altia financial statements 2010 · mondavi. altia provides its customers, partners and consumers...

Altia Financial Statements 2010

Altia is the leading wine and spirits company offering quality brands in the Nordic and Baltic countries. Altia produces, delivers, markets, sells, imports and exports alcoholic beverages in these markets.

Altia’s own brands such as Blossa, Chill Out, Explorer, Grönstedts, Koskenkorva, Jaloviina, O.P. Anderson, Renault and Skåne Akvavit have a strong market position and many of them a long heritage to cherish.

Altia’s partner brands represent both local and international brands from all over the world, such as Codorniu, Drostdy-Hof, Hardy’s, Jack Daniel’s, Bowmore, Nederburg, Ravenswood and Robert Mondavi.

Altia provides its customers, partners and consumers with extensive production, sales and logistic set-up.

Your 1st Choice Service Company

Contents 2 CEO’s review

Financial StatementSconSolidated Financial StatementS 4 Board of Directors’ report 10 Consolidated statement of comprehensive income 11 Consolidated statement of financial position 12 Consolidated statement of cash flows 13 Consolidated statement of changes in equity 14 Notes to the consolidated financial statements

Parent comPany Financial StatementS 46 Parent company’s income statement 47 Parent company’s balance 48 Parent company’s statement of cash flows 49 Notes to the parent company’s financial statements 55 Board of Directors’ proposal for the distribution of profit 56 Auditor’s report

57 Corporate governance principles 60 Board of Directors 61 Executive Management Team

1 Altia Financial Statements 2010

Dear reader, I am pleased to announce that Altia Group’s profits have improved substantially compared to last year and we have also achieved the financial and operational goals we set ourselves for 2010. We continued to execute our strategy as planned. I would like to extend my thanks to all our staff for their excellent work and strong commitment to the Group during the year.

Altia Group’s net sales amounted to EUR 487.9 (407.3) million in the reporting period. Operating profit grew substantially from the previous year and totalled EUR 32.6 (15.6) million. Return on invested capital increased to 10% (4.2%) and return on equity increased to 17.2% (4.3%).

Profit improvements have been generated through enhanced efficiency across the Group, profitable growth, efficient utilisation of capacity and opera-tional improvement in Sweden. The units that were already performing well, particularly in Finland and Norway, have continued their stable performance and provided a valuable contribution to the Group.

The integration of the business acquired in Sweden and Denmark proceeded as planned and we succeeded in achieving the goals set for the first year after the acquisition. All those involved in the project, both new and existing employees of Altia, have made a significant contribution to this success.

Following the acquisition, Altia has become the biggest wine and spirits producer and importer in the Swedish market, and we now have an excellent opportunity to become the leading wine and spirits producer and importer our operating area. We have noted already during the reporting year that we have achieved remarkable scale benefits, which we can further increase in the future.

In Sweden, our largest market, the development and efficiency improvements made in 2009 have been highly successful and we achieved substantial operational and financial improvements compared to the previous year. At the same time, we have created a strong basis for operational growth in this market.

CEO’s review


In Denmark, we increased our market share as a result of the acquisition and our strategy is to continue strengthening our market position. In Norway, we embarked on an efficiency improve-ment project during the year. The competitive landscape between importers continues to be exceptionally tough, but we believe that we are well placed to strengthen our market position

In the Baltic countries, market volume stabilised during the year but was clearly below the level of 2008. The benefits of our efficiency improvement project will be delivered in 2011. Once the overall economic situation improves, we will be able to leverage our strong market position in these countries.

In Finland, our performance was substantially affected by alcohol tax increases, which caused a decrease in the market volume of spirits of approxi-mately 7%. Despite this, our financial performance was at the same level as last year due to our programme of operational efficiency improvements.

We achieved remarkable cost savings in production, purchasing and logistics operations during the year, which increased supply chain efficiency, and we also achieved a high capacity utilisation rate. Based on the savings achieved, I believe that Altia will be able to realise remarkable efficiency improvements in this area.

In 2010, we acquired the Renault cognac trademark, which supplements our product portfolio and gives us significant efficiency benefits within the cognac business.

Revised operating model reflects our strategyOur operating model comprising three business areas (Brands, Trading and Industrial Services) has turned out to be highly successful. All business areas have created their own competition strategies and operating models best suited to them. We have already been able to find substantial synergy opportunities through better cooperation between the supply chain and business areas, which will

give us remarkable efficiency and competitive advantages in the future.

During the reporting period, we have brought more new products to market than in previous years, thanks to excellent cooperation between our product development, marketing, sales and produc-tion professionals. This will create a strong basis for growth in the future.

We continue in 2011 guided by our strategyIn 2011, we will continue to execute our strategy. Together with operational efficiency improvements, our strategy work will concentrate on growth and developing competencies required in strategy realisation. Our goal is to grow faster than the markets, and we will seek growth both organically and through acquisitions. Increasing the company value through growth strategy will remain the factor steering development.

Antti Pankakoski CEO


Board of Directors’ report for the reporting period 1 January–31 December 2010

Altia Group’s net sales amounted to EUR 487.9 million, which is 19.8% more than in the previous year (EUR 407.3 million). Profitability improved substantially compared to the comparison period. This resulted partly from the business acquisition, cost adjustments and strengthening of exchange rates. Operating profit excluding non-recurring items was EUR 32.4 (11.6) million and EUR 32.6 (15.6) million including non-recurring items.

Altia Group’s 2010 financial statements are prepared in accordance with the IFRS standards. Comparative information is based on corresponding figures for the previous period 2009, unless otherwise stated (figures in brackets).

Operating environmentIn the case of Finland, Sweden and Norway, State monopoly sales have been taken into account as retail sales. The figures are based on sales volumes published by the monopolies (Alko, Systembolaget, Vinmonopolet) and the comparison period is the corresponding time period of previous year, figures in brackets. The information relating to Denmark, Estonia and Latvia is based on Altia’s own estimates.

The economic recovery during the reporting period was reflected as an increase in the alcoholic beverage sales volumes especially in more expensive categories, for example, in sparkling wine and champagne. Due to the large differences in the alcohol taxation and exchange rate fluctuations, cross-border trade for alcoholic beverages was active in the whole operating area. Consumers’ growing interest towards combining wine and food affected wine sales development in the Nordic countries. The demand for ecological products increased in the Nordic countries. Ecological thinking had an effect also on packages – the relative proportion of the recycklable plastic bottles and bag-in-boxes increased. The lighter glass bottles are the next ecological trend which has not yet fully reached the Nordic and Baltic countries.

In Finland, the decline in alcoholic beverage sales continued last year due to the tax increases in 2008 and 2009 and the challenging economic situation. The total sales decreased by 3.2% (3.0%). Spirits sales

declined by 5.4% (6.6%), while wine sales remained almost at the same level as last year, the change was

-0.2% (1%). When fortified wine sales are excluded, wine sales increased by 0.5% (1.4%).

In Sweden, the development of total sales was 1.2% (7.6%), while spirits sales changed by -0.7% (5.2%). Wine sales further increased by 3.6% (9.0%), but the increase was more moderate compared to the previous reporting period. Sales growth in the comparison year was exceptionally intense due to the weak Swedish krona, which promoted cross-border trade.

Also in Norway, the State monopoly sales grew by 1.6% (4.0%). Spirits sales changed by -2.1% (0.6%) and wine sales increased by 2.0% (4.6%). In the reporting period 2010, the growth rate of sales in Norway was the weakest after the end of 1980s. The weakening rate is assumed to be deriving from active cross-border and tax-free trade.

In Denmark, spirits sales increased by approximately 4.0%, while wine sales remained constant and sales of bag-in-boxes increased by 2–3%.

In Estonia, the domestic vodka market decreased by 13.5% and the grey market was estimated to have increased. The wine market volume remained stable and the price level of bag-in-boxes decreased.

In Latvia, the grey market of alcoholic beverages is estimated to be around 40% of the total market, and the volume of legal market of alcoholic beverages decreased by 12.0%. Wine market increased by 3.0% and at the same time the price level decreased in all product categories. Stores reduced their product selection of alcoholic beverages and gave more space for their own and often cheaper products.

Financial performanceAltia Group’s net sales amounted to EUR 487.9 million, which is 19.8% more than in the previous year (EUR 407.3 million). Net sales decreased by 2.9% in Finland but increased by 51.8% in foreign markets. In the reporting period, net sales include eight months net sales resulting from the business acquisi-tion executed in the end of April, EUR 91.2 million.


Other operating income amounted to EUR 7.8 (11.4) million. Other operating income includes a non-recurring gain of EUR 0.2 million realised on the liquidation of a subsidiary. The profit of the comparison period includes a non-recurring capital gain of EUR 5.0 million from the sale of an associ-ated company.

Personnel expenses were EUR 63.7 (53.2) million, including salaries and remunerations amounting to EUR 50.6 (40.9) million. The personnel expenses were increased due to the business acquisition. Personnel expenses in the reporting period included provision for annual bonus with social costs in total of EUR 5.1 million.

Other operating expenses amounted to EUR 75.0 (57.2) million. The increase resulted from the busi-ness acquisition executed in April. In total, approxi-mately EUR 1.4 (1.9) million has been entered as obsolete items and write-downs on the inventories within the Group during the reporting period. The comparable year’s figure includes a non-recurring loss on disposal of EUR 1.0 million from the sale of a subsidiary.

Operating profit amounted to EUR 32.4 (11.6) million excluding non-recurring items and EUR 32.6 (15.6) million including non-recurring items. Operating profit percentage excluding non-recurring items was 6.6% (2.8%) and 6.7% (3.8%) including non-recurring items. The operating profit increased partly as a result of including the profit of the acquired business to the May-December figures (EUR 8.9 million), the strengthening Swedish and Norwegian krona, price decrease of barley, more competitive raw material contracts and other actions to downsize the costs. The comparable period’s result was affected by the non-recurring loss on disposal of EUR 1.0 million from the sale of a subsidiary and by the non-recurring gain of EUR 5.0 million on the sale of an associated company.

Net financial expences amounted to EUR 3.1 (6.6) million. In the comparable year, the significant exchange rate losses increased the net financial expenses. Net interest expenses increased during 2010. This increase was affected especially by the new funding arrangement in April and the resulting increase in interest-bearing liabilities. On the other hand, non-recurring exchange gains reduced the financial expenses.

Profit for the period excluding non-recurring items totalled EUR 24.9 (1.3) million and EUR 25.1 (5.3) million including non-recurring items.

Financing and liquidityNet cash flow from operating activities was EUR 50.8 (23.9) million. The Group used EUR 106.4 million to net investments, from which the business acquisition covers EUR 89.8 million. Altia Group’s liquidity position was good during the whole reporting period.

In April 2010, Altia Plc signed an agreement concerning a syndicate loan arrangement of EUR 225 million with duration of maximum five years. The loan was used to finance the business acquisition and to refinance previous non-current loan arrangement which amounted to EUR 98 million. Part of the loan was raised as Swedish krona denominated. The loan arrangement includes also a revolving credit line totalling EUR 40 million and maturing in four years. This credit line together with the Group’s overdraft facilities of EUR 30 million constitute the Group’s main liquidity reserve. Both reserves were unused on 31 December 2010.

The Group’s interest-bearing net debt amounted to EUR 131.4 (75.9) million at the year-end and the ratio of net interest-bearing liabilities to equity, gearing, was 76.3% (55.5%). Equity ratio was 29.6% (34.3%).

Group investmentsIn 2010, net investments amounted to EUR 106.4 (6.7) million.

Additions to property, plant and equipment as a result of the business acquisitions in the reporting period were following: buildings and constructions, EUR 4.9 million; land areas, EUR 0.9 million; and machinery and equipment, EUR 9.5 million, including alcoholic beverage plant and two logistics centres. From the acquisition cost, EUR 26.3 million has been allocated to goodwill according to the acquisition cost calcula-tion. In addition, acquisition cost has been allocated to intangible rights, EUR 23.5 million; buildings and constructions, EUR 10.3 million; land areas, EUR 1.1 million; and to inventories, EUR 3.0 million.

One of the significant investments during the reporting period was the acquisition of cognac trademark Renault in the beginning of October. From the acquisition, EUR 9.9 million was allocated to intangible rights.

The most significant investments in the comparable year included modernisation of the production line at Rajamäki for EUR 2.7 million, investments at Koskenkorva plant in total of EUR 0.6 million, acquisition of Grönstedts cognac trademark and modification work of the new premises in Ruoholahti.


ProductionIn 2010, the Rajamäki alcohol plant produced 54.9 (58.9) million litres of spirits and wines. The total production of the Estonian alcohol plant was 3.2 (3.1) million litres.

The investments of EUR 2.4 million in the produc-tion at Rajamäki assured the efficiency and competi-tiveness of the production lines in responding to future challenges.

Due to the fall in demand for starch delivered mainly to wood-processing industry, the Koskenkorva plant operated at average capacity of 86%. In the production of grain spirits a new record was achieved. Koskenkorva plant used 164 (116) million kilograms of Finnish barley to produce 23.9 (18.5) million kilo-grams of grain spirit, 39.2 (24.3) million kilograms of starch and 56.8 (40.6) million kilograms of feed.

The portion of contract production of starch barley at Koskenkorva plant was 61% of the total need of barley because barley consumption grew larger than predicted. The rest of the barley was acquired outside the contracts from farmers and grain firms in the surrounding area. The average cost of barley inven-tory increased from the beginning of the year to the end of the year by 54% due to the radical increase in the market price of barley during the fall 2010. The average price for the used barley amounted to EUR 126 per ton.

At Koskenkorva plant, investments were executed in total of EUR 1.2 million. The main target was the equalisation basin of the waste water facility to ensure the operation of the facility.

In Denmark, the production volume of the alcoholic beverage plant Svendborg amounted to 23.0 million litres from May to December in 2010. This bottling facility was included in the business acquisition executed in the end of April.

Research and development activitiesThe Group’s research and development expenditure was EUR 2.0 (1.5) million and they focused on the product development of alcoholic beverages.

Economic development of the operating segments As of the beginning of 2010, Altia Group has reported in accordance with the new operating model which was revised in the end of 2009 and became operative in the beginning of 2010. The new separately reportable operating segments are Brands, Trading and Industrial Services. The figures from the comparable reporting period have been changed to correspond to the new operating segments. However,

the figures are not completely comparable in respect of all cost allocations.

Net sales in Brands business area amounted to EUR 217.5 (138.9) million from January to December, which is 54.5% more than in the comparable reporting period. The business acquisition carried out in the end of April increased the net sales substantially as Brands business area is responsible for the new trade-marks, as well as sales and marketing in Altia’s entire operating area. Comparable net sales from January to December amounted to EUR 136.1 (138.9) million, that is, 3.3% less compared to previous reporting period. Decrease in net sales resulted mainly from the operations in the Baltic countries and from export sales, in which the challenging market situation was caused by the economic downturn. Also in Finland, net sales decreased by 5.2% compared to the previous reporting period.

Operating profit in Brands business area amounted to EUR 29.0 (25.0) million from January to December, with an increase of 13.8% compared to previous period. Without the acquired operations, operating profit amounted to EUR 22.2 (25.0) million, with a decrease of 11.2% compared to previous period. The integration and financial performance development of the acquired business have continued as planned.

Trading segment’s profit for the period was increased in 2010 compared to previous year. Net sales increased by 1% and amounted to EUR 157.8 (156.2) million. Operating profit increased substantially more and totalled EUR 6.4 (–1.6) million. Working on the product portfolio, cost control and positive changes in exchange rates increased the result.

Net sales in the Industrial Services business area amounted to EUR 124.4 (126.5) million for January–December, with a decrease of 0.3% compared to previous period. Operating profit totalled EUR 7.3 (9.5) million, which is 23.2% less than in comparable period. Decrease in operating profit resulted from both decrease in net sales and sales margin. World market prices of industrial raw materials increased.

Net sales in the Others business area comprised Supply Chain operation. In addition, sale of the subsidiary Ancrona AB in May 2009 is included in the comparable year’s figures.

Strategy and business modelAltia’s strategic goal is to increase the value of the company with a growth strategy executed in three waves. The themes of these waves are efficiency improvement, growth and expansion. In 2010, the execution of the strategy continued as planned and Altia achieved its goals.


During the first wave, the operating model is further developed and competitiveness strengthened. The main sources of efficiency improvement are Supply Chain and all operative processes. The actions executed in 2009 and 2010 had a significant effect on the increase in operating profit in 2010 compared to the previous year.

In the second wave, which aims at growth, Altia’s market position in the Nordic and Baltic countries is strengthened with a goal to increase market shares faster than the overall market growth. Growth is pursued organically as well as through business acquisitions. The business acquisition executed in the spring of 2010 was already part of the execution of the growth stage, as well as the acquisition of cognac trademark Renault in the end of 2010. The business acquisition in the spring 2010 included wine and spirits trademarks, bottling facility in Svendborg in Denrmark and logistics centres in Odense in Denmark and Årsta in Sweden. The effect of the business acquisition on the increase in operating profit in 2010 was as planned.

The goal of the third wave focusing on expansion is to broaden the operations to the growing close markets which have centralisation potential and possible acquisition targets.

Altia Group comprises Brands, Trading and Industrial Services business areas, to which Supply Chain offers cost-efficient operation chain. Synergy advantages are generated through purchasing, logistics, production and Group’s services, as well as through specialisation and scale benefits.

Brands business area develops, markets and sells Altia’s own products and brands. Trading business area is mainly responsible for partner relationships, as well as marketing and sales of partner products. Industrial Services business comprises contract production, logistics, technical ethanol, as well as feed and starch businesses. Supply Chain consists of the Group’s production, logistics and purchasing operations and the development of these operations with a goal of cost leadership in Altia’s operating area.

Group managementDuring the period under review, the company’s Executive Management Team comprised six members that, in addition to CEO Antti Pankakoski, were Joacim Hultin, SVP (Senior Vice President) of Trading business area; Sirpa Laakso, SVP of Human Resources; Kari Lampinen, SVP of Brands business area; Tomi Tanninen, CFO; and Hannu Tuominen, SVP of Industrial Services and Supply Chain operations.

Personnel and incentive programmesIn January–December 2010, Altia Group employed on average 1,122 (1,042) persons. On 31 December 2010, Altia Group employed 1,151 persons (947), of which 551 were employed in Finland, 186 in Sweden, 202 in Denmark, 62 in Norway, 81 in Latvia and 69 in Estonia.

The changes in the number of employees resulted primarily from reorganisation of the operations and increased number of personnel, 271 persons, via the business acquisition.

Altia’s clerical and managerial employees as well as management are part of annual performance bonus programme applied in Altia Group. The annual performance bonus is based on budgeted operative performance targets. Other working employees are part of production bonus system. The profit for the period 2010 includes a performance bonus provision of EUR 4.0 million with social expenses. Based on the profit for the comparable period, no annual performance bonuses were paid in 2010.

Altia Group’s Executive Management Team and key personnel of business are part of a long-term incentive plan executed in accordance with the guidance on management remuneration in State-owned companies. In 2010, EUR 1.1 million of the above-mentioned provision with social expenses was included in the profit for the period. In 2009, the set targets were not reached, thus, no incentives were accumulated.

