 | 99.58 | - |
| OAO Lidskoe Pivo, Belarus | 95.87 | 95.87 | - |
| Servaali Oy, Finland | 80.00 | - | 80.00 |
| The Helsinki Distilling Company, Finland | 67.00 | - | 67.00 |
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, which will be consolidated in the Group’s figures starting from the financial statements 2018.
SHARES
Olvi’s share capital at the end of December 2018 stood at 20.8 million euro. The total number of shares was 20,722,232, of these 16,989,976 or 82.0 percent being publicly traded Series A shares and 3,732,256 or 18.0 percent Series K shares.
Each Series A share carries one (1) vote and each Series K share carries twenty (20) votes. Series A and Series K shares have equal rights to dividends.
Detailed information on Olvi’s shares and share capital can be found in the tables attached to this financial statements bulletin, in Table 5, Section 4.
The total trading volume of Olvi A shares on Nasdaq OMX Helsinki Ltd (Helsinki Stock Exchange) in 2018 was 1,741,051 (1,464,747) shares, which represented 10.2 (8.6) percent of all Series A shares. The value of trading was 52.1 (41.9) million euro.
The Olvi A share was quoted on Nasdaq OMX Helsinki Ltd at 31.50 (29.87) euro at the end of 2018. In January-December, the highest quote for the Series A share was 34.00 (32.49) euro and the lowest quote was 27.00 (25.05) euro. The average share price in 2018 was 29.95 (28.59) euro.
At the end of December 2018, the market capitalisation of Series A shares was 534.4 (507.4) million euro and the market capitalisation of all shares was 651.9 (618.8) million euro.
The number of shareholders at the end of December 2018 was 11,601 (10,800). Foreign holdings plus foreign and Finnish nominee-registered holdings represented 24.8 (23.8) percent of the total number of book entries and 5.6 (5.4) percent of total votes.
Foreign and nominee-registered holdings are reported in Table 5, Section 9 of the tables attached to this financial statements bulletin, and the largest shareholders are reported in Table 5, Section 10.
Treasury shares
At the beginning of January 2018, Olvi plc held 41,125 of its own shares as treasury shares. During January–December 2018, the following changes have occurred in treasury shares.
On 9 May 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 36,280 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 May 2018 and ended on 8 June 2018. At the start of the repurchase scheme, Olvi plc held 41,125 Series A shares as treasury shares. After the end of the scheme, Olvi plc held 77,405 Series A shares as treasury shares. The total purchase price of treasury shares was 1,332,427.31 euro.
Olvi plc’s Annual General Meeting on 21 April 2017 made a decision concerning abandoned or “ghost” shares held in a joint book-entry account. The decision was that the right to a share incorporated in the book-entry system and placed in the joint account, and the rights that the share carries have been forfeited, and authorised the Board of Directors to take all measures called for by the decision. On this basis, 36,576 shares have been transferred from Olvi’s joint account to treasury shares on 18 May 2017. At its meeting on 28 May 2018, the Board of Directors of Olvi plc decided to cancel the shares that were gratuitously transferred to Olvi on 18 May 2017. The cancellation of shares was recorded in the Trade Register on 15 June 2018.
Olvi Group’s share-based incentive plan for key personnel, the performance period of which was from 1 July 2016 to 30 June 2018, has expired. The target group of the plan included approximately 50 people, and in accordance with the terms and conditions of the plan, rewards were paid in Olvi plc Series A shares and partially in cash. A total of 35,830 Series A shares were handed over as share-based rewards.
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. The number of Series A shares held by Olvi plc as treasury shares on 31 December 2018 is 25,728 and the total acquisition price up to the end of the year is 956,460.18 euro.
At the end of December 2018, Olvi held 25,728 treasury shares, which is 0.1 percent of the total number of shares. Treasury shares held by the company itself are ineligible for voting.
Detailed information on treasury shares is provided in Table 5, Section 6 of the tables attached to this financial statements bulletin.
Flagging notices
During January-December 2018, Olvi has not received any flagging notices in accordance with Chapter 2, Section 10 of the Securities Markets Act.
EVENTS AFTER THE REVIEW PERIOD
Olvi plc’s share repurchase scheme continued until 21 January 2019. On the basis of the repurchase scheme, Olvi plc acquired a total of 43,000 Series A shares for a total acquisition price of 1,391,253.37 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 36,456 treasury shares to the target group members for a price of 1,179,522.94 euro. After this, Olvi holds 11,543 treasury shares, the acquisition price of which is 502,763.70 euro.
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 section of the company’s Web site.
