OLVI PLC                 Half-year report 11 August 2023 at 9.00 am

Olvi Group's half-year report January-June 2023

Net sales grew as a result of strong demand and price increases - Profitability increased in the second quarter compared with the previous quarter

• Net sales increased by 15.8% and were EUR 195.4 (168.8) million. Sales volume increased by 9.8%.
• The adjusted operating result and the operating result increased to EUR 28.8 (26.7) million.
• With costs remaining high, relative profitability was lower than in the previous year. However, profitability improved markedly from the first quarter.
• A strong balance sheet and a solid financial position, with no net debt, enable the further development of the company.

• Net sales increased by 19.2% and were EUR 324.9 (272.7) million. Sales volume increased by 8.9%.
• The adjusted operating result was EUR 38.8 (33.1) million, and the operating result was EUR 26.6 (33.1) million. The operating result decreased because of a fine paid by the Belarusian subsidiary.

Near-term outlook

Olvi Group's adjusted operating result for the 2023 financial year is expected to increase year-on-year. The adjusted operating result in Belarus is expected to remain at the previous year's level.

Olvi cancelled its guidance on 20 February 2023 because the audit by the State Control Committee of the Republic of Belarus had not been completed and its result was uncertain. The audit has to a great extent been completed. The local business environment continues to involve risks arising from the prevailing geopolitical situation.

The Group's key figures

4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/
% /pp % / pp
2023 2022 2023 2022 2022
Sales volume, 305.7 278.4 9.8 509.0 467.2 8.9 956.1
Mltr
Net sales, MEUR 195.4 168.8 15.8 324.9 272.7 19.2 583.7
Gross profit, 73.7 66.7 10.5 120.7 105.7 14.1 219.9
MEUR
% of net sales 37.7 39.5 37.1 38.8 37.7
Adjusted 28.8 26.7 8.0 38.8 33.1 17.2 59.8
operating
result, MEUR
% of net sales 14.7 15.8 11.9 12.1 10.2
Items affecting 0.0 0.0 -12.2 0.0 -37.4
the
comparability
of the
operating
result, MEUR
Operating 28.8 26.7 8.0 26.6 33.1 -19.6 22.4
result, MEUR
% of net sales 14.7 15.8 8.2 12.1 3.8
Adjusted profit 22.9 19.4 18.2 27.5 24.9 10.3 44.9
for the period,
MEUR
% of net sales 11.7 11.5 8.5 9.1 7.7
Profit for the 22.9 19.4 18.2 15.3 24.9 -38.6 7.5
period, MEUR
% of net sales 11.7 11.5 4.7 9.1 1.3
Earnings per 1.10 0.92 19.4 0.74 1.18 -37.1 0.39
share, EUR
Investments, 6.9 9.1 -24.0 13.8 17.7 -21.7 37.1
MEUR
Equity per 12.91 14.45 -10.7 13.49
share, EUR
Equity ratio, % 49.1 53.7 -4.6 57.5
Gearing, % -10.1 -16.8 -6.7 -20.3

Olvi presents the adjusted operating result and the adjusted profit for the period as alternative performance measures to improve comparability between reporting periods. In January-June 2023, the items affecting comparability not included in the adjusted operating result and the profit for the period totalled EUR 12.2 million and were related to the fine imposed on the Belarusian subsidiary.

Business development

CEO Patrik Lundell:

April-June 2023: The profitability of business operations improved from the first quarter

Olvi Group's sales volume increased by 9.8% in the second quarter, and its net sales grew by 15.8%. Good retail sales development continued. Net sales grew as a result of higher sales volumes and price increases. The growth in sales volumes was supported by investments made in Finland and the Baltic Sea region. In addition, the development of the product portfolio through new summer products and the company's own brands supported the increase in the average price.  

The prices of raw materials and packaging materials remained at a high level in the first half of the year, and salary increases entered into force in several markets. The cost of sales increased by 19.3%, and the increase continued to be higher than increase of net sales. Logistics costs remained at the first quarter's high level.

Profitability improved sequentially in the second quarter. Relative to net sales, the gross profit and the operating result improved as a result of price increases, the beginning of the season and the launch of new products. The Group's euro-denominated gross profit improved by 10.5% year-on-year. The relative gross profit decreased year-on-year and was 37.7% of net sales (39.5%). The adjusted operating result increased by 8.0% and was EUR 28.8 million. The increase in costs has not yet been fully offset by price increases in all markets, which is why the implementation of profitability measures continues.

The Group's strategy work progressed significantly in the second quarter, and an action plan is being prepared to further clarify the focus of operations and long-term growth targets and determine operating models to achieve the targets. The work has progressed well and will continue in order to concretise strategic projects in the third quarter. The updated strategy and its targets are planned to be published in the fourth quarter.  