During the reporting period, a remuneration of EUR 2,750 per month was paid to the Chairman of Altia Plc’s Board of Directors, EUR 1,800 per month to the Vice Chairman, and EUR 1,450 per month to the members of the Board, in accordance with a decision made in the Annual General Meeting on 28 April, 2010. In addition, the Chairman and the members of the Board receive remuneration for the meetings that they attended to the amount of EUR 600.

Salaries and remuneration including fringe benefits paid to the CEO of Altia Plc during the reporting period totaled EUR 291,021. No performance bonus was paid from the previous year during the reporting period. Financial performance did not entitle to performance bonuses. The CEO has a personal supplementary pension insurance ( annual fee in 2010 EUR 90.122) paid by the employer, which includes a life insurance.

Health, safety and environmentSickness absence at the Koskenkorva and Rajamäki plants was below the average of food industry. Sick-ness absences are intervened through early interven-tion model.


The number of work accidents and close call –situa-tions is monitored in Altia on a regular basis.

Key environmental impacts of Altia are related to the Koskenkorva barley spirits plant and the operations at the Rajamäki, Svendborg and Tabasalu alcoholic beverage plants. At the Koskenkorva, Rajamäki and Svendborg plants and in the support functions of the Helsinki headquarters, the environmental management system has been certified according to the ISO 14001 standard. The Tabasalu plant follows the applicable Estonian environmental standards and regulations issued by the authorities. The environmental management systems are continuously developed through audits and common functional practices, for example, through the harmonisation of the assessment of environmental aspects.

The Quality, Safety and Environmental principles were updated during the reporting period 2010 and the main Group-wide environmental targets were added to these principles. Environmental targets and environment programmes were prepared for the operations in Finland for the time period 2010–2012. The environmental targets of the Finnish operations were:

– reduction in the use of energy in relation to production,

– reduction in the use of groundwater in relation to production,

– reduction in chemical oxygen demand of waste water in relation to production, and

– reduction in the value of disposable packaging material as of 2011.

Target levels have been defined for all environmental targets. The minimum targets for reduction in the use of energy are based on an energy-efficiency agreement issued by the Confederation of Finnish Industries (EK) and the Finnish State, which Altia has agreed to follow.

During 2010, no significant environmental damages took place and stakeholders did not present any environmental concerns. The environmental permit obligations realised in the reporting period in Rajamäki and Koskenkorva. Energy consumption at the Koskenkorva plant is part of the emissions trading.

In the Rajamäki plant, the waste water pipeline picturing to protect the groundwater started last year was continued. In the Koskenkorva plant, environ-mental investments of around EUR 800,000 were completed, of which most important were repairs of waste water pools and dismantling areas of dangerous chemicals. In the Svendborg plant, monitoring of

the chemical oxygen demand (COD) of waste water was commenced and measures to reduce the chemical oxygen demand will be sought in Svendborg in the future.

Altia Group Company A-Pullo Oy centrally manages the bottle return system for refillable alcoholic beverage bottles in Finland.

Significant risks and uncertainties, and risk managementThere have been no significant changes in near future risks of Altia Group’s operations compared to the risks disclosed in the financial statements of 2009.

The most significant uncertainties in Altia Group’s operation are related to the price development of raw materials. Financial risks comprise currency risk, interest rate risk, liquidity risk and credit risk. These risks are hedged against in accordance with the prin-ciples defined in the Group Risk Management Policy. A more detailed presentation of Group’s risks and risk management policies can be found in the notes to the consolidated financial statements in Financial Risk Management.

The development of a comprehensive risk manage-ment system for risks related to strategy, operations, financing and hazards was continued in 2010. The goal is especially to integrate operation management and risk management, risk management training and creation of risk management indicators.

Altia’s business areas are responsible for the risks involved in their operations, for preventing damages caused by the risks or for hedging against the risks. Risk management in Altia Group is part of the operative planning and management process, which is led by the Group’s finance function under the CFO. As part of the reporting and planning process, risk management identifies business area risks, which are assessed based on their impact and probability. The key risks are described and analysed key in detail. Furthermore, measures to manage risks, as well as tasks and responsibilities associated with the risks, are determined.

Group structureThe Group structure has changed as follows:

In the beginning of April, VSD Logistics Ltd’s business operations serving its group companies were transferred to Altia Plc trough business acquisition. Altia Plc owns 100% of VSD Logistics Ltd through its subsidiaries.

Altia signed an agreement in February on the acquisi-tion of a business operation from Pernod Ricard. The business acquisition was executed in the end of April and it included leading Swedish and Danish wine


and spirits trademarks, the alcoholic beverage plant Svendborg in Denmark and the logistics centres in Odense, Denmark and Årsta, Sweden. Relating to these, Altia and Pernod Ricard have made long-term agreements on production, bottling and logistics services. The acquired trademarks were, among others, Chill Out wines, Blossa Glögg, O.P. Andersson Akvavit, 1-Enkelt bitter, Explorer vodka and Lord Calvert whisky. Brands business area is responsible for these trademarks, as well as their sales and marketing in Altia’s whole operating area. Altia Plc owns the following brand companies as a result of the business acquisition: Explorer AB, Kron AB, Lord Calvert AB, OP Anderson AB, Svenska Nubbar AB and Winter Wines Nordic AB.

In May, Altia Plc redeemed a non-controlling interest (19.9%) from its subsidiary SkyCellar Ltd. Altia owns 100% of the subsidiary as a result of the acquisition.

In September, Altia Holding AB’s (former Altia Sweden AB) subsidiary Bibendum Wine & Spirits A/S, owned by 100%, was liquidated. In the end of November, Ancrona Nordic AB, owned also 100% by Altia Plc’s subsidiary Altia Holding Sweden AB, was liquidated. In the end of November, also Altia Logistics AB, owned 100% by VSD Logistics AS, was liquidated.

In the beginning of October, Altia Plc made an agreement on the acquisition of cognac trademark Renault.

In the beginning of October, Altia Plc also acquired a non-controlling interest (19.9%) in the established Chemigate Ltd. The operative management of Chemigate Ltd acquired a European starch business located in Finland from BASF on behalf of the established company.

SharesAltia Plc’s shares comprise A and L stock series. At the end of the 2010 reporting period, there were 35,960,000 A-shares and 25,003 of L-shares. All shares entitle to equal voting and financial rights. At the end of the period, all L-series shares, which were earlier part of the company’s incentive plan, were held by the company.

Board of Directors, Auditors and Annual General MeetingOn 28 April 2010, Altia Plc’s Annual General Meeting appointed the following members to the Board of Directors:

Professor Jarmo Leppiniemi, Chairman Managing Director Catarina Fagerholm, Vice Chairman

Managing Director Ainomaija Haarla, Member Director Annikka Hurme, Member Senior Financial Counsellor Ilkka Puro, Member Managing Director, Markku Rönkkö, Member.

On 25 August 2010, Altia Plc’s Extraordinary General Meeting appointed CEO Mikael Aro as a Member of the Board of Directors.

The Board of Directors has nominated two commit-tees, Nomination and Compensation Committee and Audit Committee, which prepare matters in their purview to present to the Board for decision-making. Chairman of Altia’s Board of Directors, Jarmo Leppiniemi, acts as Chairman and Ilkka Puro as a Member of Nomination and Compensation Committee. Vice Chairman of Altia’s Board of Direc-tors, Catarina Fagerholm, acts as a Chairman and Ainomaija Haarla, Jarmo Leppiniemi and Markku Rönkkö as Members of Audit Committee.

Altia Plc’s Annual General Meeting appointed KPMG Oy Ab, with Pekka Pajamo, APA, acting as the Auditor in Charge, as the auditor of Altia Plc.

Board of Directors proposal on dividend distributionAccording to the financial statements, parent company’s distributable funds amounted to EUR 125,270,534.88. The Board of Directors proposes that no dividend is distributed and profit for the period is left in equity.

Post-reporting date eventsNo significant changes took place in business opera-tions after the reporting period.

Outlook for the near futureThe development of the Group’s businesses is affected by the economic outlook and changes in alcohol taxation in different market areas.

The Group’s net sales for 2011 are expected to increase and operating profit to grow from the level of 2010.

Helsinki, 25 March 2011 Altia Plc Board of Directors


Consolidated financial statements (IFRS)

Consolidated statement of comprehensive income

EUR million Note 1 Jan–31 Dec 2010 1 Jan–31 Dec 2009

NET SALES 1. 487.9 407.3

Change in inventories of finished goods and work in progress 7.0 –3.2

Other operating income 3. 7.8 11.4

Materials and services –313.0 –275.3

Employee benefit expenses 4. –63.7 –53.2

Depreciation and amortisation 5. –18.4 –14.2

Impairment of goodwill 5. – –0.1

Other operating expenses 6. –75.0 –57.2

–470.1 –400.0

OPERATING PROFIT 32.6 15.6

Financial income 8. 11.4 12.1

Financial expenses 9. –14.5 –18.7

Share of profit in associated companies and joint ventures 0.1 0.4

PROFIT BEFORE TAXES 29.6 9.4

Income taxes 10. –3.9 –4.0

PROFIT FOR THE PERIOD 25.7 5.3

OTHER COMPREHENSIVE INCOME:Cash flow hedges 2.2 –1.6

Available-for-sale financial assets 0.1 0.1

Share of other comprehensive income in associated companies 0.1 –0.1

Translation differences 9.4 0.0

Income tax on other comprehensive income 10. –0.6 0.4

Other comprehensive income for the period, net of tax 11.1 9.9

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 36.9 15.2

Profit for the period attributable to: Owners of the parent company 25.7 5.2

Non-controlling interests –0.0 0.1

25.7 5.3

Total comprehensive income attributable to:Owners of the parent company 36.9 15.1 Non-controlling interests –0.0 0.1

36.9 15.2

Earnings per share based on profit attributable to the owners of the parent(basic/diluted): 0.71 0.14



Consolidated statement of financial position


ASSETSNon-current assetsGoodwill 12. 104. 3 74.1

Other intangible assets 12. 59.9 29.9

Property, plant and equipment 13. 84.7 63.0

Investment property 14. 0.0 0.0

Investments in associated companies and joint ventures 26. 8.3 8.5

Available-for-sale financial assets 15. 0.6 0.5

Other receivables 1.2 0.2

Deferred tax assets 16. 5.7 4.5

Total non-current assets 264.7 180.7

Current assetsInventories 17. 64.7 53.9

Trade receivables and other receivables 18. 193.0 137.4

Current tax assets 0.9 2.3

Available-for-sale financial assets 19. 5.4 5.3

Financial assets at fair value through profit and loss 20. 0.9 0.8

Cash and cash equivalents 21. 51.5 20.8

Total current assets 316.4 220.5

TOTAL ASSETS 581.1 401.3

EQUITY AND LIABILITIESShare capital 60.5 60.5

Share premium fund 0.0 0.0

Fair value reserve 0.3 0.2

Hedging reserve 0.3 –1.4

Translation differences 4.8 –3.9

Retained earnings 105.7 79.4

Equity attributable to shareholders of the parent company 22. 171.5 134.7

Non-controlling interest 0.6 2.1

Total equity 172.1 136.8

Non-current liabilities Deferred tax liabilities 16. 23.2 14.2

Non-current interest-bearing liabilities 22. 169.0 89.5

Pension liabilities 24. 6.9 6.2

Other employee benefit obligations 24. 0.5 0.7

Total non-current liabilities 199.5 110.5

Current liabilitiesCurrent interest-bearing liabilities 23. 19.4 12.5

Trade payables and other payables 25. 185.7 140.0

Current tax liabilities 4.4 1.4

Total current liabilities 209.5 153.9

Total liabilities 409.0 264.5

TOTAL EQUITY AND LIABILITIES 581.1 401.3



Consolidated statement of cash flows

EUR million 1 Jan–31 Dec 2010 1 Jan–31 Dec 2009

CASH FLOWS FROM OPERATING ACTIVITIES:Proceeds from sales 456.4 410.3

Proceeds from other operating income 6.9 6.3

Payments for other operating expenses –407.6 –384.2

CASH FLOWS FROM OPERATING ACTIVITIES BEFORE FINANCIAL ITEMS AND TAXES 55.7 32.3

Interests paid and payments for other financial expenses –13.1 –15.6

Interests received from operating activities 9.5 11.5

Income taxes paid –1.3 –4.2

NET CASH FLOW FROM OPERATING ACTIVITIES (A) 50.8 23.9

CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment and intangible assets –17.2 –6.3

Proceeds from sale of property, plant and equipment and intangible assets 1.1 0.2

Proceeds from sale of associated companies – 9.8

Disposal of subsidiaries, net of cash disposed of – 0.0

Acquisition of subsidiaries, net of cash acquired –89.8 0.0

Loans granted –1.0 –

Repayment of loan receivables 0.0 0.7

Dividends received 0.5 2.4

NET CASH FLOW USED IN INVESTING ACTIVITIES (B) –106.4 6.8

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from non-current borrowings 184.9 –

Repayment of current borrowings –0.5 –4.1

Proceeds from current borrowings – 0.1

Repayment of non-current borrowings –98.0 –12.3

NET CASH FLOW FROM FINANCING ACTIVITIES (C ) 86.4 –16.3

INCREASE + / DECREASE – (A+B+C) IN CASH AND CASH EQUIVALENTS 30.8 14.5

CASH AND CASH EQUIVALENTS AT 1 JAN 26.1 11.1

Effect of exchange rate fluctuations on cash held 0.0 0.5

CASH AND CASH EQUIVALENTS AT 31 DEC 56.9 26.1

Cash and cash equivalents

Cash on hand and in bank 49.5 19.3

Other cash and cash equivalents 2.1 1.5

Total cash and cash equivalents 51.5 20.8

Other liquid assetsAvailable-for-sale financial assets at 31 Dec 5.4 5.3

Total other liquid assets 5.4 5.3

Total cash and cash equivalents and other liquid assets 56.9 26.1



Equity attributable to shareholders of the parent company

Non-controlling

interestTotal

equity

EUR millionShare

capital

Share premium

fundFair value

reserveHedging

reserveTranslation differences

Treasury shares

Retained earnings Total

Equity at 1 January 2009 60.5 0.0 0.1 –0.2 –15.1 – 74.4 119.7 1.9 121.7Total comprehensive income

Total comprehensive income for the period – – – – – – 5.2 5.2 0.1 5.3

Other comprehensive income – – – – – – – – – –(net of tax)

Cash flow hedges – – – –1.2 – – – –1.2 –1.2Available-for-sale financial assets – – 0.1 – – – – 0.1 0.1Translation differences – – – – 11.2 – –0.2 11.0 11.0

Total comprehensive income for the period – – 0.1 –1.2 11.2 – 5.0 15.1 0.1 15.2

Acquisition of own shares – – – – – –0.1 – –0.1 – –0.1Equity at 31 December 2009 60.5 0.0 0.2 –1.4 –3.9 –0.1 79.4 134.7 2.1 136.8

Equity at 1 January 2010 60.5 0.0 0.2 –1.4 –3.9 –0.1 79.4 134.7 2.1 136.8Total comprehensive income

Total comprehensive income for the period – – – – – – 25.7 25.7 –0.0 25.7

Other comprehensive income – – – – – – – – – –(net of tax) –

Cash flow hedges – – – 1.7 – – – 1.7 – 1.7Available-for-sale financial assets – – 0.0 – – – – 0.0 – 0.0Translation differences – – – – 8.7 – 0.6 9.4 – 9.4Other changes – – – – – – 0.1 0.1 – 0.1

Total comprehensive income for the period – – 0.0 1.7 8.7 – 26.4 36.9 –0.0 36.8Transactions with owners of the company

Acquisitions of non-controlling interests – – – – – – –0.1 –0.1 –1.4 –1.5

Equity at 31 December 2010 60.5 0.0 0.3 0.3 4.8 –0.1 105.8 171.5 0.6 172.1

Consolidated statement of changes in equity



Notes to the consolidated financial statementsCOMPANY INFORMATIONAltia Plc is an international alcoholic beverage service company that operates in the Nordic countries and in Estonia and Latvia producing, marketing, selling and distributing both own and partner brands. The company distils barley spirit from domestic barley for its beverages. Altia has strong local products and international brands. In addition, the company represents international quality brands from all over the world.

Altia’s customers comprise alcohol retail monopolies, alcoholic beverage wholesale outlets, restaurants, grocery shops, and travel trade and import companies in the export market. The company is owned by the State of Finland.

Altia Plc is the parent company of Altia Group, domiciled in Helsinki, Finland. The registered address of the parent company is Porkkalankatu 22, FI-00101 Helsinki, Finland. Copies of the consolidated financial statements are available online at www.altiacorporation.com or at the Group adminis-tration at Porkkalankatu 22, FI-00101 Helsinki, Finland.

In its meeting on 25 March 2011, Altia Plc’s Board of Direc-tors has approved these financial statements for publication. In accordance with Companies Act, the shareholders have the option to approve or reject the financial statements in the Annual General Meeting held after the publication of the financial statements. The Annual General Meeting also has the option to decide on making changes to the financial statements.

BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTSStatement of complianceThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) complying with the IAS and IFRS standards as well as the SIC and IFRIC interpretations in force on 31 December 2010. In the Finnish Accounting Act and ordinances based on the provisions of the Act, IFRS refers to the standards and to their interpretations adopted in accordance with the procedures laid down in regulation (EC) No 1606/2002 of the European Parliament and of the Council. Notes to the consoli-dated financial statements also comply with the requirements of the Finnish Accounting Act and Companies Act, which supplement the IFRS regulations.

The consolidated financial statements have been prepared on a historical cost basis, unless otherwise stated in the accounting policies.

Starting as of 1 January 2010, the Group has applied the following revised and new standards and interpretations:

– Revised IFRS 3 Business Combinations. The revised standard includes several significant changes from the Group’s point of

view. According to the revised standard, business combinations are still accounted for using the acquisition method, although the standard has been significantly revised compared to the prior IFRS 3. The amendments affect the amount of goodwill recognised on acquisitions, as well as the gains on disposal of businesses. All costs related to the acquisition are expensed as incurred. The amendments also have an impact on items recognised in profit or loss on both the acquisition period and on reporting periods during which contingent consideration is transferred or further acquisitions are executed. According to the transitional provisions of the standard, business combina-tions are not adjusted if the acquisition date is earlier that the effective date of the revised standard.

– Amended IAS 27 Consolidated and Separate Financial Statements. According to the amended standard, if the parent company retains control, impacts of changes in the ownership interest in a subsidiary are recognised directly within Group’s equity. If control of a subsidiary is lost, any investment retained is measured at its fair value through profit and loss. Similar accounting policy is applied also to associated companies (IAS 28) and joint ventures (IAS 31). As a result of the amendments, losses of a subsidiary may be allocated to non-controlling interests even if the losses exceed the invested amount of non-controlling interests.

The following amendments and adoption of interpretations had no impact on the consolidated financial statements:

– Amendment to IAS 39 Financial instruments: Recognition and measurement – Designation of items as hedged items

– IFRIC 17 Distributions of Non-cash Assets to Owners– IFRIC 18 Transfers of assets from customers– Amendment to IFRS 2 Share-based Payment – Intragroup

cash-settled share-based payment transaction

Accounting policies for the consolidated financial statementsThe consolidated financial statements include the parent company Altia Plc and its subsidiaries, of which the parent company owns, directly or indirectly, more than 50% of the voting rights, or in which the parent company otherwise exercises control.