NEAR-TERM OUTLOOK
Olvi has decided to change the way of presenting its near-term outlook. From now on, the outlook is limited to financial prospects.
Olvi’s operating profit for fiscal year 2019 are 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 70.3 (52.3) million euro of distributable funds on 31 December 2018, of which profit for the period accounted for 35.2 (19.9) 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 0.90 (0.80) euro shall be paid for 2018 on each Series K and Series A share, totalling 18.6 (16.6) million euro. The dividend represents 45.7 (46.1) percent of Olvi Group’s earnings per share. The dividends will be paid in two instalments. The first instalment of 0.45 euro per share will be paid on 9 May 2019 to shareholders registered in the register of shareholders held by Euroclear Finland Ltd on the record date 18 April 2019. The second instalment of 0.45 euro per share will be paid on 9 September 2019 to shareholders registered in the register of shareholders held by Euroclear Finland Ltd on the record date 2 September 2019.
No dividend shall be paid on treasury shares.
2) 51.7 million euro shall be retained in the parent company’s non-restricted equity.
FINANCIAL REPORTS IN 2019
Olvi Group’s Annual Report will be published in week 13. 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 2018. At the same time, the company will issue its corporate governance statement and a report on wages, salaries and emoluments in fiscal 2018.
The notice to convene Olvi plc’s Annual General Meeting, which will be held on 16 April 2019 in Iisalmi, will be published in week 13. 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 2019:
Interim report from January to March on 2 May 2019,
Interim report from January to June on 15 August 2019, and
Interim report from January to September on 30 October 2019.
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 bulletin, Table 5
DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Key media
www.olvi.fi
| OLVI GROUP | TABLE 1 | |||
| INCOME STATEMENT | ||||
| EUR 1,000 | ||||
| 10-12/2018 | 10-12/2017 | 1-12/2018 | 1-12/2017 | |
| Net sales | 86217 | 75574 | 384302 | 345185 |
| Other operating income | 963 | 596 | 2144 | 2034 |
| Operating expenses | -76021 | -65646 | -315694 | -281717 |
| Depreciation and impairment | -5456 | -6142 | -20602 | -20755 |
| Operating profit | 5703 | 4382 | 50150 | 44747 |
| Financial income | 101 | -1409 | 432 | 477 |
| Financial expenses | -184 | -33 | -1429 | -2819 |
| Share of profit in associates | 23 | -69 | 23 | -69 |
| Earnings before tax | 5643 | 2871 | 49176 | 42336 |
| Taxes *) | -557 | 1187 | -8039 | -6212 |
| NET PROFIT FOR THE PERIOD | 5086 | 4058 | 41137 | 36124 |
| Other comprehensive income items that may be subsequently reclassified to profit and loss: | ||||
| Translation differences related to | ||||
| foreign subsidiaries | -453 | 321 | -2713 | -7278 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 4633 | 4379 | 38424 | 28846 |
| Distribution of profit: | ||||
| - parent company shareholders | 5132 | 4054 | 40809 | 35956 |
| - non-controlling interests | -46 | 4 | 328 | 168 |
| Distribution of comprehensive income: | ||||
| - parent company shareholders | 4691 | 4398 | 38169 | 28872 |
| - non-controlling interests | -58 | -19 | 255 | -26 |
| Earnings per share calculated from the profit belonging | ||||
| to parent company shareholders, EUR | ||||
| - undiluted | 0.25 | 0.20 | 1.97 | 1.73 |
| - diluted | 0.25 | 0.20 | 1.97 | 1.73 |
*) Taxes calculated from the profit for the review period.
The notes constitute an essential part of the financial statements.
| OLVI GROUP | TABLE 2 | |
| BALANCE SHEET | ||
| EUR 1,000 | 31 Dec 2018 | 31 Dec 2017 |
| ASSETS | ||
| Non-current assets | ||
| Tangible assets | 195599 | 188155 |
| Goodwill | 26134 | 15279 |
| Other intangible assets | 11481 | 5340 |
| Shares in associates | 1016 | 1113 |
| Investments | 543 | 543 |
| Loans receivable and other non-current receivables | 235 | 433 |
| Deferred tax receivables | 558 | 379 |
| Total non-current assets | 235566 | 211242 |
| Current assets | ||
| Inventories | 39882 | 34336 |
| Accounts receivable and other receivables | 71038 | 64181 |
| Income tax receivable | 440 | 235 |
| Liquid assets | 18520 | 28625 |
| Total current assets | 129880 | 127377 |
| TOTAL ASSETS | 365446 | 338619 |
| SHAREHOLDERS’ EQUITY AND LIABILITIES | ||
| Shareholders’ equity held by parent company shareholders | ||
| Share capital | 20759 | 20759 |
| Other reserves | 1092 | 1092 |
| Treasury shares | -956 | -228 |
| Translation differences | -46746 | -44106 |
| Retained earnings | 259864 | 238242 |
| 234013 | 215759 | |
| Share belonging to non-controlling interests | 3165 | 1228 |
| Total shareholders’ equity | 237178 | 216987 |
| Non-current liabilities | ||
| Financial liabilities | 1167 | 4651 |
| Other liabilities | 4765 | 28 |
| Deferred tax liabilities | 8085 | 6443 |
| Current liabilities | ||
| Financial liabilities | 3554 | 8573 |
| Accounts payable and other liabilities | 110222 | 100052 |
| Income tax liability | 475 | 1885 |
| Total liabilities | 128268 | 121632 |
| TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES | 365446 | 338619 |
The notes constitute an essential part of the financial statements.
