Annual Report • Mar 24, 2016
Annual Report
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FINANCIAL STATEMENTS 2015
| Board of Directors' Report | 3 – 14 |
|---|---|
| Consolidated Financial Statements 2015 (IFRS) | |
| Consolidated Income Statement | 15 |
| Consolidated Balance Sheet | 16 |
| Consolidated Cash Flow Statement | 17 |
| Changes in Consolidated Shareholders' Equity | 18 |
| Consolidated Accounting Policies | 19 – 33 |
| Notes to the Consolidated Financial Statements | 34 – 55 |
| Consolidated Key Ratios 2013 to 2015 | 56 |
| Per-share Ratios | 56 |
| Parent Company's Financial Statements 2015 (FAS) | |
| Parent Company's Income Statement | 57 |
| Parent Company's Balance Sheet | 58 |
| Parent Company's Cash Flow Statement | 59 |
| Parent Company's Accounting Policies | 60 |
| Notes to the Parent Company's Financial Statements | 61 – 67 |
| Shares and Shareholders | 68 – 69 |
| Parent Company's Key Ratios 2013 to 2015 | 70 |
| Per-share Ratios | 70 |
| Calculation of Financial Ratios | 71 |
| Board of Directors' Proposal for the Distribution of Profit |
72 |
| Date and Signatures | 72 |
| Auditor's Note | 72 |
| Olvi plc's Board of Directors | 73 - 74 |
Olvi Group's profitability remained on a healthy level in spite of a challenging operating environment and declining markets. Fullyear operating profit declined slightly but profitability remained on a strong level. Cash flow from operations increased clearly and the balance sheet became even stronger.
Full year 2015:
| 1-12/ 2015 |
1-12/ 2014 |
|
|---|---|---|
| Sales volume, Mltr | 579.9 | 576.5 |
| Net sales, MEUR | 310.5 | 320.8 |
| EBITDA, MEUR | 54.5 | 55.9 |
| % of net sales | 17.6 | 17.4 |
| Operating profit, MEUR |
38.2 | 41.0 |
| % of net sales | 12.3 | 12.8 |
| Net profit for the period |
22.2 | 33.1 |
| % of net sales | 7.2 | 10.3 |
| Earnings per share, EUR |
1.08 | 1.57 |
| Gross capital expenditure, MEUR |
26.0 | 41.6 |
| Equity per share, EUR | 8.92 | 9.17 |
| Equity to total assets, % |
59.4 | 57.9 |
| Gearing, % | 18.3 | 29.8 |
The operating environment in 2015 was challenging, and the total markets in Olvi Group's operating area clearly diminished, particularly in the high-season months. Taking this into account, the slight increase in the Group's sales volume and also the earnings development can be considered good performance.
The market decline, and also Olvi Group's performance, were affected by cool and rainy weather in Finland and the Baltic states during the most important high-season months, as well as negative economic and currency development in Belarus. In spite of the overall market decline, operating profits in Finland and the Baltic states improved on the previous year. ………………………………………………. Profitability in Finland improved through cost savings, efficiency measures and sales actions particularly in the latter half of the year. Fullyear operating profit increased by 16.2 percent. A slight improvement was also seen in market share.
All in all, development in the Baltic states was good in 2015. Profitability in Estonia remained on a very strong level even though sales volume and earnings fell short of the previous year due to a diminishing market. Our Estonian company A. Le Coq retained its clear market leadership within the country's beverage industry. The company was awarded the most competitive food industry company in Estonia for the tenth time. Business in Latvia developed favourably in 2015. Operating profit in Latvia increased by 45.1 percent during 2015, reaching an all-time high along the company's history. In Lithuania, the market share strengthened and sales volume increased during 2015. Operating profit in Lithuania improved by 10.8 percent on the previous year. Our Lithuanian company Volfas Engelman was ranked as the best Lithuanian company in the European Business Awards competition. The primary criteria for the choice were innovation, financial performance and business ethics.
The market situation in Belarus is more difficult compared to other parts of the Group due to challenges coming from the operating environment. Strong devaluation of the local currency in 2015 on the one hand, and a rapid rise of costs on the other, had a negative impact on the company's earnings development measured in euro. The business as such continued to develop favourably and the company's sales volume increased during the year, clearly outperforming the country's market development. One of the most important successes in 2015 is the newly initiated co-operation with PepsiCo, which was reflected as a steady increase in market share in 2015 and which is believed to boost the soft drinks market share of Olvi's Belarusian unit also in upcoming years.
The development of Olvi Group's business is supported by the great appreciation enjoyed by our brands. The parent company's Sandels and Olvi were elected the most appreciated brands of beer in Finland. Lidskoe beer was ranked as the number one brand in the Belarusian market according to two different market surveys. Our Lithuanian subsidiary's beer brand Volfas Engelman was successful in an annual customer survey, ranking second in a comparison of most liked beer brands. Volfas Engelman was also the most popular consumer brand in a competition arranged by the Lithuanian newspaper Verslo žinios.
During 2015, the Group invested 26.0 million euro in capital expenditure. A logistics investment in Finland was completed during the spring, allowing more efficient operations. Investments carried out in 2015 increased the production capacity in Finland. Thanks to substantial investment efforts in recent years, our production facilities are in good shape, allowing efficient operation and growth well into the future.
The Group's balance sheet became even stronger during 2015. The equity ratio improved to 59.4 percent while the gearing ratio dropped to 18.3 percent. Cash flow from operations increased clearly and totalled 61.7 (46.3) million euro.
OLVI GROUP'S AND ITS GEOGRAPHICAL SEGMENTS' SALES VOLUME, NET SALES AND EARNINGS IN 2015
Olvi Group's sales volume in 2015 made an all-time high of 579.9 (576.5) million litres. This represents an increase of 3.4 million litres or 0.6 percent.
The strongest growth was seen in Belarus (increase 5.2 million litres) and in Lithuania (increase 3.8 million litres). Sales volumes declined in Finland, Estonia and Latvia particularly due to cool and rainy weather in the highseason months.
| Sales volume, | 1-12/ | 1-12/ |
|---|---|---|
| million litres | 2015 | 2014 |
| Finland (Olvi plc) | 148.0 | 151.8 |
| Estonia (AS A. Le Coq) | 123.9 | 131.6 |
| Latvia (A/S Cēsu Alus) | 68.1 | 76.1 |
| Lithuania (AB Volfas Engelman) |
84.9 | 81.1 |
| Belarus (OAO Lidskoe Pivo) |
175.1 | 169.9 |
| Eliminations | -20.1 | -34.0 |
| Total | 579.9 | 576.5 |
The Group's net sales in 2015 declined by 3.2 percent and amounted to 310.5 (320.8) million euro. The net sales decline reflects a diminishing market, intense price competition and devaluation of the Belarusian exchange rate.
| Net sales, | 1-12/ | 1-12/ |
|---|---|---|
| million euro | 2015 | 2014 |
| Finland (Olvi plc) | 102.9 | 105.3 |
| Estonia (AS A. Le Coq) | 75.8 | 80.7 |
| Latvia (A/S Cēsu Alus) | 31.2 | 34.1 |
| Lithuania (AB Volfas Engelman) |
35.8 | 36.1 |
| Belarus (OAO Lidskoe Pivo) |
73.6 | 78.6 |
| Eliminations | -8.7 | -14.0 |
| Total | 310.5 | 320.8 |
Earnings development
The Group's operating profit for January-December declined by 6.9 percent and amounted to 38.2 (41.0) million euro, or 12.3 (12.8) percent of net sales. In spite of the decline in consolidated operating profit, earnings improved in Finland, Latvia and Lithuania. There was a slight drop in earnings in Estonia but profitability remained on a very strong level. Operating profit in Belarus declined by 32.6 percent or 4.3 million euro due to a diminishing market and devaluation of the exchange rate.
| Operating profit, million euro |
1-12/ 2015 |
1-12/ 2014 |
|---|---|---|
| Finland (Olvi plc) | 7.8 | 6,7*) |
| Estonia (AS A. Le Coq) | 15.9 | 16.5 |
| Latvia (A/S Cēsu Alus) | 3.0 | 2.1 |
| Lithuania (AB Volfas Engelman) |
2.6 | 2.4 |
| Belarus (OAO Lidskoe Pivo) |
8.8 | 13.1 |
| Eliminations | -0.0 | 0,2*) |
| Total | 38.2 | 41.0 |
*) Reported operating profit in Finland 1-12/2014 stood at 7.4 million euro. The reported operating profit included non-recurring income of 0.7 million euro attributable to an intra-Group sales gain. The country-specific data for 2014 has been adjusted for comparability with the 1-12/2015 figures.
The Group's full-year profit in 2015 totalled 22.2 (33.1) million euro. Earnings per share calculated from the profit belonging to parent company shareholders in January-December stood at 1.08 (1.57) euro per share.
Net profit for the period and earnings per share were burdened by unrealised exchange rate losses on an intra-Group loan targeted at investments in Belarus. The losses totalled 10.5 million euro and were recognised in financial items.
Olvi Group's balance sheet total at the end of December 2015 was 314.5 (332.8) million euro. Equity per share at the end of 2015 stood at 8.92 (9.17) euro. The equity ratio improved and stood at 59.4 (57.9) percent. The Group's interest-bearing net liabilities decreased by 23.2 million euro during 2015 and amounted to 34.1 million euro at year-end (57.3). The gearing ratio declined substantially during 2015 and stood at 18.3 (29.8) percent. Cash flow from operations increased clearly and totalled 61.7 (46.3) million euro. The current ratio, which represents the Group's liquidity, was 1.1 (1.1).
Olvi Group's gross capital expenditure in 2015 amounted to 26.0 (41.6) million euro. The parent company Olvi accounted for 3.9 million euro, the Baltic subsidiaries for 7.6 million euro and Lidskoe Pivo in Belarus for 14.5 million euro of the total. Capital expenditure declined clearly on the previous year. The largest investments were targeted at increasing production capacity in Belarus.
CHANGES IN CORPORATE STRUCTURE IN 2015
In August 2015, Olvi Group acquired 26 shares in the subsidiary A/S Cēsu Alus. There were no other changes in Olvi's holdings in subsidiaries in January-December 2015.
At the end of the accounting period, Olvi's shares of holding were:
| 2015 | 2014 | |
|---|---|---|
| AS A. Le Coq, Estonia | 100.00 | 100.00 |
| A/S Cēsu Alus, Latvia | 99.87 | 99.86 |
| AB Volfas Engelman, Lithuania | 99.58 | 99.58 |
| OAO Lidskoe Pivo, Belarus | 94.57 | 94.57 |
Furthermore, A. Le Coq has a 49.0 percent holding in AS Karme and 20.0 percent holding in Verska Mineraalvee OÜ in Estonia.
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 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 2015 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.
Olvi plc adheres to responsible and open corporate governance of a high standard. Good corporate governance is based on a combination of laws and decrees issued on the basis of them, as well as self-regulation and other best practices. Open corporate governance supports the value creation of the company and its attractiveness as an investment object.
Olvi plc complies with the Corporate Governance Recommendation for Listed Companies issued by NASDAQ OMX Helsinki Ltd, Finland Chamber of Commerce and the Confederation of Finnish Industries as valid from time to
time, explaining any departures. Olvi plc has complied with the recommendation as valid from time to time since it entered into force in 2003.
Until the end of 2015, Olvi plc has operated in compliance with the Corporate Governance Code for Listed Companies published by the Securities Market Association that entered into force on 1 October 2010.
In its reporting for 2015, the company partially complies with the new Corporate Governance Code approved by the Securities Market Association that entered into force on 1 January 2016.
The company's Board of Directors has considered the Corporate Governance Statement 2015. In accordance with the recommendation, Olvi plc has issued a separate corporate governance statement for its accounting period starting 1 January 2015 in connection with the Board of Directors' report and financial statements for 2015.
Olvi's Corporate Governance Statement is available on the company's Web site. The statement is not updated during the accounting period, but up-to-date information on the subject areas included in it is presented on the company's Web site.
Olvi maintains a public and company-specific insider register, as well as project-specific insider registers for individual projects. Public insiders comprise the members of the Board of Directors and Management Group, auditors and their closely related parties.
Olvi Group's human resources strategy plays a central role in achieving the Group's business targets. Olvi plc is actively developing its management, training and incentive systems in order to improve wellbeing at work and provide employees a safe working environment. It is most important to guarantee the attractiveness of Group companies as employers and ensure the availability of personnel and commitment to the Group companies.
Olvi Group has a shared mission statement and vision. The business strategies in all of the operating countries are largely similar and based on the same values.
In implementing the strategies, Olvi plc approves local flexibility in the means used for achieving targets because the operating environments and competitive situations are different.
Olvi Group's business strategies and objectives are put into practice in the organisation through result cards, appraisal discussions and regular feedback. The competence of personnel is maintained through continuous training and development of operations. Olvi issues a separate human resources statement each year for internal use within the company.
Olvi Group's average number of personnel in January-December was 1,940 (1,958). The Group's average number of personnel decreased by 18 people or 0.9 percent. The greatest decline in the Group's average number of personnel was seen in Finland, where the figure dropped by 33 people. The decline in Finland reflects the reduction in the number of sales promoters as well as the effects of the efficiency measures and reorganisation carried out after the statutory co-operation negotiations completed in January 2015. The aggregate number of personnel in the Baltic states increased by 16 people from January to December. In Belarus, the number of personnel in January-December remained at the previous year's level.
Olvi Group's average number of personnel by country:
| 1-12/ 2015 |
1-12/ 2014 |
|
|---|---|---|
| Finland | 336 | 369 |
| Estonia | 336 | 331 |
| Latvia | 206 | 214 |
| Lithuania | 233 | 214 |
| Belarus | 829 | 830 |
| Total | 1,940 | 1,958 |
Wages, salaries and emoluments in the accounting period:
| EUR 1,000 | 2015 | 2014 |
|---|---|---|
| Wages, salaries and emoluments |
32,854 | 33,779 |
In accordance with the implementing provisions of the Finnish Corporate Governance Code, Olvi has issued a separate remuneration report for its accounting period starting 1 January 2015 in connection with the Board of Directors' report and financial statements for 2015. The report has been prepared in accordance with Recommendations 22 to 24 in the Remuneration section of the revised CG Code.
Olvi's remuneration report is publicly available on the company's Web site at www.olvi.fi.
Bonuses based on the achievement of earnings and performance targets are an important incentive for personnel and a management tool.
Performance bonus schemes communicate the targets, will and desire set by the company's Board of Directors. Bonuses based on earnings or performance are a sign of achievements that outperform the target level. Basic wages and salary are compensation for work well done.
The overall objectives of bonuses based on target-setting include clarity, fairness and sufficient effect.
Bonus schemes must not encourage imprudent risk-taking or negligence.
The objectives for long-term bonuses in particular include increasing shareholder value, supporting profitable growth and relative profitability, and making operational management and key employees committed to the company.
Components of remuneration to personnel
The components of remuneration to personnel consist of fixed remuneration as well as shortand long-term incentive schemes.
Olvi's Board of Directors decides on the terms of service of the Managing Director, which are specified in a written directors' contract. The Board of Directors assesses the Managing Director's performance annually. The terms of service of other top management shall be decided by the Board of Directors on the basis of the Managing Director's proposal. The Managing Director and other management executives shall not receive separate remuneration for their work in the management group or other internal management organs within the Group.
Short-term incentives are performance bonus schemes in which the monitoring period is one accounting period. The Board of Directors shall decide upon the basis for definition of the incentives. In 2015, the basis for definition of the performance bonus was operating profit. The entire personnel of Olvi is included in the scope of performance bonuses, while in other Group companies, the scope includes the management group members.
Furthermore, Olvi Group's subsidiaries have incentive schemes that cover either the entire personnel or the company's key employees and are based on the achievement of targets specified in performance cards.
Long-term incentives are based on programmes confirmed by the company's Board of Directors that are valid for at least two accounting periods. The programmes can be share-based incentive schemes or performance bonus schemes based on Grouplevel targets.
The Group has an active share-based incentive plan for key personnel in accordance with a resolution made by Olvi plc's Board of Directors on 29 April 2014. The aim of the 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.
The share-based incentive plan is described in more detail in Note 22 to the financial statements, Share-based payments.
Olvi has an operational personnel fund that covers Olvi's entire personnel excluding top management.
The basis of making profit-sharing contributions to the personnel fund shall be decided annually by the company's Board of Directors.
The Chairman of the Board of Olvi plc is Heikki Hortling, M.Sc. (Econ), Industrial Counsellor, and the Vice Chairman is Esa Lager, M.Sc. (Econ), LL.M. Other members of the Board of Directors include Jaakko Autere, M.Sc. (Econ), Nora Hortling, M.Sc. (Econ) (since 16 April 2015), Elisa Markula, M.Sc. (Econ) (since 16 April 2015) and Heikki Sirviö, M.Sc. (Engineering), Industrial Counsellor (since 16 April 2015). In addition, until the Annual General Meeting of Olvi plc held on 16 April 2015, the members of the Board included Heikki Sinnemaa, LL.M, and Tarja Pääkkönen, Dr. Tech.
The company's auditor is the authorised public accounting firm PricewaterhouseCoopers Oy, with Sami Posti, Authorised Public Accountant, as auditor in charge.
The Management Group of Olvi plc consists of Lasse Aho, Managing Director (Chairman), Ilkka Auvola, Sales Director, Olli Heikkilä, Marketing Director, Pia Hortling, Product Development and Purchasing Director, Kati Kokkonen, Chief Financial Officer, Lauri Multanen, Production Director, as well as Marjatta Rissanen, Customer Service and Administrative Director.
The Managing Directors of the subsidiaries are:
The Managing Directors of the subsidiaries report to Lasse Aho, the Managing Director of Olvi plc. The Management Group of each subsidiary consists of the corresponding Managing Director and two to four sector directors.
Olvi's share capital at the end of December 2015 stood at 20.8 million euro. The total number of shares was 20,758,808, of these 17,026,552 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.
The total trading volume of Olvi A shares on Nasdaq OMX Helsinki in 2015 was 2,036,830 (2,174,302) shares, which represented 12.0 (12.8) percent of all Series A shares. The value of trading was 48.4 (54.3) million euro.
The Olvi A share was quoted on Nasdaq OMX Helsinki (Helsinki Stock Exchange) at 22.19 (21.07) euro at the end of 2015. In January-December, the highest quote for the Series A share was 27.20 (29.90) euro and the lowest quote was 20.51 (20.70) euro. The average share price in 2015 was 23.76 (25.03) euro. At the end of December 2015, the market capitalisation of Series A shares was 377.8 (358.7) million euro and the market capitalisation of all shares was 460.6 (437.4) million euro.
The number of shareholders at the end of December 2015 was 10,108 (10,021). Foreign holdings plus foreign and Finnish nomineeregistered holdings represented 22.4 (20.5) percent of the total number of book entries and 5.1 (4.6) percent of total votes.
Detailed information on Olvi's shares and shareholdings can be found in the notes to the parent company's financial statements.
On 16 April 2015, the General Meeting of Shareholders of Olvi plc decided to authorise the Board of Directors to decide on the acquisition of a maximum of 500,000 of the company's own Series A shares. The shares were to be acquired in deviation from the pro rata principle among shareholders, using the company's unrestricted equity at the market price at time of acquisition in public trading arranged by NASDAQ OMX Helsinki Ltd.
The Annual General Meeting also decided to 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 ("Issue authorisation").
The new shares were to be issued and the treasury shares transferred in one or more lots either against payment or free of charge.
The new shares were to be issued and the treasury shares transferred to the company's shareholders on a pro rata basis in relation to their existing holdings, or a private placing could have been executed in deviation from shareholders' pre-emptive rights if a weighty economic reason for this existed from the company's viewpoint, such as financing or execution of corporate acquisitions or arrangements, development of the company's equity structure, improvement of share liquidity or implementation of the company's incentive schemes. A private placing can be free of charge only if a particularly weighty economic reason for this exists from the company's viewpoint, taking into consideration the interests of all shareholders. The Board of Directors would have decided upon other matters related to share issues.
It was proposed that the issue authorisation would be valid until the closing of the Annual General Meeting 2015, however no longer than 18 months from the General Meeting's decision of issue authorisation.
At its meeting on 23 December 2015, the Board of Directors of Olvi plc decided to exercise the authorisation to purchase treasury shares given by the Annual General Meeting on 16 April 2015 and acquire a maximum of 10,000 Series A shares. The acquisition of shares started on 28 December 2015. Between 28 December and 31 December 2015, a total of 4,500 Series A shares were acquired for a price of 99,492 euro.