All business combinations are accounted for by using the acquisition method. The consideration transferred and the identifiable assets acquired and liabilities assumed in the acquired company are measured at fair value at the acquisition date. All acquisition related costs, with the exception of costs to issue debt or equity securities, are recognised as expenses. The consideration transferred does not include any transactions accounted for separately from the acquisition. Any contingent consideration is recognised at fair value at the acquisition date and it is classified as either liability or equity. Contingent



consideration classified as liability is measured at its fair value at each reporting date and the subsequent changes to the fair value are recognised in profit or loss.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intragroup transactions, receivables, liabilities and unrealised gains, as well as the distribution of profits within the Group are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated only to the extent that there is no evidence of impairment. The allocation of profit or loss for the period attributable to the owners of the parent and to non-controlling interests is disclosed in the statement of comprehensive income. Any share of non-controlling interests in the acquiree is measured either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. The basis of measurement is determined separately for each acquisition. Total comprehensive income for the period is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Non-controlling interests are presented as a separate item within equity. Changes in the ownership interest in a subsidiary are accounted for as equity transactions if the parent company retains control of the subsidiary. In a business combination achieved in stages, the existing equity interest is measured at fair value and any resulting gain or loss is recognised in profit or loss. If the Group loses control of a subsidiary, any invest-ment retained is measured at fair value at the date of losing control and the resulting gain or loss is recognised in profit or loss. Acquisitions taking place before 1 January 2010 are accounted for according to the standards effective at that time.

Associated companies are companies in which Altia owns 20–50% of the voting rights, or on which Altia otherwise has significant influence but not control. Joint ventures are compa-nies in which the Group exercises contractual control jointly with another party. Joint venture Roal Ltd, of which Altia owns 50%, has been consolidated by using the equity method. Unrealised gains resulting from transactions between the Group and associated company or joint venture are eliminated to the extent of the Group’s ownership in the associates or joint ventures. The carrying amount of the investments in associates and jointly controlled entities includes goodwill identified on acquisition. The Group’s share of the associated company’s or joint venture’s result for the period is separately disclosed after operating profit or loss. The Group’s share of changes in associated company’s or joint venture’s other comprehensive income is recognised in other comprehensive income. If the Group’s share of the associated company’s or joint venture’s loss exceeds the carrying amount of the investment, the investment is recognised at zero value in the consolidated statement of financial position and the loss exceeding the carrying amount is not consolidated, unless the Group has committed to fulfil the company’s obligations.

Segment reportingSince the beginning of 2010, the Group has reported according to a new business model and structure. According to the new model, Altia Group comprises Brands, Trading and Industrial Services business areas, as well as Supply Chain function. Complying with this, the new separately reporting operating segments are Brands, Trading and Industrial Services.

Foreign currency itemsThe consolidated financial statements are presented in euro, which is the functional and presentation currency of the parent company. Transactions in foreign currencies are translated to euro at average foreign exchange rates published by the European Central Bank on banking days. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to euro at the average exchange rates prevailing at that date. Foreign currency differences arising on translation are recognised in profit or loss. Foreign exchange gains and losses related to purchases and sales are treated as adjustments to the respective items and are included in operating profit. Foreign currency gains and losses arising from loans denominated in foreign currencies are recognised in the finance income and finance expenses.

The statements of comprehensive income of foreign subsidi-aries are translated using the average rates of the European Central Bank’s exchange rates at the end of the month. The statements of financial position of foreign subsidiaries are translated using the exchange rates ruling at the reporting date. Foreign currency differences arising on the translation of profit or loss for the period and other comprehensive income and statement of financial position with different exchange rates are presented in equity and changes recognised in other comprehensive income. In the consolidated financial state-ments, exchange rate differences caused by foreign currency denominated loans to foreign subsidiaries, which form a part of net investments in foreign companies, are recognised in other comprehensive income and included in translation reserve within equity. The exchange rate differences realized upon repayment of loans classified as net investments are recognised in finance income and costs.

Translation differences arising from eliminating the acquisition cost of foreign subsidiaries and from translating the foreign subsidiaries’ accumulated equity subsequent to acquisition are recognised in other comprehensive income and presented as a separate item within equity. Goodwill arising on acquisition and the fair value adjustments of assets and liabilities of foreign units are accounted for as assets and liabilities of the foreign units, which are translated at the exchange rates prevailing at the reporting date. If these foreign subsidiaries are sold or if the position of the subsidiaries is otherwise changed, these exchange rate differences are recognised through profit or loss as part of capital gain or loss on disposal.



Intangible assetsIntangible assets are recognised at cost less accumulated amortisation and accumulated impairment losses. Intangible assets with finite useful lives are capitalised and amortisation recognised in profit or loss on a straight-line basis over the estimated useful life of the asset.

The estimated useful lives of intangible assets are as follows:Customer relationships 12 yearsSupplier relationships 10 yearsOther intangible assets 5 years IT software 3 years

GoodwillGoodwill arising on the acquisition of subsidiaries is recog-nised as the excess of the aggregate of the consideration trans-ferred, the amount of non-controlling interests and excising equity interest in the acquiree, over the Group’s share of the fair value of the identifiable net assets acquired. The goodwill arising on acquisitions taking place before 2010 corresponds to the carrying amounts in accordance with the previous financial reporting standards. Goodwill is not amortised, but is tested annually for impairment, and is measured at cost less accumu-lated impairment losses. For the purpose of impairment testing, goodwill is allocated to groups of cash-generating units that are expected to benefit from the synergies of the combination in which the goodwill was generated. The carrying amount of goodwill related to associated companies and joint ventures is included in the carrying amount of the investment.

Property, plant and equipmentProperty, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. In case parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. The subsequent costs of items of property, plant and equipment is recognised in the carrying amount of the item if the future economic benefits embodied with the item is in excess of the originally assessed standard of performance. All other expenditure is recognised as an expense as occurred. The borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset when it is probable that they will result in future economic benefits and the costs can be measured reliably. Altia Group holds no qualifying assets in the statement of financial position at the reporting date.

Investment properties are properties held by the Group in order to earn rental income or for capital appreciation. Investment properties are measured at cost less accumulated depreciation and accumulated impairment losses. Fair values of investment properties are determined based on a valuation carried out by an external property valuer. Changes in the fair values of investment properties are recognised in profit or loss and included in other operating income or other operating expenses.

Depreciation is recognised on a straight-line basis over the esti-mated useful lives of items of property, plant and equipment.

The estimated useful lives of property, plant and equipment are as follows:Buildings and structures 20–40 yearsMachinery and equipment 10 yearsVehicles 5 yearsIT hardware 3 years

The estimated useful lives are reviewed at each reporting date. If they differ substantially from previous estimates, the depreciation periods are adjusted accordingly. Depreciation of property, plant and equipment is discontinued when the item of property, plant and equipment is classified as being held for sale in accordance with the IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations.

Gains and losses on the disposal of property, plant and equipment are included in other operating income or other operating expenses.

InventoriesInventories are measured at the lower of cost and net realisable value. Proprietary products are measured at standard prices. Production overheads are allocated to the cost of proprietary products. The cost of inventories is determined using the weighted average cost formula. The cost of finished goods and work in progress includes materials, direct labour, other direct costs and an allocable proportion of variable and fixed procure-ment and production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Recycled bottles are included in the cost of inventories.

Financial assetsFinancial assets are classified as financial assets at fair value through profit or loss, loans and other receivables, and as available-for-sale financial assets. Classification is made upon initial recognition and is based on the purpose of use of the item. Financial assets are recognised in the statement of financial position at original cost that corresponds to their market value on the acquisition date. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. All purchases and sales of financial instruments are recognised on the trade date. Financial instruments are included in non-current items of the statement of financial position when their maturity is over 12 months, excluding derivative instruments and publicly quoted shares and fund units, which are always included in current items of the statement of financial position.



Financial assets recognised at fair value through profit or lossFinancial assets are classified at fair value through profit or loss if they are classified as held for trading or have been designated as such by Altia Group. The assets comprise investments in publicly listed securities, and derivative instruments held for hedging purposes but not qualifying for the criteria of hedge accounting. Financial assets are measured at fair value at the reporting date, which is their current market bid price at the reporting date. Realised or unrealised gains and losses arising from changes in fair values are recognised in profit or loss in financial items in the period in which they are incurred if they relate to hedging financial items (loans and receivables). If derivative instruments relate to hedging commercial items, the realised or unrealised gains and losses are recognised in profit or loss above operating profit at the latest when the exchange rate differences of the underlying hedged item are recognised in profit or loss.

Loans and other receivablesLoans and other receivables arise when money, goods or serv-ices are delivered to a debtor. They are included in current or non-current financial assets in accordance with their maturity. In Altia, non-current receivables include loan receivables maturing in over one year and other receivables. Current items include trade receivables and deposits held in banks presented in current financial assets. The receivables are measured at amortised cost when the instrument-related payments are fixed or can be determined, and the instruments are not quoted in the financial markets. Exhange differences arising from Intra-Group currency denominated items in the statement of financial position are presented within financial items in the foreign exhange differences of loans and other receivables.

Trade receivables are recognised at original invoice amount less any impairment losses from doubtful receivables. The assessment of doubtful receivables and need to recognise an impairment loss is based on objective evidence of potential non-recovery of a single asset item. Examples of this kind of evidence resulting in impairment include significant financial difficulties of the debtor, the likelihood that the debtor will enter bankruptcy or other financial reorganisation; and the continuous and severe neglect of payment due dates.

Available-for-sale financial assetsCurrent available-for-sale financial assets comprise interest-bearing investments tradable on the secondary markets and funds. Unquoted shares and other investments are included in non-current financial assets. Purchases and sales of financial assets of this category are accounted for on the trade date and are subsequently measured at fair value. Unquoted equity instruments, for which fair values cannot be reliably measured, are measured at the lower of cost and probable value. Unreal-ised gains and losses arising from the changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income and recognised within equity in the fair value reserve, net of tax effect. Cumulative changes in the

fair values of assets are transferred from equity to profit and loss as adjustments to financial items when the asset is sold or otherwise disposed of. Significant impairment losses, for which there is objective evidence, are immediately recognised in profit or loss.

Cash and cash equivalentsCash and cash equivalents comprise cash balances, cash in bank and other liquid investments with maturities of three months or less on the acquisition date. Group’s bank overdrafts are included in current liabilities.

Financial liabilitiesFinancial liabilities are classified as financial liabilities at fair value through profit and loss, and to financial liabilities at amortised cost. Financial liabilities are initially recognised at fair value, which is based on the compensation received. Financial instruments are classified as non-current when their maturity is over 12 months, excluding derivative instruments, which are always recognised in current items in the statement of financial position.

Financial liabilities at fair value through profit or lossFinancial liabilities in this category are measured at fair value at the reporting date, which is their current market bid price in active markets. Realised and unrealised gains or losses arising from changes in fair values are recognised in the financial items as incurred. This category includes derivative instruments held for hedging purposes but not qualifying for the criteria of hedge accounting.

Financial liabilities at amortised costThis category includes Group’s external liabilities and trade payables. Any directly attributable transaction costs are included in the original cost. During their maturity, these financial liabilities are measured at amortised cost using the effective interest method. These financial liabilities comprise both non-current and current liabilities, and include interest-bearing and non-interest-bearing liabilities. Exchange rate differences on foreign currency denominated bank loans are presented in financial items.

Fair values of derivative financial instruments Derivatives are included in financial assets and liabilities at fair value through profit and loss when they do not meet the criteria of IAS 39 hedge accounting. These derivatives are recognised at fair value on the trade date, and are later measured at fair value at the reporting date. The changes in the fair values of derivative financial instruments not qualifying for IAS 39 hedge accounting, even if they are considered to be effective economic hedges, are recognised in profit or loss in financial items, or above operating profit if they relate to hedging commercial cash flows.

The fair values of interest rate derivatives are calculated by discounting the expected future cash flows related to the contracts. The fair values of currency derivative instruments are determined using the market prices at the reporting



date. Fair value of currency options is determined based on Garman-Kohlhagen measurement model using volatilities of key currency pairs of 1–12 months. Fair values confirmed by the counterpart are used in measuring commodity derivative instruments.

Altia Group applies cash flow hedging in accordance with IAS 39 based on case-by-case judgement to allocate the fair value measurements of the hedge and the underlying cash flow. Hedge accounting in applied to the following instru-ments: partially to interest rate and currency derivatives and to electricity derivatives. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges are recognised in other comprehensive income and presented in the hedging reserve in equity. The ineffective portion of the changes in fair value is recognised immediately in profit or loss. The cumulative gain or loss presented in equity on derivative instruments related to commercial items is recognised in profit or loss as adjustments to purchases or sales simultaneously with the hedged item. However, interest rate differential on forward contracts (so called forward points) and the time-value of options is always recognised in profit or loss. Hedge accounting is not applied to these items even if the hedge accounting is applied to the derivative instrument in question. Realised gain or loss on electricity derivatives is included in operating profit in electricity procurement.

The changes in the fair value of derivative instruments are recognised immediately in profit or loss above operating profit if the derivative instrument relates to hedging commercial cash flows and hedge accounting is not applied. The fair value changes of other derivative instruments, when hedge accounting is not applied, are recognised immediately in profit or loss in financial items.

ProvisionsA provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditure required to settle the obligation. An increase in provision amount due to the progress of time is presented as an interest expense.

A provision for restructuring is recognised when a detailed and formal restructuring plan has been prepared, and the implementation of the plan has either commenced or the plan has been announced publicly.

Government grants and assistanceGovernment grants or other grants are recognised in profit or loss in the same period in which the related expenses are incurred. Grants that compensate the Group for the cost of an asset are deducted from the carrying amount of that asset. The depreciable amount of the asset in question is determined based on carrying adjusted with the grant received.

Altia Plc discloses its carbon dioxide emission allowances on net basis. According to this, the Group does not recognise granted emission allowances or the obligation to deliver allowances equal to emissions made in the statement of financial position. The Group also does not recognise income or expenses arising from emission allowances if the emission allowances granted are sufficient to cover the obligation to deliver allowances equal to emissions made.

If the emissions made exceed the granted emission allowances, the obligation generated by the excess emissions is recognised at fair value as an expense and as a liability in the statement of financial position. If the emissions made fall below the granted emission allowances, the difference is not recognised in the statement of financial position but it is disclosed in the notes.

Research and development expenditureExpenditure on research activities is recognised in profit or loss in the period in which they are incurred. The Group has no projects related to development activities of new products or processes qualifying for the identifiability and other criteria of IAS 38 Intangible assets.

ImpairmentAt each reporting date, the carrying amounts of the Group’s assets are assessed to determine whether there is any objective evidence of impairment. If any such evidence of impairment emerges, the asset’s recoverable amount is estimated. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Irrespective of whether there is any evidence of impairment, the recoverable amount of the following items is estimated annually: goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use. The need for recognising an impairment loss is assessed at cash-generating unit level; that is, on the lowest unit level with separate, essentially independent cash flows.

The recoverable amount is the higher of fair value less costs to sell and value in use. The value in use is calculated based on estimated future net cash flows generated by assets or cash-generating units discounted to their present value. In Altia Group, the recoverable amount has been determined based on value in use.

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. The impairment loss is reversed if there has been a positive change in the estimates used to determine the recover-able amount of an asset or cash-generating unit. Impairment losses are only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised. An impairment loss in respect of goodwill is never reversed.

The cash-generating unit is the lowest unit level that generates separate, largely independent cash inflows. In Altia Group, the operating segments are classified as cash-generating units.



Goodwill has been allocated to those cash-generating units that are expected to benefit from the synergies of combination.

Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset when it is probable that they will result in future economic benefits for the entity and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred. Any fees related to loans and borrowings are recog-nised as part of transaction costs. The fee for the arrangement of so-called back-up limit is accrued on a linear basis in other finance costs over the contractual period of the limit.

Non-current liabilities including the related transaction costs are measured at amortised cost using the effective interest method.

LeasesLeases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. At the inception of the lease term, the leased asset is measured at the lower of its fair value and the present value of the minimum lease payments. Assets acquired with finance lease are depreciated according to plan over the shorter of its useful life and the lease period.

Leases where the lessor retains the risks and rewards of owner-ship are classified as operating leases. Payments made under operating leases are recognised as expenses in income statement on a straight-line basis over the lease periods.

Employee benefitsThe Group companies in different countries operate various pension plans in accordance with the local conditions and practices. These pension plans are classified as either defined contribution plans or defined benefit plans.

Contributions to defined contribution pension plans are recognised in profit or loss in the periods during which services are rendered by employees.

The obligation in respect of defined benefit pension plans is calculated using the projected unit credit method. Pension expenses are recognised in periods during which services are rendered by employees according to actuarial calculations prepared by qualified actuaries. The amount recognised as a defined benefit liability or receivable comprises of the net total of the following items: the present value of the defined benefit obligation, the fair value of the plan assets, past service cost and actuarial gains and losses. The discount rate to determine the present value of the defined benefit obligation is the yield on high quality corporate or government bonds with a similar maturity to that of the assessed pension scheme.

The Group applies the so-called corridor method to actuarial gains and losses. Actuarial gains and losses are recognised over the expected average remaining working lives of the employees

participating in the plan, to the extent that the net cumulative actuarial gains and losses exceed the greater of 10% of the present value of the defined benefit obligation or 10% of the fair value of the plan assets.

Altia Group gives its employees long-service benefits classified as long-term employee benefit plans. The employees partici-pating in the plan have been employed by the company prior to 31 December 1993. The amount recognised as a liability arising from this type of a long-term employee benefit is the present value of the defined benefit obligation based on actuarial calculations at the reporting date.

The shares are measured at fair value on their grant date and recognised as an expense on a straight-line basis over the vesting period. Arrangements paid in cash are recognised at fair value at each reporting date and changes in the fair value of the liability are recognised in profit and loss. The Group updates the estimate of the total number of shares at each reporting date. Changes in the estimate are recognised in income statement.

Income taxConsolidated income tax expense comprises current tax based on taxable income for the period, any adjustments to tax payable in respect of previous years and deferred tax. Current income tax based on taxable income is calculated according to the local tax regulations of each Group company.

Deferred tax assets and liabilities are recognised for all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The most significant temporary differences arise from property, plant and equipment, carry forward of unused tax losses and provisions. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which they can be utilised.

Deferred taxes are calculated using tax rates enacted by the reporting date. Deferred tax related to items recognised directly in equity or in other comprehensive income is also recognised in equity or other comprehensive income.

Revenue recognitionRevenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer. Usually this coincides with the delivery.

Operating profitThe Group has defined operating profit as follows: operating profit is the net amount consisting of net sales and other oper-ating income less purchases of materials and services adjusted with changes in the inventory of finished goods and work in progress and the cost of production for own use, costs of employee benefits, depreciation, impairment losses, and other operating expenses. Foreign currency gains and losses related



to normal business operations are included in operating profit; otherwise they are included in finance income and expenses.