| OLVI GROUP | TABLE 3 | |||||||
| CHANGES IN SHAREHOLDERS’ EQUITY | ||||||||
| EUR 1,000 | Share capital | Other reserves | Treasury shares reserve | Translation differences | Retained earnings | Share of non-controlling interests | Total | |
| Shareholders’ equity 1 Jan 2017 | 20759 | 1092 | -228 | -37022 | 217234 | 1714 | 203549 | |
| Comprehensive income: | ||||||||
| Net profit for the period | 35956 | 168 | 36124 | |||||
| Other comprehensive income items: | ||||||||
| Translation differences | -7084 | -194 | -7278 | |||||
| Total comprehensive income for the period | -7084 | 35956 | -26 | 28846 | ||||
| Transactions with shareholders: | ||||||||
| Payment of dividends | -15561 | -35 | -15596 | |||||
| Share-based incentives | 534 | 534 | ||||||
| Total transactions with shareholders | -15027 | -35 | -15062 | |||||
| Changes in holdings in subsidiaries: | ||||||||
| Acquisition of shares from non-controlling interests | 258 | 258 | ||||||
| Change in share belonging to non-controlling interests | -179 | -425 | -604 | |||||
| Total changes in holdings in subsidiaries | 79 | -425 | -346 | |||||
| Shareholders’ equity 31 Dec 2017 | 20759 | 1092 | -228 | -44106 | 238242 | 1228 | 216987 | |
| EUR 1,000 | Share capital | Other reserves | Treasury shares reserve | Translation differences | Retained earnings | Share of non-controlling interests | Total | |
| Shareholders’ equity 1 Jan 2018 | 20759 | 1092 | -228 | -44106 | 238242 | 1228 | 216987 | |
| Comprehensive income: | ||||||||
| Net profit for the period | 40809 | 328 | 41137 | |||||
| Other comprehensive income items: | ||||||||
| Translation differences | -2640 | -73 | -2713 | |||||
| Total comprehensive income for the period | -2640 | 40809 | 255 | 38424 | ||||
| Transactions with shareholders: | ||||||||
| Payment of dividends | -16574 | -200 | -16774 | |||||
| Acquisition of treasury shares | -1770 | -1770 | ||||||
| Share-based incentives, value of work performed | 391 | 391 | ||||||
| Issue of treasury shares to employees | 1042 | -1042 | 0 | |||||
| Adjustment to previous periods | 37 | 2 | 39 | |||||
| Total transactions with shareholders | -728 | -17188 | -198 | -18114 | ||||
| Changes in holdings in subsidiaries: | ||||||||
| Obligation to redeem shares from non-controlling interests | -1999 | -1999 | ||||||
| Change in share belonging to non-controlling interests | 1880 | 1880 | ||||||
| Total changes in holdings in subsidiaries | -1999 | 1880 | -119 | |||||
| Shareholders’ equity 31 Dec 2018 | 20759 | 1092 | -956 | -46746 | 259864 | 3165 | 237178 | |
| Other reserves include the share premium account, legal reserve and other reserves. | ||||||||
The notes constitute an essential part of the financial statements.