In line with the Board's proposal, the General Meeting of Olvi plc also decided to authorise the Board to decide on the distribution of extra dividends.
The extra dividend to be distributed on the basis of the authorisation, as an aggregate total of any separate decisions of distribution, might amount to a maximum of 0.15 euro for each Series A and Series K share, in total a maximum of 3,113,652.60 euro.
Extra dividends based on the Board of Directors' decision would be paid to shareholders registered in the company's register of shareholders held by Euroclear Finland Ltd on the record date of the dividend payment decided by the Board.
According to the authorisation, the Board of Directors shall decide on the record date of the dividend payment and the payment date, which may be no earlier than the fifth banking day after the record date. The authorisation includes the right of the Board of Directors to decide on all other terms and conditions related to the distribution of extra dividends referred to in the above. The authorisation shall remain valid until the commencement of the next General Meeting of Shareholders. No dividend shall be paid on treasury shares held by the company.
Olvi plc held a total of 5,624 of its own Series A shares on 31 December 2015, and the total acquisition price was 108.0 thousand euro (on 31 December 2014 1,124 shares, acquisition price 8.5 thousand euro).
Series A shares held by Olvi plc as treasury shares represented 0.027 percent of the share capital and 0.006 percent of the aggregate number of votes. The treasury shares represented 0.033 percent of all Series A shares and associated votes.
During 2015, Olvi has not received any flagging notices in accordance with Chapter 2, Section 10 of the Securities Markets Act.
In accordance with its environmental policy, Olvi is strongly committed to procedures and methods that spare the environment, as well as all laws and recommendations related to its business. The objectives for Olvi's environmental policy are defined annually and realised as objectives on the performance cards. The achievement of environmental targets and related indicators are regularly monitored by top management and designated representatives.
Olvi Group's environmental principles:
We openly disclose information on our operations and the environmental impacts of our products.
We encourage our personnel to take responsibility and show innovation also with regard to their work environment and environmental impacts.
Handling of waste and emissions from production, packaging and transports
Olvi's environmental measures and objectives are described in more detail on the corporate Web site at www.olvi.fi.
In 2009, Olvi joined a voluntary energy efficiency agreement system for the food industry based on the EU Energy Services Directive. The system is valid until the end of 2016 and replaces the energy-saving agreement that expired at the end of 2007. The system involves agreement on a framework for continuous and systematic improvements in energy efficiency. This shows that Olvi is a serious player in our society's joint effort against climate change.
Olvi's environmental permit was granted on 30 September 2003 and has been valid until further notice. An application to update the environmental permit has been submitted at the end of 2014. An official decision regarding the approval of the update is expected during 2016.
Olvi Group companies have not been involved in any legal or administrative proceedings related to environmental issues, and the company is not aware of any environmental risks that would have a significant effect on the Group's financial position.
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.
Olvi Group's strategic risks refer to risks related to the characteristics of the company's business and strategic choices. The Group's operations are located in several countries that differ substantially in terms of their social and economic situations and the phases and directions of development. For example, strategic risks relate to changes in tax legislation and other regulations, the environment and foreign exchange markets. If realised, strategic risks can substantially hamper the company's operational preconditions. The Group's most substantial identified strategic risks relate to Belarus, particularly the situation in the country's economy and politics.
The Group's most substantial identified operational risks relate to the procurement and quality of raw materials, the production process, markets and customers, personnel, information security and systems, as well as changes in foreign exchange rates.
General economic development and annual fluctuations in crop yield affect the prices and availability of major raw materials used within Olvi Group. Disruptions in raw material deliveries and quality may hamper customer relations and business operations. Purchases of major raw materials are made under procurement contracts standardised at the Group level. The Group aims to secure the predictability of purchase prices for critical raw materials through long-term procurement contracts. The company has a hedging policy concerning raw materials and their prices. All units emphasise the significance of the quality of raw materials and other production factors in the overall production chain.
The aim is to minimise production risks through clear documentation of processes, increasing the degree of automation, compliance with quality management system and the pursuit of clear operating methods in relation to decision-making and supervision. The efficiency and applicability of processes and methods are monitored using internal indicators.
The monitoring and development of production efficiency includes, among other things, the reliability and utilisation rate of production machinery, development of the working environment and factors related to people's work. The Group has a property and loss-of-profits insurance programme covering all of the operating areas, and its coverage is reviewed annually.
The Group's business operations are characterised by substantial seasonal variation. The net sales and operating profit from the reported geographical segments do not accumulate evenly but vary substantially according to the time of the year and the characteristics of each season.
Negative changes in the economy may impact consumers' purchasing behaviour and hamper the liquidity of our customers. All Group companies employ efficient credit controls as a major method for minimising credit losses.
Legislative changes and other changes in the operations of authorities, such as changes in excise taxes and marketing restrictions, may affect the demand for the Group's products and their relative competitive position.
Risks related to personnel include risks in obtaining labour, employment relationship risks, key person risks, competence risks and risks related to well-being at work and occupational accidents.
Crucial focal points in HR management include maintaining and developing a good employer image, as well as ensuring the availability and commitment of personnel. Other focal points include maintaining and continuously developing well-being and safety at work, improvement of management systems, construction and maintenance of backup personnel systems, as well as training and incentive schemes.
Olvi Group employs an information security policy pertaining to all of the companies. It defines the principles for implementing information security and provides guidelines for its development.
Risks related to information technology and systems are manifested as operational disruptions and deficiencies, for example. The availability and correctness of data is ensured through the choice of operating methods and various technical solutions. The Group's operations in Finland, the Baltic states and Belarus utilise a common enterprise resource planning system. A risk analysis pertaining to information security and the operation of information systems is carried out annually.
The Group is exposed to financing risks in its normal course of business: market risk (including foreign exchange risk and interest rate risk), credit risk, liquidity risk and capital risk.
The objective of financing risk management is to minimise the adverse effects of changes in the financial markets on the Group's financial performance, shareholders' equity and liquidity.
The general principles of the Group's risk management are approved by the Board of Directors of the parent company, and the parent company's management together with the management of subsidiaries is responsible for their practical implementation.
Responsibility for Olvi Group's financing tasks is centralised in the parent company Olvi. The objectives of centralisation include optimisation of cash flows and financing costs, as well as efficient risk management.
Financing risks are described in more detail in Note 25 to the consolidated financial statements, Management of financing risks. Financing risks are also described in more detail in the Investors section of the corporate Web site.
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, negative development of 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, internal financing and the conversion of the subsidiary's 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 continuing negative 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.
Olvi estimates that the Group's sales volume and net sales for 2016 will increase slightly on the previous year.
Operating profit for 2016 is estimated to be on a par with the previous year or increase slightly.
BOARD OF DIRECTORS' PROPOSAL FOR THE DISTRIBUTION OF PROFIT
The parent company Olvi plc had 47.7 (49.5) million euro of distributable funds on 31 December 2015, of which profit for the period accounted for 11.7 (12.5) 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 0.70 (0.65) euro shall be paid for 2015 on each Series K and Series A share, totalling 14.5 (13.5) million euro. The dividend represents 64.8 (41.4) percent of Olvi Group's earnings per share. The dividend will be paid to shareholders registered in Olvi plc's register of shareholders held by Euroclear Finland Ltd on the record date of the dividend payment, 18 April 2016. It is proposed that the dividend be paid on 28 April 2016. No dividend shall be paid on treasury shares.
2) 33.2 million euro shall be retained in the parent company's non-restricted equity.
The acquisition of Olvi plc's own shares continued according to plan in January 2016. Between 1 January and 7 January 2016, a total of 5,500 Series A shares were acquired. After the completion of the repurchase scheme, Olvi plc holds a total of 11,124 of its own Series A shares. The total purchase price of treasury shares was 228,162 euro.
Olvi plc's Board of Directors has decided on a new share-based incentive plan for the Group's key employees. The aim of the new plan is to combine the objectives of the shareholders and the key employees in order to increase the value of the company, to commit the key employees to the company, and to offer them a competitive reward plan based on earning the company's shares.
The performance period of the incentive scheme is 2016–2017. The prerequisite for receiving reward is that a key employee purchases the company's Series A shares up to the number determined by the Board of Directors. Furthermore, entitlement to a reward is tied to the continuance of employment or service upon reward payment. Rewards will be paid partly in the company's Series A shares and partly in cash in 2018. The cash proportion is intended to cover taxes and tax-related costs arising from the rewards to the key employees. The plan is directed to approximately 50 people.
The rewards to be paid on the basis of the plan are in total an approximate maximum of 60,000 Series A shares in Olvi plc and a cash payment needed for taxes and tax-related costs arising from the shares.
Olvi Group's financial statements, Board of Directors' report and Corporate Governance Statement 2015 will be published on 24 March 2016. The parent company Olvi plc's remuneration report will also be published at the same time.
The notice to convene Olvi plc's Annual General Meeting, which will be held on 14 April 2016 in Iisalmi, will be published on 24 March 2016. 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 2016:
OLVI PLC Board of Directors
| Note EUR 1,000 % EUR 1,000 % NET SALES 1 310,494 100.0 320,785 100.0 Increase (+)/decrease(-) in inventories of finished and unfinished products 253 0.1 -2,813 -0.9 Manufacture for own use 63 0.0 65 0.0 Other operating income 3 1,743 0.6 1,626 0.5 Materials and services 145,304 46.8 148,219 46.2 Personnel expenses 6 41,320 13.3 42,506 13.2 Depreciation and impairment 5 16,348 5.3 14,907 4.6 Other operating expenses 4 71,423 23.0 73,031 22.8 OPERATING PROFIT 38,157 12.3 41,000 12.8 Financial income 8 281 0.1 3,990 1.2 Financial expenses 9 -11,641 -3.8 -3,985 -1.2 Share of profit in associates 32 21 0.0 48 0.0 PROFIT BEFORE TAXES 26,818 8.6 41,053 12.8 Income taxes 10 -4,598 -1.4 -7,974 -2.5 NET PROFIT FOR THE PERIOD 22,220 7.2 33,079 10.3 Other comprehensive income items: Translation differences related to foreign subsidiaries -14,620 -4.8 -2,874 -0.9 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 7,600 2.4 30,205 9.4 Distribution of profit: - parent company shareholders 22,334 7.2 32,522 10.1 - non-controlling interests -114 0.0 557 0.2 Distribution of comprehensive income: - parent company shareholders 8,358 2.6 29,879 9.3 - non-controlling interests -758 -0.2 326 0.1 Earnings per share calculated from the profit belonging to parent company shareholders: Undiluted earnings per share |
1 JAN TO 31 DEC 2015 | 1 JAN TO 31 DEC 2014 | |||
|---|---|---|---|---|---|
| (EUR) 1.08 1.57 |
|||||
| Diluted earnings per share (EUR) 1.08 1.57 |
| Note EUR 1,000 % EUR 1,000 % ASSETS Non-current assets Tangible assets 12 185,240 192,149 Goodwill 13, 14 16,017 18,217 Other intangible assets 13 4,183 4,562 Shares in associates 1,146 1,125 Financial assets available for sale 15 543 549 Loan receivables and other non-current receivables 16 310 333 Deferred tax receivables 19 147 163 Total non-current assets 207,586 66.1 217,098 65.3 Current assets Inventories 17 42,236 43,522 Accounts receivable and other receivables 18 51,232 66,309 Income tax receivable 236 1,023 Other non-current assets held for sale 2 421 421 Liquid assets 20 12,786 4,382 Total current assets 106,911 33.9 115,657 34.7 TOTAL ASSETS 314,497 100.0 332,755 100.0 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity held by parent company shareholders Share capital 21 20,759 20,759 Other reserves 21 1,092 1,092 Treasury shares 21 -108 -8 Translation differences -36,940 -22,964 Retained earnings 200,415 191,408 Total shareholders' equity held by parent company shareholders 185,218 58.9 190,287 57.2 Share belonging to non-controlling interests 1,447 0.5 2,252 0.7 Total shareholders' equity 186,665 59.4 192,539 57.9 Non-current liabilities Financial liabilities 23 24,179 30,040 Other liabilities 4 2 Deferred tax liabilities 19 6,777 5,598 Current liabilities Financial liabilities 23 22,683 31,652 Accounts payable and other liabilities 24 74,153 72,899 Income tax liability 36 25 Total liabilities 127,832 40.6 140,216 42.1 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 314,497 100.0 332,755 100.0 |
31 DEC 2015 | 31 DEC 2014 | ||
|---|---|---|---|---|
| Note | 1-12/2015 EUR 1,000 |
1-12/2014 EUR 1,000 |
|
|---|---|---|---|
| Cash flow from operations | |||
| Net profit for the period | 22,220 | 33,079 | |
| Adjustments: | 27 | ||
| Depreciation and impairment | 5 | 16,348 | 14,907 |
| Other adjustments | 12,336 | 10,792 | |
| Change in net working capital: | |||
| Increase (-) / decrease (+) in current interest-free accounts | |||
| receivable and other receivables | 11,832 | -7,020 | |
| Increase (-) / decrease (+) in inventories | -361 | -1,952 | |
| Increase (+) / decrease (-) in current interest-free liabilities | 2,698 | 6,614 | |
| Interest paid | -1,113 | -3,393 | |
| Interest received | 228 | 385 | |
| Taxes paid | -2,520 | -7,063 | |
| Cash flow from operations (A) | 61,668 | 46,349 | |
| Cash flow from investments | |||
| Investments in tangible and intangible assets | -25,100 | -43,855 | |
| Capital gains on disposal of tangible and intangible assets | 249 | 200 | |
| Expenditure on other investments | -16 | -298 | |
| Cash flow from investments (B) | -24,867 | -43,953 | |
| Cash flow from financing | |||
| Withdrawals of loans | 20,360 | 32,657 | |
| Repayments of loans | -35,250 | -24,542 | |
| Acquisition of treasury shares | -64 | 0 | |
| Dividends paid | -13,514 | -13,531 | |
| Increase (-)/decrease (+) in current interest-bearing business | |||
| receivables | -8 | -23 | |
| Increase (-)/decrease (+) in non-current loan receivables | 26 | 16 | |
| Cash flow from financing (C) | -28,450 | -5,423 | |
| Increase (+)/decrease (-) in liquid assets (A+B+C) | 8,351 | -3,027 | |
| Liquid assets 1 January | 4,382 | 7,507 | |
| Effect of exchange rate changes | 53 | -98 | |
| Liquid assets 31 December | 20 | 12,786 | 4,382 |
| EUR 1,000 | SH A R EH OLD A |
ER S' EQUIT B |
Y B C |
ELON GIN G T O P D |
A R EN T C OM E |
P A N Y SH A F |
R EH OLD ER S G |
|---|---|---|---|---|---|---|---|
| Shareholders' equity 1 Jan 2014 Adjustments for hyperinflation |
20,759 | 1,092 | - 8 |
-20,321 | 167,420 4,263 |
2,597 245 |
171,539 4,508 |
| Adjusted shareholders' equity 1 Jan | |||||||
| 2014 | 20,759 | 1,092 | - 8 |
-20,321 | 171,683 | 2,842 | 176,047 |
| Comprehensive income Net profit for the period |
32,522 | 557 | 33,079 | ||||
| Other comprehensive income items Translation differences |
-2,643 | -231 | -2,874 | ||||
| Total comprehensive income for the period |
-2,643 | 32,522 | 326 | 30,205 | |||
| Transactions with shareholders | |||||||
| Payment of dividends | -13,492 | -80 | -13,572 | ||||
| Share-based incentives | 27 | 27 | |||||
| Total transactions with shareholders | -13,465 | -80 | -13,545 | ||||
| Changes in holdings in subsidiaries | |||||||
| Acquisition of shares from non controlling interests |
-168 | -168 | |||||
| Change in share belonging to non controlling interests |
836 | -836 | 0 | ||||
| Total changes in holdings in | |||||||
| subsidiaries Shareholders' equity 31 Dec 2014 |
20,759 | 1,092 | - 8 |
-22,964 | 668 191,408 |
-836 2,252 |
-168 192,539 |
| EUR 1,000 | SH A R EH OLD A |
ER S' EQUIT B |
Y B C |
ELON GIN G T O P D |
A R EN T C OM E |
P A N Y SH A F |
R EH OLD ER G |
|---|---|---|---|---|---|---|---|
| Shareholders' equity 1 Jan 2015 Comprehensive income |
20,759 | 1,092 | - 8 |
-22,964 | 191,408 | 2,252 | 192,539 |
| Net profit for the period Other comprehensive income items |
22,334 | -114 | 22,220 | ||||
| Translation differences Total comprehensive income for the |
-13,976 | -644 | -14,620 | ||||
| period | -13,976 | 22,334 | -758 | 7,600 | |||
| Transactions with shareholders | |||||||
| Payment of dividends | -13,492 | -46 | -13,538 | ||||
| Dividends not withdrawn | 109 | 109 | |||||
| Acquisition of treasury shares | -100 | -100 | |||||
| Share-based incentives | 56 | 56 | |||||
| Total transactions with shareholders | -100 | -13,327 | -46 | -13,473 | |||
| Changes in holdings in subsidiaries Acquisition of shares from non |
|||||||
| controlling interests Change in share belonging to non |
0 | 0 | |||||
| controlling interests Total changes in holdings in |
0 | -1 | -1 | ||||
| subsidiaries | 0 | - 1 |
- 1 |
||||
| Shareholders' equity 31 Dec 2015 | 20,759 | 1,092 -108 | -36,940 | 200,415 | 1,447 | 186,665 |
B = Other reserves
C = Treasury shares reserve D = Translation differences
E = Retained earnings
F = Share belonging to non-controlling interests
G = Total
Other reserves include the share premium account, legal reserve and other reserves.
Olvi plc ("the company") and its subsidiaries (jointly "the Group") manufacture beers, ciders, long drinks, mineral waters, juices, soft drinks, energy drinks, sports beverages, kvass and other beverages. The companies belonging to Olvi Group are located in Finland, Estonia, Latvia, Lithuania and Belarus.
The Group's parent company is Olvi plc (Business ID 0170318-9), and its Series A shares are quoted on the Nasdaq OMX Helsinki Ltd Main List. The parent company is headquartered in Iisalmi and its registered address is P.O. Box 16, 74101 Iisalmi.
A copy of the consolidated financial statements is available on the Internet at www.olvi.fi or from the headquarters of the Group's parent company at Olvitie I-IV, 74100 Iisalmi.
The accounting period of all Group companies corresponds to the calendar year and ended on 31 December 2015.
Olvi plc's Board of Directors has approved the disclosure of these financial statements at its meeting on 24 February 2016. According to the Finnish Companies Act, shareholders have the option to approve or reject the financial statements at a General Meeting of Shareholders to be held after disclosure. The General Meeting of Shareholders may also decide on amending the financial statements.
The consolidated financial statements have been prepared in compliance with the approved International Financial Reporting Standards (IFRS), observing the IAS and IFRS standards as well as SIC and IFRIC interpretations valid on 31 December 2015. In the Finnish Accounting Act and regulations enacted by virtue of the Act, International Financial Reporting Standards refer to the standards approved for use in the European Union in accordance with the procedure specified in the EU regulation (EC) No 1606/2002. The notes to the financial statements are also in compliance with Finnish legislation concerning accounting and corporate law that supplements the IFRS regulations.
The consolidated financial statements have been prepared on the basis of original cost with the exception of financial assets available for sale, financial assets and liabilities recognised at fair value through profit or loss, derivative contracts, as well as share-based transactions settled in cash, which have been recognised at fair value. The financial statement information is presented in thousands of euros (EUR 1,000). For the sake of presentation, individual figures and totals have been rounded to full thousands, which may cause rounding differences in additions.
Preparation of financial statements in accordance with IFRS standards requires the Group's management to make certain estimates and considerations. Information on considerations made by management with regard to application of the Group's accounting policies that have the most significant effect on the figures presented in the financial statements is presented in the Section "Accounting policies requiring consideration by management and crucial factors of uncertainty associated with estimates".
Subsidiaries are entities in which the Group exercises control. The consolidated financial statements include the parent company Olvi plc as well as all Finnish and non-Finnish subsidiaries in which the Group directly or indirectly controls more than 50 percent of the voting rights associated with shares or otherwise has the right to define the principles of the entity's finances and business operations in order to gain benefit from its operations.
Intra-Group shareholdings have been eliminated using the purchase method. The consideration given and the acquired entity's identifiable assets and assumed liabilities have been measured at fair value at the time of acquisition.