Non-current assets held for sale and discontinued operationsNon-current assets (or disposal groups) and assets and liabili-ties related to discontinued operations are classified as for sale if they are expected to be recovered primary through sale rather than through continuing use. Non-current assets held for sale and assets related to discontinued operations are recognised at the lower of carrying amount and fair value less the costs to sell, if the carrying amount will be recovered principally through a sale transaction and the sale is highly probable.

A discontinued operation is a separate major line of business or geographical area of operations that has been disposed of or classified as for sale. Profit of discontinued operations is presented separately in income statement. Available-for-sale assets, groups of disposed items, items related to available-for-sale assets and recognised in other comprehensive income, and liabilities included in the group of disposed items are presented in the statement of financial position separately from other items. The Group had no such items at the reporting date.

Accounting policies requiring management judgement and key sources of estimation uncertaintyIn preparation of the financial statements, the Group manage-ment makes estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, as well as the disclosed notes. Estimates and underlying assumptions are based on historical experience and other factors expected to be plausible in the measurement of assets and liabilities. Consequently, the realised results can differ from these estimates.

Within the Group, critical future assumptions and estimation uncertainties at the reporting date, which pose a significant risk of resulting in material adjustments in the carrying amounts of assets and liabilities within the next financial year, include the following:

Impairment testingWithin the Group, goodwill, intangible assets with indefinite useful lives and intangible assets that are not yet available for use are tested annually for impairment. Indication of impairment is estimated according to the accounting policies presented above. Recoverable amounts of cash-generating units have been determined by calculations based on their value in use. The preparation of these calculations requires making estimates about the future. Further information on the sensi-tivity of the recoverable amounts to changes in the underlying assumptions is disclosed in note Intangible Assets.

Employee benefitsEstimates used in the measurement of defined benefit pension obligation and plan assets are based on the actuarial assump-tions made by the management. These include the discount rate used in calculating the present value of the obligation,

future salary and pension level, expected return on assets included in the plan and the turnover of personnel included in the plan. Changes in the actuarial assumptions and differences between assumed values and realised values result in actuarial gains and losses.

Accounting for deferred taxesDeferred tax assets are recognised for carry forward of unused tax losses and for all temporary differences between the carrying amounts of assets for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which they can be utilised. The recognised amount of deferred tax assets is based on the management’s assessment of future taxable income. Changes in tax legislation can also affect the estimates made by the management.

Adoption of new or revised IFRS standardsThe Group will adopt the following revised standard as of 1 January 2011. Other new standards and interpretations are not expected to affect the Group’s figures:

– Revised IAS 24 Related Party Disclosures (effective for financial periods beginning on or after 1 January 2011). The definition of a related party is clarified and certain disclosure requirements for government related entities are changed.



1. Segment reportingAs of the beginning of 2010, Altia Group has reported according to the new operating model. The reportable operating segments are Brands, Trading and Industrial Services.

The Brands segment is responsible for selling, marketing and product development of Altia’s own products. The Brands’ sales comprise of Altia’s own regional and local trademarks as well as suppliers’ international trademarks.

The Trading segment is responsible for selling and marketing partner products.

The Industrial Services segment is responsible for logistics and production services, as well as industrial products, from which the profit of the segment accumulates.

Net sales of the Others segment consists almost completely of the net sales of the Supply Chain segment.

Group’s highest operative decision-maker is the Executive Management Team. Performance of the segments is measured

based on operating units’ operating profit, in addition to which the share of profit in associated companies and joint ventures are included in the management reports as a separate item.

Pricing of inter-segment transactions is based on market prices.

Segment assetsSegment assets include assets which can directly or justifiably be allocated to the segments in question. All other assets are included in unallocated items.

Segment liabilitiesSegment liabilities include liabilities which can directly or justifiably be allocated to the segments in question. All other liabilities are included in unallocated items.

Unallocated itemsUnallocated assets consist mainly of tax and financial items and unallocated liabilities of deferred tax liabilities and income tax liabilities.

Notes to the consolidated financial statements

Operating segments

EUR million2010 Brands Trading

Industrial Services Others Total

Net sales –Sales of goods 220.7 157.8 103.3 7.6 489.4Rendering of services 4.9 0.0 21.2 0.0 26.1

Net sales 225.6 157.9 124.4 7.6 515.5

Inter-segment net sales –8.1 –0.1 –19.2 –0.2 –27.6External net sales 217.5 157.8 105.3 7.4 487.9

Segments’ operating profit 29.0 6.4 7.3 –9.7 33.0

Share of profit in associated companies and joint ventures – – – 0.1 0.1Depreciation and amortisation 4.7 –3.1 –0.2 –10.4 18.4

Total assets 374.6 236.5 58.0 178.1 847.2

Total liabilities 227.0 62.5 35.8 176.1 501.4

Capital expenditure on property, plant and equipmentand intangible assets 91.3 0.2 0.0 15.1 106.5



Operating segments

EUR million 2009 Brands Trading

Industrial Services Muut Yhteensä

Net salesSales of goods 141.0 156.2 103.6 21.0 421.9Rendering of services 0.0 0.0 22.9 – 22.9

Net sales 141.0 156.2 126.5 21.0 444.7

Inter-segment net sales –2.1 –0.3 –24.6 –10.0 –37.0External net sales 138.9 156.0 101.9 11.0 407.8

Segments’ operating profit 25.0 –1.6 9.5 –24.3 8.6

Share of profit in associated companies and joint ventures – – – 0.4 0.4Depreciation and amortisation –0.1 –2.9 –0.1 –11.2 –14.3

Total assets 96.7 163.6 43.4 287.5 591.1

Total liabilities 83.7 59.8 14.0 156.1 313.6

Capital expenditure on property, plant and equipment 0.2 0.0 0.0 6.5 6.7

Reconciliation between Group and reportable segments 20102010 2009

Net salesTotal net sales for reportable segments 507.9 423.7Others 7.6 21.0Inter-segment revenue –27.6 –37.0Foreign currency hedges – –0.4Group’s net sales 487.9 407.3

Operating profitTotal operating profit for reportable segments 42.7 32.9Others –9.7 –24.3Elimination of intra-segment profit 0.0 –0.4Finance income 11.4 12.1Finance costs –14.5 –18.7Employee benefit related items –1.2 3.2Other operating income – 5.0Acquisition of subsidiaries – –1.0Proceeds from sale of property, plant and equipment 1.0 0.6Share of profit in associated companies 0.1 0.4Foreign currency hedges –0.3 –0.5Group’s profit before taxes 29.6 9.4

AssetsTotal assets for reportable segments 669.1 303.7Others 178.1 287.5Inter-segment assets –331.5 –224.4Unallocated items 57.1 26.1Investments in associated companies 8.3 8.5Group’s assets 581.1 401.3

LiabilitiesTotal liabilities for reportable segments 325.3 157.5Others 176.1 156.1Inter-segment liabilities –120.0 –64.8Deferred tax liabilities 23.2 14.2Current tax liability 4.4 1.4Group’s liabilities 409.0 264.5



Individual major customers

2010Share of external

salesCustomer 1 Brands, Trading 21.1%Customer 2 Brands., Trading 18.2%

2009Share of external

sales Customer 1 Brands., Trading 26.9%Customer 2 Brands., Trading 19.4%Customer 3 Industrial Services 11.7%

Income and assets relating to regional areas2010 2009

Income Assets Income AssetsFinland 221.9 355.5 230.1 297.2Norway 54.7 43.4 55.8 51.8Sweden 161.9 86.2 100.0 20.7The Baltic countries 17.9 4.2 20.0 6.1Denmark 31.5 36.6 1.5 0.1

Unallocated assets 55.2 25.3Group’s total 487.9 581.1 407.3 401.3

2. Acquired and disposed businesses

Acquisitions in the reporting period of 2010

The most significant acquisition in 2010 was the acquisition of wine and spirits product portfolio from Pernod Ricard in the end of April. The acquisition contract was signed in February, and according to the contract the control was trasferred on 30 April 2010. The acquisition included, in addition to brands and inventories, the Svendborg bottling facility in Denmark and logistics centers in Odense, Denmark, and Årsta, Sweden. The acquisiton parties have made long-term contracts related to

production, bottling and logistics services. In addition to the preliminarily determined consideration, SEK 835 million, Altia paid SEK 65.7 million in September as the final consideration was confirmed. No contingent consideration was included in the acquisition. To finance the investment, Altia agreed on a new loan arrangement in April.

The fair values of the assets acquired and liabilities assumed at the acquisiton date were the following:

EUR million Fair values recognised

upon acquisition

Property, plant and equipment 28.7Intangible assets 23.8Inventories 19.5Trade and other receivables 3.0Total assets 75.0Other liabilities –1.2Deferred tax liabilities –8.7Total liabilities –9.9

Net assets 65.0

EUR million Fair values recognised

upon acquisition

Goodwill arising on acquisitionConsideration transferred 91.3Identifiable net assets in the acquisition target 65.0Goodwill 26.3

Consideration paid in cash 91.3Acquired financial assets –1.5Cash flow effect 89.8



Altia recognised intangible rights of EUR 23.5 million, property, plant and equipment of EUR 11.3 million and inventories of EUR 3.0 million, taking into account deferred tax liabilities, separately from goodwill on the acquisition. The acquisition generated goodwill of EUR 26.3 million, which is based on synergies from broader product selection, centralised procurement and more efficient logistic operations. Customer relationships were not measured separately from goodwill. The carrying amount of trade receivables corresponded to their fair value at the acquisition date. Tax deductible amout of goodwill, SEK 286.5 million, relates to the goodwill recognised in Sweden.

Arrangement fees related to the acquisition, EUR 2.4 million, concern legal advisor services and Due diligence expenses. The arrangement fees are included in other operating expenses.

Altia Group’s 2010 financial statements include eight months’ net sales of the acquisition target, EUR 91.2 million, and operating profit EUR 8.9 million. The Group’s net sales for 2010 would have been EUR 515.0 million and operation profit EUR 33.3 million if the acquisiton realised during the reporting period had been included in the consolidated financial state-ments from the beginning of 2010.

Acquisition of non-controlling interestsIn May 2010, Altia redeemed the non-controlling interest (19.9%) in its subsidiary SkyCellar Oy. After the acquisition, Altia owns 100% of the subsidiary. The increase in owner-ship determined in accordance with the guidance of IAS 27 impacted equity by EUR -0.1 million.

During 2010, there were no disposals of businesses.

Disposals in the reporting period of 2009During the comparison period, the Group sold its subsidiary, Ancrona AB, which was included in the Sweden segment in the previous segment allocation. Altia owned 100% of the sold company through its subsidiaries. The Group recognised a loss on disposal of EUR 1 million on the sale. The loss was recognised in other operating expenses.

The Group also sold its associated company Brand Partners AS, which was part of the Norway segment. Altia owned 50% of the sold company. The associated company was consolidated in Altia’s consolidated financial statements by using the equity method until the investment was classified as non-current asset held for sale.

During 2009, there were no business acquistions.

3. Other operating income

EUR million 2010 2009

Gain on sale of property, plant and equipment and intangible assets 1.0 5.2Rental income 1.2 1.4Proceeds from the sale of energy, water and steam 2.9 2.6Other income 2.7 2.3Total 7.8 11.4

4. Employee benefit expenses


Wages and salaries 50.6 40.9Pension expensesDefined contribution plans 6.5 5.0Defined benefit plans 1.0 2.0Other social expenses 5.7 5.3Total 63.7 53.2

Average number of personnel during the periodWorkers 439 386Clerical employees 683 656Total 1122 1042

Employee benefits for management is presented in Note 29. Related party transactions.

5. Depreciation, amortisation and impairment losses


Depreciation by asset group:Property, plant and equipment

Buildings 3.7 2.6Machinery and equipment 7.0 5.7Machinery and equipment, acquired by finance leases 0.5 0.5Other tangible assets 0.0 0.0

Total 11.2 8.8

Intangible assetsIntangible rights 5.5 3.8Other intangible assets 1.7 1.6

Total 7.3 5.4

Impairment losses by assets group:Goodwill – 0.1Effect of movements in exchange rates – –0.0Total impairment loss on goodwill – 0.1



6. Other operating expenses


Loss on sale of property, plant and equipment and intangible assets 0.1 1.1 Rental expenses 7.4 6.0 Marketing expenses 12.1 11.4 Production overheads 9.0 9.1 Travel and representation expenses 3.8 3.2 Outsourcing services 8.2 4.8 Repair and maintenance expenses 7.0 4.4 Cars and transport services 5.4 1.0 Other expenses 22.0 16.2 Total 75.0 57.2

Auditor’s feesAuditing fees 0.3 0.3 Tax consultation 0.0 0.0 Due diligence fees 0.3 0.2 Services related to accounting for business acquisitions 0.1 – Other fees 0.1 0.2

Total 0.8 0.7

7. Research and development expenditure

Research and development expenditure amounting to EUR 2,0 million has been recognised in the income statement (EUR 1,5 million thousand in 2009).

8. Financial income


Interest incomeFinancial assets at fair value through profit or loss 0.8 1.7Loans and other receivables 0.5 0.6Available-for-sale financial assets 0.3 0.0Derivatives under hedge accounting 0.2 0.1Interest income in total 1.8 2.4

Foreign exchange gainsFinancial assets at fair value through profit or loss 4.0 5.0Loans and other receivables 5.4 3.6Derivatives under hedge accounting – 0.6Foreign exchange gains in total 9.4 9.2

Dividend incomeFinancial assets at fair value through profit or loss 0.1 0.0Available-for-sale financial assets 0.0 0.0Dividend income in total 0.1 0.1

Foreign exchange differences arising from accounts receivables and accounts payables amounting to EUR 0.7 million (EUR 0.4 million) are included in the operating profit.


Other finance incomeGains on financial assets held for trading 0.0 0.0Financial assets at fair value through profit or loss 0.2 0.3Loans and other receivables 0.0 0.2Other finance income 0.0 0.0Other finance income in total 0.2 0.5Financial income in total 11.4 12.1

9. Financial expenses


Interest expensesFinancial assets at fair value through profit or loss 1.9 1.9Liabilities at amortised cost 3.4 2.4Derivatives under hedge accounting 0.7 0.5Interest expenses in total 6.0 4.7

Foreign exchange lossesFinancial assets at fair value through profit or loss 1.6 2.0Liabilities at amortised cost 1.9 –Loans and other receivables 4.5 11.8Derivatives under hedge accounting – 0.1Foreign exchange losses in total 7.9 13.8

Other financial expensesFinancial assets at fair value through profit or loss 0.0 0.0Other finance costs 0.6 0.1Losses on financial assets at fair value through profit or loss – –Ineffective portion of commodity derivatives under hedge accounting – 0.1Other financial expenses in total 0.7 0.2Financial expenses in total 14.5 18.7

Interest expenses include interest expenses of EUR 0.2 million (EUR 0.2 million in 2009) relating to financial leases.



10. Income tax expense


Current income tax expense 5.8 3.4Adjustments to taxes of prior periods 0.0 1.2Deferred taxes –1.9 –0.6Total 3.9 4.0

The reconciliation of the tax expense recognised in the income statement and the tax expense calculated using the Altia Group’s domestic corporate tax rate (26% in 2010, 26% in 2009):


Profit before tax 29.6 9.4

Income tax using the company’s domestic tax rate 7.7 2.4Effect of tax rates of foreign jurisdictions –0.3 –0.1Taxfree income –0.1 –0.6Non-deductible expenses 0.6 2.0Goodwill impairment – 0.0Recognition of previously unrecognised tax losses –4.0 –Adjustments to taxes of prior periods 0.0 1.2Current period losses for which no tax was recognised – –0.6Share of profit in associated companies –0.0 –0.1Taxes recognised for current period losses at Group level – –0.2Tax expense in income statement 3.9 4.0

Income tax recognised in other comprehensive income 2010 2009

EUR million Before taxTax expense/

benefit Net of tax Before taxTax expense/

benefit Net of tax

Cash flow hedges 2.2 –0.6 1.6 –1.6 0.4 –1.2Available-for-sale financial assets 0.1 –0.0 0.0 0.1 –0.0 0.1Share of other comprehensive income in associated companies 0.1 –0.0 0.1 –0.1 –0.0 –0.1Translation differences 9.4 – 9.4 0.0 – 0.0Total 11.8 –0.6 11.1 –1.6 0.4 –1.2

11. Earnings per share

Earnings per share is calculated by dividing the profit attributable to the company’s shareholders by the weighted average number of shares outstanding during the reporting period.

2010 2009

Profit attributable to the parent company’s shareholders 25.7 5.2 Weighted average number of shares (1,000) 35,985 35,985 Basic and diluted earnings per share, EUR 0.71 0.14



12. Intangible assets

EUR million Intangible rightsOther intangible

assets Pre-payments Total

Acquisition cost at 1 January 2010 69.5 12.0 – 81.4Additions 11.0 – 1.1 12.1Disposals –0.0 –0.3 – –0.3Acquisition of subsidiaries 23.7 – – 23.7Effect of movement in exchange rates 6.7 0.1 – 6.9Transfers between items 0.3 – –0.2 0.0Acquisition cost at 31 December 2010 111.2 11.9 0.9 123.9

Accumulated amortisation and impairment losses at 1 January 2010 –46.8 –4.7 – –51.5Amortisation –5.7 –1.7 – –7.4Accumulated amortisation on disposals and transfers 0.0 0.3 – 0.3Effect of movement in exchange rates –5.1 –0.1 – –5.3Accumulated amortisation and impairment losses at 31 December 2010 –57.6 –6.3 – –63.9 Carrying amount at 1 January 2010 22.7 7.3 – 29.9Carrying amount at 31 December 2010 53.6 5.5 0.9 59.9

Acquisition cost at 1 January 2009 63.1 10.0 0.0 73.2Additions 1.5 1.6 0.4 3.5Disposals –0.1 –0.0 – –0.1Effect of movement in exchange rates 4.7 0.1 – 4.8Transfers between items 0.2 0.3 –0.5 0.0Acquisition cost at 31 December 2009 69.5 12.0 – 81.4

Accumulated amortisation and impairment losses at 1 January 2009 –40.3 –3.0 – –43.3Amortisation –3.9 –1.6 – –5.5Accumulated amortisation on disposals and transfers 0.1 0.0 – 0.1Effect of movement in exchange rates –2.7 –0.1 – –2.8Accumulated amortisation and impairment losses at 31 December 2009 –46.8 –4.7 – –51.5 Carrying amount at 1 January 2009 22.8 7.0 0.0 29.9Carrying amount at 31 December 2009 22.7 7.3 – 29.9

In the beginning of October Altia Plc made an agreement on the acquisition of Renault cognac trademark. The purchase price amounted to EUR 10.0 million and it included product inventories. From the purchase price of Renault, EUR 9.9 million was allocated to intangible assets.