| OLVI GROUP | TABLE 4 | |
| CASH FLOW STATEMENT | ||
| EUR 1,000 | ||
| 1-12/2018 | 1-12/2017 | |
| Net profit for the period | 41137 | 36124 |
| Adjustments to profit for the period | 31061 | 29649 |
| Change in net working capital | 1409 | -3764 |
| Interest paid | -603 | -491 |
| Interest received | 440 | 271 |
| Dividends received | 123 | 4 |
| Taxes paid | -10525 | -4713 |
| Cash flow from operations (A) | 63042 | 57080 |
| Investments in tangible and intangible | ||
| assets | -32315 | -22108 |
| Sales gains from tangible and intangible | ||
| assets | 1796 | 1682 |
| Acquisition of shares from non-controlling interests | 0 | -345 |
| Shares purchased in subsidiaries | -16059 | 0 |
| Cash flow from investments (B) | -46578 | -20771 |
| Withdrawals of loans | 13543 | 0 |
| Repayments of loans | -21641 | -11491 |
| Acquisition of treasury shares | -1770 | 0 |
| Dividends paid | -16587 | -15574 |
| Increase (-) / decrease (+) in current interest- | ||
| bearing business receivables | 316 | 15 |
| Cash flow from financing (C) | -26139 | -27050 |
| Increase (+)/decrease (-) in liquid assets (A+B+C) | -9675 | 9259 |
| Liquid assets 1 January | 28625 | 20297 |
| Effect of exchange rate changes | -430 | -931 |
| Liquid assets 31 December | 18520 | 28625 |
| The notes constitute an essential part of the financial statements. | ||
OLVI GROUP TABLE 5
NOTES TO THE FINANCIAL STATEMENTS
The financial statements for 1 January to 31 December 2018 have been prepared in compliance with the International Financial Reporting Standards (IFRS), including IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 2 Share-based Payments, observing the IAS and IFRS standards as well as the official SIC and IFRIC interpretations valid on 31 December 2018.
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. The 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 2017. The accounting policies are presented in the Annual Report 2017, which was published on 26 March 2018. Standards that entered into force in 2018 have not caused any changes in the income statement and balance sheet but some amendments to standards affect the scope of notes to the financial statement.
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.
New standards
Olvi has adopted the new standards that entered into force on 1 January 2018 (IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 2 Share-based Payments).
IFRS 9 Financial Instruments addresses the classification of financial assets and liabilities, their measurement and derecognition, revises the rules for hedge accounting and provides for a new impairment model for financial assets. The adoption of the standard in Olvi Group affects the presentation of information in the financial statements and the timing of recognition of credit losses.
Olvi Group’s financial assets consist mainly of funds in bank accounts and accounts receivable. Furthermore, the Group has had a minor amount (approximately 0.5 million euro) of equity investments classified as “Financial assets available for sale” under the old standard. These assets have been classified as “Financial assets measured at fair value through other comprehensive income”. The change in classification thus does not have any substantial impact on the Group’s earnings.
Furthermore, the Group has introduced a provision matrix for credit losses on accounts receivable. According to this, a credit loss provision is booked to the amount of expected credit losses over the entire life of an asset when a financial asset is initially recognised on the balance sheet. The special characteristics of each country are accounted for. The adoption has had an impact of 149 thousand euro on consolidated earnings. No retroactive adjustments have been made to accrued earnings.
IFRS 15 Revenue from Contracts with Customers includes a five-step model applicable to revenue recognition. The standard is based on the principle that revenue is recognised when control of a good or service transfers to the customer. In accordance with the standard, revenue is recognised on the basis of transfer of control either over time or at a specific point of time.
The adoption of the standard has not had any effect on the Group’s earnings, the time of revenue recognition or the accounting policies. However, the amendment affects the presentation of the financial statements through the imposed requirements on the disclosure of notes. The Group will adopt the standard by providing additional information non-retroactively.
IFRS 2 Share-based Payments has been amended to clarify the accounting for certain types of share-based transactions. The adoption of the standard has not had any effect on the consolidated financial statements.
IFRIC 22 provides guidance on the exchange rate that should be applied to foreign currency items (such as sales transactions) at the time of reporting when performance has been provided or received in advance. The Group will take the guidance into account. The interpretation has no effect on the consolidated financial statements.
Olvi will adopt one new standard in 2019 (IFRS 16 Leases). Information on the adoption and estimated effects of the standard can be found below.
IFRS 16 Leases
From the lessee’s point of view, the standard has abandoned the current division between operational leases and finance leases, and according to the standard, in practice all leases result in the recognition of an asset (right to use the leased asset) and a financial liability pertaining to the lease payment obligation. The standard also has effect on the income statement as the total costs are typically higher in the beginning of the lease period and lower towards the end. Furthermore, the lease costs now included in operating expenses will be replaced by interest and depreciation, which will affect crucial indicators such as EBITDA (gross margin). The standard also has an impact on the presentation of the cash flow statement.