January-June 2023

The sales volume increased by 8.9% and net sales grew by 19.2% in the first half of the year. The market shares remained at a good level or continued to improve in many product categories. Compared with the end of 2022, the cost level of cost of sales increased in the first quarter and remained high in the second quarter. The cost of sales was EUR 204.2 million in January-June. This was 22.3% more than in the previous year. Other costs increased by 11.9%. As a result of the general inflation rate in Europe, Olvi Group's costs increased throughout the first half of the year.

The adjusted operating result was EUR 38.8 million, increasing by 17.2% from the previous year. The company's performance improved during the first half of the year as price increases were implemented to compensate for higher costs. Operational efficiency has also been improved through investments and operational measures.

Segment-specific business development: April-June 2023

Price increases improved profitability in Finland compared with the first quarter

The sales volume of Finnish operations increased by 6.7%, and their net sales grew by 15.3%. Retail sales growth continued to be strong. Sales also increased in the hotel and restaurant channel (HoReCa). Retail prices were increased from March onwards, but the costs remained high. Salary increases and general inflation are among the factors increasing costs in 2023. The Finnish operations' operating result was EUR 8.0 million, with a decrease of 7.7% year-on-year. However, the decrease in the operating result was markedly lower than in the first quarter. Price increases will continue to be implemented as planned within the limits of contractual terms and conditions and price periods to restore profitability over the long term.  

The operating result in the Baltic Sea region improved significantly year-on-year

The sales volume in the Baltic Sea region increased by 5.7%. Sales volumes increased in all countries of operation and sales channels except cross-border trade. Net sales increased by 24.2%. Price increases and the launch of new products for the summer season contributed to the growth of net sales. 

The operating result increased by 34.8% to EUR 9.8 million. Price increases have largely been sufficient to cover significant cost increases, meaning that profitability has improved. The operations in Denmark in particular still have potential for improving profitability, and the local management focuses on this potential.  

Business operations grew in Belarus despite the challenging operating environment

The sales volume increased by 17.9%, and net sales grew by 5.3%. The increase in the sales volume was supported by the favourable development of market shares in several product categories. Compared with the previous year, net sales in the local currency increased by 21.8%, meaning that the weaker exchange rate had a significant impact on euro-denominated net sales.

The operating result was EUR 11.4 million, with an increase of 1.6%. In the local currency, the operating result grew by 5.6%. The Belarusian segment does not include depreciation during 2023 because of an impairment of non-current assets in the 2022 financial statements. Furthermore, the operating result for the comparison period does not include depreciation, which was not recognised when the segment was classified as assets held for sale.

Investments

Olvi's balance sheet is strong, and the company has no net debt. This gives Olvi good opportunities to develop its business operations, invest in Finland and the Baltic Sea region, and seek growth and develop in new markets. The company maintains its plants' good competitiveness by investing in new technologies to ensure production efficiency and environmental friendliness. 

Olvi Group's extension and replacement investments were EUR 13.8 (17.7) million in January-June. Investments decreased because of the scheduling of some projects. Of the investments, EUR 6.7 million were related to Finland and EUR 6.5 million to subsidiaries in the Baltic Sea region. Only replacement investments necessary for the continuity of production have been made in Belarus through the subsidiary's income financing, totalling EUR 0.6 million.

Olvi is investing in environmental friendliness and the cost-effectiveness and capacity of production. The installation of the carbon dioxide capture and purification equipment at the Iisalmi plant was completed in June. Its implementation will take place in the third quarter. The equipment will reduce emissions from the transport of purchased carbon dioxide, use carbon dioxide generated in production, secure the availability of the critical raw material and generate cost savings. Olvi is investing in production and storage capacity required for business growth. For example, collection and storage capacity was improved in Finland for the season.

Sustainability

In recognition of the long-term development of sustainability in operations, Olvi's Latvian subsidiary, Cēsu Alus, was the first food industry company to receive the highest rating (Diamond) in the annual assessment of Latvian companies by the Institute for Corporate Sustainability and Responsibility (InSCR).

Environmental sustainability

The climate emissions calculation for 2022 has been completed. Compared with the previous year, Olvi Group's absolute total emissions have increased by 0.7%, where the total emissions from the company's own operations and purchased energy (Scope 1 and 2) have decreased by 2.5%, and total emissions from the value chain (Scope 3) have increased by 1%. This is because of higher material purchases ja transport volumes as a result of higher production volumes, in addition to the availability of more accurate information about the value chain. The emission intensity (emissions in relation to litres produced) has decreased considerably, by 3.6%. Thanks
to operational development, the emission intensity has been reduced through lower emissions from packaging materials and transport. The Greenhouse Gas inventory (GHG inventory) has been reviewed and updated with a third party and is based on the GHG Protocol Corporate Standard and the Land Sector and Removals Guidance. In addition, annual climate emission reporting under the CDP (Customer Data Platform) project and Global Compact reporting are in progress.