Acquired subsidiaries are included in the consolidated financial statements as of the date the Group has acquired a position of control, and divested subsidiaries are included until the date the Group's control is discontinued. All intra-Group business transactions, receivables, liabilities, unrealised gains and internal profit distribution are eliminated during the preparation of the consolidated financial statements. Unrealised losses are not eliminated if they are caused by impairment.
The distribution of profit or loss for the financial period between the parent company's shareholders and non-controlling interests is presented in the separate income statement, and the distribution of comprehensive income between the parent company's shareholders and non-controlling interests is presented in connection with the statement of comprehensive income. Comprehensive income is allocated between parent company shareholders and non-controlling interests even if this would lead to a negative share allocated to non-controlling interests. The share of equity belonging to non-controlling interests is presented as a separate balance sheet item under shareholders' equity. Changes in the parent company's holding in a subsidiary that do not lead to loss of control are treated as equity transactions.
Associates in which the Group holds 20 to 50 percent of voting rights or in which the Group exercises significant power but has no position of control are consolidated using the equity method. A share of profit in associates corresponding to the Group's share of holding has been calculated in accordance with the Group's holding and presented as a separate item in the income statement after financial income and expenses. If the Group's share of an associate's losses exceeds the book value of the investment, the investment is recognised in the balance sheet at zero value, and losses exceeding the book value are not taken into account unless the Group is otherwise committed to the fulfilment of the associate's obligations.
Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible of allocating resources to the operating segments and assessing their performance, is identified to be the Group's Managing Director making strategic decisions together with the parent company's Board of Directors.
Olvi Group's operating segments consist of the Group's geographical operating areas, which are Finland, Estonia, Latvia, Lithuania and Belarus.
The Group's segment information is described in more detail in Note 1 to the consolidated financial statements, Segment information.
The figures indicating the earnings and financial position of Group entities are determined in the currency of each unit's primary operating environment ("functional currency"). The consolidated financial statements are presented in euro, which is the operating and presentation currency of the Group's parent company.
Transactions denominated in foreign currency have been converted into the functional currency at the exchange rate valid on the transaction date. Monetary items in foreign currency have been converted into the functional currency at the exchange rates valid on the closing date of the reporting period.
Gains and losses originating from business transactions in foreign currency and the conversion of monetary items are recognised through profit and loss. Foreign exchange gains and losses from operations are included in the corresponding items above operating profit. Foreign exchange gains and losses on loans denominated in foreign currency are included in financial income and expenses, with the exception of exchange rate differences on foreign currency items that constitute a part of the net investment made in a foreign unit. These exchange rate differences are recognised in other comprehensive income items, and accumulated exchange rate differences are included in the translation difference presented in shareholders' equity.
The income statements of non-Finnish consolidated companies that use a functional currency other than the Group's presentation currency have been converted into euro at the average exchange rates for the accounting period, and balance sheet items have been converted at the exchange rates on the balance sheet date. The different exchange rates applicable to the conversion of profit or loss on the income statement and balance sheet result in a translation difference recognised in shareholders' equity on the balance sheet, and any change in this difference is recognised in other comprehensive income items. Translation differences arising from the elimination of the acquisition cost of foreign Group companies, as well as translation differences arising from equity items accumulated after the acquisition, are recognised in other comprehensive income items. When a subsidiary is divested in full or in part, accumulated translation differences are recognised in the income statement as part of the sales gain or loss.
Goodwill arising from the acquisition of foreign entities and the fair value adjustments made to the book values of the assets and liabilities of such foreign entities upon acquisition are treated as assets and liabilities belonging to the foreign entities. They are converted into euro at the exchange rates valid on the closing date of the reporting period.
As of 1 January 2015, Olvi Group has discontinued the application of the IAS 29 Financial Reporting in Hyperinflationary Economies standard in its Belarusian unit because the Belarusian functional currency is no longer considered hyperinflationary as referred to in the standard.
However, the Belarusian unit's data for the comparison year is presented as previously reported, adhering to the regulations for inflation accounting described below.
Items denominated in BYR currency have been adjusted using the Belarusian general consumer price index. Adjustments have been made monthly starting from December 2008.
The adjustment factors applied from December 2008 to December 2014 were as follows:
| 12/2008 | 4.1618 |
|---|---|
| 12/2009 | 3.7886 |
| 12/2010 | 3.4434 |
| 12/2011 | 1.6501 |
| 12/2012 | 1.3560 |
| 12/2013 | 1.1629 |
| 12/2014 | 1.0000 |
The values do not represent market values, repurchase values or other fair values used in actual transactions.
In the conversion of the 2014 financial statements, monetary receivables and liabilities have not been reassessed using a conversion factor but they have been converted into euro using the exchange rate between BYR and euro valid on the closing date of the reporting period.
The same procedure has also been applied to other non-monetary balance sheet items measured at fair value. On the other hand, other non-monetary balance sheet items as well as income statement items have been converted using the corresponding conversion factor values.
Monthly averages of the conversion factor have been applied to income statement items. The impact of the inflation factor on the company's monetary net position arising from the procedure has been included in financial income and/or expenses as a profit or loss. A change in tax accruals corresponding to the financial statement adjustments has been recognised in deferred tax liabilities.
The income and expense items within OAO Lidskoe Pivo's income statement, as well as the company's balance sheet, have been converted into euro at the mean exchange rate quoted by the Belarusian Central Bank on the balance sheet date.
Property, plant and equipment are recognised in the balance sheet at original cost deducted by accumulated depreciation and impairment losses.
Asset items are depreciated by the straightline method over their estimated useful life. Depreciation is not booked on land areas. Estimated useful lives are the following:
| Buildings | 20 to 40 years |
|---|---|
| Plant machinery and | |
| equipment | 15 to 20 years |
| Other fixed assets | 5 years |
The residual value and useful life of asset items are reviewed upon each closing of the accounts and adjusted if necessary to reflect any changes in the expected economic benefit.
Depreciation on a property, plant or equipment item will be discontinued when the item is classified as available for sale in accordance with the standard IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
Sales gains and losses arising from the decommissioning and transfer of property, plant and equipment items are included in other operating income or other operating expenses.
Borrowing costs attributable to the acquisition, construction or manufacture of an item fulfilling the conditions of the revised IAS 23 standard are capitalised as part of the acquisition cost of that item if the item fulfils said conditions and capitalisation is started on or after 1 January 2009. All borrowing costs were previously recognised as immediate expenses. The Group has not had any capitalised borrowing costs up to date.
All borrowing costs other than those falling under IAS 23 are recognised as expenses in the period during which they have arisen.
Public subsidies such as government grants associated with the acquisition of property, plant and equipment items are recognised as deductions in the book values of property, plant and equipment items. The subsidies will be recognised as income through reduced depreciation over the useful life of the item.
Subsidies received as compensation for realised costs are recognised on the income statement at the same time as the associated costs are recognised as expenses. Such subsidies are presented in other operating income.
Goodwill arising from business combinations is recognised at the amount to which the total of consideration given, the share of non-controlling interests in the acquired entity and any previous holding exceed the fair value of net assets acquired.
No regular amortisation is booked on goodwill but it is tested for impairment annually or, if necessary, more frequently. For this purpose, goodwill is allocated to cash generating units that correspond to the management's way of supervising the business and associated goodwill. In the Group, cash generating units correspond to operating segments reported to top management. Goodwill is recognised at original cost deducted by impairment.
Research and development costs are recognised as expenses in the income statement. Development costs arising from the design of new or more advanced products are capitalised as intangible assets in the balance sheet starting from the time the product is technically feasible, it can be utilised commercially, and future economic benefit is expected from the product.
Development costs previously recognised as expenses will not be subsequently capitalised. Amortisation is booked on an item starting from the time it is ready for use. An item that is not yet ready for use is tested annually for impairment.
An intangible asset item is recognised in the balance sheet only if its acquisition cost can be reliably determined and it is probable that the expected economic benefit from the item will be to the Group's advantage. Patents, trademarks and licences with a limited useful life are booked in the balance sheet at original cost and recognised as expenses in the income statement by straight-line amortisation over their known or estimated useful life. No amortisation is booked on intangible assets with an unlimited useful life but they are tested annually for impairment. The Group currently has no intangible assets with an unlimited useful life.
The amortisation periods for intangible assets are the following:
| Trademarks and development costs 10 years | |
|---|---|
| Computer software | 5 years |
| Others | 5 years |
Leases
Leases on tangible assets in which the Group has a significant part of the risks and benefits characteristic of ownership are categorised as finance lease agreements. Asset items acquired on finance lease agreements are recognised in the balance sheet at the fair value of the leased item in the start of the lease period or at a lower present value of minimum rents. Asset items acquired on finance lease agreements are depreciated over the useful life of the item or the lease period, whichever is shorter. Leasing rents payable are divided into financing cost and reduction of debt over the lease period so that the interest rate on the debt remaining in each accounting period is equal. Lease obligations are included in financial liabilities.
Lease agreements in which the risks and benefits characteristic of ownership remain with the lessor are treated as other lease agreements. Leases payable on the basis of other lease agreements are recognised as expenses in the income statement in equal instalments over the lease period.
Items leased out by the Group in which a significant part of the risks and benefits characteristic of ownership have been transferred to the lessee are treated as finance lease agreements and recognised as receivables in the balance sheet. The receivable is recognised at present value.
The financial income on a finance lease agreement is recognised as income during the lease period so that the remaining net investment will produce the same percentage of yield over the lease period. The Group does not currently have any substantial finance lease agreements as a lessor.
Assets leased out on agreements other than finance lease are included in property, plant and equipment items in the balance sheet. They are depreciated over their useful life just as similar property, plant and equipment items in own use. Lease income is recognised in the balance sheet as equal instalments over the lease period.
The balance sheet values of non-current tangible and intangible assets are assessed for impairment on the balance sheet date and every time there is evidence that the value of an asset may have been impaired. The impairment test estimates the amount recoverable from an asset. Recoverable amount equals to the fair value of an asset deducted by costs arising from its transfer, or value in use if this is higher.
An impairment loss is recognised in the income statement when the book value of an asset exceeds its recoverable amount. If an impairment loss is attributable to a cash generating unit, it is first allocated to reduce the goodwill attributable to the cash generating unit and then to reduce other asset items within the unit on a pro rata basis. An impairment loss will be reversed if there is a change in the circumstances and the amount recoverable from an asset has changed since the recognition of the impairment loss. However, any impairment loss reversal may not exceed the amount that would be the book value of the asset if the impairment loss was not recognised. Impairment losses recognised on goodwill are not to be reversed in any circumstances.
The Group carries out annual impairment testing of goodwill as well as unfinished intangible and tangible assets, and any evidence of potential impairment is evaluated as presented above in the accounting policies. Recoverable amounts from cash generating units are determined through calculations based on value in use. The preparation of these calculations requires the use of estimates.
Cash flow estimates are based on forecasts approved by management covering a fouryear period. The crucial variables used for the calculation of value in use are budgeted sales volume, budgeted net sales and operating profit. Estimated sales and production volumes are based on existing fixed assets. More information on goodwill and impairment testing is provided in Note 14, Impairment testing of goodwill.
Inventories are recognised at acquisition cost or a lower probable net realisable value. The acquisition cost of raw materials and supplies is determined by the weighted average method. The acquisition cost of finished and unfinished products is based on actual costs and manufacturing volumes and comprises raw materials, direct expenses due to work performed, other direct expenses, as well as a proportion of the variable and fixed overheads of manufacturing based on actual manufacturing volumes. Net realisable value refers to estimated sales price available through normal business operations, deducted by estimated costs of finishing the product and costs of sale.
The Group's pension schemes are defined contribution plans. Contributions paid to defined contribution pension plans are recognised in the income statement during the period to which the charge applies.
The Group applies the standard IFRS 2 Sharebased Payment to all share-based business transactions.
Arrangements settled in equity instruments are measured at fair value on the date of granting and recognised as expenses in the income statement in equal instalments over the validity period of the right. Arrangements settled in cash are measured at fair value at each closing of the accounts, and changes in the fair value of the liability are recognised in the income statement. The earnings effect of the arrangement is presented in the income statement under the costs of employee benefits.
The cost determined at the time of granting the share-based bonuses is based on the Group management's estimate of the number of shares that are expected to become vested at the end of the vesting period. The Group updates the expectation of the final number of shares on each balance sheet date. The changes in the estimates are recognised in the income statement.
A provision is recognised in the balance sheet when the Group has a legal or factual obligation based on a previous event, it is probable that the fulfilment of the obligation requires payment or causes a financial loss, and the amount of the obligation can be reliably estimated. If there is a possibility to receive compensation for part of the obligation from a third party, the compensation is recognised as a separate asset item but this is only done once the possibility of receiving compensation is practically certain. Provisions are measured at the present value of the costs required to cover the obligation.
A provision is recognised for onerous contracts if the costs necessary for fulfilling the obligations exceed the benefits available from the contract.
A provision for obligations associated with decommissioning and restoration is recognised when the Group has an obligation based on environmental legislation and the Group's environmental responsibility policy that is associated with the decommissioning of a production facility, remedy of environmental damage or transfer of equipment to another location.
The tax expenses in the income statement comprise tax based on the taxable income for the period and change in deferred tax. The tax based on the taxable income for the period is calculated on the basis of taxable income in accordance with the tax rate valid in each country. The tax is adjusted by any taxes associated with previous periods.
Deferred taxes are calculated on all temporary differences between book value and tax base. No deferred tax is recognised on impairment losses on goodwill that are not tax deductible, and no deferred tax is recognised on undistributed accrued profits of subsidiaries to the extent that the difference will probably not be eliminated during the foreseeable future. The most substantial temporary differences arise from depreciation on property, plant and equipment, arrangements settled in equity instruments, as well as the fair valuation of derivative contracts.
Deferred taxes are calculated at tax rates enacted or practically approved by the balance sheet date, which are expected to be applicable when the deferred tax receivable is realised or the deferred tax liability is paid.
Deferred tax receivables are recognised up to the probable amount of taxable income in the future against which the temporary difference can be utilised. The amount of deferred tax receivables and the probability of utilisation are assessed at every closing of the accounts.
Deferred tax receivables and liabilities are presented in the balance sheet as separate items under non-current assets or liabilities.
Net sales consist of consideration received for the sales of beverages and other brewery-related commodities during the course of the Group's ordinary business, measured at fair value.
Income is presented less value-added tax, indirect taxes, refunds and discounts, with intra-Group sales eliminated.
Income is recognised when it can be reliably determined and when it is probable that future economic benefit will be gained.
The Group manufactures different kinds of alcoholic and non-alcoholic beverages and sells them, along with other products related to the beverage industry, to customers who have a retail or wholesale licence to sell alcohol for consumption on or off their premises. Product sales are recognised when the Group has delivered the products to the customer and when substantial risks and benefits related to their ownership have been transferred to the customer, and there are no outstanding obligations that could affect the customer's acceptance of the products. Delivery is considered to be realised only once the products have been delivered to the location agreed with the customer, and the risk of non-marketability and damage has been transferred to the customer.
The sales of beverages often carry annual discounts, and customers are entitled to return any defective products. Sales are recognised at the price specified in the sales contract less annual discounts and returns of defective products estimated at the time of sale.
Discounts are estimated and recognised on the basis of actual purchases and expected annual purchases in accordance with the terms and conditions of the sales contracts.
The Group rents out beverage-serving equipment to its HoReCa customers and coolers to its retailers. Rental income is recognised in equal instalments over the rental period.
Interest income is recognised on the basis of elapsed time using the effective interest method. If a loan receivable or other receivable becomes impaired, its book value is reduced to correspond to the recoverable amount. Interest income from impaired loan receivables is recognised in accordance with original effective interest.
Dividend income is recognised when the right to dividend becomes vested.
Non-current assets held for sale and discontinued operations
Non-current assets held for sale and assets associated with discontinued operations are classified as assets held for sale and measured at book value or a lower fair value deducted by sales costs if the amount corresponding to the book value is going to be accrued mostly from the sale of the asset instead of continuous use. The prerequisites for classification as an item held for sale are considered to be fulfilled when a sale is highly probable and the asset can be immediately sold in its current condition on usual and conventional terms, management is committed to the sale, and it is expected to be carried out within one year of classification. Depreciation of these assets will be discontinued at the time of classification.
The Group's financial assets are classified into the following groups: loans and other receivables, financial assets available for sale and financial assets at fair value through profit or loss (derivatives). The classification is based on the purpose of acquiring the financial assets and carried out upon original acquisition.
All purchases and sales of financial assets are recognised based on the transaction date. Transaction costs are included in the original book value of financial assets.
Financial assets are derecognised once the rights to the investment's cash flows have ceased or have been transferred to another party, and the Group has transferred any substantial risks and benefits of ownership.
The group of loans and receivables includes the Group's accounts receivable and other receivables. They are measured at original amortised cost using the effective interest method. On the balance sheet, they are included in current or non-current assets according to their nature. Accounts receivable are originally recognised at fair value and subsequently measured at original amortised cost using the effective interest method, taking any impairment into account. Factors suggesting impairment of an account receivable include the debtor's substantial financial difficulties, a threat of bankruptcy or a payment delay exceeding 60 days.
The Group's other financial assets, with the exception of derivative contracts, are classified as financial assets available for sale. Financial assets available for sale may comprise equities and interest-bearing investments. They are recognised at fair value or, if the fair value cannot be determined reliably, at purchase price. Changes in the fair value of financial assets available for sale are booked in the fair value reserve within shareholders' equity, taking the tax effect into account. Changes in fair value are transferred from shareholders' equity to the income statement when the investment is sold or its value has reduced so that an impairment loss must be recognised.
Financial assets available for sale are included in non-current assets except if the intention is to hold them for less than 12 months from the balance sheet date, in which case they are included in current assets.
Olvi Group uses derivative contracts that are treated as assets held for trading because the Group does not apply hedge accounting in accordance with the IFRS regulations. Derivatives held for trading are interest rate and currency swaps recognised at fair value. The fair value of interest rate swaps is recognised in other current assets or liabilities. Both realised and unrealised gains and losses arising from changes in fair value are recognised in financial items within the income statement for the accounting period during which they arise.
Liquid assets comprise cash, bank deposits withdrawable on demand, as well as other short-term very liquid investments. Items classified as liquid assets have a maturity of no more than three months calculated from the date of acquisition. Account overdraft facilities in use are presented under other current liabilities.
On each balance sheet date, the Group estimates whether there is objective evidence that the value of a financial asset item or financial asset group may have been impaired. If there is evidence of potential impairment, the amount of loss is determined as the difference between the book value of the asset and its fair value or the present value of estimated future cash flows discounted at the original effective interest rate. Impairment losses are recognised in financial items through profit or loss.
Financial liabilities are initially recognised at fair value increased by transaction costs arising from the acquisition of debt. Financial liabilities will subsequently be measured at original amortised cost using the effective interest method.
Financial liabilities are divided into non-current and current liabilities on the basis of the period of realisation, and may constitute interest-bearing or interest-free liabilities.
Financial liabilities are derecognised once the liability or a part thereof has ceased to exist – in other words, once the obligation specified in the contract has been fulfilled or annulled or it has ceased to be valid.
Outstanding Series K and Series A shares are presented as share capital. Any transaction costs immediately arising from the issuance of new shares or options, after being adjusted for tax effects, are presented in shareholders' equity as a deduction of payments received.
If the Group acquires the company's own shares, the consideration paid and the immediate costs of acquisition are deducted from shareholders' equity until the shares are annulled or re-released to circulation.
If the shares are re-released, the consideration received less immediate transaction costs is included in shareholders' equity.
The dividend proposed by the Board of Directors to the General Meeting of Shareholders has not been recognised in these financial statements. Dividends will only be recognised on the basis of the General Meeting's decision.
The standard IAS 1 Presentation of Financial Statements does not define the concept of operating profit. The Group has defined it as follows: operating profit is the net amount created by adding other operating income to net sales, subtracting purchase costs adjusted by change in inventories of finished and unfinished products and costs of manufacture for own use, and subtracting costs of employee benefits, depreciation and amortisation, any impairment losses and other operating expenses. All income statement items other than the above are presented below operating profit. Exchange rate differences are included in operating profit if they arise from items associated with business operations, otherwise they are recognised in financial items.
Earnings per share is calculated by dividing the profit for the period belonging to the parent company's shareholders by the average weighted number of shares outstanding during the accounting period. When calculating the average, the number of treasury shares in the company's possession is deducted from the number of shares.
The average weighted number of shares used for the calculation of diluted earnings per share includes the dilution effect of sharebased payments outstanding during the accounting period.
The calculation of the dilution effect includes consideration for the number of treasury shares acquired using funds received from the exchange of options. Olvi Group has no warrants or options on 31 December 2015.