The Group has contracts classified as operational leases under the current standard, and upon adoption of the new standard, these will be recognised in the balance sheet with the exception of minor and short-term contracts. The Group’s leases concern the rental of individual office spaces and logistics premises, as well as machinery and equipment. Due to the adoption of IFRS 16, some of the lease payments now recognised as other operating expenses in the consolidated income statement will be moved to depreciation, and the share of interest will be moved to financial expenses. The standard will mainly affect the recognition of the Group’s operational leases, increasing the balance sheet total and causing some changes in the key indicators. The Group’s operational lease commitments that will hereafter be recognised in the balance sheet amount to 1,399 thousand euro at the balance sheet date. The standard will be adopted as of 1 January 2019. A simplified approach to adoption will be taken, with no adjustments to the comparison figures for the previous year.
| 1. SEGMENT INFORMATION | ||||
| SALES VOLUME BY GEOGRAPHICAL SEGMENT (1,000 litres) | ||||
| 10-12/2018 | 10-12/2017 | 1-12/2018 | 1-12/2017 | |
| Olvi Group total | 150273 | 142498 | 701273 | 643024 |
| Finland | 51379 | 48404 | 213205 | 199717 |
| Estonia | 23356 | 21515 | 110733 | 112794 |
| Latvia | 15207 | 14936 | 75590 | 76326 |
| Lithuania | 20372 | 19245 | 95384 | 85381 |
| Belarus | 43884 | 42321 | 228161 | 196389 |
| - sales between segments | -3925 | -3923 | -21800 | -27583 |
| NET SALES BY GEOGRAPHICAL SEGMENT (EUR 1,000) | ||||
| 10-12/2018 | 10-12/2017 | 1-12/2018 | 1-12/2017 | |
| Olvi Group total | 86217 | 75574 | 384302 | 345185 |
| Finland | 39488 | 32161 | 159296 | 131457 |
| Estonia | 14736 | 13627 | 70377 | 73751 |
| Latvia | 8120 | 7271 | 39831 | 37512 |
| Lithuania | 9359 | 8719 | 43051 | 39155 |
| Belarus | 17173 | 15531 | 82093 | 75437 |
| - sales between segments | -2659 | -1735 | -10346 | -12127 |
| OPERATING PROFIT BY GEOGRAPHICAL SEGMENT (EUR 1,000) | ||||||
| 10-12/2018 | 10-12/2017 | 1-12/2018 | 1-12/2017 | |||
| Olvi Group total | 5703 | 4382 | 50150 | 44747 | ||
| Finland | 3233 | 1167 | 18510 | 12763 | ||
| Estonia | 1804 | 1519 | 14011 | 14734 | ||
| Latvia | 230 | 433 | 4328 | 4437 | ||
| Lithuania | 218 | 321 | 3658 | 3365 | ||
| Belarus | 695 | 885 | 10320 | 9435 | ||
| - eliminations | -477 | 57 | -677 | 13 | ||
Finland (Olvi Oyj, Servaali Oy and The Helsinki Distilling Company), Estonia (AS A. Le Coq), Latvia (A/S Cēsu Alus), Lithuania (AB Volfas Engelman and UAB Lamate) and Belarus (OAO Lidskoe Pivo and Trade House Lidskoe Pivo).
| 2. PERSONNEL ON AVERAGE | 10-12/2018 | 10-12/2017 | 1-12/2018 | 1-12/2017 |
| Finland | 367 | 321 | 371 | 337 |
| Estonia | 291 | 309 | 301 | 327 |
| Latvia | 184 | 172 | 194 | 196 |
| Lithuania | 220 | 226 | 215 | 228 |
| Belarus | 707 | 692 | 716 | 695 |
| Total | 1769 | 1720 | 1797 | 1783 |
| 3. 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 | ||
| 1-12/2018 | 1-12/2017 | |
| Managing Director | 823 | 689 |
| Chairman of the Board | 71 | 69 |
| Other members of the Board | 164 | 148 |
| Total | 1058 | 906 |
| 4. SHARES AND SHARE CAPITAL | ||
| 31 Dec 2018 | % | |
| Number of A shares | 16989976 | 82.0 |
| Number of K shares | 3732256 | 18.0 |
| Total | 20722232 | 100.0 |
| Total votes carried by A shares | 16989976 | 18.5 |
| Total votes carried by K shares | 74645120 | 81.5 |
| Total number of votes | 91635096 | 100.0 |
| Votes per Series A share | 1 |
| Votes per Series K share | 20 |
| The registered share capital on 31 December 2018 totalled 20,759 thousand euro. | |
Olvi plc’s shares received a dividend of 0.80 euro per share for 2017 (0.75 euro per share for 2016), totalling 16.6 (15.6) million euro. The dividends were paid on 30 April 2018. The Series K and Series A shares entitle to equal dividend. The Articles of Association include a redemption clause concerning Series K shares.