To further develop operations, Olvi, the parent company, is implementing carbon dioxide capture and purification equipment to reduce the need for purchased carbon dioxide and emissions from its transport. Olvi is also piloting the use of biofuels in the transport of products.

Social sustainability

In social sustainability, Olvi Group is focusing on its occupational safety culture. The Group has prepared common occupational safety principles, and their implementation in the Group companies has started. In addition, Olvi Group has created an operating model to identify human rights impacts throughout the value chain. The first assessment has been carried out with regard to Olvi's own operations and value chain, and the assessments will continue in other Group companies in the autumn.

Good governance

To promote good governance, Olvi Group works to ensure its partners' commitment to compliance with its Code of Conduct for Partners. The Group has updated its Code of Conduct and other guiding principles, and guidelines for partners are currently in the signing phase.

Seasonal nature of operations

The nature of the Group's business operations involves seasonal fluctuation. The net sales and operating result of the geographical reporting segments are not accumulated steadily. Instead, they fluctuate in accordance with the special characteristics of the seasons of the year and product seasons.

Sales development

Olvi Group's sales volume grew by 8.9% in January-June, totalling 509.0 (467.2) million litres.

Sales 4-6/ 2023 4-6/ 2022 Change, % 1-6/ 2023 1-6/ 2022 Change, %
volume, Mltr
Finland 80.1 75.1 6.7 138.9 130.7 6.3
Baltic Sea 135.7 128.4 5.7 224.0 218.3 2.6
region
Belarus 105.9 89.8 17.9 171.8 144.0 19.3
Eliminations -16.0 -14.9 -25.7 -25.8
Total 305.7 278.4 9.8 509.0 467.2 8.9

The Group's net sales in January-June increased by 19.2% and were EUR 324.9 (272.7) million. 

Net sales, 4-6/ 2023 4-6/ 2022 Change, % 1-6/ 2023 1-6/ 2022 Change, %
MEUR
Finland 68.0 58.9 15.3 116.3 100.5 15.7
Baltic Sea 94.4 76.1 24.2 153.1 124.7 22.7
region
Belarus 44.1 41.9 5.3 72.9 61.1 19.3
Eliminations -11.1 -8.1 -17.3 -13.6
Total 195.4 168.8 15.8 324.9 272.7 19.2

Financial performance

The Group's operating result in April-June was EUR 28.8 (26.7) million, or 14.7% (15.8%) of net sales. The second-quarter operating result does not include items affecting comparability. The adjusted operating result increased by 17.2% in January-June and was EUR 38.8 million. The operating result in January-June was EUR 26.6 million, down 19.6% from the previous year. The EUR 12.2 million fine paid in Belarus was recognised as an item affecting comparability in the first half of the year.

Adjusted 4-6/ 2023 4-6/ 2022 Change, % 1-6/ 1-6/ Change, %
operating
result, MEUR 2023 2022
Finland 8.0 8.6 -7.7 9.7 11.3 -14.3
Baltic Sea 9.8 7.3 34.8 12.3 9.6 28.0
region
Belarus 11.4 11.3 1.6 17.5 13.1 34.1
Eliminations -0.4 -0.5 -0.7 -0.9
Total 28.8 26.7 8.0 38.8 33.1 17.2

Operating 4-6/ 2023 4-6/ 2022 Change, % 1-6/ 2023 1-6/ 2022 Change, %
result, MEUR
Finland 8.0 8.6 -7.7 9.7 11.3 -14.3
Baltic Sea 9.8 7.3 34.8 12.3 9.6 28.0
region
Belarus 11.4 11.3 1.6 5.4 13.1 -59.0
Eliminations -0.4 -0.5 -0.7 -0.9
Total 28.8 26.7 8.0 26.6 33.1 -19.6

The Group's profit after taxes in January-June was EUR 15.3 (24.9) million.

Earnings per share calculated from the profit attributable to the owners of the parent company were EUR 0.74 (1.18) in January-June.

Financial position and the balance sheet

Olvi Group's balance sheet total at the end of June 2023 was EUR 545.6 (563.4) million. The balance sheet total is reduced by an impairment of EUR 35 million in the Belarusian business segment in connection with the 2022 financial statements. Equity per share was EUR 12.91 (14.45). The equity ratio was 49.1% (53.7%), and gearing was -10.1% (-16.8%). The Group's liquidity indicator, the current ratio, remained at the same good level as before, at 1.1 (1.2). Interest-bearing liabilities amounted to EUR 5.5 (9.0) million at the end of June. Of the interest-bearing liabilities, short-term liabilities accounted for EUR 3.4 (7.0) million.

Olvi Group's balance sheet and financial position are strong. The company has no net debt. The company's ability to invest has remained good.