Accounting policies requiring consideration by management and crucial factors of uncertainty associated with estimates
Estimates and assumptions regarding the future have to be made during preparation of the financial statements. These are based on previous experience and expectations of future events, but the outcome may differ from the estimates and assumptions. Furthermore, the application of accounting policies requires choice and consideration.
Olvi plc – Financial Statements 2015
Management consideration associated with the selection and application of accounting policies
Group management makes considerationbased choices with regard to the selection and application of accounting policies. This applies particularly to cases in which valid IFRS standards provide for alternative methods of recognition, measurement or presentation.
Factors of uncertainty associated with estimates
Estimates made in connection with the preparation of financial statements are based on the management's best understanding on the balance sheet date. The background of the estimates includes previous experience and assumptions concerning the future that are deemed most probable on the balance sheet date with regard to issues such as the expected development of the Group's financial operating environment concerning sales and the level of costs. The Group, regularly and jointly with the management of subsidiaries, assesses the realisation of estimates and assumptions, as well as changes in the underlying factors, by applying several sources of information, both internal and external.
Any changes in the estimates and assumptions are recognised in the accounting period during which the estimates and assumptions are adjusted and in all subsequent accounting periods.
The most important sectors in which management has applied consideration and that require the use of estimates and assumptions are goodwill testing as well as deferred tax receivables and liabilities.
New and upcoming IFRS standards applicable to accounting periods beginning on or after 1 January 2015
The consolidated financial statements have been prepared in accordance with the same accounting policies used in 2014, with the exception of the following new standards, interpretations and revisions to existing standards that the Group has applied since 1 January 2015.
| Subject | Crucial requirements | Effective date *) |
|---|---|---|
| Annual improve ments to IFRS 2010–2012 and 2011–2013 |
The IASB has made the following amendments in December 2013: IFRS 2 – Clarifying the definition of a "vesting condition" and separately de fining "performance condition" and "service condition". IFRS 3 – Clarifying that an obligation to pay contingent consideration is clas sified either as a financial liability or equity on the basis of the definitions in IAS 32 and that all non-equity contin gent consideration (belonging to finan cial items or not) is measured at fair value at each reporting date. IFRS 3 – Clarifying that IFRS 3 is not applied to the formation of joint ar rangements in the financial statements of the joint arrangement itself. IFRS 8 – Amended to require disclo sure of the judgments made by man agement in aggregating operating seg ments, and clarifying that a reconcilia tion of segment assets is only required if segment assets are reported. |
1 July 2014 |
The Group has adopted the following new or revised standards and interpretations in 2015:
| IFRS 13 – Confirming that current re ceivables and liabilities can still be measured at invoiced amounts if the effect of discounting is minor. IFRS 13 – Clarifying that the portfolio exception in IFRS 13 (determination of the fair value of a group of financial as sets and liabilities on net terms) ap plies to all contracts within the scope of IAS 39 or IFRS 9. IAS 16 and IAS 38 – Clarifying the treatment of gross book value and ac cumulated depreciation when assets are measured at revalued amount. IAS 24 – If the entity receives key management personnel services from a third party (management entity), the fees paid for such services must be disclosed in the financial statements but not the compensation that the management entity has paid to its em ployees or directors. IAS 40 – Clarifying that IAS 40 and IFRS 3 are not mutually exclusive when distinguishing between invest ment property and owner-occupied property and determining whether the acquisition of an investment property is a business combination. The amendments have not had any substantial effect on the consolidated financial statements. |
||
|---|---|---|
| IFRIC 21 Levies | The interpretation applies to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 outlines the recognition criteria for lia bilities. One of the criteria is the requirement that the company has an existing liability which is a result of an earlier event (obligating event). The interpretation identifies the obligating event for the recognition of a liability as the ac tivity that triggers the payment of the levy in accordance with the relevant legislation. The amendment has not had any substantial ef fect on the consolidated financial statements. |
17 June 2014 |
*) applicable to accounting periods starting on or after the specified date
In addition to the amendments to standards and interpretations described above, as of the beginning of the accounting period 2015, Olvi Group has redefined the accounting for marketing subsidies granted to customers so that they are deducted from net sales as a sales adjustment item similar to discounts granted. After the change, the presentation corresponds better to the true meaning of marketing subsidies. Previously a part of the marketing subsidies was presented as marketing expenses under other operating expenses.
IFRS standards, interpretations and amendments coming into force later
The following is a list of standards and interpretations that have been published but will enter into force on a date later than 1 January 2015.
| Subject Crucial requirements Effective date IFRS 9 Financial IFRS 9 replaces the multiple classification 1 January 2018 *) Instruments and measurement models in IAS 39 Finan and associated cial Instruments: Recognition and Measure amendments to ment with a single model that has initially several other stand only two classification categories: amortised ards cost and fair value. Classification of debt instruments will be driven by the business model for managing the financial assets and the contractual cash flow characteristics. A debt instrument is measured at amortised cost if: a) the objec tive of the business model is to hold the fi nancial asset for the collection of the con tractual cash flows, and b) the contractual cash flows under the instrument solely rep resent payments of principal and interest. All other debt and equity investments, in cluding structured debt and equity instru ments, must be recognised at fair value. All changes in the fair value of financial as sets are recognised through profit or loss. An exception to this are changes in the fair value of equity investments that are not held for trading: these may be recognised either through profit or loss or in equity re serves (without subsequent relocation to profit or loss). For financial liabilities that are measured un der the fair value option, the share of fair value change arising from the entity's own credit risk is not recognised in profit or loss but in other comprehensive income. The new hedge accounting rules (published in December 2013) align hedge accounting more closely with common risk management practices. Generally speaking, the applica tion of hedge accounting will be easier from now on. The new standard also introduces more extensive disclosure requirements and changes in presentation. In December 2014, the IASB made further changes to the classification and measure ment rules and also introduced a new im pairment model. With these amendments, IFRS 9 is now complete. The changes in clude, among others: A third measurement category (meas ured at fair value through other com prehensive income) applicable to cer tain financial assets that belong to debt instruments. |
|||||
|---|---|---|---|---|---|
| A new expected credit loss model ac cording to which financial assets move through three different stages as the associated credit risk increases. The stage determines how impairment losses are measured and how the effec tive interest rate method is applied. A simplified approach is permitted for fi nancial assets that do not have a signif icant financing component (such as ac counts receivable). On initial recogni tion, a loss is recorded corresponding to the expected credit losses for 12 months (or the entire validity period for accounts receivable) unless the financial assets are considered impaired due to credit risk. All of the new rules must be adopted at the same time. |
||
|---|---|---|
| The Group assesses the potential effects of the standard. |
||
| IFRS 15 Revenue from Contracts with Customers and associated amendments to several other stand ards |
The IASB has published a new standard for revenue recognition. It replaces IAS 18 con cerning the sales of goods and services, as well as IAS 11 concerning construction con tracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to the customer – so the notion of control replaces the existing notion of risks and rewards. A new five-step process must be applied to revenue recogni tion: identify contracts with customers identify the separate performance obli gation determine the transaction price of the contract allocate the transaction price to each of the separate performance obligations, and recognise the revenue as each perfor mance obligation is satisfied. Most significant changes to current practice are: Any bundled goods or services that are distinct must be separately recognised, and any discounts on the contract price must generally be allocated to the sep arate elements. |
1 January 2018 *) |
| Revenue may be recognised earlier than under current standards if the con sideration varies for any reasons (such as for incentives, discounts, perfor mance-based fees, royalties, success of an outcome etc.) – minimum amounts must be recognised if they are not at significant risk of reversal. |
| The point at which revenue is recog nised may change: some revenue which is currently recognised at the end of a contract may be recognised during the contract term and vice versa. Among others, there are new rules on licenses, warranties, non-refundable advance payments and consignment stock. As with any new standard, there are also new requirements for notes to the financial statements. These accounting changes may have effects on the entity's business practices with re gard to systems, processes and controls, compensation and bonus schemes, tax plan ning and investor relations. The standard may be adopted fully retro spectively, or prospectively with additional disclosures. The Group assesses the potential effects of the standard. |
||
|---|---|---|
| Sales or contribu tion of assets be tween an investor and its associates or joint ventures – amendments to IFRS 10 and IAS 28 |
The IASB has made limited amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures. The amendments clarify the accounting treatment for sales or contribution of assets between an investor and its associates or joint ventures. They confirm that the ac counting treatment depends on whether the non-monetary assets sold or contributed to an associate or joint venture constitute a 'business' (as defined in IFRS 3 Business Combinations). Where the non-monetary assets constitute a business, the investor will recognise the full gain or loss on the sale or contribution of assets. If the assets do not meet the defini tion of a business, the gain or loss is recog nised by the investor only to the extent of the share of other investors in the associate or joint venture. The amendments apply prospectively. The amendment does not have any substan tial effect on the consolidated financial statements. |
entry into force postponed |
| Annual improvements to IFRS 2012–2014 |
The most recent annual improvements clar ify the following: IFRS 5 – when an asset (or disposal group) is reclassified from "held for sale" to "held for distribution," or vice versa, this does not constitute a change to a plan of sale or distribu tion, and does not have to be ac counted for as such. IFRS 7 – specific guidance for trans ferred financial assets to help man agement determine whether the terms of a servicing arrangement constitute 'continuing involvement' and, therefore, whether the asset qualifies for derecognition. IFRS 7 – that the additional disclo sures relating to the offsetting of fi nancial assets and financial liabilities only need to be included in interim reports if required by IAS 34. IAS 19 – that when determining the discount rate for post-employment benefit obliga tions, it is the currency that the lia bilities are denominated in that is important and not the country where they arise. IAS 34 – what is meant by the refer ence in the standard to 'information disclosed elsewhere in the interim fi nancial report' and adds a requirement to cross-reference from the interim fi nancial statements to the location of that information. The Group assesses the potential effects of the standard. |
1 January 2016 |
|---|---|---|
| Disclosure Initiative – amendments to IAS 1 |
The amendments to IAS 1 Presentation of Financial Statements relate to the IASB's Disclosure Initiative, which explores how fi nancial statement disclosures can be im proved. The amendments provide clarifica tions on a number of issues, including: Materiality – an entity should not aggregate or disaggregate infor mation in a manner that obscures useful information. Where items are material, sufficient information must be provided to explain the impact on the financial position or performance. |
1 January 2016 |
| Disaggregation and subtotals – line items specified in IAS 1 may need to be disaggregated where this is rele vant to an understanding of the en tity's financial position or perfor mance. There is also new guidance on the use of subtotals. |
|
|---|---|
| Notes – confirmation that the notes do not need to be pre sented in a particular order. Other comprehensive income arising from investments accounted for under the equity method – the share of other com prehensive income arising from eq uity-accounted investments is grouped based on whether the items will or will not subsequently be re classified to profit or loss. Each group should then be presented as a single item in the statement of other comprehensive income. According to the transitional provisions, the disclosures in IAS 8 regarding the adoption of new standards or accounting policies are not required for these amendments. The Group assesses the potential effects of the standard. |
Olvi Group has five reporting segments corresponding to the Group's business units. Operating segments are defined on the basis of the management model and internal reporting utilised by the Group's top management for strategic decisions. Olvi Group's operating segments consist of the Group's geographical operating areas, which are Finland, Estonia, Latvia, Lithuania and Belarus.
The products and services of the reporting segments are produced in a specific economic environment with risks and profitability deviating from the risks and profitability of the economic environment of other segments. The Group has not aggregated operating segments together to create reporting segments.
Net sales in the reported operating segments are mostly generated from the manufacture and wholesale of various beverages. The net sales also include a minor amount of services to licensed restaurants in relation to beverage-serving equipment.
The Group's management assesses the operating segments' performance through operating profit (EBIT). Interest income and expenses are not allocated to segments because responsibility for the Group's financing tasks is centralised in the parent company Olvi plc.
A segment's assets and liabilities refer to business items that the segment uses in its business operations or that can be allocated to segments on reasonable grounds. Unallocated items include tax and financial items, as well as items common to the entire Group. Investments include increases in property, plant and equipment items and intangible assets that are used during more than one accounting period.
Pricing between segments is based on fair market terms.
| Elimin | |||||||
|---|---|---|---|---|---|---|---|
| 1,000 litres | Finland | Estonia | Latvia | Lithuania | Belarus | ations | Group |
| Sales in 2015 | 148,029 | 123,871 | 68,122 | 84,877 | 175,129 | -20,127 | 579,901 |
| Sales in 2014 | 151,828 | 131,550 | 76,096 | 81,054 | 169,919 | -33,969 | 576,478 |
| Operating segments 2015 in accordance with asset locations |
|---|
| ------------------------------------------------------------ |
| Elimin | |||||||
|---|---|---|---|---|---|---|---|
| EUR 1,000 | Finland | Estonia | Latvia | Lithuania | Belarus | ations | Group |
| INCOME External sales |
102,658 | 70,847 | 28,669 | 34,774 | 73,546 | 310,494 | |
| Internal sales | 211 | 4,943 | 2,519 | 1,069 | 4 | -8,746 | 0 |
| Total net sales | 102,869 | 75,790 | 31,188 | 35,843 | 73,550 | -8,746 | 310,494 |
| EARNINGS Operating profit for the segment Financial income Financial expenses |
7,839 | 15,913 | 2,987 | 2,610 | 8,838 | -30 | 38,157 281 -11,641 |
| Share of profit in associates Income taxes |
21 -4,598 |
||||||
| Net profit for the period |
22,220 | ||||||
| OTHER INFORMATION Segment assets Unallocated assets Total consolidated assets |
155,104 | 69,133 | 30,712 | 38,470 | 74,485 | -66,916 | 300,988 13,509 314,497 |
| Segment liabilities Unallocated liabilities Total consolidated |
46,831 | 12,299 | 4,424 | 5,550 | 6,334 | -1,566 | 73,872 53,960 |
| liabilities | 127,832 | ||||||
| Segment investments Unallocated investments Total investments |
3,855 | 3,397 | 1,232 | 3,011 | 14,466 | 0 | 25,961 0 25,961 |
| Depreciation | 5,752 | 2,989 | 1,767 | 1,923 | 4,099 | -182 | 16,348 |
| EUR 1,000 | Finland | Estonia | Latvia | Lithuania | Belarus | Elimin ations |
Group |
|---|---|---|---|---|---|---|---|
| INCOME External sales Internal sales Total net sales |
105,099 230 105,329 |
75,308 5,358 80,666 |
27,162 6,950 34,112 |
34,673 1,457 36,130 |
78,543 11 78,554 |
-14,006 -14,006 |
320,785 0 320,785 |
| EARNINGS Operating profit for the segment Financial income Financial expenses Share of profit in associates Income taxes Net profit for the period |
7,436 | 16,504 | 2,058 | 2,356 | 13,117 | -471 | 41,000 3,990 -3,985 48 -7,974 33,079 |
| OTHER INFORMATION Segment assets Unallocated assets Total consolidated assets |
176,057 | 69,108 | 30,330 | 38,398 | 83,636 | -66,565 | 330,964 1,791 332,755 |
| Segment liabilities Unallocated liabilities Total consolidated liabilities |
44,567 | 11,205 | 4,140 | 4,705 | 9,011 | -1,152 | 72,476 67,740 140,216 |
| Segment investments Unallocated investments Total investments |
15,591 | 2,192 | 2,196 | 6,311 | 15,343 | 0 | 41,633 0 41,633 |
| Depreciation | 4,736 | 2,856 | 1,508 | 1,600 | 4,372 | -165 | 14,907 |
| Elimin | |||||||
|---|---|---|---|---|---|---|---|
| EUR 1,000 | Finland | Estonia | Latvia | Lithuania | Belarus | ations | Group |
| External sales | 98,247 | 69,143 | 28,233 | 33,373 | 62,676 | 18,822 | 310,494 |
| Internal sales | 1,415 | 1,624 | 2,317 | 2,932 | 458 | -8,746 | 0 |
| Total net sales | 99,662 | 70,767 | 30,550 | 36,305 | 63,134 | 10,076 | 310,494 |
| Elimin | |||||||
|---|---|---|---|---|---|---|---|
| EUR 1,000 | Finland | Estonia | Latvia | Lithuania | Belarus | ations | Group |
| External sales | 99,817 | 73,716 | 26,708 | 33,418 | 66,468 | 20,658 | 320,785 |
| Internal sales | 585 | 1,593 | 4,380 | 6,745 | 703 | -14,006 | 0 |
| Total net sales | 100,402 | 75,309 | 31,088 | 40,163 | 67,171 | 6,652 | 320,785 |
| 2. Non-current assets held for sale | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Non-current assets held for sale | 421 | 421 |
| Total | 421 | 421 |
Non-current assets held for sale consist of equipment decommissioned by the parent company Olvi plc and AB Volfas Engelman.
| EUR 1,000 | 2015 | 2014 |
|---|---|---|
| Sales gains on property, plant and equipment | 353 | 125 |
| Rental income | 146 | 121 |
| Others | 1,244 | 1,380 |
| Total | 1,743 | 1,626 |
| Other operating income consists mostly of project grants and energy tax refunds. |
| 4. Other operating expenses | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Sales losses and scrapping of property, plant and equipment | 125 | 192 |
| Rental costs | 3,976 | 4,197 |
| External services | 47,178 | 51,317 |
| Others | 20,144 | 17,325 |
| Total | 71,423 | 73,031 |
Outsourced services include freight costs and other purchased services. Other operating expenses consist mostly of the costs of administration, marketing and sales, energy and repair costs, building maintenance costs, as well as other personnel-related costs.
| 5. Depreciation and impairment | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Depreciation on tangible assets: | ||
| Buildings | 2,982 | 2,711 |
| Machinery and equipment | 9,209 | 8,149 |
| Machinery and equipment, finance lease | 771 | 828 |
| Other tangible assets | 2,321 | 2,278 |
| Other tangible assets, finance lease | 203 | 147 |
| Total depreciation on tangible assets | 15,486 | 14,113 |
| Amortisation of intangible assets: | ||
| Intangible assets | 862 | 794 |
| Total amortisation of intangible assets | 862 | 794 |
| Total | 16,348 | 14,907 |
| EUR 1,000 | 2015 | 2014 |
|---|---|---|
| Wages and salaries | 32,854 | 33,779 |
| Pension costs - defined contribution | 2,581 | 2,687 |
| Benefits exercised and payable in stock | 56 | 27 |
| Benefits payable in cash | 32 | 17 |
| Other personnel expenses | 5,797 | 5,996 |
| Total | 41,320 | 42,506 |
| Group personnel on average during the period | ||
| Finland | 336 | 369 |
| Estonia | 336 | 331 |
| Latvia | 206 | 214 |
| Lithuania | 233 | 214 |
| Belarus | 829 | 830 |
| Total | 1,940 | 1,958 |
Information on employee benefits and loans to management is presented in Note 30, Related party transactions.
The income statement includes 498 thousand euro of R&D costs recognised as expenses in 2015 (412 thousand euro in 2014), which is 0.2 (0.1) percent of net sales.
| 8. Financial income | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Dividend income from investments held as fixed assets | 3 | 4 |
| Interest income from bank deposits | 129 | 263 |
| Adjustment for hyperinflation: effect on the company's monetary net | ||
| position | 0 | 2,845 |
| Other interest and financial income | 149 | 878 |
| Total | 281 | 3,990 |
| 9. Financial expenses | ||
| EUR 1,000 | 2015 | 2014 |
| Interest expenses on finance lease contracts | 91 | 100 |
| Interest expenses on financial liabilities measured at original amortised | ||
| cost | 858 | 1,084 |
| Net gains (-) / losses (+) from interest derivatives | 4 | -171 |
| Other financial expenses | 10,688 | 2,972 |
Total 11,641 3,985
Other financial expenses include unrealised exchange rate losses on an intra-Group loan.
| EUR 1,000 | Note | 2015 | 2014 |
|---|---|---|---|
| Tax based on taxable income for the period | 3,248 | 6,316 | |
| Taxes from previous accounting periods | -81 | -95 | |
| Deferred taxes | 19 | 1,431 | 1,753 |
| Total | 4,598 | 7,974 |
Reconciliation between the tax expenses in the income statement and taxes calculated in accordance with the tax rate in the Group's home country 20.0 % (20.0 %):
| EUR 1,000 | 2015 | 2014 |
|---|---|---|
| Earnings before tax | 26,817 | 41,053 |
| Taxes calculated at the home country's rate | 5,363 | 8,211 |
| Effect of different tax rates for foreign subsidiaries | -1,060 | -251 |
| Tax effect of tax-free items | -104 | -136 |
| Tax effect of non-deductible items | 480 | 245 |
| Taxes from previous accounting period | -81 | -95 |
| Taxes in income statement | 4,598 | 7,974 |
Undiluted earnings per share are calculated by dividing the profit for the accounting period belonging to the parent company's shareholders by the weighted average of shares outstanding during the accounting period. When calculating the weighted average, the number of treasury shares in the company's possession is deducted from the number of shares. Olvi plc held a total of 5,624 of its own Series A shares on 31 December 2015.