5. SHARE-BASED PAYMENTS
During the review period, Olvi Group has had an active share-based incentive plan for key personnel. The aim of the share-based incentive plan was 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.
The share-based incentive plan for key personnel that started in 2016 has been active during the review period and expired on 30 June 2018. The performance period for the share-based incentive plan was two years. The prerequisite for receiving reward was that a key employee purchased the company’s Series A shares up to the maximum number determined by the Board of Directors. Furthermore, entitlement to a reward was tied to the continuance of employment upon reward payment. Rewards were paid partly in the company’s Series A shares and partly in cash in July 2018. The cash proportion was intended to cover taxes and tax-related costs arising from the rewards to the key employees. The plan was directed to approximately 50 people. The rewards paid on the basis of the plan were 35,830 Series A shares in Olvi plc and a cash payment needed for taxes and tax-related costs arising from the shares. The costs of the plan were recognised over the performance period from 1 July 2016 to 30 June 2018. From January to December 2018, costs associated with the plan were recognised for a total of 782.3 thousand euro.
Olvi Group has initiated a new share-based incentive plan for key employees with terms and conditions equivalent to the previous plan. The performance period is from 1 February 2019 to 31 January 2021. This has been described in the section “Events after the review period” in this bulletin.
6. TREASURY SHARES
Authorisations related to treasury shares
On 16/04/2018, the General Meeting of Shareholders of Olvi plc decided to revoke any unused authorisations to acquire treasury shares and authorise the Board of Directors of Olvi plc to decide on the acquisition of the company’s own shares using distributable funds. The authorisation is valid for one year starting from the General Meeting and covers a maximum of 500,000 Series A shares.
The Annual General Meeting also decided to revoke all existing unused authorisations for the transfer of own shares and authorise the Board of Directors to decide on the issue of a maximum of 1,000,000 new Series A shares and the transfer of a maximum of 500,000 Series A shares held as treasury shares.
Transactions related to treasury shares
On 9 May 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 36,280 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 May 2018 and ended on 8 June 2018. The total acquisition price for the 36,280 shares acquired was 1,104,266 euro. At the start of the repurchase scheme, Olvi held 41,125 Series A shares as treasury shares.
Olvi plc’s Annual General Meeting on 21 April 2017 made a decision concerning abandoned or “ghost” shares held in a joint book-entry account. The decision was that the right to a share incorporated in the book-entry system and placed in the joint account, and the rights that the share carries have been forfeited, and authorised the Board of Directors to take all measures called for by the decision. On this basis, 36,576 shares have been transferred from Olvi’s joint account to treasury shares on 18 May 2017. At its meeting on 28 May 2018, the Board of Directors of Olvi plc decided to cancel the shares that were gratuitously transferred to Olvi on 18 May 2017. The cancellation of shares was recorded in the Trade Register on 15 June 2018.
Olvi Group’s share-based incentive plan for key personnel, the performance period of which was from 1 July 2016 to 30 June 2018, has expired. The target group of the plan included approximately 50 people, and in accordance with the terms and conditions of the plan, rewards were paid in Olvi plc Series A shares and partially in cash. A total of 35,830 Series A shares were handed over as share-based rewards at the beginning of July.
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.
Series A shares held by Olvi plc as treasury shares on 31 December 2018 (25,728 shares) represent 0.01 percent of all shares and 0.02 percent of the aggregate number of votes. The treasury shares represented 0.1 percent of all Series A shares and associated votes. The total purchase price of treasury shares was 956,460.18 euro. Treasury shares held by the company itself are ineligible for voting.