Cash assets stood at EUR 32.5 million at the end of June, with a decrease of EUR 27.2 million year-on-year. Cash flow from operations was EUR -0.1 (26.0) million. Working capital was reduced by the parent company's decision to replace the factoring of accounts receivable with other forms of short-term financing at the beginning of 2023. The EUR 12.2 million fine imposed on Lidskoe Pivo was paid in the second quarter from local funds. The fine had a significant negative impact on the company's and thereby also the Group's cash assets. Cash flow from investing activities was EUR -13.9 (-17.8) million, and cash flow from financing activities was EUR -12.7 (-7.5) million. 

Personnel

In January-June, Olvi Group had an average of 2,374 (2,317) employees, with an increase of 2.5%.

Olvi Group's average number of personnel by segment:

4-6/ 2023 4-6/ 2022 Change, % 1-6/ 2023 1-6/ 2022 Change, %
Finland 483 476 1.5 448 441 1.6
Baltic 1,098 1,067 2.9 1,069 1,027 4.1
Sea
region
Belarus 865 850 1.8 857 849 0.9
Total 2,446 2,393 2.2 2,374 2,317 2.5

Board of Directors and management

No changes took place in Olvi plc's Board of Directors and management during the second quarter.

Other events during the review period

Changes in the Group structure

On 22 June 2023, Olvi plc redeemed the remaining 20.0% of Servaali Oy's share capital. The redemption liability was recognised on the Group's balance sheet in connection with the acquisition in 2018. No other changes took place in Olvi's subsidiary holdings in January-June 2023.

Business risks and their management

Impacts of the war in Ukraine

The war in Ukraine has significantly increased business risks. The coronavirus pandemic caused problems in the availability of raw materials and packaging materials, and the war in Ukraine has further complicated the procurement of materials. The increase in the prices of packaging materials, which started during the coronavirus pandemic, has continued after the pandemic. The prices of raw materials, especially barley malt, sugar and carbon dioxide, are at high levels, and their market availability has been more uncertain than usual. The prices of electricity and gas have fluctuated more greatly than before, particularly in the Baltic Sea region segment, which continues to be reflected in production costs. The price of oil has affected fuel prices, which are directly reflected in logistics costs. Olvi will respond to the increase in costs by continuing price increases as far as possible. The company will also improve the efficiency of its production operations.

Consumer prices have risen rapidly, especially in Europe, as a result of the war in Ukraine. General cost inflation may reduce consumers' purchasing power and affect consumer behaviour. Changes in consumer behaviour are already being reflected in a shift in consumption to more affordable product options, and overall consumption may decrease. This may have an impact on the preconditions for business growth and profitability over the long term.

Because of the geopolitical situation, uncertainty is related to the Belarusian business segment and the stability and predictability of the operating environment. Beginning in December 2022, Olvi's subsidiary Lidskoe Pivo was inspected in a special audit carried out by the State Control Committee of the Republic of Belarus. The audit has to a great extent been completed by the time of publication of the half-year report, and any consequences arising from the remaining aspects are limited. The audit resulted in a significant fine that undermines business conditions. The fine was announced on 29 March 2023. The fine was appealed to a higher court by Olvi, but the decision remained unchanged. In addition, the company's shares are subject to a sales ban, as a result of which Olvi has stopped the process to sell Lidskoe Pivo. Olvi has stated to the local authorities that it complies with local and international laws and has stressed the importance of local operational capability and the maintenance of owners' rights in the current operating environment. Other uncertainties in the Belarus business segment are related to the development of exchange rates, changes in the operating environment, trade sanctions and the functioning of financial transactions with Western countries. Olvi's Belarusian subsidiary operates by means of its own cash flow financing. Lidskoe Pivo paid the fine from local funds, which significantly reduced the company's cash assets, but the company has been able to continue its operating activities.

Preparedness

Olvi Group has prepared several scenarios related to the development of the business environment and is prepared to respond to changing situations. We are prepared for production disruptions and have drawn up continuity plans related to the availability of labour, raw materials, and energy, for example. Investments have been made to secure energy availability. The company has also made efforts to ensure the procurement of raw materials and packaging materials.

A more detailed description of the normal risks related to business operations is provided in Olvi Group's Board of Directors' report and the notes to the financial statements and on the company website (Investors > Olvi as an investment > Risks and risk management).

Events after the review period

Olvi returned its guidance by means of a stock exchange release published on 8 August 2023. There are no other significant events to report after the review period.

OLVI PLC
Board of Directors
Webcast

Olvi plc and its CEO will hold a press conference, which can be followed at https://olvi.videosync.fi/q2-2023 from 10.00 am onwards on the date of publication of this half-year report.
The press conference will be held in Finnish.