EUR million Goodwill

Acquisition cost at 1 January 2010 115.3Acquisition of subsidiaries 26.3Effect of movement in exchange rates 4.9Acquisition cost at 31 December 2010 146.5

Accumulated amortisation and impairment losses at 1 January 2010 –41.2Effect of movement in exchange rates –1.0Accumulated amortisation and impairment losses at 31 December 2010 –42.2 Carrying amount at 1 January 2010 74.1Carrying amount at 31 December 2010 104.3

Acquisition cost at 1 January 2009 110.9Transfers between items 0.6Effect of movement in exchange rates 3.8Acquisition cost at 31 December 2009 115.3

Accumulated amortisation and impairment losses at 1 January 2009 –39.8Impairment –0.1Accumulated amortisation on transfers –0.6Other exchange differences –0.6Accumulated amortisation and impairment losses at 31 December 2009 –41.2 Carrying amount at 1 January 2009 71.1Carrying amount at 31 December 2009 74.1

Goodwill allocation and impairment testingFor impairment testing purposes, Altia Group’s goodwill has been allocated to legal entities, each of which constitutes cash-generating unit to be tested separately. The total carrying amount of goodwill amounted to EUR 104.3 million (74.1) at the end of the period and it was allocated to the segments to be tested as follows:

– Brands 84.8 million euro – Trading 19.3 million euro– Industrial Services 0.2 million euro

The acquisition of the wine and spirits product portfolio has been integrated to the Brands business operations in the end of April 2010, therefore it does not form a separate cash-generating unit. Goodwill generated from the acquisition in question amounted to EUR 26.2 million.

Goodwill allocated to the Group’s cash-generating units are annually tested for impairment. In the test, their carrying amount is compared to their recoverable amount. Impair-ment tests have been carried out as at 31 December 2008, 31 December 2009 and 31 December 2010. In addition, goodwill generated from the acquisition of the product potrfolio has been tested at the acquisition date. These impairment tests

showed no need for recognition of impairment losses. Altia does not hold any intangible assets with indefinite useful life.

In the impairment testing, the recoverable amounts of the legal entities are based on value in use calculations. The variables for determining the cash flows are profitability, weighted average cost of capital (WACC) per segment, terminal value, as well as the length of the forecast period for the cash flows.

The market-specific WACC estimates were updated for the testing at 31 December 2010 based on market-specific refer-ences. The assumptions the management makes regarding to the development of other variables than the WACC, are based on internal and external views of the industry’s history and future. As previously, the forecast period used for the calcula-tions covers five years. Thereafter, the cash flow projections are extrapolated using a constant market-specific growth rate estimate. The segment-specific WACCs used as discount rates for the cash flow estimates were 5.5% (7.19%) in Finland, 5.89% (7.65%) in Norway, 5.4% in Sweden and 5.4% in Denmark. WACC is country-specific and therefore the WACC used in Finland has been utilised in the Brands and Industrial segments and accordingly WACC used in Norway has been used in the Trading segment.

Sensitivity analysis of impairment testingIn the case of Brands, Trading and Industrial Services segments, the impairment testing showed that the recoverable amounts exceeded the corresponding carrying amounts and thus there was no need for recognition of impairment losses.

In the case of Brands segment, if the operating profit as a percentage of net sales decreased by 21 percentage points and simultaneously WACC increased by three percentage points, the changes would not result in recognition of impairment loss.

In the case of Trading segment, if the operating profit as a percentage of net sales decreased by 6.4 percentage points and simultaneously WACC increased by three percentage points, the changes would not result in recognition of impairment loss.

In the case of Industrial Services segment, if the operating profit as a percentage of net sales decreased by 7.4 percentage points and simultaneously WACC increased by 4.1 percentage points, the changes would not result in recognition of impair-ment loss.



13. Property, plant and equipment

EUR millionLand and

water areasBuildings and

structures

Machinery and

equipment

Other tangible

assets

Prepayments and assets

under construction Total

Acquisition cost at 1 January 2010 2.7 87.1 132.2 1.4 0.5 223.9Additions 0.0 15.8 –16.1 – 2.8 2.5Acquisition of subsidiaries 1.9 0.0 28.7 – 30.6Disposals –0.0 0.0 –2.5 – – –2.5Effect of movement in exchange rates 0.0 0.0 0.3 0.0 – 0.3Transfers between items – 0.9 1.6 0.0 –2.5 –0.0Acquisition cost at 31 December 2010 4.5 103.8 144.2 1.4 0.8 254.7

Accumulated depreciation and impairment losses at 1 January 2010 – –59.9 –103.6 –1.0 – –164.5Depreciation – –3.7 –7.0 –0.0 – –10.7Accumulated depreciation on disposals and transfers – 0.1 2.2 – – 2.4Effect of movement in exchange rates – –0.0 –0.3 – – –0.3Accumulated depreciation and impairment losses at 31 December 2010 –63.5 –108.6 –1.0 – –173.1 Carrying amount at 1 January 2010 2.7 27.1 28.6 0.4 0.5 59.3Carrying amount at 31 December 2010 4.5 40.3 35.5 0.4 0.8 81.6

Acquisition cost at 1 January 2009 2.7 86.6 131.1 1.4 2.0 223.8Additions – 0.0 0.5 – 2.0 2.5Disposals – 0.0 –3.0 – 0.0 –3.0Effect of movement in exchange rates 0.0 0.0 0.5 0.0 – 0.5Transfers between items – 0.5 3.0 0.0 –3.5 –0.0Acquisition cost at 31 December 2009 2.7 87.1 132.2 1.4 0.5 223.9

Accumulated depreciation and impairment losses at 1 January 2009 –57.3 –100.3 –1.0 – –158.5Depreciation – –2.6 –5.7 –0.0 – –8.3Impairment – – – – –Accumulated depreciation on acquisition of subsidiaries – – – – – –Accumulated depreciation on disposals and transfers – – 2.9 – – 2.9Effect of movement in exchange rates – –0.0 –0.5 – – –0.5Accumulated depreciation and impairment losses at 31 December 2009 –59.9 –103.6 –1.0 – –164.5 Carrying amount at 1 January 2009 2.7 29.3 30.8 0.4 2.0 65.3Carrying amount at 31 December 2009 2.7 27.1 28.6 0.4 0.5 59.3

The assets under construction includes the reconstruction of a production line at Altia’s Rajamäki plant. Commitments related to this amounted to EUR 1.5 million at the end of the period under review.

Carrying amount of production machinery and equipment:

31 December 2010 21.3 31 December 2009 23.9



Property, plant and equipment includes assets acquired under finance lease as follows:

EUR million

Machinery and equipment finance

leasesProperty, plant and equipment in total

Acquisition cost at 1 January 2010 6.6 230.5Additions 0.0 2.5Disposals – 0.3 –2.9Effect of movement in exchange rates 0.1 0.4Transfers between items 0.0 –0.0Acquisition cost at 31 December 2010 6.4 230.5

Accumulated depreciation and impairment losses at 1 January 2010 –3.1 –167.7Depreciation – 0.5 –11.2Accumulated depreciation on disposals and transfers 0.3 2.6Effect of movement in exchange rates – 0.1 – 0.4Accumulated depreciation and impairment losses at 31 December 2010 –3.4 –176.6

Carrying amount at 1 January 2010 3.5 62.8Carrying amount at 31 December 2010 3.0 84.5

Acquisition cost at 1 January 2009 6.2 230.0Additions 0.7 3.2Disposals – 0.2 –3.2Effect of movement in exchange rates 0.0 0.6Transfers between items 0.0 –0.0Acquisition cost at 31 December 2009 6.6 230.5

Accumulated depreciation and impairment losses at 1 January 2009 –2.8 –161.3Depreciation – 0.5 –8.8Accumulated depreciation on disposals and transfers 0.2 3.0Effect of movement in exchange rates –0.0 – 0.6Accumulated depreciation and impairment losses at 31 December 2009 –3.1 –167.7

Carrying amount at 1 January 2009 3.4 68.6Carrying amount at 31 December 2009 3.5 62.8

Fortum Lämpo Oy has built at its own cost a steam power plant in Altia’s plant area in Rajamäki. According to the agreement, Altia is obliged to acquire the plant at the end of the agreement period on 31 December 2017, or if the agreement is terminated. Altia pays Fortum annually for the plant as energy costs during a period of 15 years after which the right of ownership is transferred to Altia. The useful life of the asset is 15 years.

14. Investment property and other non-current investments

INVESTMENT PROPERTY


Acquisition cost at 1 January 0.0 0.0Disposals 0.0 –At the end of the period 0.0 0.0

Fair value 0.7 0.9

Altia measures all investment property based on the cost model.

15. Available-for-sale investments

EUR million 2010 2009Unquoted shares 0.4 0.5Other shares 0.2 –Available-for-sale investments at the end of the period 0.6 0.5



16. Deferred tax assets and liabilities

EUR million 1 Jan 2010Recognised in

profit or loss

Recognised in other com-

prehensive income

Exchange rate differences Acquisitions 31 Dec 2010

Change in deferred tax assets and liabilities during 2010:Deferred tax assets:

Tax losses carried forward 0.1 1.1 – –0.0 – 1.1Pension benefits 1.6 0.2 – 0.0 – 1.8Internal margin in inventories 0.2 0.0 – – – 0.2Recognised in hedging reserve 0.5 – –0.2 0.0 – 0.3Other items 2.2 –0.0 0.0 0.1 – 2.3

Total 4.5 1.2 –0.2 0.1 – 5.7

Deferred tax liabilities: Depreciation in excess of plan and voluntary provisions 5.3 0.3 – 0.0 – 5.7Recognised in hedging reserve 0.0 –0.0 0.4 0.0 – 0.4Recognised in fair value reserve 0.1 0.0 0.0 –0.0 – 0.1Fair value allocation on acquisitions 5.5 –1.4 –0.1 0.4 8.7 13.1Other items 3.2 0.4 0.1 0.3 – 4.0

Total 14.2 –0.7 0.4 0.7 8.7 23.2

EUR million 1 Jan 2009Recognised in

profit or loss

Recognised in other com-

prehensive income

Exchange rate differences Acquisitions 31 Dec 2009

Change in deferred tax assets and liabilities during 2009:Deferred tax assets:

Tax losses carried forward 0.2 –0.2 – 0.1 – 0.1Pension benefits 1.4 0.1 – 0.1 – 1.6Internal margin in inventories 0.0 0.1 – 0.0 – 0.2Recognised in hedging reserve 0.4 – 0.0 0.1 – 0.5Other items 1.9 0.4 –0.0 –0.0 – 2.2

Total 3.9 0.5 0.0 0.1 – 4.5

Deferred tax liabilities: Depreciation in excess of plan and voluntary provisions 5.5 –0.1 – – – 5.3Recognised in hedging reserve 0.4 0.0 –0.4 0.0 – 0.0Recognised in fair value reserve 0.0 – 0.0 – – 0.1Fair value allocation on acquisitions 5.9 –0.9 0.0 0.5 – 5.5Other items 2.3 0.9 0.0 –0.0 – 3.2

Total 14.0 –0.1 –0.3 0.6 – 14.2

No deferred tax liability for the foreign subsidiaries’ retained earnings has been recognised.



17. Inventories


Raw materials and supplies 18.7 13.5Work in progress 4.8 4.6Finished goods 13.3 7.2Goods 26.8 25.3Advance payments 1.1 0.5Total 64.7 51.1

The write-downs of inventories recognised during the period amounts to EUR 1.4 million (EUR 1.9 million in 2009).

The aging of trade receivables 2010 Impairment

losses Net 2010 2009 Impairment

losses Net 2009Trade receivables not past due 165.8 – 165.8 117.3 0.0 117.3Trade receivables past due 1–30 days 15.0 – 15.0 11.8 0.0 11.8Trade receivables past due 31–60 days 0.8 – 0.8 1.0 0.0 1.0Trade receivables past due 61–90 days 0.4 – 0.4 –0.7 0.0 –0.7Trade receivables past due over 90 days 1.4 –1.3 0.0 1.7 –1.2 0.4Total 183.2 –1.3 181.9 131.1 –1.2 129.8

An impairment loss of EUR 0.3 million has been recognised on the Group companies’ trade receivables during the reporting period (EUR 0.9 million in 2009).

19. Other financial assets


Money market funds 5.4 5.3Bank deposits 0.0 0.0Available-for-sale financial assets at the end of the period 5.4 5.3

Unquoted shares (EUR 0.5 million) have been transferred to non-current available-for-sale investments during the reporting period.

20. Other investments


Publicly quoted shares 0.9 0.8Financial assets at fair value through profit and loss 0.9 0.8

21. Cash and cash equivalents


Cash in hand and at bank 49.5 19.3Other cash and cash equivalents 2.1 1.5Total 51.5 20.8

18. Trade and other receivables (current)


Trade receivables 181.9 129.8Receivables from joint ventures 0.4 0.1Accrued income

Interest receivables 0.0 –Personnel cost accrual 0.4 0.3Other accrued income 3.4 1.7

Receivables on derivative instruments 0.8 0.8Other receivables 6.4 4.8Income tax receivables 0.5 2.3Total 193.9 139.7



Share capitalShare capital consists of A and L series shares. At the end of the reporting period 2010, there were 35,960,000 A shares and 25,003 L shares. All shares have the same voting and financial rights.

The following reserves are included in equity:Share premium fundPortion of payments received for share subscriptions were recognised in the share premium reserve in accordance with the terms and conditions of share issues before the new Companies Act (21 July 2006/624) entered into force.

22. Equity

23. Interest-bearing liabilities

2010 2009

EUR millionCarrying amounts

Carrying amounts

Non-currentLoans from financial institutions 165.9 85.9Financial lease liabilities 3.0 3.5Total 169.0 89.5

CurrentLoans from financial institutions 18.9 12.0Current portion of financial lease liabilities 0.5 0.5Total 19.4 12.5

Interest-bearing non-current loans from financial institutions are measured at amortised cost using the effective interest method.

Group’s interest-bearing liabilities mature as follows:

2010EUR million 2011 2012 2013 2014 2015 2016 –

Loans from financial institutions (nominal value) 19.0 19.0 19.0 19.0 110.5Financial lease liabilities 0.5 0.7 0.5 0.5 0.5 0.8Total 19.5 19.7 19.6 19.5 111.0 0.8

2009EUR million 2010 2011 2012 2013 2014 2015 –

Loans from financial institutions (nominal value) 12.0 62.0 12.0 12.0 – –Financial lease liabilities 0.5 0.5 0.5 0.4 0.4 1.7Total 12.5 62.5 12.5 12.4 0.4 1.7

Hedging reserveThe hedging reserve includes the change in the fair value of the effective portion of the derivative instruments used for cash flow hedging.

Fair value reserveThe fair value reserve includes the changes in the fair value of available-for-sale financial assets.

Translation differencesThe translation differencies comprise all foreign exchange differences arising from the translation of the foreign subsidi-aries’ financial statements, as well as the fair value adjustments of goodwill, assets and liabilities arising from the acquisition of these companies. The Group’s translation differences amounted to EUR 8.7 million on 31 December 2010 (EUR –3.9 million in 2009).



The Group’s non-current interest-bearing liabilities by currency is as follows:

2010 2009EUR 145 89SEK 21 –

The weighted average effective interest rates of the Group’s loans from financial institutions on 31 December:

2010 2009Loans from financial institutions, EUR 3.03 2.47%*Loans from financial institutions, SEK 3.25 –

* The comparison year figure has been corrected and now includes also the impact of interest rate derivatives.The figure (0.91%) presented in 2009 included only interest on loans on 31 December.

The weighted average interest rates of the Group’s finance lease liabilities on 31 December:

2010 2009Financial lease liabilities 3% 3%

The Group’s current interest-bearing liabilities by currency is as follows (EUR thousand):

2010 2009EUR 14.9 12.5 SEK 4.4 0.0

The Group’s financial lease liabilities mature as follows:

EUR 2010 2009Total amount of minimum lease paymentsLess than one year 0.7 0.7 More than one and less than five years 2.7 2.9 More than five years 1.0 1.5 Minimum lease payments in total 4.4 5.1

Present value of minimum lease paymentsLess than one year 0.5 0.5 More than one and less than five years 2.2 1.8 More than five years 0.8 1.7 Present value of minimum lease payments in total 3.5 4.0

Future finance charges 0.9 1.1

Total financial lease liabilities 4.4 5.1

24. Non-current employee benefit obligations

a) Pension obligationsThe Group operates various pension plans in accordance with local conditions and practices in different countries. In Finnish companies, statutory pension obligations are arranged through insurance companies, and the voluntary pension schemes are covered by supplementary pension insurance. Foreign subsidiaries manage their pension plans in accordance with local legislation and established practice. In Finland, pension security is mainly arranged through the TYEL system. Some pension arrangements may also include an option of early retirement or disability benefit. In Sweden, pension security is arranged through pension insurance companies.

The Group has defined benefit pension plans for supplemen-tary pension in Finland and Norway. Defined benefit pension plans are arranged through pension insurance companies. In defined benefit plans, the amount of pension benefit at retirement is calculated on the basis of salary, years of service and life expectancy.

Defined benefit pension liability in the statement of financial position is determined as follows:


Present value of unfunded obligations 1.9 1.5Present value of funded obligations 92.9 75.1Fair value of plan assets –80.8 –66.5Deficit 14.0 10.2

Unrecognised actuarial gains (+) and losses (–) -7.1 –4.0Net pension liability in the statement of financial position 6.9 6.2

Defined benefit pension expense in the statement of comprehensive income is determined as follows:Current service cost –0.9 –0.9Interest cost –3.5 –3.7Expected return on plan assets 2.9 2.5Actuarial gains (+) and losses (–) 0.0 0.1Past service costs 0.0 –

–1.5 –2.2

Actual return on plan assets14.9 5.6



Changes in the fair value of pension obligation and assets in the statement of financial position: Present value of the obligation, EUR million 2010 2009

Obligation at 1 January 76.7 75.7Service cost 0.9 0.9Interest cost 3.5 3.7Benefits paid –6.4 –5.9Exchange differences 0.2 0.0Impact of the release of obligation 19.8 –Unrecognised actuarial gains (+) and losses (–) – 2.3Obligation at 31 December 94.7 76.7

Fair value of plan assets, EUR million 2010 2009

Fair value of plan assets at 1 January 66.5 63.7Expected return on plan assets 2.9 2.5Contributions paid by employer 0.8 3.1Actuarial gains (+) and losses (–) 17.0 3.1Exchange differences – –0.1Benefits paid –6.3 –5.9Fair value of plan assets at 31 December 80.9 66.5

It is not possible to provide a split-up of the plan assets by asset classes, since the part of the obligation paid to pension insurance companies is considered an asset. The asset is the responsibility of the insurance company and forms a part of their investment capital, which is why a profile by asset class cannot be determined.

The Group estimates that the contributions to defined benefit pension plans will amount to EUR 310 thousand in 2011.