| 7. NUMBER OF SHARES *) | 1-12/2018 | 1-12/2017 |
| - average | 20711397 | 20728115 |
| - at end of period | 20696504 | 20717683 |
| *) Treasury shares deducted. | ||
| 8. TRADING OF SERIES A SHARES ON THE HELSINKI STOCK EXCHANGE | ||
| 1-12/2018 | 1-12/2017 | |
| Trading volume of Olvi A shares | 1741051 | 1464747 |
| Total trading volume, EUR 1,000 | 52140 | 41884 |
| Traded shares in proportion to | ||
| all Series A shares, % | 10.2 | 8.6 |
| Average share price, EUR | 29.95 | 28.59 |
| Price on the closing date, EUR | 31.50 | 29.87 |
| Highest quote, EUR | 34.00 | 32.49 |
| Lowest quote, EUR | 27.00 | 25.05 |
| 9. FOREIGN AND NOMINEE-REGISTERED HOLDINGS ON 31 DECEMBER 2018 | ||||||
| Book entries | Votes | Shareholders | ||||
| qty | % | qty | % | qty | % | |
| Finnish total | 15587556 | 75.22 | 86500420 | 94.40 | 11549 | 99.55 |
| Foreign total | 294293 | 1.42 | 294293 | 0.32 | 42 | 0.37 |
| Nominee-registered (foreign) total | 110477 | 0.53 | 110477 | 0.12 | 4 | 0.03 |
| Nominee-registered (Finnish) total | 4729906 | 22.83 | 4729906 | 5.16 | 6 | 0.05 |
| Total | 20722232 | 100.00 | 91635096 | 100.00 | 11601 | 100.00 |
| 10. LARGEST SHAREHOLDERS ON 31 DECEMBER 2018 | |||||||
| Series K | Series A | Total | % | Votes | % | ||
| 1. Olvi Foundation | 2363904 | 890613 | 3254517 | 15.71 | 48168693 | 52.57 | |
| 2. The Estate of Hortling Heikki *) | 903488 | 103280 | 1006768 | 4.86 | 18173040 | 19.83 | |
| 3. Hortling Timo Einari | 212600 | 49577 | 262177 | 1.27 | 4301577 | 4.69 | |
| 4. Hortling-Rinne Marit | 149064 | 14699 | 163763 | 0.79 | 2995979 | 3.27 | |
| 5. OP Corporate Bank plc, nominee reg. | 2153674 | 2153674 | 10.39 | 2153674 | 2.35 | ||
| 6. Nordea Bank Abp, nominee register | 1428482 | 1428482 | 6.89 | 1428482 | 1.56 | ||
| 7. Skandinaviska Enskilda Banken AB (publ) | 1062064 | 1062064 | 5.13 | 1062064 | 1.16 | ||
| Helsinki branch, nominee register | |||||||
| 8. Ilmarinen Mutual Pension Insurance Company | 901401 | 901401 | 4.35 | 901401 | 0.98 | ||
| 9. Varma Mutual Pension Insurance Company | 828075 | 828075 | 4.00 | 828075 | 0.90 | ||
| 10. Hortling Pia Johanna | 23388 | 22066 | 45454 | 0.22 | 489826 | 0.53 | |
| Others | 79812 | 9536045 | 9615857 | 46.39 | 11132285 | 12.16 | |
| Total | 3732256 | 16989976 | 20722232 | 100.00 | 91635096 | 100.00 | |
| *) The figures include the shareholder’s own holdings and shares held by parties in his control. | |||||||
| 11. PROPERTY, PLANT AND EQUIPMENT | ||
| EUR 1,000 | ||
| 1-12/2018 | 1-12/2017 | |
| Opening balance | 188155 | 196239 |
| Additions | 32833 | 20806 |
| Deductions and transfers | -4395 | -3655 |
| Depreciation | -18922 | -18498 |
| Exchange rate differences | -2072 | -6737 |
| Closing balance | 195599 | 188155 |
| 12. CONTINGENT LIABILITIES | ||
| EUR 1,000 | ||
| 31 Dec 2018 | 31 Dec 2017 | |
| Pledges and contingent liabilities | ||
| For own commitments | 2114 | 1886 |
| Leasing and rental liabilities: | ||
| Due within one year | 1129 | 1163 |
| Due within 1 to 5 years | 805 | 739 |
| Due in more than 5 years | 2 | 2 |
| Leasing and rental liabilities total | 1936 | 1904 |
| Other liabilities | 57 | 2000 |
13. BUSINESS COMBINATIONS
The Helsinki Distilling Company
On 2 July 2018, Olvi plc acquired 67 percent of the stock of The Helsinki Distilling Company. The Helsinki Distilling Company focuses on the manufacture of strong alcoholic products, of which Helsinki Whiskey and Helsinki Dry Gin are the best known. The company also has a subsidiary called Tislaamo – Distillery Bar, which operates an exhibition space and restaurant. Through the acquisition, Olvi expands its operations to strong alcoholic beverages. The Helsinki Distilling Company brings a substantial addition to our expertise in this sector.
The acquisition was executed through a share purchase, and the debt-free sales price for a 67 percent stake was approximately 2.3 million euro, paid on 2 July 2018. Furthermore, Olvi subscribed to 195,643 Series B shares in a private placing. The agreement also includes a conditional additional sales price that will be due for payment on 30 April 2019.