Detailed information on treasury shares can be found in Note 21, Notes concerning shareholders' equity.
| 2015 | 2014 | |
|---|---|---|
| Profit belonging to parent company shareholders (EUR 1,000) | 22,334 | 32,522 |
| Weighted average number of shares during the period (1,000) | 20,759 | 20,759 |
| Effect of treasury shares (1,000) | -1 | -1 |
| Weighted average number of shares for the calculation of EPS (1,000) | 20,758 | 20,758 |
| Undiluted/diluted earnings per share (euro per share) | 1.08 | 1.57 |
In the calculation of earnings per share adjusted for dilution, the weighted average number of shares includes the diluting effect of the conversion of all potential options outstanding during the period. When calculating the weighted average number of shares adjusted for dilution, the number of treasury shares in the company's possession is deducted from the number of shares. The calculation of the dilution effect includes consideration for the number of treasury shares acquired using funds received from the exchange of options.
During 2014 and 2015, Olvi Group has not had options or any other schemes having a diluting effect, which means that undiluted earnings per share and earnings per share adjusted for dilution have been equal during these years.
| EUR 1,000 | Land and water properties |
Buildings | Machinery and equipment |
Machinery and equipment, finance lease |
Other tangible assets |
Other tangible assets, finance lease |
Advance payments and unfinished purchases |
Total |
|---|---|---|---|---|---|---|---|---|
| Acquisition cost | ||||||||
| 1 Jan 2015 Additions |
1,862 0 |
101,878 247 |
235,838 2,168 |
7,599 689 |
17,542 686 |
1,193 150 |
21,555 | 42,113 408,025 25,495 |
| Deductions Transfers between |
0 | -113 | -3,300 | 0 | -324 | 0 | -6 | -3,743 |
| items Exchange rate |
0 | 20,682 | 22,335 | -18 | 1,851 | 0 | -44,952 | -103 |
| differences Acquisition cost |
0 | -4,780 | -10,496 | 0 | -3,205 | 0 | -4,178 | -22,659 |
| 31 Dec 2015 | 1,862 | 117,914 | 246,545 | 8,270 | 16,551 | 1,342 | 14,531 407,014 | |
| Accumulated depreciation and impairment |
||||||||
| 1 Jan 2015 | 0 | 46,194 | 154,026 | 4,261 | 10,706 | 690 | 0 215,876 | |
| Depreciation Accumulated depreciation on |
0 | 2,982 | 9,219 | 771 | 2,320 | 203 | 0 | 15,495 |
| deductions Accumulated |
0 | -36 | -3,117 | 0 | -303 | 0 | 0 | -3,457 |
| depreciation on transfers Exchange rate |
0 | 0 | 0 | -48 | 48 | 0 | 0 | 0 |
| differences Accumulated depreciation and impairment |
0 | -762 | -3,419 | 0 | -1,959 | 0 | 0 | -6,140 |
| 31 Dec 2015 | 0 | 48,378 | 156,708 | 4,984 | 10,812 | 893 | 0 221,775 | |
| Book value | ||||||||
| 1 Jan 2015 Book value |
1,862 | 55,684 | 81,811 | 3,338 | 6,837 | 503 | 42,113 192,149 | |
| 31 Dec 2015 | 1,862 | 69,536 | 89,836 | 3,285 | 5,739 | 449 | 14,531 185,240 |
Other tangible assets consist mainly of vehicles, equipment included in equipment service, as well as office furniture.
| EUR 1,000 | Land and water properties |
Buildings | Machinery and equipment |
Machinery and equipment, finance lease |
Other tangible assets |
Other tangible assets, finance lease |
Advance payments and unfinished purchases |
Total |
|---|---|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan 2014 |
1,862 | 98,813 | 223,252 | 7,502 | 15,646 | 980 | 23,376 | 371,431 |
| Adjustment for hyperinflation Additions Transfer to non current assets held |
0 0 |
2,277 1,008 |
4,333 1,987 |
0 485 |
1,342 991 |
0 294 |
656 34,233 |
8,607 38,998 |
| for sale Deductions Transfers between |
0 0 |
0 0 |
-1,008 -2,409 |
0 -147 |
0 -1,834 |
0 -84 |
0 -99 |
-1,008 -4,572 |
| items Exchange rate |
0 | 1,170 | 12,326 | -242 | 2,216 | 3 | -15,473 | 0 |
| differences Acquisition cost |
0 | -1,389 | -2,643 | 0 | -819 | 0 | -580 | -5,431 |
| 31 Dec 2014 | 1,862 | 101,878 | 235,838 | 7,599 | 17,542 | 1,193 | 42,113 | 408,025 |
| Accumulated depreciation and impairment |
||||||||
| 1 Jan 2014 | 0 | 43,383 | 148,200 | 3,778 | 9,658 | 629 | 0 | 205,648 |
| Adjustment for hyperinflation Depreciation Transfer to non current assets held |
0 0 |
257 2,711 |
1,273 8,175 |
0 828 |
654 2,278 |
0 147 |
0 0 |
2,184 14,139 |
| for sale, accumulated depreciation Accumulated |
0 | 0 | -592 | 0 | 0 | 0 | 0 | -592 |
| depreciation on deductions Accumulated depreciation on |
0 | 0 | -2,068 | -111 | -1,722 | -84 | 0 | -3,986 |
| transfers Exchange rate |
0 | 0 | -185 | -235 | 237 | -2 | 0 | -185 |
| differences Accumulated depreciation and impairment |
0 | -157 | -776 | 0 | -399 | 0 | 0 | -1,332 |
| 31 Dec 2014 | 0 | 46,194 | 154,026 | 4,261 | 10,706 | 690 | 0 | 215,876 |
| Book value 1 Jan 2014 Book value |
1,862 | 55,430 | 75,052 | 3,724 | 5,988 | 351 | 23,376 | 165,783 |
| 31 Dec 2014 | 1,862 | 55,684 | 81,811 | 3,338 | 6,837 | 503 | 42,113 | 192,149 |
Other tangible assets consist mainly of vehicles, equipment included in equipment service, as well as office furniture.
| Intangible | |||
|---|---|---|---|
| EUR 1,000 | Goodwill | assets | Total |
| Acquisition cost 1 Jan 2015 | 23,194 | 24,714 | 47,908 |
| Additions | 0 | 466 | 466 |
| Deductions | 0 | -1 | -1 |
| Transfers between items | 0 | 103 | 103 |
| Exchange rate differences | -2,200 | -128 | -2,328 |
| Acquisition cost 31 Dec 2015 | 20,994 | 25,153 | 46,147 |
| Accumulated depreciation and | |||
| impairment 1 Jan 2015 | 4,977 | 20,152 | 25,129 |
| Depreciation | 0 | 862 | 862 |
| Accumulated depreciation on deductions | 0 | -1 | -1 |
| Exchange rate differences | 0 | -42 | -42 |
| Accumulated depreciation and | |||
| impairment 31 Dec 2015 | 4,977 | 20,970 | 25,947 |
| Book value 1 Jan 2015 | 18,217 | 4,562 | 22,779 |
| Book value 31 Dec 2015 | 16,017 | 4,183 | 20,200 |
Intangible assets consist mainly of trademarks, computer software and leases on land areas.
| Intangible | |||
|---|---|---|---|
| EUR 1,000 | Goodwill | assets | Total |
| Acquisition cost 1 Jan 2014 | 22,782 | 22,157 | 44,939 |
| Adjustment for hyperinflation | 1,057 | 57 | 1,114 |
| Additions | 0 | 2,635 | 2,635 |
| Deductions | 0 | -100 | -100 |
| Exchange rate differences | -645 | -35 | -680 |
| Acquisition cost 31 Dec 2014 | 23,194 | 24,714 | 47,908 |
| Accumulated depreciation and | |||
| impairment 1 Jan 2014 | 4,977 | 19,456 | 24,433 |
| Adjustment for hyperinflation | 0 | 5 | 5 |
| Depreciation | 0 | 794 | 794 |
| Accumulated depreciation on deductions | 0 | -100 | -100 |
| Exchange rate differences | 0 | -3 | -3 |
| Accumulated depreciation and | |||
| impairment 31 Dec 2014 | 4,977 | 20,152 | 25,129 |
| Book value 1 Jan 2014 | 17,805 | 2,701 | 20,506 |
| Book value 31 Dec 2014 | 18,217 | 4,562 | 22,779 |
Intangible assets consist mainly of trademarks, computer software and leases on land areas.
Goodwill allocated to the Estonian segment amounts to 8,146 thousand euro, to the Latvian segment 287 thousand euro, to the Lithuanian segment 2,241 thousand euro and to the Belarusian segment 5,343 thousand euro.
The estimated future cash flows used for impairment testing are based on the financial plans of the operating segments approved by Group management. The cash flow estimates are based on financial plans for the next four years. Cash flow estimates due later than four years are extrapolated using estimated growth rates that do not exceed the estimated long-term growth rates of the cash generating units. The growth rates applied to each segment were as follows: Estonia 2.0 % (2.0 %), Latvia 2.0 % (2.0 %), Lithuania 3.0 % (3.0 %) and Belarus 5.0 % (7.0 %). In the assessment of future cash flows, management has also compared previous financial plans with actual development.
The discount rate is weighted average cost of capital (WACC) before taxes: in Estonia 7.93 (11.12), in Latvia 7.86 (11.70), in Lithuania 8.12 (11.87) and in Belarus 17.71 (17.11) percent. The most significant factor contributing to the drop in the discount rate was the declining risk-free interest rate.
In the management's opinion, any reasonably potential change in any of the variables used for assessing each segment's recoverable amount could not lead into a situation in which the segments' recoverable amounts would be lower than their book values.
According to sensitivity analysis applied to impairment testing, there is currently no need for recognition of impairment. The Board of Directors of Olvi plc is actively monitoring the development of the economic situation in the subsidiary countries and any effects this may have.
Other financial assets consist mostly of unquoted equity investments contributing to the Group company's operations, as well as shares in a housing corporation. Financial assets available for sale are recognised at fair value. If fair value cannot be reliably determined, the assets are recognised at original cost.
| EUR 1,000 | Note | 2015 | 2014 |
|---|---|---|---|
| Book value 1 January | 549 | 549 | |
| Deductions | -6 | 0 | |
| Book value 31 December | 26 | 543 | 549 |
| EUR 1,000 | Note | 2015 | 2014 |
|---|---|---|---|
| Loans receivable | 26 | 169 | 195 |
| Other non-current receivables | 26 | 141 | 138 |
| Total | 310 | 333 |
Other non-current receivables consist mainly of security deposits.
| 17. Inventories | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Materials and supplies | 28,682 | 29,741 |
| Unfinished products | 1,968 | 2,034 |
| Finished products/goods | 8,925 | 9,169 |
| Other inventories | 2,661 | 2,578 |
| Total | 42,236 | 43,522 |
Non-marketability deductions on inventories have been booked for 2,444 thousand euro in 2015 (3,339 thousand euro in 2014).
| EUR 1,000 | Note | 2015 | 2014 |
|---|---|---|---|
| Accounts receivable | 26 | 43,246 | 58,867 |
| Prepayments and accrued income | 26 | 4,160 | 4,341 |
| Other receivables | 26 | 3,826 | 3,101 |
| Total | 51,232 | 66,309 |
Essential items included in prepayments and accrued income are associated with the accruals of rents and the costs of marketing and sales, insurance and administration, as well as discounts and marketing subsidies. During the accounting period, the Group has recognised 151 thousand euro of credit losses on accounts receivable (266 thousand euro in 2014). There are no significant credit risk concentrations associated with receivables.
| Maturity distribution of accounts receivable | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Not due | 33,240 | 50,930 |
| Overdue | ||
| Less than 30 days | 6,147 | 6,160 |
| 31 to 60 days | 2,187 | 330 |
| 61 to 90 days | 68 | 152 |
| 91 to 120 days | 1,075 | 735 |
| More than 120 days | 529 | 560 |
| Total | 43,246 | 58,867 |
| Accounts receivable by currency | 2015 | 2015 | 2014 | 2014 |
|---|---|---|---|---|
| Foreign 1,000 | EUR 1,000 | Foreign 1,000 | EUR 1,000 | |
| EUR | 33,022 | 33,022 | 43,248 | 43,248 |
| LTL | 0 | 0 | 19,785 | 5,730 |
| BYR | 207,074,239 | 10,201 | 142,131,929 | 9,884 |
| RUB | 1,889 | 23 | 374 | 5 |
| Deferred tax receivables | |||||
|---|---|---|---|---|---|
| Recognised through profit and |
Recognised in | Exchange rate |
|||
| EUR 1,000 | 31 DEC 2014 | loss | equity | differences | 31 DEC 2015 |
| Internal margin on inventories | |||||
| and fixed assets | 156 | -10 | 0 | 1 | 147 |
| Other items | 7 | -7 | 0 | 0 | 0 |
| Total | 163 | -17 | 0 | 1 | 147 |
| Recognised through profit and |
Recognised in | Exchange rate |
|||
|---|---|---|---|---|---|
| EUR 1,000 | 31 DEC 2014 | loss | equity | differences | 31 DEC 2015 |
| Fair valuation of derivatives | 109 | 10 | 0 | 0 | 119 |
| Property, plant and equipment A/S Cēsu Alus's tax on depreciation difference and |
4,280 | 880 | 0 | -234 | 4,926 |
| retained losses Exchange rate difference on |
1,209 | 415 | 0 | 0 | 1,624 |
| intra-Group loan Total |
0 5,598 |
108 1,413 |
0 0 |
0 -234 |
108 6,777 |
The Group's unused fiscal losses amounted to 1,161 thousand euro at the end of the accounting period (3,594 thousand euro in 2014). The losses are not subject to any limitation period.
No deferred tax liability has been recognised on the undistributed earnings of AS A. Le Coq, 87,615 thousand euro in 2015, as the parent company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
| Recognised through profit and |
Recognised in | Exchange rate |
|||
|---|---|---|---|---|---|
| EUR 1,000 | 31 DEC 2013 | loss | equity | differences | 31 DEC 2014 |
| Fair valuation of derivatives Internal margin on inventories |
47 | -47 | 0 | 0 | 0 |
| and fixed assets | 33 | 123 | 0 | 0 | 156 |
| Other items | 7 | 0 | 0 | 0 | 7 |
| Total | 87 | 76 | 0 | 0 | 163 |
| Deferred tax liabilities | |||||
|---|---|---|---|---|---|
| Recognised through profit and |
Recognised in | Exchange rate |
|||
| EUR 1,000 | 31 DEC 2013 | loss | equity | differences 31 DEC 2014 | |
| Fair valuation of derivatives Property, plant and equipment |
0 2,844 |
109 1,429 |
0 0 |
0 7 |
109 4,280 |
| A/S Cēsu Alus's tax on depreciation difference and |
|||||
| retained losses | 917 | 292 | 0 | 0 | 1,209 |
| Total | 3,761 | 1,830 | 0 | 7 | 5,598 |
| 20. Liquid assets | |||||
| EUR 1,000 | Note | 2015 | 2014 | ||
| Cash and bank accounts Total |
26 | 12,786 12,786 |
4,382 4,382 |
The liquid assets presented in the cash flow statement comprise cash and bank deposits.
The following specifies changes in the numbers of shares and corresponding changes in shareholders' equity.
| Number of Series K |
Number of Series A |
Share | Other | Treasury | ||
|---|---|---|---|---|---|---|
| EUR 1,000 | shares | shares | capital | reserves | shares | Total |
| 31 December 2014 | 3,732,256 | 17,025,428 | 20,759 | 1,092 | -8 | 21,843 |
| Acquisition of treasury shares | -4,500 | -100 | ||||
| 31 December 2015 | 3,732,256 | 17,020,928 | 20,759 | 1,092 | -108 | 21,743 |
The maximum number of shares is 6.0 million K shares and 24.0 million A shares (6.0 million K shares and 24.0 million A shares in 2014). The minimum number of K shares is 1.5 million. The Group's maximum share capital is 60.0 million euro (60.0 million euro in 2014) and the minimum share capital is 15.0 (15.0) million euro. All issued shares have been paid in full.
Other reserves include the share premium account, legal reserve and other reserves.
The following is a description of reserves in shareholders' equity:
The share premium account comprises any subscription price in excess of the par value of shares upon share issues.
The legal reserve originates from reserve transfers made due to an obligation formerly included in the Articles of Association.
The Translation differences reserve includes translation differences arising from the conversion of the financial statements of foreign subsidiaries.
Olvi plc held a total of 1,124 of its own Series A shares on 1 January 2015.
On 16 April 2015, 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. The authorisation is valid until the next Annual General Meeting of Olvi plc.
At its meeting on 23 December 2015, the Board of Directors of Olvi plc decided to exercise the authorisation to purchase treasury shares given by the Annual General Meeting on 16 April 2015 and acquire a maximum of 10,000 Series A shares. The share repurchases started on 28 December 2015 and will end no later than 25 January 2016. In December 2015, the company repurchased 4,500 of its own Series A shares for an acquisition price of 99,492 euro.
Olvi plc held a total of 5,624 of its own Series A shares on 31 December 2015, and the total acquisition price was 108.0 thousand euro. Series A shares held by Olvi plc as treasury shares represented 0.027 percent of the share capital and 0.006 percent of the aggregate number of votes. The treasury shares represented 0.033 percent of all Series A shares and associated votes.
After the balance sheet date, the Board of Directors has proposed a dividend of 0.70 euro per share for both Series K and Series A shares for 2015, totalling 14.5 million euro. Dividend for 2014 was paid at 0.65 euro per share, totalling 13.5 million euro. The dividends were paid on 30 April 2015.
Olvi plc has a valid share-based incentive plan for key employees in accordance with a decision made on 29 April 2014. The aim of the 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.
The share-based incentive plan is divided into two parts. The earnings-based plan includes one three-year performance period, calendar years 2014–2016. The potential reward will be based on Olvi Group's cumulative operating profit, also known as earnings before interest and taxes (EBIT) for the performance period 2014–2016. In addition to the EBIT-based part, the Group has a commitment plan with one performance period starting on 1 July 2014 and ending on 30 June 2017. The prerequisite for receiving reward on the basis of this performance period is that a key employee has purchased the company's Series A shares up to the number determined by the Board of Directors. Furthermore, entitlement to a reward is tied to the continuance of employment or service upon reward payment.
Rewards from both performance periods will be paid partly in the company's Series A shares and partly in cash in 2017. The cash proportion is intended to cover taxes and tax-related costs arising from the rewards to the key employees. As a rule, no reward will be paid if the key employee's employment or service ends before the reward payment. Members of the Management Group must hold one half of the shares received on the basis of the performance period 2014—2016 for the entire validity of their employment or service.
The plan is directed to approximately 50 people. The rewards to be paid on the basis of the plan are in total an approximate maximum of 40,000 series A shares in Olvi plc and a cash payment needed for taxes and tax-related costs arising from the shares.
From January to December 2015, accounting entries associated with the share-based incentive plans referred to in the above were recognised for a total of 88.7 thousand euro (2014: 44.7 thousand euro). Liabilities on 31 December 2015 include 49.7 thousand euro of liabilities associated with share-based payments.
Olvi Group does not have any other share-based plans or option plans.
| EUR 1,000 | Note | Book values 2015 |
Fair values 2015 |
Book values 2014 |
Fair values 2014 |
|---|---|---|---|---|---|
| Non-current liabilities | |||||
| Loans from financial institutions | 26 | 21,573 | 21,088 | 27,344 | 26,418 |
| Finance lease liabilities | 26 | 2,590 | 2,590 | 2,680 | 2,680 |
| Other liabilities | 26 | 16 | 16 | 16 | 16 |
| Total | 24,179 | 23,694 | 30,040 | 29,114 |
| EUR 1,000 | Note | Book values 2015 |
Fair values 2015 |
Book values 2014 |
Fair values 2014 |
|---|---|---|---|---|---|
| Current liabilities | |||||
| Loans from financial institutions | 26 | 21,879 | 21,879 | 30,854 | 30,854 |
| Finance lease liabilities | 26 | 804 | 804 | 798 | 798 |
| Total | 22,683 | 22,683 | 31,652 | 31,652 |
The Group's financial liabilities on 31 December 2015 consist of loans from financial institutions, as well as finance lease liabilities. Typical finance lease contracts extend over a period of 36 to 48 months and have a fixed instalment throughout the contract period.