A recording of the webcast will become available on the company's website at https://www.olvigroup.fi/en/releases-and-publications/financial-releases/

More information:
Patrik Lundell, CEO, Olvi plc, tel. +358 290 00 1050
Tiina-Liisa Liukkonen, CFO, Olvi plc, tel. +358 29 000 1050

TABLES:
- Consolidated statement of comprehensive income, Table 1
- Balance sheet, Table 2
- Statement of changes in equity, Table 3
- Cash flow statement, Table 4
- Notes to the half-year report bulletin, Table 5

DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Key media outlets
www.olvi.fi

OLVI GROUP TABLE 1
CONSOLIDATED STATEMENT
OF COMPREHENSIVE
INCOME
EUR 1,000
4-6/2023 4-6/2022 1-6/2023 1-6/2022 1-12/2022

Gross sales 401,925 354,120 680,778 587,875 1,253,782
Excise taxes and other -206,497 -185,364 -355,887 -315,211 -670,079
adjustments
Net sales 195,428 168,756 324,891 272,664 583,703

Cost of sales -121,689 -102,028 -204,204 -166,925 -363,816

Gross profit 73,739 66,728 120,687 105,739 219,887

Logistics, sales and -35,379 -31,660 -62,320 -55,712 -120,997
marketing expenses
Administrative -9,272 -8,567 -19,454 -17,371 -42,415
expenses
Other operating income -294 161 -12,337 417 -34,111
and expenses
Operating result 28,794 26,662 26,576 33,073 22,364

Financial income 380 -202 422 243 1,593
Financial expenses -470 -882 -807 -1,185 -5,628
Share of the profit of 0 0 0 0 45
associated companies
and joint ventures
Profit before tax 28,704 25,578 26,191 32,131 18,374

Income taxes -5,756 -6,168 -10,910 - 7,236 -10,848
PROFIT FOR THE PERIOD 22,948 19,410 15,281 24,895 7,526

Other items of
comprehensive income
that may
be later reclassified
to profit or loss:
Translation 435 13,858 -3,392 5,809 1,638
differences related to
foreign
subsidiaries
Income taxes related 0 -188 0 -66 0
to items
TOTAL COMPREHENSIVE 23,383 33,080 11,889 30,638 9,164
INCOME FOR THE PERIOD

Distribution of the
profit for the period:
- Owners of the parent 22,687 19,013 15,388 24,497 7,977
company
- Non-controlling 261 397 -107 398 -451
interest

Distribution of
comprehensive income
for the
period:
- Owners of the parent 23,248 32,250 12,269 30,060 9,674
company
- Non-controlling 135 830 -380 578 -510
interest

Earnings per share
calculated from profit
attributable to owners
of the parent company,
EUR
- Undiluted 1.10 0.92 0.74 1.18 0.39
- Diluted 1.10 0.92 0.74 1.18 0.39

OLVI GROUP TABLE 2
BALANCE SHEET
EUR 1,000 30 Jun 2023 30 Jun 2022 31 Dec 2022
ASSETS
Non-current assets
Tangible assets 209,796 238,431 208,165
Goodwill 22,204 26,276 22,204
Other intangible assets 11,012 12,221 10,972
Holdings in associated 987 980 1,025
companies and joint
ventures
Other investments 1,043 888 1,046
Loans receivable and 3,061 2,359 1,377
other long-term
receivables
Deferred tax assets 2,445 1,667 2,569
Total non-current assets 250,548 282,822 247,358

Current assets
Inventories 84,277 73,333 70,891
Accounts receivable and 178,205 147,515 109,712
other receivables
Income tax receivables 132 22 506
Cash and cash equivalents 32,482 59,691 61,207
Total current assets 295,096 280,561 242,316
TOTAL ASSETS 545,644 563,383 489,674

EQUITY AND LIABILITIES
Equity attributable to
owners of the parent
company
Share capital 20,759 20,759 20,759
Other reserves 1,092 1,092 1,092
Fair value reserve 295 295 295
Treasury shares -884 -1,075 -1,079
Translation differences -55,066 -48,164 -52,030
Retained earnings 300,955 326,092 310,194
267,151 298,998 279,231
Non-controlling interest 566 3,798 2,514
Total equity 267,717 302,796 281,745

Non-current liabilities
Financial liabilities 2,044 2,001 1,983
Other liabilities 826 3,999 3,667
Deferred tax liabilities 13,141 13,765 13,466

Current liabilities
Financial liabilities 3,413 6,967 2,164
Accounts payable and 252,067 228,689 186,362
other payables
Income tax liability 6,436 5,166 287
Total liabilities 277,927 260,587 207,929
TOTAL EQUITY AND 545,644 563,383 489,674
LIABILITIES