Significant actuarial assumptions:2010 2009

FinlandDiscount rate 4.5% 4.8%Expected return on plan assets 4.5% 4.5%Future salary increase 2.3% 3.5%

NorwayDiscount rate 4.0% 4.4%Future salary increase 4.0% 4.3%

Five-year time series (as of 1 January 2006)

EUR million 2010 2009 2008 2007 2006

Present value of the obligation 94.7 76.7 75.7 73.2 33.1 Present value of the plan assets –80.9 –66.5 –63.7 –60.8 –18.0 Deficit 13.8 10.3 11.9 12.4 15.1

Experience adjustments arising on plan assets 17.0 3.1 5.8 40.9 1.2 Experience adjustments arising on plan liabilities 22.0 –0.4 3.7 –44.8 –0.4

b) Long-service benefitsIn Altia Plc, long-service benefit is calculated based on the length of employment for employees employed prior to 1 January 1994. The benefit is annually reviewed. The amount of the benefit in the Group is as follows:

Other employee benefit liability in the statement of financial position is determined as follows:

EUR million 2010 2009Present value of funded obligations / deficit 0.5 0.7

Other employee benefit expense in the statement of comprehensive income is determined as follows:

EUR million 2010 2009Current service cost –0.0 –0.0 Interest cost –0.0 –0.0Expected return on plan assets – – Actuarial gains (+) and losses (–) 0.2 0.0

0.1 –0.1

Changes in the fair value of other employee benefit obligation and assets in the statement of financial position:

Present value of the obligation: 2010 2009

Obligation at 1 January 0.7 0.8 Service cost 0.0 0.0 Interest cost 0.0 0.0 Benefits paid –0.1 –0.1 Unrecognised actuarial gains (+) and losses (–) –0.2 0.0 Obligation at 31 December 0.5 0.7

Significant actuarial assumptions:

Finland 2010 2009Discount rate 4.5% 4.8%Future salary increase 2.3% 3.5%

Five-year time series (as of 1 January 2006)

thousand eur 2010 2009 2008 2007 2006Present value of the obligation / deficit 0.5 0.7 0.8 1.0 1.3



25. Trade and other payables

EUR million 2010 2009CurrentTrade payables 44.1 38.3Wage and social security accruals 6.0 7.3Interest and other financial liabilities 0.2 0.1Other accrued expenses 9.6 9.9Liabilities on derivatives* 3.1 3.8Excise tax 67.7 50.6VAT liability 35.0 20.5Other liabilities 20.1 8.7Total 185.7 139.3

26. Fair values of financial assets and liabilities

The following table presents the fair value and the carrying amount of each financial instrument item.

2010EUR million Note

Derivatives, hedge

accounting

Financial assets/

liabilities at fair value

through profit or loss

Loans and other

receivables

Available- for-sale

financial assets

Financial liabilities at

amortised cost

Carrying amounts Fair value

Financial assetsNon-current financial assets

Unquoted shares 15. – – – 0.6 – 0.6 0.6 Loan receivables 18. – – 1.0 – – 1.0 1.0

Current financial assets – – Money market funds 19. – – – 5.4 – 5.4 5.4 Publicly quoted shares 20. – 0.9 – – 0.9 0.9 Trade and other receivables 18. – – 182.3 – – 182.3 182.3 Trade and other receivables/ Derivative instruments 18.

Commodity derivatives, hedge accounting 18. 1.3 – – – – 1.3 1.3 Interest rate derivatives, non-hedge accounting 18. – 0.1 – – – 0.1 0.1 Interest rate derivatives, hedge accounting 18. 0.3 – – – – 0.3 0.3 Currency forward contracts, non-hedge accounting 18. – 0.2 – – – 0.2 0.2 Currency options, purchased 18. – 0.2 – – – 0.2 0.2 Currency options, written 18. – – – – – – –

Cash and cash equivalents 21. – – 51.5 – – 51.5 51.5

1.6 1.4 183.3 6.0 – 243.8 243.8 Financial liabilities 23. Non-current financial liabilities

Interest-bearing liabilities 23. – – – – 169.0 169.0 169.0 Current financial liabilities – – – – – – –

Interest-bearing liabilities 23. – – – – 19.4 19.4 19.4 Trade and other payables 25. – – – – 45.0 45.0 45.0 Trade and other payables/ Derivative instruments 25.

Interest rate derivatives, non-hedge accounting 25. – 0.3 – – – 0.3 0.3 Interest rate derivatives, hedge accounting 25. 1.1 – – – – 1.1 1.1 Currency forward contracts, non-hedge accounting 25. 0.2 0.2 0.2 Currency forward contracts, hedge accounting, cash flow hedge 25. 0.1 – – – – 0.1 0.1 Currency options, purchased 25. – 0.2 – – – 0.2 0.2 Currency options, written 25. – 0.5 – – – 0.5 0.5

1.2 1.3 – – 233.4 235.8 235.8

* The figure of 2010 includes also the portion of realised interest expenses (EUR 0.6 million) related to interest rate derivatives.



2009 EUR million Note

Derivatives, hedge

accounting

Financial assets/

liabilities at fair value

through profit or loss

Loans and other

receivables

Available- for-sale

financial assets

Financial liabilities at

amortised cost

Carrying amounts Fair value

Financial assetsNon-current financial assets

Unquoted shares 15. – 0.5 0.5 0.5 Current financial assets 18.

Money market funds 19. – – – 5.8 – 5.8 5.8 Publicly quoted shares 20. 0.8 – – 0.8 0.8 Trade and other receivables 18. – – 132.0 – – 132.0 132.0 Trade and other receivables/ Derivative instruments 18.

Interest rate derivatives, non-hedge accounting 18. – 0.3 – – – 0.3 0.3 Interest rate derivatives, hedge accounting 18. 0.0 – – – – 0.0 0.0Currency forward contracts, hedge accounting 18. 0.0 – – – – 0.0 0.0 Currency options, purchased 18. – 0.4 – – – 0.4 0.4 Currency options, written 18. – – – – – – –

Cash and cash equivalents 21. – – 20.8 – – 20.8 20.8 0.0 1.5 152.8 6.3 – 160.6 160.6

Financial liabilities Non-current financial liabilities

Interest-bearing liabilities – – – – 85.9 85.9 85.9 Current financial liabilities 23. – – – – – – –

Interest-bearing liabilities – – – – 12.0 12.0 12.0 Trade and other payables 23. – – – – 42.8 42.8 42.8 Trade and other payables/Derivative instruments 25.

Commodity derivatives, hedge accounting 25. 0.5 0.5 0.5 Interest rate derivatives, non-hedge accounting 25. – 1.5 1.5 1.5 Interest rate derivatives, hedge accounting 25. 1.5 – – – – 1.5 1.5 Currency forward contracts, hedge accounting 25. 0.1 – – – – 0.1 0.1 Currency options, purchased 25. – – – – – – – Currency options, written 25. – 0.3 – – – 0.3 0.3

2.1 1.7 – – 140.7 144.5 144.5

Nominal values of derivative instrumentsEUR million 2010 2009Derivative instruments designated for cash flow hedging

Interest rate derivatives 76.5 30.0Currency forward contracts 6.0 5.3Commodity derivatives, electricity 5.5 5.4

0.1 TWh 0.1 TWhDerivative instruments, non-hedge accounting

Currency options, purchased 20.3 8.2Currency options, written 17.8 5.4Interest rate derivatives 144.0 78.0Currency forward contracts 58.9 40.6



Financial assets, EUR million Fair value

LEVEL 1Financial assets at fair value through profit or loss

Publicly quoted shares 0.9

LEVEL 2Financial assets at fair value through profit or loss

Currency derivatives 0.4 Interest rate drivatives 0.1

Derivatives, hedge accountingInterest rate derivatives 0.3 Commodity derivatives 1.3

Available-for-sale financial assetsMoney market funds 5.4

LEVEL 3Unquoted shares 0.6

Financial liabilities, EUR million Fair value

LEVEL 2Financial liabilities at fair value through profit or loss

Currency derivatives 1.0 Interest rate derivatives 0.3

Derivatives, hedge accountingCurrency derivatives 0.1 Interest rate derivatives 1.1

Equity and interest securities Available-for-sale financial assets mainly include interest securi-ties and non-current unquoted equity securities.

Unquoted equity instruments are measured at cost because their fair value can not be reliably determined.

Quoted securities are measured at fair value based on market bid price at the reporting date and recognised in current financial assets at fair value through profit or loss.

Derivative instrumentsThe fair values of currency forward contracts and options are determined using the market prices at the reporting date. The fair value of currency options is determined using the Garman-Kohlhagen valuation model and one to twelve month’s volatili-ties of key currency pairs. For the fair values of interest rate swaps the discounted future cash flow technique is used. The fair values correspond to amounts that the Group would pay or receive to terminate the derivative contract at the measurement date. The Group applies IAS 39 hedge accounting to part of the currency and interest rate derivatives. Thus, the effective

part of fair value is recognised in other comprehensive income and presented within equity in the hedging reserve.

Altia uses electricity derivatives to manage the price risk of electricity. The Group applies IAS 39 hedge accounting to electricity derivatives, and in respect of these instruments, the changes in fair values are recognised in other comprehensive income and presented in equity in the hedging reserve.

Classification of financial instruments into different levels enables the assessment of the relative reliability of their fair values. Loans from financial institutions The fair value of interest-bearing liabilities from financial institutions has been measured at amortised cost using the effective interest method. The carrying amount of the loans is considered to correspond their fair value because the loans are tied to short-term market interest rates.

Financial lease liabilities The fair values of financial lease liabilities are based on discounted future cash flows. The discount rate is the corresponding interest rate on similar lease contracts. Trade and other payables or receivablesDue to short maturity, the fair value of trade and other payables and receivables is assumed to correspond to their carrying amount.

27. Associated companies and joint venturesThe Group has a 50% interest in a joint venture, Roal Ltd (domiciled in Finland) which engages in the enzyme business. The joint venture’s other owner is ABF Overseas Ltd. In addi-tion, the Group had a 50% interest in an associated company, Brand Partners AS (domiciled in Norway), during previous period. The company was sold in July 2009.

Both companies are consolidated using the equity method (the sold associated company until the date of sale).



Interests in associated companies and joint ventures:

EUR million 2010 2009On 1 January 8.5 16.4Share of profit for the period 0.1 0.4Dividends received –0.4 –2.4Other changes 0.2 –0.1Divestment of associated companies – –5.0Translation differences – –0.8At the end of the reporting period 8.3 8.5

Financial summary of associated companies and joint ventures:

EUR million 2010 2009Roal OyAssets 43.4 44.7Liabilities 27.0 27.9Net assets (liabilities) 16.3 16.8Net sales 34.8 35.6Profit for the period 0.1 0.7

28. Collaterals and commitments, and contingent assets and liabilities

Collaterals and commitmentsEUR million 2010 2009

Collateral given for own commitmentsDeposits – 0.0

Collateral given on behalf of Group companies

Mortgages 23.5 23.5Guarantees 4.9 2.9

Other commitmentsLeasing liabilities 2.9 2.3Other rent liabilities 17.7 15.1Other liabilities 4.3 4.1

Assets outside the statement of financial positionTons 2010 2009Emission allowances received 54,632 54,632Excess emission allowances from the previous period 64,645 54,636Realised emissions –38,863 –44,623Emission allowances at 31 December 80,413 64,645

Fair value of emission allowances at 31 December 1.2 0.8

Emissions allowances have been granted for the periods from 2008 to 2012.

29. Related party transactions

The following transactions have been taken place with related parties:EUR million 2010 2009a) Sales of goods and servicesSales of goods

Other companies included in related parties 363.3 374.7Associated companies and joint ventures 1.1 1.9Sales of servicesAssociated companies and joint ventures – 0.1

Total 364.4 376.7

b) Purchases of goods and servicesPurchases of goods

Other companies included in related parties 19.8 22.1

Purchases of servicesOther companies included in related parties 3.2 2.7Associated companies and joint ventures – –

Total 23.0 24.8

c) Outstanding balance of sales and purchases of goods and servicesSales of goods and services

Other companies included in related parties 54.1 61.5Associated companies and joint ventures 0.2 0.1

Purchases of goods and servicesOther companies included in related parties 2.0 2.2

Liabilities to and receivables from associated companies and joint ventures are presented in Note 18. Trade and other receivables (current) and Note 25. Trade and other payables.

EUR million 2010 2009d) Management remunerationCEO of the parent company 0.3 0.3Performance bonus – 0.1Total 0.3 0.4

Members and deputy members of the Board of Directors 0.2 0.2

Employee benefits of other members of the Management Team

Salaries and short-term employee benefits 0.6 1.2Post service benefits – 0.3Share-based payments – 0.1Total 0.6 1.6

The retirement age of the CEO of the parent company is 63 years.



Related party transactionsThe parties are considered to be related to each other if one party can control or have significant influence over decision-making relating to the financial and business operations of another party. The Group’s parent-subsidiary relationships are presented under specification of ownership in subsidiaries, associated companies and joint ventures.

Related parties includes also the Board members, CEO, and their family members, and the State of Finland that owns 100% of the Altia’s shares. Shareholdings have changed in 2009 due to shares granted under the management incentive plan. At the end of 2009 reporting period, there were no outstanding shares related to the plan.

Transactions with the organisations in which the State of Finland owns over 50% are treated as related party transactions. Transactions with other organisations are based on market prices.

Employee benefits to management include employee benefits to the Executive Management Team members. The number of members in the Executive Management Team has changed during 2010.

No monetary loans have been granted to the CEO or the members of the Board of Directors, and no collaterals or guarantees have been given on their behalf.

30. Specification of ownership in subsidiaries and joint ventures

SUBSIDIARIES

Parent company’s share

of ownership %Group’s share of

ownership %A-Beverages Ltd., Helsinki 100.00 100.00A-Pullo Ltd., Nurmijärvi 76.24 76.24Altia Eesti AS, Estonia 100.00 100.00Altia Denmark A/S, Denmark 100.00 100.00Altia Holding Sweden AB, Sweden (former Altia Sweden AB) 100.00 100.00Altia Norway Services AS, Norway 100.00 100.00Altia Sweden AB, Sweden (former Premium Wines AB) 100.00Altia Sweden Services AB, Sweden 100.00Best Buys International AS, Norway 100.00 100.00BevCo AB, Sweden 100.00Bibendum AB, Sweden 100.00Bibendum AS, Norway 100.00 100.00ExCellar Ltd., Helsinki 100.00 100.00Explorer AB, Sweden 100.00 100.00Harald Zetterström Ltd. Ab, Helsinki 100.00 100.00Interbev AS, Norway 100.00 100.00Kron AB 100.00 100.00Lord Calvert AB 100.00 100.00OP Anderson AB 100.00 100.00Philipson & Söderberg AB, Sweden 100.00Prime Wines Ltd., Helsinki 100.00 100.00Premium Wines AS, Norway 100.00 100.00Scandinavian Beverage Group AS, Norway 100.00SIA Mobil Plus ADV, Latvia 100.00 100.00SIA Altia Latvia, Latvia 100.00 100.00SkyCellar Ltd., Helsinki 100.00 100.00Ström AS, Norway 100.00 100.00Svenska Nubbar Ab, Sweden 100.00 100.00Oy Wennerco Ab, Espoo 100.00Winter Wines Nordic Ab 100.00 100.00VSD Logistics AB, Sweden 100.00VSD Logistics AS, Norway 100.00 100.00VSD Logistics Ltd., Helsinki 100.00VSD Logistis A/S, Denmark 100.00Ölcompagniet i Sverige AB, Sweden 100.00

During the reporting period 2010, Bibendum Wine & Spirits A/S and Ancrona Nordic AB owned 100% by Altia Plc’s subsidiary Altia Holding Sweden AB were discontinued. In addition, Altia Logistics AB owned 100% by Altia Plc’s subsidiary VDS AS was also discontinued.

JOINT VENTURES

Roal Ltd., Nurmijärvi 50.00 50.00



31. Financial risk management

Financial risk management principlesThe aim of financial risk management is to ensure the Group’s financial stability and availability of sufficient financing options in different market situations. In addition, the aim is to support the business operations to identify business-related financial risks and their management, and to hedge against material financial risks.

The Group is exposed to various market risks. Changes in these risks affect the company’s assets, liabilities and anticipated transactions. The risks are caused by changes in interest rates, currencies and commodity market prices. Selected derivative instruments can be used to manage the risks resulting from these market risks. Altia mainly hedges against risks that impact the Group’s cash flow, and, if deemed appropriate, also certain currency-denominated items in the statement of financial position. Derivatives are used solely to hedge against the above-mentioned risks. The principles of IAS 39 hedge accounting are applied to electricity forward contracts and certain interest rate and currency derivatives. Financial risk management is carried out as part of the Group’s risk management, according to the risk management principles approved by the Board of Directors in 2009. Altia’s principles, which aim to achieve financial, credit and operational continuity, form the basis for financial risk management.

Risk management processSpecial process features related to financing are described below in connection with the descriptions of market, liquidity and credit risks. The financial risk position is regularly reported to the Audit Committee and Altia’s Board of Directors. The most significant decisions in principle concerning risk management are made by the company’s Board of Directors.

As part of the financial risk management principles, Altia’s Board has approved a list of financial instruments, in which the accepted instruments, their purpose and the person who decides on their use have been specified for different types of financial risks.

Financial risk management organisationThe Group management receives regular reports on financial matters. On a case-by-case basis, the Board of Directors processes all essential financial matters, such as the Group’s internal and external loan arrangements and guarantees granted on behalf of subsidiaries.

Tasks and responsibilities regarding Altia’s financial operations and financial risk management are described in the financial risk management principles. The Group Treasury is responsible for the centralised financial operations and their management, securing financing, identifying risks and, if required, executing

hedging transactions with external counterparts. The business units and subsidiaries are responsible for managing the risks associated with their own operations and forecasting cash flows.

Concentrations of riskAltia carefully analyses the financial risks and concentrations of risk related to its operations. Concentrations of risk identified as a result of this assessment are described in connection with the descriptions of market, liquidity and credit risks.

Market riskAltia defines market risk as a risk where the fair values of finan-cial instruments or future cash flows fluctuate due to changes in market prices. The most significant market risks for the Group include currency risk, interest rate risk and price risks.

1. Currency riskAltia is exposed to currency risks resulting from export and import, trade across the company’s internal borders, as well as investments and loans in cooperation with foreign subsidiaries. The objective of Group’s currency risk management is to limit the uncertainties associated with exchange rates and their effect on the Group’s profit, cash flow and statement of financial position.

Transaction risksTransaction risks are caused by foreign currency-denominated items in the statement of financial position and future cash inflows: import, export and capital flows. Transaction risk management is aiming to hedge the Group’s profit against the effects of changes in exchange rates.

The target is to hedge 60–80% of highly probable commercial cash flows. The average hedge ratio has remained at the target level. Hedging transactions are executed with currency forward contracts and options up to maximum the next nine months, predominantly in accordance with the pricing periods of customers. Altia may apply cash flow hedge accounting to currency derivatives. Hedge accounting has not so far been applied to currency options. Intra-Group loan arrangements are hedged at most by 100%. Hedge accounting is not applied to these arrangements.

In the table below, the Group’s net currency position is presented as currency pairs: functional currency – transaction currency:

The Group’s net currency position at 31 DecemberEUR million 2010 2009EUR–SEK 2.2 –0.2EUR–NOK 0.4 0.3EUR–PLN 1.4 0.8EUR–AUD –0.7 –SEK–EUR –2.5 –NOK–EUR –1.0 –



The net currency risk has been taken into account in the table when the transaction currency is other than the company’s functional currency. The amounts of forecasted commercial cash flows taken into account in the position match the amounts of the related derivatives. The currency risk between Euro and the Danish krona is not separately reported or hedged against because of the fixed link between Euro and the Danish krona.

The Group’s net currency position consists of trade receivables, trade payables, hedged estimated cash flows, cash and cash equivalents, the Group’s internal and external loans and deriva-tive instruments.