27.0 million euro of the loans from financial institutions have a fixed interest rate or are converted to fixed rate through interest rate swaps. The amount of variable-rate loans was 8.6 million euro.
The fair value of non-current loans is determined by discounting estimated future cash flows to the present using the interest rate at which the Group could get a similar loan on the balance sheet date. Market rates on the balance sheet date stood at –0.131% to 0.061%, and a company-specific margin has been added for discounting.
The book value of current financial liabilities and finance lease liabilities corresponds to their fair value.
| Ranges of interest rates on financial liabilities | |||
|---|---|---|---|
| 2015 | 2014 | ||
| Loans from financial institutions Interest rate swaps Finance lease liabilities Other liabilities |
0.57% to 3.55% 0.33% to 2.01% 1.55% to 6.75% 0% |
0.52% to 3.55% 0.67% to 2.63% 1.80% to 6.75% 0% |
|
| Maturities of finance lease liabilities | |||
| EUR 1,000 | Note | 2015 | 2014 |
| Finance lease liabilities - total of minimum rents Due within one year Within more than one but less than five years Within more than five years |
26 | 803 2,009 582 3,394 |
798 1,810 870 3,478 |
| Finance lease liabilities - present value of minimum rents Due within one year Within more than one but less than five years Within more than five years |
26 | 803 2,009 582 3,394 |
798 1,810 870 3,478 |
| Total amount of finance lease liabilities | 26 | 3,394 | 3,478 |
| The Group's other interest-bearing liabilities will fall due as follows: | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| in 2015 | 30,855 | |
| in 2016 | 21,879 | 12,038 |
| in 2017 | 10,964 | 8,466 |
| in 2018 | 7,810 | 5,299 |
| in 2019 | 2,785 | 1,526 |
| Later | 30 | 30 |
| Total | 43,468 | 58,214 |
| 24. Accounts payable and other liabilities | |||
|---|---|---|---|
| EUR 1,000 | Note | 2015 | 2014 |
| Current | |||
| Accounts payable | 26 | 36,272 | 35,702 |
| Accrued expenses | 26 | 8,053 | 8,183 |
| Other liabilities | 26 | 29,828 | 29,014 |
| Total | 74,153 | 72,899 |
Essential items included in accrued expenses are associated with subsequent remuneration and salary obligations. Other liabilities include, among other things, accruals related to indirect taxes.
| Distribution of accounts payable by currency | ||||
|---|---|---|---|---|
| 2015 | 2015 | 2014 | 2014 | |
| Foreign 1,000 | EUR 1,000 | Foreign 1,000 | EUR 1,000 | |
| EUR | 34,457 | 34,457 | 30,234 | 30,234 |
| LTL | 0 | 0 | 7,480 | 2,166 |
| USD | 28 | 25 | 86 | 71 |
| BYR | 36,345,079 | 1,790 | 45,962,289 | 3,196 |
| GBP | 0 | 0 | 1 | 1 |
| RUB | 0 | 0 | 2,493 | 34 |
The Group is exposed to financing risks in its normal course of business: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk.
The objective of financing risk management is to minimise the adverse effects of changes in the financial markets on the Group's financial performance, shareholders' equity and liquidity. The general principles of the Group's risk management are approved by the Board of Directors of the parent company, and the parent company's management together with the management of subsidiaries is responsible for their practical implementation. Responsibility for Olvi Group's financing tasks is centralised in the parent company Olvi plc. The objectives of centralisation include optimisation of cash flows and financing costs, as well as efficient risk management.
Olvi Group operates internationally, and its business involves risks arising from exchange rate fluctuations. Foreign exchange risks arise from commercial transactions, in other words cash flows from purchases and sales, as well as investments in foreign subsidiaries, internal loan receivables and the conversion of the subsidiary's financial statements into euro.
The Group's most significant foreign exchange risk arises from the operations in Belarus. 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, internal financing and the conversion of the subsidiary's income statement and balance sheet items into euro.
The Belarusian currency (BYR) devaluated considerably during 2015. This has had a substantial effect on the Group's income statement and balance sheet for 2015. The weaker currency causes depreciation of the Belarusian subsidiary's operating profit denominated in euro, and financial expenses include 10.5 million euro of unrealised exchange rate losses on an internal loan used for funding investments in Belarus. The translation difference on consolidated shareholders' equity increased by 14.6 million euro in 2015, which has a negative impact on the consolidated key indicators related to equity. The Belarusian currency will continue to carry a risk of devaluation in the future, and if realised, this would result in a decline in Olvi Group's operating profit, net profit and shareholders' equity denominated in euro.
With regard to the net investment in the Belarusian subsidiary, the Group is exposed to balance sheet conversion risk. The translation position (BYR) on 31 December 2015 was EUR 63.0 million (49.1 million in 2014). An exchange rate change of +/- 10 percent would impact consolidated shareholders' equity by approximately +7.0/-5.7 million euro. Intra-Group receivables and liabilities that constitute a part of the net investment made in a foreign operation have been taken into account in the sensitivity analysis.
The Group's other foreign exchange risks can be considered minor. The functional and reporting currency of the Group's other foreign subsidiaries is the euro. The Group has a minor amount of purchases and sales in other currencies. Due to the nature of the business, the time between order and delivery is short, which results in minor operations-related foreign exchange risk. Foreign exchange risk is also reduced by the fact that most of the Group's product sales and purchases of raw materials are denominated in euro. Loans in foreign currencies are fully hedged.
Consolidated financial income and expenses include 53 thousand euro of exchange rate gains (3,605 thousand euro in 2014) and 10,554 thousand euro of exchange rate losses (2,961 thousand euro in 2014).
Olvi Group regularly assesses the exchange rate risks related to operations and financing. Exchange rates can be hedged if this is considered reasonable.
Foreign currency accounts receivable and payable are presented in Notes 18, Accounts receivable and other receivables and 24, Accounts payable and other liabilities.
The Group's interest rate risk arises from non-current liabilities. Most of the Group's income and operational cash flows are independent of market interest rate fluctuations.
The Group has diversified its borrowing between fixed- and variable-rate loans. The Group uses interest rate swaps to reduce interest rate risk if required by the debt market conditions. On the balance sheet date, fixed-rate loans accounted for 75.8 percent (24.5 in 2014) of interest-bearing loans. The principal-weighted average maturity of interest-bearing loans was 2.6 (3.3) years.
Fixed currency swaps taken out for the purpose of hedging against foreign exchange risk associated with loans denominated in foreign currency are recognised at fair value. The Group does not apply hedge accounting in accordance with IFRS.
The amount of payment obligations under finance lease contracts on 31 December 2015 was 3.4 million euro (3.5 million euro in 2014).
The Group aims to optimise financing costs through operational measures and to manage interest rate risk using available means.
The maturity distribution of financial liabilities is presented in Note 23, Financial liabilities.
The following assumptions have been used when preparing the interest rate risk analysis: The sensitivity analysis represents the pre-tax net earnings effect of a reasonably potential change (= +/- 2%). The effect of a change in the interest rate level is calculated on the amount of interest-bearing variable-rate debt at year-end, in other words, net debt is assumed to remain at the year-end level for the entire accounting period.
Variable-rate net debt on 31 December 2015 amounted to 8,640 thousand euro (21,153). An interest rate increase of two percentage points would increase annual financial expenses by 173 thousand euro. The change does not have any essential effect on consolidated net profit before tax or the consolidated balance sheet.
The Group's credit risk arises from wholesale and HoReCa (hotel, restaurant, catering) customers with outstanding accounts receivable.
The creditworthiness of the Group's customers is reviewed regularly and always when entering into agreements with new customers. The Group only extends credit to businesses with flawless credit ratings. Furthermore, the Group aims to control credit risks through efficient collection of receivables. The amount of customer-specific accounts receivable is monitored regularly, and the customer's creditworthiness is re-assessed if necessary.
The Group does not have any significant concentrations of credit risk on receivables because its accounts receivable are distributed across a variety of customers and geographical regions. The largest customer accounts for 10.8 percent (10.6 in 2014) of the Group's total sales. The amount of credit losses recognised in 2015 was 151 (266) thousand euro.
The maturity distribution of accounts receivable is presented in Note 18, Accounts receivable and other receivables.
Investments related to cash management are made in liquid money market instruments having a fundamentally low risk.
Olvi Group's parent company and subsidiaries prepare monthly rolling cash flow estimates that the Group uses for assessing the amount of financing required for business operations in order to maintain sufficient liquid assets to fund everyday operations and investments, as well as to repay any loans falling due.
The Group aims to secure the availability and flexibility of funding by centralising the management of the Group's liquid assets with the parent company. The Group uses several banks and several forms of financing. The Group aims to secure the availability and flexibility of funding with an account overdraft facility and credit limits.
On the date of closing the accounts, the Group had 40 million euro of unused binding credit limits and an account overdraft facility of 5 million euro, 5 million euro of which was unused on 31 December 2015. Some of the facilities are valid until further notice, while some are renewed annually. The Group also has 2 million euro of unbinding credit limits.
The parent company Olvi plc has issued a 30 million euro commercial paper programme in order to secure short-term liquidity needs quickly and cost-efficiently. At the time of closing the accounts, Olvi plc had 7 million euro of short-term loans withdrawn under the commercial paper programme.
In order to secure short-term liquidity, operating capital is monitored regularly, and the aim is to reduce the amount of money tied in operating capital. Key factors include monitoring the turnover rate of receivables and improving the efficiency of credit control.
The Group had 12,786 thousand euro of liquid assets on 31 December 2015 (4,382 thousand euro in 2014). The Group's liquidity on the balance sheet date was good. The current ratio on 31 December 2015 was 1.1 (1.1 in 2014).
Note 23, Financial liabilities, presents the maturity distribution of financial liabilities.
Olvi Group's long-term objective is to generate the highest possible added value on invested capital, however taking into account the expectations imposed on the Group by various parties and the company's development in the long term. The main principle of capital management is to maintain Olvi Group's strong financial position and to ensure that the Group's financing needs can be fulfilled cost-efficiently also under critical financial market conditions.
Another objective is to maintain an optimal capital structure in order to manage and reduce the cost of capital.
In order to maintain or change its capital structure, the Group may change the amount of dividends paid to shareholders, repay capital to shareholders, issue new shares, acquire treasury shares and annul them, or sell its assets to reduce debt.
Capital is monitored through the equity to total assets ratio and the gearing ratio. Olvi Group's equity to total assets ratio in 2015 stood at 59.4 (57.9) percent and the gearing ratio was 18.3 (29.8) percent.
The fair values of financial liabilities are presented in Note 23, Financial liabilities.
Olvi Group has the following interest rate swaps valid on 31 December 2015:
| EUR/other 1,000 | Nominal value |
Currency | Expiration date |
Fair value |
|---|---|---|---|---|
| Interest rate swap | 3,040 | EUR | 1.4.2016 | -40 |
| Interest rate swap | 8,750 | EUR | 29.1.2019 | -48 |
| Interest rate swap | 1,800 | EUR | 25.4.2017 | -2 |
| Interest rate swap | 10,000 | EUR | 5.5.2020 | -102 |
| Interest and exchange rate swap | 2,024 | GBP | 14.3.2017 | 2,783 |
| Interest and exchange rate swap | 2,400 | EUR | 14.3.2017 | -2,452 |
| Interest and exchange rate swap | 2,531 | GBP | 14.3.2017 | 3,480 |
| Interest and exchange rate swap | 3,000 | EUR | 14.3.2017 | -3,066 |
Unquoted equity investments are recognised at purchase price as they cannot be recognised at fair value using the valuation methods. The original book value of receivables corresponds to their fair value.
The fair values of interest rate swaps have been determined using the method of present value of future cash flows, supported by market interest rates and other market information on the balance sheet date. The fair values of loans from financial institutions, finance lease liabilities, accounts payable and other liabilities do not substantially deviate from their balance sheet values. The fair values are presented in Note 23, Financial liabilities.
| 27. Adjustments to business cash flows | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Transactions with no associated payment: | ||
| Depreciation | 16,348 | 14,907 |
| Unrealised foreign exchange gains and losses | -4,413 | 2,388 |
| Financial income | -281 | -3,990 |
| Adjustment for hyperinflation | 0 | -475 |
| Financial expenses | 11,641 | 3,985 |
| Income taxes | 4,598 | 7,974 |
| Other adjustments | 791 | 910 |
| Total | 28,684 | 25,699 |
| EUR 1,000 | 2015 | 2014 |
|---|---|---|
| Minimum rents payable on the basis of other non-cancellable leases: | ||
| Due within one year | 1,402 | 1,143 |
| Within more than one but less than five years | 1,179 | 758 |
| Within more than five years | 4 | 5 |
| Total | 2,585 | 1,906 |
The Group has leased operating premises and storage terminal facilities, as well as machinery and equipment.
| Within more than five years Total |
1,400 | 1,058 |
|---|---|---|
| Due within one year Within more than one but less than five years |
1,400 | 1,058 |
| Minimum rents payable on the basis of other non-cancellable leases: | ||
| EUR 1,000 | 2015 | 2014 |
The Group rents out beverage distribution and refrigeration equipment to its customers. The amount of rental income received is not significant to the Group's overall business.
| 29. Collateral and contingent liabilities | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Pledges and contingent liabilities | ||
| For own commitments | 2,352 | 2,397 |
| Package liabilities | 3,234 | 2,496 |
| Other liabilities | 2,000 | 2,000 |
The package liability corresponds to Olvi plc's share of the entire stock of recyclable beverage packages in accordance with proportions determined by Ekopulloyhdistys ry, deducted by packages in Olvi plc's inventory on 31 December 2015. Ekopulloyhdistys ry administers the stock of refillable beverage packages. Every member in the system maintains a stock of packages required for the requirement declared to Ekopulloyhdistys ry for each type of package it uses.
| Share of holding (%) |
Share of voting rights (%) |
|
|---|---|---|
| Parent company Olvi plc, Iisalmi, Finland | ||
| AS A. Le Coq, Tartu, Estonia | 100.00 | 100.00 |
| AS Karme, Karksi vald, Estonia | 49.00 | 49.00 |
| Verska Mineraalvee OÜ, Värska vald, Estonia | 20.00 | 20.00 |
| A/S Cēsu Alus, Cēsis, Latvia | 99.87 | 99.87 |
| AB Volfas Engelman, Kaunas, Lithuania | 99.58 | 99.58 |
| OAO Lidskoe Pivo, Lida, Belarus | 94.57 | 94.57 |
Transactions with associated companies, as well as receivables from and liabilities to associated companies:
| EUR 1,000 | 2015 | 2014 |
|---|---|---|
| Sales | 279 | 369 |
| Purchases | 732 | 739 |
| Receivables | 276 | 294 |
| Liabilities | 53 | 34 |
Associated companies are presented in more detail in Note 32, Investments in associated companies.
| Employee benefits to management | ||
|---|---|---|
| -- | -- | --------------------------------- |
| Wages, salaries and emoluments | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Managing Director | ||
| Salaries and other short-term employee benefits | 350 | 361 |
| Pension commitments, statutory pension cover | 61 | 62 |
| Total | 411 | 423 |
| Compensation paid to members of the Board of Directors for Board duties |
||
| Hortling Heikki | 83 | 84 |
| Lager Esa | 37 | 36 |
| Autere Jaakko | 31 | 30 |
| Hortling Nora | 20 | 0 |
| Markula Elisa | 20 | 0 |
| Pääkkönen Tarja | 11 | 30 |
| Sinnemaa Heikki | 11 | 30 |
| Sirviö Heikki | 20 | 0 |
| Total | 233 | 209 |
No loans have been granted to management.
| 31. Costs arising from audit | ||
|---|---|---|
| EUR 1,000 | 2015 | 2014 |
| Fees for statutory audit | 142 | 102 |
| Other services | 85 | 88 |
| Total | 227 | 190 |
Information on the Group's associated companies and their aggregate assets, liabilities, net sales and profit/loss:
| Share of | |||
|---|---|---|---|
| EUR 1,000 | holding (%) | 2015 | 2014 |
| AS Karme, Karksi vald, Estonia | 49.00 | ||
| Current assets | 303 | 378 | |
| Non-current assets | 544 | 745 | |
| Current liabilities | 209 | 335 | |
| Non-current liabilities | 0 | 2 | |
| Net sales | 1,150 | 1,579 | |
| Profit/loss | 106 | 51 | |
| Verska Mineraalvee OÜ, Värska vald, Estonia | 20.00 | ||
| Current assets | 259 | 149 | |
| Non-current assets | 448 | 440 | |
| Current liabilities | 160 | 138 | |
| Non-current liabilities | 155 | 171 | |
| Net sales | 718 | 584 | |
| Profit/loss | 103 | 114 |
The acquisition of Olvi plc's own shares continued according to plan in January 2016. Between 1 January and 7 January 2016, a total of 5,500 Series A shares were acquired. After the completion of the repurchase scheme, Olvi plc holds a total of 11,124 of its own Series A shares. The total purchase price of treasury shares was 228,162 euro.
On 24 February 2016, Olvi plc's Board of Directors has decided on a new share-based incentive plan for the Group's key employees. The aim of the new plan is to combine the objectives of the shareholders and the key employees in order to increase the value of the company, to commit the key employees to the company, and to offer them a competitive reward plan based on earning the company's shares.