OLVI GROUP TABLE 3
STATEMENT OF
CHANGES IN
EQUITY
EUR 1,000 Share Other Fair Reserve Translation Earnings Attributable Total
capital reserves value for differences to non
reserve treasury -controlling
shares interest
Equity 1 Jan 20,759 1,092 295 -1,079 -52,030 310,194 2,514 281,745
2023
Comprehensive
income:
     Profit 15,388 -107 15,281
for the
period
     Other
items of
comprehensive
income:
          -3,119 -273 -3,392
Translation
differences
Total -3,119 15,388 -380 11,889
comprehensive
income for
the period
Business
transactions
with
shareholders:
     Dividend -24,818 -382 -25,200
payment
     Share 337 337
-based
incentives,
value of work
performance
     -604 -604
Acquisition
of treasury
shares
     Issue of 799 -1,361 -562
treasury
shares to
personnel
     83 52 -23 112
Adjustment
for previous
periods
Business 195 83 -25,790 -405 -25,917
transactions
with
shareholders,
total
Changes in
holdings in
subsidiaries:
      Change 1,163 -1,163 0
in non
-controlling
interest
Changes in 1,163 -1,163 0
holdings in
subsidiaries,
total
Equity 30 Jun 20,759 1,092 295 -884 -55,066 300,955 566 267,717
2023
EUR 1,000 Share Other Fair Reserve Translation Earnings Attributable Total
capital reserves value for differences to non
reserve treasury -controlling
shares interest
Equity 1 Jan 20,759 1,092 295 -438 -53,728 326,016 3,627 297,624
2022
Comprehensive
income:
     Profit 24,497 398 24,895
for the
period
     Other
items of
comprehensive
income:
          5,629 180 5,809
Translation
differences
          -66 -66
Income taxes
related to
items
Total 5,563 24,497 578 30,638
comprehensive
income for
the period
Business
transactions
with
shareholders:
     Dividend -24,855 -175 -25,030
payment
     -637 -637
Acquisition
of treasury
shares
  Share-based 518 518
incentives,
value of work
performance
     -84 -84
Adjustment
for previous
periods
Business -637 -24,421 -175 -25,233
transactions
with
shareholders,
total
Changes in
holdings in
subsidiaries:
      -232 -232
Acquisition
of shares
from non
-controlling
interest
      Change 232 -232 0
in non
-controlling
interest
Changes in 0 -232 -232
holdings in
subsidiaries,
total
Equity 30 Jun 20,759 1,092 295 -1,075 -48,165 326,092 3,798 302,796
2022

OLVI GROUP TABLE 4
CASH FLOW STATEMENT
EUR 1,000
1-6/2023 1-6/2022 1-12/2022

Profit for the period 15,281 24,896 7,526
Adjustments:
     Depreciation and impairment 12,160 12,533 64,532
     Other adjustments 12,147 8,568 14,509
Change in net working capital:
     Change in accounts -71,820 -47,052 -9,578
receivable and other receivables
     Change in inventories -15,245 -13,310 -12,349
     Change in accounts payable 51,762 44,246 16,536
and other liabilities
Interest paid -189 -544 -449
Interest received 188 140 292
Dividends received 3 5 5
Taxes paid -4,361 -3,446 -13,861
Cash flow from operating -74 26,036 67,163
activities (A)

Investments in tangible and -14,262 -17,835 -37,392
intangible assets
Proceeds from the sale of 311 377 976
tangible and intangible assets
Acquisition of shares from non 0 -378 -378
-controlling interest
Expenditure on other investments 0 0 -163
Dividends received 41 38 38
Cash flow from investing -13,910 -17,798 -36,919
activities (B)

Loan withdrawals 2,822 6,864 11,351
Repayment of loans -2,351 -1,125 -11,674
Acquisition of treasury shares -604 -637 -641
Dividends paid -12,581 -12,587 -25,268
Cash flow from financing -12,714 -7,485 -26,232
activities (C)

Increase (+) / decrease (-) in -26,698 753 4,012
cash and cash equivalents
(A+B+C)

Cash and cash equivalents 1 Jan 61,207 58,741 58,741
Impact of exchange rate changes -2,027 197 -1,546
Cash and cash equivalents 30 Jun 32,482 59,691 61,207
/ 31 Dec

OLVI GROUPTABLE 5

NOTES TO THE HALF-YEAR REPORT

The half-year report has been prepared in accordance with IAS 34 Interim Financial Reporting, applying the same accounting principles that were applied to the 2022 financial statements (31 December 2022).

The figures in the half-year report are presented in thousands (1,000) of euros. For presentation, individual figures and totals have been rounded up to full thousands, which causes rounding differences in the totals. Exchange rates obtained from the Central Bank of Belarus have been used as the exchange rate for the Belarusian rouble. The key ratios have been calculated by using accurate euro-denominated figures. The information published in the half-year report has not been audited.