Translation riskTranslation risks are mainly caused by the parent company’s foreign currency denominated net investments in foreign subsidiaries, which cause a translation difference in equity upon consolidation. The Group Treasury regularly analyses the translation risk and reports any significant issues to the management. The most significant net investments are denominated in the Swedish, Norwegian and Danish kronas. The translation risk has not been hedged.

2. Interest rate riskThe objective of the Group’s interest rate risk management is to minimise the impact of fluctuations arising from interest rate changes on the Group’s profit. The Group’s exposure to interest rate risk is mainly due to non-current interest-bearing debt of EUR 186.6 million in nominal value. The loan was divided into two portions at 31 December 2010:

– A EUR 76.1 million portion of the loan matures in equal instalments in April during years 2011–2014. The interest rate on the loan is based on one-month market rates. A part of the loan is SEK-denominated due to currency risk hedging purposes. Altia has hedged the interest payments for approxi-mately 80% of the nominal loan amount by using interest rate derivatives. Cash flow hedge accounting principles are applied to part of the Euro-denominated interest rate deriva-tives and to all SEK-denominated interest rate derivatives, and the hedge effectiveness is tested quarterly. The hedges have been regarded as effective.

– A EUR 110.5 million portion of the loan matures in April 2015. The loan is repaid annually in December by instal-ments of EUR 12 million. The interest rate on the loan is based on one-month market rates. A part of the loan is SEK-denominated due to currency risk hedging purposes. Altia has hedged the interest payments for approximately 80% of the nominal loan amount. Hedge accounting principles are applied to SEK-denominated interest rate derivatives and the hedges have been regarded as effective. Hedge accounting is not applied to Euro-denominated interest rate derivatives.

Altia manages interest rate risk by optimising the interest flow and interest price risks, carrying out regular sensitivity analyses and using financial instruments approved by Altia’s Board of Directors.

3. Price risk associated with commodities and share investmentsBarleyIn 2010, Altia used approximately 164 million kilos of Finnish barley to produce ethanol and starch. The availability of high-quality domestic starch barley is ensured with contract cultivation. The market price of barley fluctuates significantly due to various factors that affect the Finnish barley supply and demand and is therefore a significant risk for Altia. The Group Treasury together with the purchasing organisation has analysed opportunities for hedging against barley price changes by using derivative instruments, but no sufficiently correlating hedging instruments have been found in the market so far.

ElectricityStrong increase in the market price of electricity is a signifi-cant risk for Altia. The risk is managed by following Altia’s principles for electricity procurement. The procurement policy determines the hedging limits, within which the price risk is hedged using derivatives from Nord Pool ASA derivatives markets. The electricity procurement hedging service has been outsourced. At the end of 2010, the hedge ratio for deliveries of the next 12 months was 76.8% (66.5% in 2009), corresponding with the set targets. In 2010, the average hedge ratio was 65.5%. Hedge accounting in accordance with the IFRS standards is applied to the hedges against electricity price risk, and hedge effectiveness is tested quarterly. The hedge has been regarded as effective.

Altia purchases its electricity as a delivery tied to the spot price of the Finnish consumption area straight from the Nord Pool markets.

Shares and fundsThe company’s investments in shares of external companies are modest, therefore changes in their fair value do not have any significant impact on the Group’s profit.

4. Sensitivity to market risksThe following analysis describes the sensitivity of the Group’s profit before tax and equity to changes in electricity prices, exchange rates and interest rates. When Altia applies hedge accounting, the sensitivity is directed at equity. When hedge accounting is not applied, the sensitivity is presented as a potential impact on profit and loss. The sensitivity to exchange rate changes has been calculated from net currency position.



Sensitivity of financial instruments to market risks in accordance with IFRS 7 (before taxes), (EUR million)

2010 2009Profit or loss Equity Profit or loss Equity

+/–10% change in electricity price +/–0.0 +/–0.7 +/–0.0 +/–0.4+/–10% change in EUR/NOK exchange rate –/+0.8 – +/–0.0 –+/–10% change in EUR/SEK exchange rate –/+2.4 – +/–0.0 +/–0.0+/–10% change in EUR/PLN exchange rate –0.1/0.2 – +/–0.1 +/–0.1+/–10% change in EUR/AUD exchange rate +/–0.1 – – –+/– 1% change in market interest rate –1.4/1.4 0.5/–0.5 –0.5/0.6* –0.2/0.3*

* Regarding interest rate sensitivity, the impact of interest rate decline is taken into account until 0%.

Liquidity riskIn order to manage the liquidity risk, Altia continuously maintains sufficient liquidity reserves approved by the Board of Directors, which in 2010 comprised Group overdraft facilities and a EUR 40 million revolving credit line. On 31 December 2010, Altia had committed unused credit facility agreements totalling EUR 70 million (EUR 30 million on 31 December 2009). More information on the Group’s external loans is provided in the interest rate risk section.

Maturities of financial liabilities

2010

Contractual maturities of financial liabilities (EUR million)

Cash flows 2011 Cash flows 2012 Cash flows 2013–

Fixed rateVariable

rateRe-

payment Fixed rateVariable

rateRe-


rateRe-

paymentNon-derivative:

Loans from financial institutions –3.8 –19.0 –4.2 –19.0 –10.3 –148.6Finance lease liabilities –0.0 –0.5 –0.0 –0.7 –0.0 –2.3Trade payables –44.1

Derivative: Currency derivatives, hedge accounting

Inflow 6.0 Outflow –6.2

Currency derivatives, non-hedge accounting


Interest rate derivatives, hedge accounting –1.3 –0.6 1.0 Interest rate derivatives, non-hedge accounting –1.0 –0.6 0.8 Commodity derivatives, hedge accounting 0.9 0.2 0.2

Total –2.3 –3.8 –63.5 –1.2 –4.2 –19.5 1.8 –10.3 –150.7



2009

Contractual maturities of financial liabilities (EUR million)

Cash flows 2010 Cash flows 2011 Cash flows 2012–

Fixed rateVariable

rateRe-


rateRe-


rateRe-

paymentNon-derivative:

Loans from financial institutions –1.0 –12.0 –0.7 –62.0 –1.3 –24.0Finance lease liabilities –0.0 –0.5 –0.0 –0.5 –0.0 –2.6Trade payables –42.8

Derivative: Currency derivatives, hedge accounting


Currency derivatives, non-hedge accounting


Interest rate derivatives, hedge accounting –0.7 –0.9 Interest rate derivatives, non-hedge accounting –1.2 Commodity derivatives, hedge accounting –0.4 –0.1 –0.1

Total 0.0 –2.9 –56.9 0.0 –1.6 –62.6 0.0 –1.3 –26.7

Credit risk The objective of Altia’s credit risk management is to minimise the losses if one of the Group’s counterparts fails to meet its obligations. The principles of credit risk management are described in the instructions for financial risk management.

Credit risks are caused when a counterpart does not fulfil its contractual payment obligations or its credit rating changes in a manner that affects the market value of the financial instruments it has issued. The maximum amount of credit risk corresponds to the carrying amount of the Group’s financial assets. The aim is to reduce credit risks by active credit control and by taking into account customers’ credit rating when determining the payment term of invoices.

Capital managementThe target of Altia’s capital management is to ensure an effective capital structure that offers the company a continuous access to the capital markets despite the volatility of the industry. Although Altia does not have public rating, its goal is to achieve a capital structure corresponding to that of other companies in the industry that have investment ratings. The Board of Directors monitors the Group’s capital structure regularly.

Altia monitors its capital based on gearing (interest-bearing net liabilities in relation to equity). Interest-bearing net liabilities consist of loans less cash and cash equivalents and other liquidity assets.

During the business cycle, the company’s net gearing is likely to change, and the goal is to retain a sufficiently strong capital structure to ensure the Group’s financing needs. Gearing at 31 December 2010 and 31 December 2009 were:

Gearing at 31 December (EUR million) 2010 2009Interest-bearing liabilities 188.3 102.0Cash and cash equivalents and liquid assets 56.9 26.1Interest-bearing net liabilities 131.4 75.9Total equity 172.1 136.8Liabilities as a share of total equity and liabilities 76.3% 55.5%

32. Events after the reporting periodThere have been no significant changes in operations after the reporting period.

Maturities of financial liabilities



GROUP’S KEY RATIOSEUR million 2010 2009 2008Net sales 487.9 407.3 463.3Operating profit 32.6 15.6 9.0

(% of net sales) 6.7 3.8 1.9Net financial items –3.1 –6.6 –1.2

(% of net sales) –0.6 –1.6 –0.3Profit before tax 29.6 9.4 9.9

(% of net sales) 6.1 2.3 2.1Profit for the period 25.7 5.3 6.1

(% of net sales) 5.3 1.3 1.3

Cash and cash equivalents and other liquid assets 56.9 26.1 11.3Total assets 581.1 401.3 402.2Equity 172.1 136.8 121.7Non-controlling interest 0.6 2.1 1.9Deferred tax liability 23.2 14.2 14.0Interest-bearing liabilities 188.3 102.0 118.2Non-interest-bearing liabilities (incl. deferred tax liability) 220.7 159.6 162.8Invested capital 360.5 238.8 239.8

Return on equity, % 17.2 4.3 4.7Return on invested capital, % 10.0 4.2 6.8Equity ratio, % 29.6 34.3 30.3Gearing, % 76.3 55.5 87.9

Number of personnel, on average 1122 1042 1108

Earnings/share, € 0.71 0.14 0.17Equity/share, € 4.77 3.74 3.38Dividend/share, € – – –

Number of shares, pcs 35,985,003 35,985,003 35,985,003

Cash and cash equivalents = Cash in hand and at bank + financial securities

Invested capital =Total assets – non-interest-bearing liabilities – deferred tax liability – obligatory provisions

Return on investment, % (ROE) =Profit/loss for the period

× 100Equity + non-controlling interests (average for period)

Return on investment, % (ROI) =Profit/loss for the period + finance costs

× 100Equity + non-controlling interests + interest-bearing liabilities

Equity ratio, % =Equity + non-controlling interests

× 100Total assets – advances received

Gearing, % =Interest-bearing liabilities – cash and cash equivalents

× 100Equity + non-controlling interests

Earnings/share =Profit/loss for the period – non-controlling interestsShare-issue adjusted number of shares (average for period)

Equity/share =Equity attributable to shareholders of the parent Share-issue adjusted number of shares (at the end of period)

Dividend/share =Dividend for periodShare-issue adjusted number of shares (average for period)


Parent company financial statements (FAS)


NET SALES 2. 195.0 197.7

Increase (+) / decrease (–) in inventoriesfinished goods and work in progress –1.4 –5.4Other operating income 3. 22.4 12.6Materials and services

Raw materials, consumables and goodsPurchases during the period 124.0 107.2Increase (–) / decrease (+) in inventories –1.3 –1.9

External services 3.6 4.8–126.3 –110.1

Personnel expenses 4. –29.9 –29.7Depreciation, amortisation and impairment losses 5. –11.1 –11.0Other operating expenses 6. –32.4 –55.8OPERATING PROFIT (LOSS) 16.1 –1.8

Financial income and expenses 7.Income from associated companies and joint ventures 0.4 2.3Other interest and finance income 12.2 8.5Impairment loss on variable assets’ financial securities –0.0 –0.0Interest and other finance expenses –15.5 –17.0

–3.0 –6.1

PROFIT (LOSS) BEFORE EXTRAORDINARY ITEMS 13.2 –8.0Extraordinary items 8. –0.4 –PROFIT BEFORE APPROPRIATIONS AND TAXES 12.7 –8.0Appropriations

Depreciation difference increase (–) /decrease (+) 9. 0.3 0.5Income taxes 10. –3.3 –2.0PROFIT (LOSS) FOR THE PERIOD 9.6 –9.5

Parent company’s income statement



Parent company’s balance sheet 31 December

EUR million Note 2010 2009

ASSETS

NON-CURRENT ASSETS 11.

Intangible assetsIntangible assets 12.1 2.1Goodwill 3.5 5.3Other long-term exependiture 5.5 7.2Prepayments and assets under construction 0.9 –

22.0 14.6Tangible assets

Land and water areas 2.7 2.7Buildings and constructions 24.3 25.7Machinery and equipment 22.5 25.3Other tangible assets 0.5 0.5Prepayments and assets under construction 0.8 0.5

50.7 54.8Investments

Shares in Group companies 243.4 192.8Shares in associates and joint ventures 8.0 8.0Other non-current assets 0.6 0.5

252.0 201.3TOTAL NON-CURRENT ASSETS 324.8 270.7

CURRENT ASSETS

Inventories 12.Materials and supplies 11.8 13.1Work in progress 4.5 4.6Finished goods 8.1 9.4Prepayments 0.9 –

25.2 27.1Receivables 13.

Non-current Receivables from Group companies 71.2 30.6Other receivables 1.0 –Deferred tax assets 16. 0.3 –

72.5 30.6Current

Trade receivables 66.5 69.3Receivables from Group companies 10.1 20.9Receivables from associates and joint ventures 0.4 0.1Other receivables – 0.0Accrued income and prepaid expenses 5.8 3.2

82.8 93.6Financial securities

Other shares and investments 0.8 0.2Other securities 5.3 5.0

6.2 5.2Cash in hand and at banks 41.6 15.0

TOTAL CURRENT ASSETS 228.2 171.5

TOTAL ASSETS 553.0 442.2

EUR million Note 2010 2009

EQUITY AND LIABILITIES

EQUITY 14.Share capital 60.5 60.5Fair value reserve 0.2 –Hedging reserve 0.4 –Retained earnings 115.6 125.1Profit (loss) for the period 9.6 –9.5TOTAL EQUITY 186.4 176.1

APPROPRIATIONS 15. 19.7 19.9

LIABILITIES 16.Non-currentLoans from financial institutions 167.6 86.0Liabilities to Group companies 34.0 31.9Deferred tax liabilities 0.5 –

202.0 117.9Current Loans from financial institutions 19.0 12.0Advances received 0.0 0.0Trade payables 13.1 11.2Liabilities to Group companies 50.9 48.1Other liabilities 48.1 47.4Accrued liabilities 13.9 9.6

144.9 128.3

TOTAL LIABILITIES 347.0 246.2

TOTAL EQUITY AND LIABILITIES 553.0 442.2



Parent company’s statement of cash flows 1 January–31 DecemberEUR million 2010 2009

CASH FLOWS FROM OPERATING ACTIVITIESProfit before extraordinary items 13.2 –8.0Adjustments:

Depreciation according to plan 11.1 11.0Unrealised foreign exchange gains and losses –2.3 –7.2Other non-cash transactions 0.6 0.8Finance income and expenses 3.0 6.1Other adjustments –0.5 15.5

CASH FLOWS BEFORE CHANGES IN WORKING CAPITAL 25.0 18.4

Changes in working capital:Increase+/decrease- in current non-interest bearing receivables 9.6 10.0Increase+/decrease- in inventories 1.3 6.9Increase+/decrease- in current non-interest liabilities 6.0 –11.1

16.9 5.8OPERATING CASH FLOW BEFORE FINANCIAL ITEMS AND TAXES 41.9 24.2

Interest and other financial expenses paid –8.3 –10.8Dividends received 0.5 2.4Interests received 8.3 8.4Direct taxes paid –0.6 –1.2CASH FLOWS BEFORE EXTRAORDINARY ITEMS 41.8 22.9

NET CASH FLOW FROM OPERATING ACTIVITIES (A) 41.8 22.9

CASH FLOWS FROM INVESTING ACTIVITIES:Investments in tangible and intangible assets –14.5 –5.7Proceeds from disposal of tangible and intangible assets 0.4 0.1Proceeds from disposal of other investments 0.0 0.0Acquired subsidiaries –49.9 –0.0Sold associates – 9.8Loans receivable, subsidiaries –41.6 –0.3

NET CASH FROM INVESTING ACTIVITIES (B) –105.5 3.9

CASH FLOWS FROM FINANCING ACTIVITIES:Repayments of current borrowings – –4.4Proceeds from non-current borrowings – 3.7Repayments of non-current borrowings –98.0 –12.0Proceeds from current borrowings 184.8 –Exchange rate gains from non-current borrowings 3.9 –Net cash flow from extraordinary items of business operations – –0.6

NET CASH FLOW FROM FINANCING ACTIVITIES (C) 90.7 –13.3

INCREASE+/DECREASE- IN CASH AND CASH EQUIVALENTS (A+B+C) 26.9 13.5

CASH AND CASH EQUIVALENTS AT 1 JANUARY 20.0 6.5

CASH AND CASH EQUIVALENTS AT 31 DECEMBER 46.9 20.0



1. Accounting policies for the parent company’s financial statements

The financial statements of the parent company have been prepared in accordance with Finnish accounting legislation.

Altia Group’s financial statements have been prepared in accord-ance with the International Financial Reporting Standards (IFRS), and the parent company follows the Group’s accounting policies when possible. Below are presented the accounting poli-cies that differ from the Group’s accounting policies. Otherwise the Group’s accounting policies are followed.

Pension plansThe pension schemes of the parent company is arranged in pension insurance companies. Pension expenses have been accrued to correspond to performance based salaries in the financial statements.

LeasesAll lease payments are recognised as rental expenses.

Hedge accountingDuring the reporting period 2010, hedge accounting entries in accordance with IAS 39 have been recognised at the parent company’s level when they relate to parent company’s positions. Earlier these items were recognised at the Group’s level. Due to this, the following items are not comparable (items in the comparable period have not been changed): hedging reserve, accrued receiva-bles and payables, deferred taxes, and interest and other finance income and expenses. The impact on comparable year’s items has been presented in the notes to finance income and expenses, accrued receivables and payables, deferred taxes and equity.

Financial securitiesFair value changes in available-for-sale financial assets and publicly quoted shares have been recognised in the books of the parent company during the reporting period. Earlier these changes were recognised at the Group’s level.

Currency derivatives During the reporting period 2010, the parent company started executing internal foreign exchange transactions with the Group companies.

The external foreign exchange transactions are performed centrally by the parent company.

Non-current liabilitiesIn the consolidated financial statements, the interest expenses and capital of loans measured using the effective interest rate method have been changes to correspond to the Finnish accounting legislation.

Extraordinary itemsNotable items unrelated to business operations are recognised in the extraordinary items.

Income taxesThe Group’s accounting policies are applied to income taxes whenever possible to the Finnish Accounting Standards.

2. Net sales distributed by business area


Brands 109.3 110.3Industrial services 84.2 79.4Other 1.5 8.0Total 195.0 197.7

Net sales distributed by geographical area

Finland 175.3 176.8Europe 19.6 20.9Rest of the world 0.1 0.0Total 195.0 197.7

3. Other operating income


Rental income 4.1 1.8Income from energy sales 3.2 2.8Proceeds from disposals 0.5 0.1Service income 7.4 3.1Other income 7.2 4.7Total 22.4 12.6

4. Personnel expenses


Wages and salaries 23.4 23.4Social expenses

Pension expenses 5.2 4.4

Other social security expenses 1.4 1.9Total 29.9 29.7

Management remunerationCEO and Deputy Managing Director 0.3 0.4Board members 0.2 0.2

Total 0.5 0.6

The retirement age of the CEO of the parent company is 63 years.

NUMBER OF PERSONNELAverage number of personnel employed during the period

Workers 278 324Clerical employees 231 224Total 509 548

Notes to the parent company’s financial statements



5. Depreciation, amortisation and impairment losses


Depreciation according to plan 11.1 11.0

Specification of depreciation by balance sheet items is included in section 11. Non-current assets.