The performance period of the incentive scheme is 2016–2017. The prerequisite for receiving reward is that a key employee purchases the company's Series A shares up to the number determined by the Board of Directors. Furthermore, entitlement to a reward is tied to the continuance of employment or service upon reward payment. Rewards will be paid partly in the company's Series A shares and partly in cash in 2018. The cash proportion is intended to cover taxes and tax-related costs arising from the rewards to the key employees. The plan is directed to approximately 50 people. The rewards to be paid on the basis of the plan are in total an approximate maximum of 60,000 Series A shares in Olvi plc and a cash payment needed for taxes and tax-related costs arising from the shares.
| BUSINESS VOLUME AND PROFITABILITY | |||
|---|---|---|---|
| EUR 1,000 | 2015 | 2014 | 2013 |
| IFRS | IFRS | IFRS | |
| Net sales | 310,494 | 320,785 | 321,901 |
| Change, % | -3.2 | -0.3 | 7.5 |
| Operating profit | 38,157 | 41,000 | 43,221 |
| % of net sales | 12.3 | 12.8 | 13.4 |
| Financial income and expenses | -11,360 | 5 | -1,396 |
| Profit before tax | 26,818 | 41,053 | 41,814 |
| % of net sales | 8.6 | 12.8 | 13.0 |
| Net profit for the period | 22,220 | 33,079 | 34,186 |
| % of net sales | 7.2 | 10.3 | 10.6 |
| Balance sheet total | 314,497 | 332,755 | 295,713 |
| Cash flow ratio, % | 12.4 | 14.6 | 14.6 |
| Return on investment, % (ROI) | 15.8 | 18.8 | 21.5 |
| Return on equity, % (ROE) | 11.7 | 18.2 | 21.4 |
| Equity to total assets, % | 59.4 | 57.9 | 58.0 |
| Current ratio | 1.1 | 1.1 | 1.2 |
| Gearing, % | 18.3 | 29.8 | 26.4 |
| Gross capital expenditure on fixed assets | 25,961 | 41,633 | 35,691 |
| % of net sales | 8.4 | 13.0 | 11.1 |
| Net capital expenditure on fixed assets | 25,674 | 41,047 | 35,484 |
| % of net sales | 8.3 | 12.8 | 11.0 |
| Average number of personnel: | |||
| Olvi plc | 336 | 369 | 401 |
| Personnel in Estonia, Latvia, | |||
| Lithuania and Belarus | 1,604 | 1,589 | 1,598 |
| Total employees | 1,940 | 1,958 | 1,999 |
| PER-SHARE RATIOS | |||
|---|---|---|---|
| 2015 | 2014 | 2013 | |
| IFRS | IFRS | IFRS | |
| Earnings per share (EPS), euro | 1.08 | 1.57 | 1.61 |
| EPS adjusted for dilution | |||
| from warrants, euro | 1.08 | 1.57 | 1.61 |
| Equity per share, euro | 8.92 | 9.17 | 8.14 |
| *) Pay-out ratio, % | 65.1 | 41.5 | 40.3 |
| Price/Earnings ratio (P/E) | 20.6 | 13.4 | 17.7 |
*) The amount of dividend used for calculating the 2015 ratios is the Board of Directors' proposal to the Annual General Meeting.
| Note | 1 JAN TO 31 DEC 2015 EUR 1,000 % |
1 JAN TO 31 DEC 2014 EUR 1,000 |
% | ||
|---|---|---|---|---|---|
| NET SALES | 1 | 102,869 | 100.0 | 105,329 | 100.0 |
| Increase (+)/decrease(-) in inventories of finished and unfinished products Manufacture for own use Other operating income |
2 | -184 63 494 |
-0.2 0.1 0.5 |
-220 68 1,415 |
-0.2 0.1 1.3 |
| Materials and services Personnel expenses Depreciation and impairment Other operating expenses |
3 4 8 9 |
44,577 18,116 5,371 27,620 |
43.4 17.6 5.2 26.9 |
45,683 18,938 4,232 30,390 |
43.4 18.0 4.0 28.8 |
| OPERATING PROFIT | 7,558 | 7.3 | 7,350 | 7.0 | |
| Financial income and expenses | 10 | 9,197 | 9.0 | 9,176 | 8.7 |
| PROFIT BEFORE APPROPRIATIONS AND TAXES |
16,755 | 16.3 | 16,525 | 15.7 | |
| Appropriations Income taxes |
11 12 |
-4,761 -332 |
-4.7 -0.3 |
-3,531 -536 |
-3.4 -0.5 |
| NET PROFIT FOR THE PERIOD | 11,663 | 11.3 | 12,458 | 11.8 |
| 31 DEC 2015 | 31 DEC 2014 | ||||
|---|---|---|---|---|---|
| ASSETS | Note | EUR 1,000 | % | EUR 1,000 | % |
| FIXED ASSETS | |||||
| Intangible assets | 13 | 1,512 | 1,737 | ||
| Tangible assets | 13 | 63,689 | 65,014 | ||
| Shares in Group companies | 14 | 59,140 | 59,138 | ||
| Other investments | 14 | 535 | 540 | ||
| TOTAL FIXED ASSETS | 124,875 | 56.7 | 126,429 | 56.8 | |
| CURRENT ASSETS | |||||
| Inventories | 16 | 12,333 | 13,620 | ||
| Non-current receivables | 17 | 58,187 | 48,017 | ||
| Current receivables | 17 | 16,302 | 34,013 | ||
| Cash in hand and at bank | 8,409 | 525 | |||
| TOTAL CURRENT ASSETS | 95,231 | 43.3 | 96,176 | 43.2 | |
| TOTAL ASSETS | 220,106 | 100.0 | 222,605 | 100.0 | |
| EQUITY AND LIABILITIES | |||||
| SHAREHOLDERS' EQUITY | |||||
| Share capital | 20,759 | 20,759 | |||
| Share premium account | 857 | 857 | |||
| Legal reserve | 127 | 127 | |||
| Retained earnings | 36,047 | 37,072 | |||
| Net profit for the period | 11,663 | 12,458 | |||
| TOTAL SHAREHOLDERS' EQUITY | 18 | 69,452 | 31.6 | 71,273 | 32.0 |
| ACCUMULATED APPROPRIATIONS | 19 | 21,632 | 9.8 | 16,871 | 7.6 |
| LIABILITIES | |||||
| Non-current liabilities | 60,003 | 58,615 | |||
| Current liabilities | 69,018 | 75,846 | |||
| TOTAL LIABILITIES | 20 | 129,022 | 58.6 | 134,461 | 60.4 |
| TOTAL EQUITY AND LIABILITIES | 220,106 | 100.0 | 222,605 | 100.0 |
| Note | 1-12/2015 EUR 1,000 |
1-12/2014 EUR 1,000 |
|
|---|---|---|---|
| Cash flow from operations | |||
| Profit before extraordinary items Adjustments: |
16,423 | 15,989 | |
| Depreciation according to plan and impairment | 8 | 5,371 | 4,232 |
| Financial income and expenses | 10 | -9,197 | -9,176 |
| Other adjustments | 318 | -412 | |
| Cash flow before change in working capital | 12,916 | 10,633 | |
| Change in net working capital: Increase (-) / decrease (+) in current interest-free accounts |
|||
| receivable and other receivables | 17,515 | -3,907 | |
| Increase (-) / decrease (+) in inventories | 1,287 | -149 | |
| Increase (+) / decrease (-) in current interest-free liabilities | 2,243 | 6,104 | |
| Interest paid | -1,011 | -926 | |
| Interest received | 91 | 118 | |
| Dividends received | 10,000 | 10,073 | |
| Taxes paid | -153 | 46 | |
| Cash flow from operations (A) | 42,886 | 21,993 | |
| Cash flow from investments | |||
| Investments in tangible and intangible assets | -3,737 | -16,013 | |
| Capital gains on disposal of tangible and intangible assets | 80 | 874 | |
| Expenditure on other investments | 4 | -710 | |
| Cash flow from investments (B) | -3,653 | -15,850 | |
| Cash flow from financing | |||
| Withdrawals of loans | 26,600 | 37,700 | |
| Repayments of loans | -34,806 | -24,091 | |
| Acquisition of treasury shares | -64 | 0 | |
| Dividends paid | -13,475 | -13,469 | |
| Increase (-)/decrease (+) in current interest-bearing business | |||
| receivables Increase (-)/decrease (+) in non-current loan receivables |
0 -9,605 |
1 -8,007 |
|
| Cash flow from financing (C) | -31,350 | -7,865 | |
| Increase (+)/decrease (-) in liquid assets (A+B+C) | 7,883 | -1,722 | |
| Liquid assets 1 January | 525 | 2,248 | |
| Liquid assets 31 December | 8,409 | 525 | |
| Change in liquid assets | 7,883 | -1,722 |
Olvi plc's accounting period extends from 1 January to 31 December. The financial statements have been prepared in accordance with the Finnish Accounting Standards (FAS).
Intangible and tangible assets have been recognised on the balance sheet at their direct acquisition cost deducted by accumulated depreciation according to plan. Depreciation according to plan has been calculated on a straight-line basis over the expected economic life of the asset item concerned.
Depreciation periods according to plan:
| Trademarks and development costs | 10 years |
|---|---|
| Other intangible fixed assets | 5 years |
| Buildings | 30 years |
| Underground shelter | 30 years |
| Plant machinery and equipment | 15 years |
| Tanks and containers | 20 years |
| Wastewater basin, tarpaulin hall | 10 years |
| Other fixed assets | 5 years |
Inventories have been valued in accordance with the FIFO principle at acquisition cost or, if lower, at probable net realisable value. The acquisition cost of raw materials and supplies is determined by the weighted average method. The value of finished and unfinished products includes variable costs and the appropriate proportion of the overheads of acquisition and manufacturing.
Research and development costs are recognised as expenses in the income statement. Development costs arising from the design of new or more advanced products are capitalised as intangible assets in the balance sheet starting from the time the product is technically feasible, it can be utilised commercially, and future economic benefit is expected from the product. Development costs previously recognised as expenses will not be subsequently capitalised. Amortisation is booked on an item starting from the time it is ready for use.
Pension cover for personnel has been arranged through a statutory TyEL (EPA) insurance policy with an external pension insurance company. Pension insurance contributions have been allocated to match the salaries booked on an accrual basis in the annual accounts.
The parent company's derivative contracts are interest rate swaps measured at fair value. Changes in fair value are recognised in financial items within the income statement.
A deferred tax liability or asset has been calculated on temporary differences between taxation and the financial statements using the tax rate for upcoming years confirmed by the balance sheet date. The balance sheet includes deferred tax liabilities in their entirety and deferred tax assets up to the estimated probable amount.
Transactions denominated in foreign currency have been recognised during the accounting period at the exchange rate on the transaction date, and any foreign currency receivables and liabilities outstanding on the balance sheet date have been recognised at the mean exchange rate on the balance sheet date.
Acquired treasury shares are recognised as a reduction in retained earnings.
| 1. Net sales by market area | 2015 | 2014 |
|---|---|---|
| Finland | 98,253 | 99,751 |
| Belarus | 269 | 765 |
| Estonia | 2,089 | 2,345 |
| Other exports | 2,258 | 2,469 |
| Total | 102,869 | 105,329 |
| 2. Other operating income | 2015 | 2014 |
| Capital gains on disposals of fixed assets | 56 | 737 |
| Others | 438 | 678 |
| Total | 494 | 1,415 |
| 3. Materials and services | 2015 | 2014 |
| Materials and supplies (goods): | ||
| Purchases during the year | 40,251 | 43,876 |
| Change in stocks | 1,103 | -369 |
| Outsourced services | 3,223 | 2,175 |
| Total | 44,577 | 45,683 |
| 4. Personnel expenses | 2015 | 2014 |
| Wages, salaries and emoluments | 14,488 | 15,297 |
| Pension expenses | 2,581 | 2,687 |
| Other personnel expenses | 1,046 | 954 |
| Total | 18,116 | 18,938 |
| 5. Management salaries and emoluments | 2015 | 2014 |
| Managing Director | 350 | 361 |
| Chairman of the Board | 83 | 84 |
| Other members of the Board | 150 | 125 |
| Total | 583 | 570 |
| 6. Parent company's personnel on average during the period | 2015 | 2014 |
| Full-time | ||
| clerical employees | 125 | 129 |
| workers | 156 | 177 |
| Part-time | ||
| clerical employees | 0 | 0 |
| workers | 55 | 63 |
| Total | 336 | 369 |
| 7. Auditors' fees | 2015 | 2014 |
| Fees for statutory audit | 75 | 47 |
| Other services | 61 | 69 |
| Total | 136 | 116 |
| 8. Depreciation and impairment | 2015 | 2014 |
| Planned depreciation on tangible and | ||
| intangible assets | 5,371 | 4,232 |
| Total | 5,371 | 4,232 |
| 9. Other operating expenses | 2015 | 2014 |
|---|---|---|
| Sales freights Costs of marketing and sales Other operating expenses Total |
12,749 3,251 11,620 27,620 |
13,335 3,634 13,422 30,390 |
| 10. Financial income and expenses | 2015 | 2014 |
| Dividend income from Group companies | 10,119 | 10,073 |
| Total income from long-term investments | 3 | 4 |
| Other interest and financial income From Group companies From others Total |
565 140 706 |
562 722 1,284 |
| Total dividend income and other interest and financial income | 10,829 | 11,362 |
| Interest expenses and other financial expenses To Group companies To others Total interest expenses and other financial expenses Total financial income and expenses |
560 1,071 1,631 9,197 |
516 1,670 2,186 9,176 |
| 11. Appropriations | 2015 | 2014 |
| Difference between depreciation according to plan and depreciation applied in taxation Total |
4,761 4,761 |
3,531 3,531 |
| 12. Income taxes | 2015 | 2014 |
| Income tax on business operations Taxes from previous accounting periods Change in deferred tax Total |
413 -81 -1 332 |
481 -95 151 536 |
| 13. Fixed assets | ||
| Intangible assets |
| Development costs |
Other intangible assets |
Total | |
|---|---|---|---|
| Acquisition cost 1 Jan 2015 | 153 | 19,878 | 20,031 |
| Additions | 0 | 373 | 373 |
| Deductions | 0 | 0 | 0 |
| Acquisition cost 31 Dec 2015 | 153 | 20,251 | 20,404 |
| Accumulated depreciation | |||
| and impairment 1 Jan 2015 | 49 | 18,245 | 18,294 |
| Depreciation | 25 | 573 | 598 |
| Accumulated depreciation | |||
| and impairment 31 Dec 2015 | 75 | 18,818 | 18,892 |
| Book value 1 Jan 2015 | 103 | 1,634 | 1,737 |
| Book value 31 Dec 2015 | 78 | 1,434 | 1,512 |
| Tangible assets | ||||||
|---|---|---|---|---|---|---|
| Advance | ||||||
| Other | payments and | |||||
| Land and water | Machinery and | tangible | unfinished | |||
| properties | Buildings | equipment | assets | purchases | Total | |
| Acquisition cost | ||||||
| 1 Jan 2015 Additions |
1,088 0 |
30,215 11,400 |
111,252 16,029 |
60 0 |
25,267 1,746 |
167,881 29,175 |
| Deductions | 0 | 0 | -34 | 0 | -25,694 | -25,727 |
| Acquisition cost | ||||||
| 31 Dec 2015 | 1,088 | 41,615 | 127,247 | 60 | 1,319 | 171,329 |
| Accumulated | ||||||
| depreciation and impairment |
||||||
| 1 Jan 2015 | 0 | 20,922 | 81,946 | 0 | 0 | 102,868 |
| Depreciation | 0 | 741 | 4,032 | 0 | 0 | 4,773 |
| Accumulated | ||||||
| depreciation and | ||||||
| impairment | ||||||
| 31 Dec 2015 | 0 | 21,663 | 85,978 | 0 | 0 | 107,641 |
| Book value | ||||||
| 1 Jan 2015 | 1,088 | 9,293 | 29,306 | 60 | 25,267 | 65,014 |
| Book value | ||||||
| 31 Dec 2015 | 1,088 | 19,953 | 41,269 | 60 | 1,319 | 63,689 |
| 31 DEC 2015 | 31 DEC 2014 | |||||
| Book value of | ||||||
| production | ||||||
machinery and
equipment 38,501 26,759
| 14. Investments | |||
|---|---|---|---|
| Shares in Group companies |
Other shares |
Total investments |
|
| Acquisition cost 1 Jan 2015 | 59,138 | 540 | 59,678 |
| Additions | 1 | 0 | 1 |
| Deductions | 0 | -5 | -5 |
| Acquisition cost 31 Dec 2015 | 59,140 | 535 | 59,675 |
| Book value 31 Dec 2015 | 59,140 | 535 | 59,675 |
| 15. Group companies | ||
|---|---|---|
| Group's holding (%) |
Parent company's holding (%) |
|
|---|---|---|
| AS A. Le Coq, Tartu, Estonia | 100.00 | 100.00 |
| AS Karme, Karksi vald, Estonia | 49.00 | 0.00 |
| Verska Mineraalvee OÜ, Värska vald, Estonia | 20.00 | 0.00 |
| A/S Cēsu Alus, Cēsis, Latvia | 99.87 | 99.87 |
| AB Volfas Engelman, Kaunas, Lithuania | 99.58 | 99.58 |
| OAO Lidskoe Pivo, Lida, Belarus | 94.57 | 94.57 |
| 16. Inventories | 2015 | 2014 |
| Materials and supplies | 8,306 | 9,410 |
| Unfinished products | 746 | 702 |
| Finished products / goods | 3,281 | 3,509 |
| Total | 12,333 | 13,620 |
| 17. Receivables | 2015 | 2014 |
|---|---|---|
| Non-current receivables | ||
| Loans receivable from Group companies | 58,048 | 47,878 |
| Deposits pledged as collateral | 119 | 119 |
| Prepayments and accrued income | 20 | 20 |
| Total non-current receivables | 58,187 | 48,017 |
| Current receivables | ||
| Receivables from Group companies | ||
| Accounts receivable | 491 | 467 |
| Prepayments and accrued income | 93 | 0 |
| Total receivables from Group companies | 584 | 467 |
| Receivables from non-Group companies | ||
| Accounts receivable | 12,835 | 30,042 |
| Other receivables | 0 | 1 |
| Prepayments and accrued income | 2,883 | 3,504 |
| Total receivables from non-Group companies | 15,718 | 33,547 |
| Total current receivables | 16,302 | 34,013 |
| Total receivables | 74,489 | 82,030 |
| Deferred tax receivables | ||
| Deferred tax receivables 1 January | 0 | 47 |
| Change in deferred tax | 0 | -47 |
| Deferred tax receivables 31 December | 0 | 0 |
| 18. Shareholders' equity | 2015 | 2014 |
|---|---|---|
| Share capital 1 January Increase of share capital Share capital 31 December |
20,759 0 20,759 |
20,759 0 20,759 |
| Share premium account 1 January Bonus issue Share premium account 31 December |
857 0 857 |
857 0 857 |
| Legal reserve 1 January and 31 December | 127 | 127 |
| Retained earnings 1 January Payment of dividends Dividends not withdrawn Acquisition of treasury shares |
49,530 -13,492 109 -99 |
50,565 -13,492 |
| Retained earnings 31 December | 36,047 | 37,072 |
| Net profit for the period | 11,663 | 12,458 |
| Total shareholders' equity | 69,452 | 71,273 |
| 2015 qty |
2015 euro |
2015 votes |
2014 qty |
2014 euro |
2014 votes |
|---|---|---|---|---|---|
| 74,645,120 | |||||
| 3,732,256 | 3,732,256 | 74,645,120 | 3,732,256 | 3,732,256 | 74,645,120 |
| 17,026,552 | 17,026,552 | 17,026,552 | 17,026,552 | ||
| 17,026,552 | 17,026,552 | 17,026,552 | 17,026,552 | ||
| 20,758,808 | 20,758,808 | 20,758,808 | 91,671,672 | ||
| 3,732,256 | 3,732,256 | 74,645,120 | 3,732,256 17,026,552 17,026,552 17,026,552 17,026,552 91,671,672 20,758,808 |
3,732,256 |
| Votes per Series A share | 1 |
|---|---|
| Votes per Series K share | 20 |
The registered share capital on 31 December 2015 totalled 20,759 thousand euro.
Olvi plc's Series A and Series K shares received a dividend of 0.65 euro per share for 2014 (0.65 euro per share for 2013), totalling 13.5 (13.5) million euro. The dividends were paid on 30 April 2015. The Series K and Series A shares entitle to equal dividend. The Articles of Association include a redemption clause concerning Series K shares.
Olvi plc held a total of 5,624 of its own Series A shares on 31 December 2015, and the total acquisition price was 108.0 thousand euro (on 31 December 2014 1,124 shares, acquisition price 8.5 thousand euro).
On 16 April 2015, 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.
At its meeting on 23 December 2015, the Board of Directors of Olvi plc decided to exercise the authorisation to purchase treasury shares given by the Annual General Meeting on 16 April 2015 and acquire a maximum of 10,000 Series A shares. The acquisition of shares started on 28 December 2015. Between 28 December and 31 December 2015, a total of 4,500 Series A shares were acquired for a price of 99,492 euro.
Series A shares held by Olvi plc as treasury shares represented 0.027 percent of the share capital and 0.006 percent of the aggregate number of votes. The treasury shares represented 0.033 percent of all Series A shares and associated votes.
Accumulated appropriations consist of accumulated depreciation difference.
| 20. Liabilities | 2015 | 2014 |
|---|---|---|
| Non-current liabilities | ||
| Loans from financial institutions Deferred tax liabilities Other liabilities Total |
21,560 103 30 21,692 |
27,331 104 29 27,464 |
| Liabilities to Group companies Other liabilities Total |
38,311 38,311 |
31,151 31,151 |
| Total non-current liabilities | 60,003 | 58,615 |
| Current liabilities | ||
| Loans from financial institutions Accounts payable Accrued expenses Other liabilities Total |
21,879 20,432 5,078 21,315 68,703 |
30,855 18,984 5,004 20,852 75,695 |
| Liabilities to Group companies Accounts payable Total |
315 315 |
151 151 |
| Total current liabilities | 69,018 | 75,846 |
| Total liabilities | 129,022 | 134,461 |
| Accrued expenses Provisions for personnel costs Provision for interest on loans Other accrued expenses Total accrued expenses |
2,791 248 2,040 5,078 |
2,917 273 1,814 5,004 |
| Interest-free liabilities 31 December | 47,139 | 44,991 |
| Liabilities falling due later than five years from now: Loans from financial institutions and other loans |
30 | 29 |
| Deferred tax liabilities Deferred tax liabilities 1 January Change in deferred tax Deferred tax liabilities 31 December |
104 -1 103 |
0 104 104 |
Olvi plc has a valid share-based incentive plan for key employees in accordance with a decision made on 29 April 2014. The aim of the 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.
The share-based incentive plan is divided into two parts. The earnings-based plan includes one three-year performance period, calendar years 2014—2016. The potential reward will be based on Olvi Group's cumulative operating profit, also known as earnings before interest and taxes (EBIT) for the performance period 2014–2016. In addition to the EBIT-based part, the Group has a commitment plan with one performance period starting on 1 July 2014 and ending on 30 June 2017. The prerequisite for receiving reward on the basis of this performance period is that a key employee has purchased the company's Series A shares up to the number determined by the Board of Directors. Furthermore, entitlement to a reward is tied to the continuance of employment or service upon reward payment.