1.  SEGMENT
INFORMATION
SEGMENTS' NET
SALES AND
PROFIT FOR
THE PERIOD 1
-6/2023
EUR 1,000 Finland Baltic Sea region Belarus Eliminations Group

INCOME
External 115,719 136,421 72,751 324,891
sales
     Beverage 114,715 136,421 72,751 323,887
sales
     1,004 0 0 1,004
Equipment
services
Internal 537 16,632 132 -17,302 0
sales
Total net 116,257 153,053 72,883 -17,302 324,891
sales

Total profit 27,196 8,835 -3,219 -17,531 15,281
for the
period

SEGMENTS' NET
SALES AND
PROFIT FOR
THE PERIOD 1
-6/2022
EUR 1,000 Finland Baltic Sea region Belarus Eliminations Group

INCOME
External 99,840 111,913 60,911 272,664
sales
     Beverage 99,031 111,913 60,911 271,855
sales
     809 0 0 809
Equipment
services
Internal 664 12,824 198 -13,686 0
sales
Total net 100,504 124,737 61,109 -13,686 272,664
sales

Total profit 29,170 6,164 10,575 -21,014 24,895
for the
period

2.  RELATED PARTY TRANSACTIONS

Management's employee benefits

Board members' and the CEO's salaries and other short-term employee benefits
EUR 1,000 1-6/2023 1-6/2022 1-12/2022
CEO 178 407 594
Chair of the Board 35 36 73
Other Board members 73 86 172
Total 286 529 839

3. SHARES AND SHARE CAPITAL
30 Jun 2023       %

Series A shares, number of shares 16,989,976 82.0
Series K shares, number of shares 3,732,256 18.0
Total 20,722,232 100.0

Total number of votes, Series A shares 16,989,976 18.5
Total number of votes, Series K shares 74,645,120 81.5
Total number of votes 91,635,096 100.0

Votes per Series A share 1
Votes per Series K share 20

The registered share capital totalled EUR 20,759 thousand on 30 June 2023.

A dividend of EUR 1.20 per share for 2022 (EUR 1.20 per share for 2021), totalling EUR 24.8 (24.9) million, will be paid on shares in Olvi plc. The dividend will be paid in two instalments. The first instalment, EUR 0.60 per share, was paid on 20/04/2023. The second instalment, EUR 0.60 per share, will be paid on 05/09/2023. Series K shares and Series A shares provide their holders with equal rights to dividends. The Articles of Association include a redemption clause concerning Series K shares.

4. SHARE-BASED REWARDS

The 2021-2022 Matching Share Plan for key personnel ended at Olvi Group in the second quarter (performance period 15 April 2021 to 14 April 2023). The incentive plan was part of the remuneration approved for the Group's key personnel for 2021-2025. In the plan, the target group was offered an opportunity to acquire additional shares as rewards by investing personally in Olvi plc's Series A shares. In accordance with the terms and conditions of the plan, the rewards were paid in both Series A shares in Olvi and in cash. A total of 11,395 Series A shares were transferred as rewards. The target group of the incentive plan consisted of 49 people, including the members of Olvi's Management Team.

The costs related to incentive plans totalled EUR 336.6 thousand in the review period. Olvi Group has no other share or option arrangements in place.

5. TREASURY SHARES

In accordance with the share plan, Olvi plc transferred its own shares to the members of the matching share plan's target group. A total of 11,395 shares were transferred, with a total acquisition price of EUR 370.9 thousand. The Series A shares transferred accounted for 0.05% of all shares.

At the end of the review period, Olvi plc held a total of 28,792 of its own Series A shares as treasury shares. The total acquisition price of treasury shares was EUR 884.0 thousand. The treasury shares do not provide the company with voting rights. The Series A shares held by Olvi plc represent 0.14% of all shares in the company and 0.03% of all votes provided by the shares in the company. The treasury shares account for 0.17% of all Series A shares in the company and 0.17% of the votes provided by all Series A shares in the company.

6. NUMBER OF SHARES 1-6/2023 1-6/2022 1-12/2022

  - Average 20,688,243 20,708,869 20,700,783
  - At the end of the period 20,693,440 20,692,828 20,692,828

7. TRADING IN SERIES A SHARES ON
THE NASDAQ HELSINKI
1-6/2023 1-6/2022 1-12/2022
Trading in Series A shares in Olvi, 804,864 1,438,181 2,351,044
number of shares
Total value of trading, EUR 1,000 24,171 52,513 82,916
Proportion of the trading out of 4.7 8.5 13.8
the total number of Series A
shares, %

Average share price, EUR 30.03 36.58 35.31
Closing price, EUR 29.00 32.35 33.15
Highest price, EUR 34.95 52.00 52.00
Lowest price, EUR 26.80 29.40 29.40