The agreement includes an option for Olvi to redeem the remaining 33% within the next few years, and accordingly includes the right of minority shareholders to sell this remainder to Olvi. A liability has been recognised in the financial statement report for this obligation of redemption.
The Helsinki Distilling Company has been consolidated in Olvi Group since the beginning of July 2018. The share of non-controlling interests has not been recognised but the acquisition has been treated as a 100-percent takeover. In Olvi Group’s segment reporting, The Helsinki Distilling Company’s business operations are included in the figures for Finland.
The operating profit for January-December includes 223.5 thousand euro of expenses related to the acquisition.
The following tables present a summary of the acquisition price and the fair value of the assets acquired and liabilities assumed at the time of acquisition. The balance sheet has been prepared in its essential parts in accordance with IFRS and Olvi Group’s accounting policies. The acquisition has been booked in Olvi Group’s figures as preliminary.
| Acquisition price | |
| EUR 1,000 | |
| Paid in cash | 2.261 |
| Estimated fair value of conditional additional sales price | 27 |
| Estimated fair value of redemption obligation | 899 |
| Total acquisition price (100%) | 3.187 |
| Amounts recognised for assets acquired and liabilities assumed (100%) | |
| EUR 1,000 | |
| Tangible assets | 561 |
| Intangible assets | |
| Intangible rights based on | |
| customers | 207 |
| Intangible rights related to markets | 653 |
| Other intangible assets | 312 |
| Inventories | 1.373 |
| Accounts receivable and other receivables | 355 |
| Deferred tax receivables | 165 |
| Liquid assets | 8 |
| Accounts payable and other liabilities | 730 |
| Deferred tax liabilities | 402 |
| Interest-bearing liabilities | 518 |
| Identifiable net assets total | 1.984 |
| Goodwill | 1.203 |
Servaali Oy
On 3 April 2018, Olvi plc acquired 80 percent of the stock of Servaali Oy. Servaali Oy is one of Finland’s largest private importers of alcoholic beverages. With the acquisition, Olvi is expanding its product portfolio to wines, strengthening its market position in mild alcoholic beverages and responding actively to the potential for growth provided by the changing operating environment.
The acquisition was executed through a share purchase, and the debt-free sales price for an 80 percent stake was 15.8 million euro, paid on 3 April 2018. The agreement also includes an additional sales price based on the company’s profitability development over an agreed review period of several years. The additional sales price has been determined on the basis of the current value of estimated future cash flows. The applicable discount rate of interest has been 9%. The conditional additional sales price will be due for payment on 30 November 2021.
The agreement includes an option for Olvi to redeem the remaining 20% of Servaali within the next few years, and accordingly includes the right of Momentin Group Oy to sell this remainder to Olvi. A liability has been recognised for this obligation of redemption.
Servaali Oy has been consolidated in Olvi Group since the beginning of April 2018. In Olvi Group’s segment reporting, Servaali’s business operations are included in the figures for Finland.
The operating profit for January-December includes 570.9 thousand euro of expenses related to the acquisition.
The following tables present a summary of the acquisition price and the fair value of the assets acquired and liabilities assumed at the time of acquisition. The balance sheet has been prepared in its essential parts in accordance with IFRS and Olvi Group’s accounting policies. The acquisition has been booked in Olvi Group’s figures as preliminary.
| Acquisition price | |
| EUR 1,000 | |
| Paid in cash | 15.800 |
| Estimated fair value of conditional additional sales price | 1.592 |
| Share belonging to non-controlling interests (20%) | 1.880 |
| Total acquisition price (100%) | 19.272 |
| | |
| Amounts recognised for assets acquired and liabilities assumed (100%) | |
| EUR 1,000 | |
| Tangible assets | 190 |
| Intangible assets | |
| Intangible rights based on customers | 3.325 |
| Intangible rights related to markets | 1.122 |
| Inventories | 3.261 |
| Accounts receivable and other receivables | 5.992 |
| Deferred tax receivables | 93 |
| Liquid assets | 1.994 |
| Accounts payable and other liabilities | 5.300 |
| Deferred tax liabilities | 935 |
| Interest-bearing liabilities | 343 |
| Identifiable net assets total | 9.400 |
| Goodwill | 9.872 |
| Share of net assets belonging to non-controlling interests (20%) *) | 1.880 |
*) The company has measured the share of non-controlling interests (20%) as a share of the fair value of the object’s net assets.
If the companies had been included in the Group since the beginning of the accounting period, the net sales for January-December would have been approximately 390.3 million euro and the operating profit 50.2 million euro.
14. 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.
Capital expenditure consists of total expenditure on fixed assets, including the effect of any corporate acquisitions.
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