Rewards from both performance periods will be paid partly in the company's Series A shares and partly in cash in 2017. The cash proportion is intended to cover taxes and tax-related costs arising from the rewards to the key employees. As a rule, no reward will be paid if the key employee's employment or service ends before the reward payment. Members of the Management Group must hold one half of the shares received on the basis of the performance period 2014—2016 for the entire validity of their employment or service.
The plan is directed to approximately 50 people. The rewards to be paid on the basis of the plan are in total an approximate maximum of 40,000 series A shares in Olvi plc and a cash payment needed for taxes and tax-related costs arising from the shares.
From January to December 2015, accounting entries associated with the share-based incentive plans referred to in the above were recognised in the parent company for a total of 52.9 thousand euro (2014: 26.4 thousand euro).
Olvi Group does not have any other share-based plans or option plans.
| 22. Pledges, contingent liabilities and other commitments | 2015 | 2014 |
|---|---|---|
| Pledges and contingent liabilities For own commitments |
||
| Mortgages on land and buildings | 1,336 | 1,336 |
| Other off-balance sheet liabilities | ||
| Package liabilities | 3,234 | 2,496 |
| Rental liabilities on business premises and land areas | 355 | 295 |
| Other liabilities | 5,047 | 5,382 |
| Total pledges, contingent liabilities and other commitments | 9,972 | 9,510 |
| 23. Leasing liabilities | 2015 | 2014 |
|---|---|---|
| Due within one year | 168 | 274 |
| Due later | 172 | 183 |
| Total | 340 | 457 |
| Nominal value | Fair value | Nominal value | Fair value | |
|---|---|---|---|---|
| 2015 | 2015 | 2014 | 2014 | |
| Derivatives | 28,990 | 553 | 17,371 | 544 |
The business significance of the derivative contracts is minor. The derivative contracts are interest rate swaps on loans and will reach maturity in 2016, 2017, 2019 and 2020.
| Shares and share capital 31 December 2015 | ||||
|---|---|---|---|---|
| Shares | % | Votes | % | |
| Series K shares, registered | 3,732,256 | 18.0 | 74,645,120 | 81.4 |
| Series A shares, registered | 17,026,552 | 82.0 | 17,026,552 | 18.6 |
| Total | 20,758,808 | 100.0 | 91,671,672 | 100.0 |
Registered share capital, EUR 1,000 20,759
Olvi plc's Series A and Series K shares received a dividend of 0.65 euro per share for 2014 (0.65 euro per share for 2013), totalling 13.5 (13.5) million euro. The dividends were paid on 30 April 2015.
Votes per Series A share 1 Votes per Series K share 20
The Series K and Series A shares entitle to equal dividend. The Articles of Association include a redemption clause concerning Series K shares.
| Series K | Series A | Total | % | Votes | % | ||
|---|---|---|---|---|---|---|---|
| 1. Olvi Foundation | 2,363,904 | 890,613 | 3,254,517 | 15.68 | 48,168,693 | 52.54 | |
| 2. Hortling Heikki Wilhelm *) | 903,488 | 103,280 | 1,006,768 | 4.85 | 18,173,040 | 19.82 | |
| 3. The Heirs of Hortling Kalle Einari | 187,104 | 25,248 | 212,352 | 1.02 | 3,767,328 | 4.11 | |
| 4. Hortling Timo Einari | 165,824 | 35,308 | 201,132 | 0.97 | 3,351,788 | 3.66 | |
| 5. Pohjola Bank plc, nominee register | 2,152,900 | 2,152,900 | 10.37 | 2,152,900 | 2.35 | ||
| 6. Hortling-Rinne Laila Marit | 102,288 | 3,380 | 105,668 | 0.51 | 2,049,140 | 2.24 | |
| 7. Nordea Bank Finland plc, nominee register | 1,786,906 | 1,786,906 | 8.61 | 1,786,906 | 1.95 | ||
| 8. Ilmarinen Mutual Pension Insurance Company | 849,218 | 849,218 | 4.09 | 849,218 | 0.93 | ||
| 9. Varma Mutual Pension Insurance Company | 828,075 | 828,075 | 3.99 | 828,075 | 0.90 | ||
| 10. AC Invest Oy |
460,000 | 460,000 | 2.22 | 460,000 | 0.50 | ||
| 11. Fondita Nordic Micro Cap mutual fund | 320,000 | 320,000 | 1.54 | 320,000 | 0.35 | ||
| 12. Laakkonen Hannu Markus | 216,072 | 216,072 | 1.04 | 216,072 | 0.24 | ||
| 13. Lahti Ari | 180,000 | 180,000 | 0.87 | 180,000 | 0.20 | ||
| 14. Skandinaviska Enskilda Banken Ab (publ) | |||||||
| Helsinki branch, nominee register | 177,575 | 177,575 | 0.86 | 177,575 | 0.19 | ||
| 15. Aktia Capital mutual fund | 164,000 | 164,000 | 0.79 | 164,000 | 0.18 | ||
| 16. Kamprad Ingvar | 153,000 | 153,000 | 0.74 | 153,000 | 0.17 | ||
| 17. Odin Finland mutual fund | 145,845 | 145,845 | 0.70 | 145,845 | 0.16 | ||
| 18. Veritas Pension Insurance Company | 145,845 | 145,845 | 0.70 | 145,845 | 0.16 | ||
| 19. Etera Mutual Pension Insurance Company | 119,274 | 119,274 | 0.57 | 119,274 | 0.13 | ||
| 20. Aktia Secura mutual fund | 111,926 | 111,926 | 0.54 | 111,926 | 0.12 | ||
| Others | 9,648 | 8,158,087 | 8,167,735 | 39.34 | 8,351,047 | 9.10 | |
| Total | 3,732,256 17,026,552 20,758,808 | 100.00 91,671,672 | 100.00 |
*) The figures include the shareholder's own holdings and shares held by parties in his control.
Olvi plc had 10,108 (10,021) shareholders registered in the book-entry system on 31 December 2015, 9 (8) of them nominee-registered.
Olvi plc adopted the insider guidelines drawn up and recommended by the Nasdaq OMX Helsinki Stock Exchange on 1 September 2005.
| Shareholders by size of holding on 31 December 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|
| N umber o f |
% o f share |
N umber o f |
% o f bo o k |
% o f |
||||
| Number of book entries | shareho lders |
ho lders |
bo o k entries |
entries | Vo tes |
vo tes |
||
| 1 to 1,000 | 8,822 | 87.28 | 2,071,029 | 9.98 | 2,080,757 | 2.27 | ||
| 1,001 to 10,000 | 1,163 | 11.52 | 3,031,909 | 14.61 | 3,169,621 | 3.46 | ||
| 10,001 to 500,000 | 117 | 1.16 | 5,744,046 | 27.67 | 14,429,022 | 15.74 | ||
| 500,001 to 999,999,999,999 | 6 | 0.06 | 9,872,800 | 47.57 | 71,914,032 | 78.45 | ||
| On waiting list | 2,064 | 0.01 | 41,280 | 0.04 | ||||
| In collective account | 36,960 | 0.18 | 36,960 | 0.04 | ||||
| Total | 10,108 | 100.00 | 20,758,808 | 100.00 91,671,672 | 100.00 |
| Management's interests | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| The members of the Board of Directors and the Managing Director of Olvi plc held a total of 903,488 | ||||||||||
| Series K shares and 152,911 Series A shares on 31 December 2015, which represent 5.1 percent of | ||||||||||
| the total number of shares and 19.9 percent of the votes. | ||||||||||
| The share-based incentive scheme for management is described in Note 21, Share-based payments. The company's management does not hold any warrants or options. |
||||||||||
| Shareholders by size of holding on 31 December 2015 | ||||||||||
| N | umber o f |
% o | f share | N umber o f |
% o f bo o k |
% o f |
||||
| Number of book entries | shareho lders |
ho | lders | bo | o k entries |
entries | Vo tes |
vo tes |
||
| 1 to 1,000 | 8,822 | 87.28 | 2,071,029 | 9.98 | 2,080,757 | 2.27 | ||||
| 1,001 to 10,000 10,001 to 500,000 |
1,163 117 |
11.52 1.16 |
3,031,909 5,744,046 |
14.61 27.67 |
3,169,621 14,429,022 |
3.46 15.74 |
||||
| 500,001 to 999,999,999,999 | 6 | 0.06 | 9,872,800 | 47.57 | 71,914,032 | 78.45 | ||||
| On waiting list | 2,064 | 0.01 | 41,280 | 0.04 | ||||||
| In collective account | 36,960 | 0.18 | 36,960 | 0.04 | ||||||
| Total | 10,108 | 100.00 | 20,758,808 | 100.00 91,671,672 | 100.00 | |||||
| Shareholders by category on 31 December 2015 | ||||||||||
| N o minee |
||||||||||
| % o f |
registered | |||||||||
| N umber o f |
share | N umber o |
f | % o f bo |
o k |
number o f |
% o f bo o k |
% o f |
||
| shareho lders |
ho lders |
bo o |
k entries | entries | bo o k entries |
entries | Vo tes |
vo tes |
||
| Businesses Financial |
408 | 4.04 | 4,680,349 | 22.55 | 49,594,525 | 54.10 | ||||
| institutions and | ||||||||||
| insurance | ||||||||||
| companies | 35 | 0.35 | 954,922 | 4.60 | 4,162,996 | 20.05 | 5,117,918 | 5.58 | ||
| Public sector | ||||||||||
| organisations | 8 | 0.08 | 1,992,450 | 9.60 | 1,992,450 | 2.17 | ||||
| Non-profit organisations |
84 | 0.83 | 423,363 | 2.04 | 423,363 | 0.46 | ||||
| Households | 9,513 | 94.11 | 8,011,029 | 38.59 | 33,970,501 | 37.06 | ||||
| Non-Finnish | ||||||||||
| shareholders | 60 | 0.59 | 398,678 | 1.92 | 95,997 | 0.46 | 494,675 | 0.54 | ||
| On waiting list | 2,064 | 0.01 | 41,280 | 0.04 | ||||||
| In collective | ||||||||||
| account | 36,960 | 0.18 | 36,960 | 0.04 | ||||||
| Total | 10,108 100.00 | 16,499,815 | 79.48 | 4,258,993 | 20.52 91,671,672 100.00 | |||||
| Foreign and nominee-registered holdings on 31 December 2015 | ||||||||||
| N | umber o f |
% o | f share | N | umber o f |
% o f bo o k |
% o f |
|||
| shareho | lders | ho | lders | bo o |
k entries | entries | Vo tes |
vo tes |
||
| Foreign total | 56 | 0.55 | 398,678 | 1.92 | 398,678 | 0.43 | ||||
| Nominee-registered (foreign) total |
4 | 0.04 | 95,997 | 0.46 | 95,997 | 0.10 | ||||
| Nominee-registered (Finnish) | ||||||||||
| total | 5 | 0.05 | 4,162,996 | 20.05 | 4,162,996 | 4.54 | ||||
| Total | 65 | 0.64 | 4,657,671 | 22.44 | 4,657,671 | 5.08 | ||||
| 69 |
| N umber o f shareho lders |
% o f share ho lders |
N umber o f bo o k entries |
% o f bo o k entries |
Vo tes |
% o f vo tes |
|
|---|---|---|---|---|---|---|
| Foreign total Nominee-registered (foreign) |
56 | 0.55 | 398,678 | 1.92 | 398,678 | 0.43 |
| total Nominee-registered (Finnish) |
4 | 0.04 | 95,997 | 0.46 | 95,997 | 0.10 |
| total Total |
5 65 |
0.05 0.64 |
4,162,996 4,657,671 |
20.05 22.44 |
4,162,996 4,657,671 |
4.54 5.08 |
| BUSINESS VOLUME AND PROFITABILITY | |||
|---|---|---|---|
| EUR 1,000 | 2015 | 2014 | 2013 |
| Net sales | 102,869 | 105,329 | 121,536 |
| Change, % | -2.3 | -13.3 | 8.7 |
| Operating profit | 7,558 | 7,350 | 12,805 |
| % of net sales | 7.3 | 7.0 | 10.5 |
| Financial income and expenses | 9,197 | 9,176 | 9,131 |
| Profit before extraordinary items | 16,755 | 16,525 | 21,936 |
| % of net sales | 16.3 | 15.7 | 18.0 |
| Profit before provisions and taxes | 16,755 | 16,525 | 21,936 |
| % of net sales | 16.3 | 15.7 | 18.0 |
| Net profit for the period | 11,663 | 12,458 | 15,823 |
| % of net sales Balance sheet total |
11.3 220,106 |
11.8 222,605 |
13.0 199,634 |
| Cash flow ratio, % | 21.2 | 18.8 | 19.4 |
| Return on investment, % (ROI) | 10.5 | 11.1 | 15.3 |
| Return on equity, % (ROE) | 19.1 | 19.1 | 25.7 |
| Equity to total assets, % | 39.4 | 38.1 | 41.6 |
| Current ratio | 0.5 | 0.6 | 0.7 |
| Gearing, % | 84.7 | 105 | 87 |
| Gross capital expenditure on fixed assets | 3,855 | 15,591 | 19,803 |
| % of net sales | 3.7 | 14.8 | 16.3 |
| Net capital expenditure on fixed assets | 3,821 | 15,431 | 19,773 |
| % of net sales | 3.7 | 14.6 | 16.3 |
| Average number of personnel | 336 | 369 | 401 |
| PER-SHARE RATIOS | |||
| 2015 | 2014 | 2013 | |
| Earnings per share (EPS), euro | 0.79 | 0.77 | 0.97 |
| Equity per share, euro | 4.18 | 4.08 | 4.00 |
| *) Nominal dividend per share, euro | 0.70 | 0.65 | 0.65 |
| *) Effective dividend yield, % | 3.15 | 3.08 | 2.27 |
| *) Pay-out ratio, % | 88.5 | 84.4 | 67.0 |
| Price/Earnings ratio (P/E) | 28.0 | 27.4 | 29.5 |
| Price of Series A share | |||
| at year-end, euro | 22.19 | 21.07 | 28.60 |
| high, euro | 27.20 | 29.90 | 28.75 |
| low, euro | 20.51 | 20.70 | 19.70 |
| average price, euro | 23.76 | 25.03 | 24.26 |
| Trading volume of A shares | 2,036,830 | 2,174,302 | 2,601,699 |
| % of all A shares outstanding | 12.0 | 12.8 | 15.3 |
| Market capitalisation of A shares 31 Dec, MEUR | 377.8 | 358.7 | 487.0 |
| Market capitalisation of K shares 31 Dec, MEUR | 82.8 | 78.6 | 106.7 |
| Total market capitalisation, MEUR | 460.6 | 437.4 | 593.7 |
| Number of shares | |||
| year's average number, adjusted for share | |||
| issues **) | 20,757,645 | 20,757,684 | 20,757,684 |
| average number of shares adjusted for | |||
| dilution from warrants **) number at year-end adjusted for dilution |
20,757,645 | 20,757,684 | 20,757,684 |
*) The amount of dividend used for calculating the 2015 ratios is the Board of Directors' proposal to the Annual General Meeting.
**) Treasury shares held by Olvi plc deducted.
| Cash flow ratio, % | = 100 * | Operating profit + depreciation + financial income and expenses + ex traordinary income and expenses - taxes _________ |
|---|---|---|
| Net sales | ||
| Return on investment, % (ROI) | = 100 * | Profit before taxes + interest and other financial expenses _________ |
| Balance sheet total - interest-free liabilities (average) | ||
| Return on equity, % (ROE) | = 100 * | Profit before taxes - taxes _________ |
| Shareholders' equity + non-controlling interests + voluntary provisions and depreciation difference deducted by deferred tax liability (average during the year) |
||
| Equity to total assets, % | = 100 * | Shareholders' equity + non-controlling interests + voluntary provisions and depreciation difference deducted by deferred tax liability _________ |
| Balance sheet total - advance payments received | ||
| Current ratio = |
Liquid assets + inventories _________ |
|
| Current liabilities | ||
| Gearing, % = 100 * |
Interest-bearing liabilities + advance payments received - cash and other liquid assets _________ |
|
| Shareholders' equity + voluntary provisions and depreciation difference deducted by deferred tax liability |
||
| Earnings per share (EPS) | = | Profit before taxes - taxes +/- non-controlling interests _________ |
| Average number of shares during the period adjusted for share issues | ||
| Equity per share = | Shareholders' equity + voluntary provisions and depreciation difference deducted by deferred tax liability and non-controlling interests __________ |
|
| Number of shares on 31 December adjusted for share issues | ||
| Effective dividend yield, % | = 100 * | Dividend per share adjusted for share issues ___________ |
| Last trading price of the year, adjusted for share issues | ||
| Price/Earnings ratio (P/E) | = | Last trading price of the year, adjusted for share issues ___________ |
| Earnings per share | ||
| Pay-out ratio, % | = 100 * | Dividend per share ___________ |
| Earnings per share | ||
| Market capitalisation at year-end |
= | Number of shares at year-end, adjusted for share issues * Price of Series A share at year-end |
The parent company Olvi plc had 47.7 (49.5) million euro of distributable funds on 31 December 2015, of which profit for the period accounted for 11.7 (12.5) million euro.
Olvi plc's Board of Directors proposes to the Annual General Meeting that distributable funds be used as follows:
• A dividend of 0.70 (0.65) euro shall be paid for 2015 on each Series K and Series A share, totalling 14.5 (13.5) million euro. The dividend represents 64.8 (41.4) percent of Olvi Group's earnings per share.
The dividend will be paid to shareholders registered in Olvi plc's register of shareholders held by Euroclear Finland Ltd on the record date of the dividend payment, 18 April 2016. It is proposed that the dividend be paid on 28 April 2016.
No dividend shall be paid on treasury shares.
• 33.2 million euro shall be retained in the parent company's non-restricted equity.
Date and Signatures
Signed in Iisalmi, this 24th day of February 2016
Heikki Hortling Esa Lager
Jaakko Autere Nora Hortling Member of the Board Member of the Board
Elisa Markula Heikki Sirviö Member of the Board Member of the Board
Lasse Aho Managing Director
A report of the audit has been submitted today. Signed in Iisalmi, this 22nd day of March 2016
PricewaterhouseCoopers Oy
Sami Posti Authorised Public Accountant
Chairman of the Board Vice Chairman of the Boar
Heikki Hortling (b. 1951), Chairman of Olvi plc's Board of Directors Master of Science in Economics Honorary Industrial Counsellor
Chairman of the Board of Olvi plc since 1998 Vice Chairman of Olvi plc's Board of Directors 1987–1997
Work experience in brief:
Several positions in Olvi plc, including marketing and materials management
Important positions in other organisations:
Vice Chairman of the Board of Ponsse Plc
Esa Lager (b. 1959), Vice Chairman of Olvi plc's Board of Directors Master of Laws Master of Science in Economics
Member of Olvi plc's Board of Directors since 2002 Chairman of Olvi plc's Board of Directors 14 April 2004 to 2 September 2004 Vice Chairman of Olvi plc's Board of Directors
Work experience in brief:
Important positions in other organisations:
Jaakko Autere (b. 1963), Member of Olvi plc's Board of Directors Master of Science in Economics Gogrow Oy, CEO
Member of Olvi plc's Board of Directors since 2011
Work experience in brief:
Important positions in other organisations:
Turku School of Economics and Business, Administration, MSc Economics (International Marketing) Managing Director, Oy Gustav Paulig Ab/Head of Coffee Division at Paulig Group
Member of Olvi plc's Board of Directors since 2015
Work experience in brief:
Important positions in other organisations:
Member of the Board of the Association of Finnish Advertisers
Heikki Sirviö (b. 1955), Member of Olvi plc's Board of Directors Master of Science (Engineering) Honorary Industrial Counsellor retired
Member of Olvi plc's Board of Directors since 2015
Work experience in brief:
Important positions in other organisations:
European Fertilizer Manufacturers Association (EFMA)
Administrative positions in other organisations:
Nora Hortling (b. 1986), Member of Olvi plc's Board of Directors Master of Science in Economics Bachelor of Hotel, Restaurant and Tourism Management
Member of Olvi plc's Board of Directors since 2015
Work experience in brief:
| | 2014 onwards | Kespro Oy, Product Group Manager |
|---|---|---|
| | 2011–2013 | Olvi plc, Marketing |
| | 2009–2010 | Ravintolakolmio Group, Restaurant Paasi, Shift Manager |
| | 2007 | Radisson Blu Hotel, Paris Boulogne, Receptionist |
| | 2005–2009 | Ravintolakolmio Group, several restaurants, Shift Manager |
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