8. FOREIGN AND
NOMINEE
-REGISTERED
HOLDINGS 30 Jun
2023
Book-entry shares Number of votes Shareholders
number % number % number %
Finnish, total 16,706,025 80.62 87,618,889 95.62 22,650 99.60
Foreign, total 67,314 0.32 67,314 0.07 79 0.35
Nominee 441,492 2.13 441,492 0.48 6 0.03
-registered
(foreign), total
Nominee 3,507,401 16.93 3,507,401 3.83 4 0.02
-registered
(Finnish), total
Total 20,722,232 100.00 91,635,096 100.00 22,739 100.00

9. LARGEST SHAREHOLDERS 30 Jun 2023
Series K Series A Total % Number of %
votes
1 Olvi Foundation        2,363,904 890,613 3,254,517 15.71 48,168,693 52.57
2 The estate of Heikki 903,488 103,280 1,006,768 4.86 18,173,040 19.83
Hortling*                                   
3 Timo Einari Hortling 212,888 49,152 262,040 1.26 4,306,912 4.70
4 Marit Hortling-Rinne     149,064 14,234 163,298 0.79 2,995,514 3.27
5 Nordea Bank Abp, nominee-registered 2,003,548 2,003,548 9.67 2,003,548 2.19
6 Skandinaviska Enskilda Banken Ab (publ), 1,446,265 1,446,265 6.98 1,446,265 1.58
Helsinki branch, nominee-registered
7 Varma Mutual Pension Insurance Company 828,075 828,075 4.00 828,075 0.90
8 Ilmarinen Mutual Pension Insurance Company 683,000 683,000 3.30 683,000 0.75
9 Pia Johanna Hortling 23,388 26,016 49,404 0.24 493,776 0.54
10 Jens Einari Hortling 23,388 16,216 39,604 0.19 483,976 0.53
Other 56,136 10,929,577 10,985,713 53.00 12,052,297 13.14
Total 3,732,256 16,989,976 20,722,232 100.00 91,635,096 100.00
* The shareholding includes shares held by
the shareholder and the entities controlled
by them.

Olvi did not receive any flagging notifications under chapter 2, section 10 of the Securities Markets Act in January-June 2023.

10. PROPERTY, PLANT AND EQUIPMENT
EUR 1,000
1-6/2023   1-6/2022   1-12/2022
Opening balance 208,165 229,356 229,356
Additions 13,207 17,189 37,286
Deductions and transfers -463 -92 -152
Depreciation and impairment -10,915 -10,955 -58,206
Exchange rate differences -198 2,932 -119
Total 209,796 238,430 208,165
11. CONTINGENT LIABILITIES
EUR 1000
30 Jun 2023 30 Jun 2022 31 Dec 2022

Pledged assets and contingent liabilities
   On the company's own behalf 4,356 10,004 2,608

Lease and rental liabilities:
   Maturing in less than a year 1,315 1,294 1,337
   Maturing within 1-5 years 1,395 1,399 1,283
Total lease and rental liabilities 2,710 2,693 2,620

Other liabilities 67 60 67

12. VALUATION OF THE BELARUSIAN BUSINESS SEGMENT

For the 2022 financial statements (31 December 2022), the management assessed the book value of the Belarusian business segment in a changed operating environment. An impairment of EUR 35.0 million was recognised based on the assessment. Based on the management's assessment and testing, the balance sheet valuation of the Belarusian business segment on 30 June 2023 is materially at the right level, and there is no need to change the impairment recognised.

13. CALCULATION PRINCIPLES FOR KEY FIGURES

In its summary of key ratios (page 1), the Group presents key ratios directly derived from the consolidated income statement (net sales, operating result, profit for the period and their proportions of net sales, as well as earnings per share). (Earnings per share = Profit for the period attributable to owners of the parent company / Average number of shares during the period, adjusted for share issues).

In addition to its IFRS-based consolidated financial statements, Olvi plc presents Alternative Performance Measures that describe the financial performance of its business operations and provide a comparable overview of the company's profitability, solvency, and liquidity.

The Group has applied the European Securities and Markets Authority's (ESMA) new guidelines (effective since 3 July 2016) on Alternative Performance Measures and has determined such measures as follows:

The Group presents sales volume data in millions of litres as an Alternative Performance Measure that supports net sales. Sales volume is an important and widely used indicator in the industry that describes the scope of operations. To improve comparability between reporting periods, the Group also presents the adjusted operating result and the adjusted profit for the period as Alternative Performance Measures. The adjusted operating result is calculated by deducting significant items affecting comparability from net sales. The corresponding items have been deducted from the profit for the period when calculating the adjusted profit for the period.

Investments consist of increases in fixed assets, excluding increases under IFRS 16.

Earnings per share = Equity attributable to owners of the parent company / Number of shares at the end of the period, adjusted for share issues.

Equity ratio, % = 100 * (Equity attributable to owners of the parent company + non-controlling interest) / (Balance sheet total).

Gearing, % = 100 * (Interest-bearing liabilities - Cash in hand and at bank) / (Equity attributable to owners of the parent company + non-controlling interest).