The depreciation periods are based on estimated useful lives as follows:

Goodwill 5–10 years Other long-term expenditure 3–10 yearsBuildings 25–40 years Structures 20 years Machinery and equipment 10 years Vehicles 5 years IT hardware 3 yearsIT software 3 years

The depreciation period of other long-term expenditure has been changed to 3 to 10 years from the beginning of the reporting period.

6. Other operating expenses EUR million 2010 2009

Loss on sale of intangible and tangible assets 0.0 15.6Rental expenses 3.6 2.8Marketing expenses 5.7 6.3Production overhead 8.3 8.8Travel and representation expenses 1.5 1.2Other expenses 13.4 21.1Total 32.4 55.8

Auditor’s feesAuditing fees 0.0 0.0Tax consultation 0.0 0.0Other fees 0.1 0.3

0.1 0.4

7. Financial income and expenses


Dividend incomeFrom associated companies and joint ventures 0.4 2.3From others 0.1 0.0

Other interest and finance incomeFrom associated companies and joint ventures 2.3 1.6From others 9.8 6.8

Interest expenses and other finance expenses

From Group companies –3.9 –6.3From others –11.7 –10.6

Total finance income and expenses –3.0 –6.1

Total interest income and expenses Interest income 3.9 1.9Interest expenses –7.6 –5.3

Net interest expenses –3.7 –3.3

During the reporting period 2010, the parent company has started applying hedge accounting. Earlier these items were recognised at the Group’s level. The effective part of hedges is recognised in the hedging reserve. (On 31 Dec 2009, EUR 1.0 million has been recognised in interest income and EUR 0.4 million in unrealised fair value changes at the Group level.)

8. Extraordinary items


Extraordinary expensesGroup contribution 0.4 –

Total extraordinary items 0.4 –

9. Appropriations


Increase–/decrease+ in depreciation difference

Intangible rights –1.0 –0.0Other long-term expenditure –0.1 –0.1Buildings and constructions 0.7 –0.5Machinery and equipment 0.9 –0.2Other tangible –0.2 0.1

0.3 –0.5

10. Direct taxes


Income taxesIncome taxes on ordinary operations 3.3 2.0Change in deferred tax liabilities 0.0 0.0

Total 3.3 2.0



11. Non-current assets


Intangible assetsIntangible rights

Acquisition cost at 1 January 5.7 4.0Additions 10.6 1.6Transfers between items – 0.0Acquisition cost at 31 December 16.2 5.7Accumulated depreciation at 1 January –3.6 –3.1Accumulated depreciation and impairment losses on disposals and transfersDepreciation on items transferred from VSD –0.0 –Depreciation for the period –0.5 –0.5Accumulated depreciation at 31 December –4.1 –3.6Carrying amount at 31 December 12.1 2.1

GoodwillAcquisition cost at 1 January 17.6 17.6Acquisition cost at 31 December 17.6 17.6Accumulated depreciation at 1 January –12.3 –10.5Depreciation for the period –1.8 –1.8Accumulated depreciation at 31 December –14.1 –12.3Carrying amount at 31 December 3.5 5.3

Other long-term expenditure Acquisition cost at 1 January 10.7 8.8Additions – 1.9Acquisition cost at 31 December 10.7 10.7Accumulated depreciation at 1 January –3.5 –1.9Accumulated depreciation and impairment losses on disposals and transfers 0.0 0.0Depreciation for the period –1.7 –1.6Accumulated depreciation at 31 December –5.2 –3.5Carrying amount at 31 December 5.5 7.2

Prepayments in intangible assets Acquisition cost at 1 January – 0.0Additions 0.9 –Transfers between items – 0.0Carrying amount at 31 December 0.9 –

Tangible assetsLand and water areas

Acquisition cost at 1 January 2.7 2.7Disposals –0.0 –Acquisition cost at 31 December 2.7 2.7Carrying amount at 31 December 2.7 2.7

Buildings and structures Acquisition cost at 1 January 84.0 83.5Additions 1.0 0.5Disposals 0.0 –Transfers between items – 0.0Acquisition cost at 31 December 85.0 84.0


Accumulated depreciation at 1 January –58.2 –55.8Accumulated depreciation and impairment losses on disposals and transfers 0.0 –Depreciation for the period –2.5 –2.4Accumulated depreciation at 31 December –60.7 –58.2Carrying amount at 31 December 24.3 25.7

Machinery and equipment Acquisition cost at 1 January 116.6 115.6Additions 1.3 1.2Disposals –1.5 –2.3Transfers between items 0.5 2.0Acquisition cost at 31 December 116.9 116.6

Accumulated depreciation at 1 January –91.2 –88.7Accumulated depreciation on additions – –Accumulated depreciation and impairment losses 1.5 2.2Depreciation on items transferred from VSD –0.0 0.0Depreciation for the period –4.6 –4.8Accumulated depreciation at 31 December –94.4 –91.2Carrying amount at 31 December 22.5 25.3

Other tangible assets Acquisition cost at 1 January 0.5 0.5Acquisition cost at 31 December 0.5 0.5Carrying amount at 31 December 0.5 0.5

Prepayments and construction in progressAcquisition cost at 1 January 0.5 2.0Additions 0.8 0.5Transfers between items –0.5 –2.0Carrying amount at 31 December 0.8 0.5

Non-depreciated balance of machines and equipment at 31 December 20.6 23.1

InvestmentsShares in Group companies

Acquisition cost at 1 January 267.0 267.0Additions 50.6 0.0Acquisition cost at 31 December 317.6 267.0Accumulated impairment at 1 January –74.2 –74.2 Accumulated impairment at 31 December –74.2 0.0Carrying amount at 31 December 243.4 192.9

Shares in associates and joint venturesAcquisition cost at 1 January 8.0 33.3

Disposals – –25.4Carrying amount at 31 December 8.0 8.0

Other shares and investmentsAcquisition cost at 1 January 0.5 0.5Additions 0.2 –Disposals –0.1 –0.0Acquisition cost at 31 December 0.6 0.5Carrying amount at 31 December 0.6 0.5



12. Inventories

There is no significant difference between the repurchase price and cost of inventories.

13. Receivables


NON-CURRENTReceivables from Group companies

Loan receivables 71.2 30.6

CURRENTReceivables from Group companies

Trade receivables 1.2 1.2Loan receivables – –Other receivables 7.7 19.7Derivatives 1.1 –Accrued income and prepaid expenses 0.1 0.0

Total 10.1 20.9

Receivables from associates and joint ventures

Trade receivables 0.4 0.1

Significant items in accrued income and prepaid expenses

Prepaid expenses 3.4 1.2Accrued income 0.3 0.4Income tax receivables – 1.3Derivatives 2.1 0.4

Total 5.8 3.2

FINANCIAL SECURITIESIn the reporting period 2010, fair value changes in available-for-sale money market funds have been recognised in the parent company’s equity and fair values changes in publicly listed shares in the parent company’s income statement. Fair values have been determined based on the market bid prices in active markets at the reporting date.

Earlier these changes have been recognised at the Group level.

EUR million 2010 2009Other shares and investments

Market value at 31 December 6.2 6.1Carrying amount at 31 December 6.2 5.2Difference 0.0 0.8

Due to the changes in the accounting practices, the changes in fair value are recognised in income statement or equity.

The fair values and bookings in fair values of financial instruments and derivatives are presented in the following table:

Fair value 31 Dec 2010

Changes in the fair value recognised in the income

statement

Changes in the fair value recognised in fair value

reserve

Changes in the fair value recognised in hedging

reserveFinancial securities

Money market fund 5.3 0.3Publicly quoted shares 0.8 0.6 –

Total 6.2 Derivative instruments 0.0

Interest rate drivatives 0.4 0.1 – 0.3Currency derivatives 1.5 1.5 –Commodity derivatives 1.3 – 1.3

Total 3.2 2.3 0.3 1.6



14. Equity


Restricted equityShare capital at 1 January 60.5 60.5Share capital at 31 December 60.5 60.5

Fair value reserve 0.2 –

In the reporting period 2010, the money market fund meas-ured at fair value has been recognised in the parent company’s equity taking into account deferred tax. Earlier this has been recognised at the Group level. (On 31 December 2009, the carrying amount in the consolidated financial statement was EUR 205 thousand.)

Hedging reserve 0.4 –

In the reporting period 2010, the parent company has started to apply hedge accounting. Earlier hedge accounting was applied at the Group level. The effective portion of hedges has been recognised in the hedging reserve taking into account deferred tax. (On 31 Dec 2009, the carrying amount in the consolidated financial statements was EUR –1,287 thousand.)

Total restricted equity 61.1 60.5

Unrestricted equityRetained earnings at 1 January 115.6 125.1Recognised in retained earnings – –0.1Profit for the period 9.6 –9.5Retained earnings at 31 December 125.3 115.6

Total unrestricted equity 125.3 115.6

Total equity 186.4 176.1

Distribution of the company’s share capitalA series shares 35,960,000 35,960,000L series shares 25,003 25,003

L series shares relate to the company’s management incentive plan and are currently held by the company.

15. Appropriations


Depreciations in excess of planIntangible rights 1.3 0.3Other long-term expenditure 1.1 1.1Buildings and constructions 6.3 6.9Machinery and equipment 11.3 12.2Other tangible assets –0.4 –0.6

Total 19.7 19.9

* The figure of 2010 includes also realised interest expenses EUR 0.2 million, regarding interest rate derivatives.

Fair value 31 Dec 2010

Changes in the fair value

recognised in the income

statement

Changes in the fair value

recognised in the hedging

reserve

Interest rate derivatives 2.0 0.7 1.1Currency derivatives 1.4 1.4 –Total 3.4 2.1 1.1

NON-INTEREST-BEARING AND INTEREST-BEARING CURRENT ASSETSEUR million 2010 2009

CurrentNon-interest-bearing 79.7 78.2Interest-bearing 3.1 15.4

82.8 93.6

NON-INTEREST-BEARING AND INTEREST-BEARING LIABILITIES 2010 2009

Non-currentInterest-bearing 202.0 117.9Non-interest-bearing 0.8 –

202.8 117.9Current

Non-interest-bearing 77.9 71.1Interest-bearing 66.3 57.2

144.2 128.3

16. Liabilities


NON-CURRENTLiabilities to Group companies

Loans 34.0 31.9

CURRENTLiabilities to Group companies

Trade payables 2.4 2.2Other liabilities 47.3 44.8Derivative instruments 0.3 0.8Other accrued expenses and deferred income 0.9 0.2

Total 50.9 48.1

Significant items in accrued income and prepaid expenses

Marketing expenditure – 0.1Holiday pay and other wages and salaries 6.6 5.0Contract discount 0.3 0.3Purchase expenses and other accrued expenses 3.1 4.3Additional pension liability 0.8 –Derivative instruments * 3.1 0.8

Total 13.9 10.7



17. Collaterals and contingent liabilities


Guarantees given on behalf of the Group companies

Guarantees issues for Group companies’ commitments

Mortgages 23.5 23.5Total guarantees 23.5 23.5

Contingent liabilities and other commitments

Operating and finance lease liabilitiesLess than one year 0.8 0.7More than one year 0.7 1.0

Total 1.4 1.7

Leasing liabilitiesLess than one year 1.9 1.8More than one year 9.5 9.2More than five years – 1.8

Total 11.3 12.9Bank guarantees

On behalf of Group companies 4.9 2.9On behalf of others – 0.1

Total 4.9 2.9

Total commitments 17.7 17.5


Derivative instrumentsElectricity derivatives

Fair value 1.3 –0.5Nominal value 5.5 5.4Amount (MWh) 122,736 113,928

The Group’s external currency forward contracts

Currency forward contractsFair value –0.2 –0.1Nominal value 64.9 45.9

The Group’s internal currency forward contracts

Currency forward contractsFair value 0.3 –Nominal value 10.9 –

The Group’s external currency optionsCurrency options, purchased call options

Fair value 0.0 0.4Nominal value 20.3 8.2

Currency options, written put optionsFair value –0.5 –0.3Nominal value 17.8 5.4

The Group’s internal currency optionsCurrency options, sold call options

Fair value 0.0 –Nominal value 20.3 –

Currency options, purchased put optionsFair value 0.5 –Nominal value 17.8 –

Interest rate derivativesFair value –1.5 –2.6Nominal value 220.5 108.0

Emission allowances (kilotonnes) 2010 2009

Emission allowances received 54,632 54,632Excess emission allowances from the previous year 64,645 54,636Realised emissions –38,863 –44,623Remaining emission allowances 80,413 64,645

Fair value of the remaining emission allowances 1.2 0.8

Emission allowances are granted for periods from 2008 to 2012.


DEFERRED TAX LIABILITIES AND ASSETSDeferred tax assets

From the effective portion of hedging instruments 0.3 –

Deferred tax liabilities From the effective portion of hedging instruments 0.4From the fair value changes in available-for-sale financial assets 0.1

Total 0.5 –

In the reporting period 2010, the amount recognised in equity from the money market fund measured at fair value and the effective portion of hedge accounting have been adjusted with deferred taxes (On 31 Dec 2009, deferred tax assets amounted to EUR 0.8 million and deferred tax liabilities amounted to EUR 0.5 million at the Group level).



Board of Directors’ proposal for the distribution of profit

The parent company’s distributable earnings include (EUR):

Profit for the period 9,641,804Other unrestricted equity 115,628,731Distributable equity 125,270,535

The Board proposes that no dividend is distributed, and profit for the period is retained in equity.

Signatures to the Board of Directors’ Report and to the financial statements

Helsinki, 25 March 2011

Jarmo Leppiniemi Chairman

Mikael Aro Catarina Fagerholm Ainomaija Haarla

Annikka Hurme Ilkka Puro Markku Rönkkö

Antti Pankakoski CEO


Auditor’s reportTo the Annual General Meeting of Altia Plc

This document is an English translation of the Finnish audi-tor’s report. Only the Finnish version of the report is legally binding.

We have audited the accounting records, the financial state-ments, the report of the Board of Directors, and the adminis-tration of Altia Plc for the year ended 31 December 2010. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, state-ment of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company’s balance sheet, income statement, cash flow statement and notes to the financial statements.

Responsibility of the Board of Directors and the Managing DirectorThe Board of Directors and the Managing Director are respon-sible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.

Auditor’s ResponsibilityOur responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accord-ance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from mate-rial misstatement, and whether the members of the Board of Directors of the parent company and the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The proce-dures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement, whether due

to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.

We believe that the audit evidence we have obtained is suffi-cient and appropriate to provide a basis for our audit opinion.

Opinion on the consolidated financial statementsIn our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

Opinion on the company’s financial statements and the report of the Board of DirectorsIn our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company’s financial performance and financial position in accordance with the laws and regula-tions governing the preparation of the financial statements and the report of the Board of Directors in Finland. The informa-tion in the report of the Board of Directors is consistent with the information in the financial statements.

Other opinionsWe support the adoption of the financial statements. The proposal by the Board of Directors regarding the treatment of the profit for the period is in compliance with the Limited Liability Companies Act. We support that the Board of Direc-tors of the Parent Company and the Managing Director be discharged from liability for the financial period audited by us.

Helsinki, 25 March 2011

KPMG OY AB

Pekka Pajamo Authorized Public Accountant


The duties of each of the bodies in Altia Plc are determined by the laws of Finland, the Articles of Association and the company’s Corporate Governance Principles. When applicable, also the Finnish Corporate Governance Code of the Securities Market Association will be followed.

The ultimate responsibility for the management and operations of the company lies with the governing bodies that include the Annual General Meeting of Shareholders, the Board of Direc-tors, the Chief Executive Officer (CEO) and the Executive Management Team. The Executive Management Team makes decisions and operates based on the authorities granted to the CEO.

Altia Plc’s operating organisation has been designed for running the company’s core businesses; the production, import, export and sales of alcoholic beverages. Management of each of the operating areas is based on the above-mentioned decision-making bodies with the operating principles of “one company” and “hands on”. Each of the core businesses is based on an operating organisation comprising the company’s Executive Management Team, Business Units and Support Functions. The Business Units operate relatively independently within a strategy framework agreed upon with the CEO and the company’s Executive Management Team. The Support Func-tions undertake preparatory work and coordinate issues across the Business Units and, in certain defined matters the Support Functions hold a decision-making authority over the Business Units. The company’s legal structure differs from that of the operating organisation. The legal structure merely provides a legal framework for business operations.

The company operates and is registered in Finland and headquartered in Helsinki.

Annual General Meeting According to the Finnish Companies Act, the Annual General Meeting of Shareholders is the highest decision-making body of the company. The main tasks of the General Meeting of Shareholders include amendments of the Articles of Associa-tion, decisions on dividend distribution, election of the Board of Directors and Auditors, as well as decisions on their remu-neration, and approval of the financial statements. Normally the General Meeting of Shareholders is held once a year.

Board of Directors (Board)The company is managed by the Board complying with Corpo-rate Governance principles. The Board acts within the powers and responsibilities provided under the Finnish Companies Act and other applicable legislation.

The Board supervises the management and the operation of the company and decides on significant matters regarding the strategy, investments, organisation and finance. The Board is

responsible for overseeing that the company’s operations are managed and organised appropriately.

In addition to other overseeing, the Board is also responsible for monitoring the functionality and adequacy of financial administration and control of financial matters.

The Board nominates and discharges CEO and his deputy, as well as makes decisions concerning their employment contracts and incentive schemes. The Board also nominates the members of the company’s Executive Management Team, defines their areas of responsibility according to the strategy and makes decisions concerning their employment contracts and incen-tive schemes.

In the separate charter of the Board of Directors, the Board defines the duties of individual Board members and the Chairman of the Board, as well as the duties and function of the Board as a whole. The Board also has its own working order complying with the Corporate Governance Principles. The Board evaluates its operations regularly.

Each member of the Board is expected to act as a resource for the company management and to offer his or her experience and expertise for the benefit of the company. The Board convenes a minimum of seven times a year.

According to the company’s Articles of Association, the Board comprises the Chairman and Vice Chairman, as well as a minimum of one and a maximum of five other members. The members are appointed by the Annual General Meeting for a period ending at the following Annual General Meeting. The Board’s work is supported by the Audit Committee as well as the Nomination and Compensation Committee.

In 2010The Board comprised six members during January 1–August 25 and thereafter seven members. The Board convened 11 times during the year. The Board members attended on average 95.9% of the meetings. Board members who are not employed by a company belonging to the Altia Group received a monthly salary amounting to EUR 2,750/month for the Chairman, EUR 1,800/ month for the Vice Chairman and EUR 1,450/month for each member. Each member of the Board received remuneration of EUR 600 for the meetings that they attended.

CEOThe CEO is responsible for managing, supervising and control-ling business operations with the aim of increasing the value of the company for its shareholders.

The CEO prepares issues for the Board’s decision, develops the company in line with the targets agreed upon with the Board and ensures proper implementation of the decisions of

Corporate governance principles


the Board. The CEO is also responsible for ensuring that the company operates in compliance with laws and regulations.

The CEO makes the most important decisions in the meetings of the Executive Management Team, and these decisions are recorded.

According to a policy by the Owner Steering Department, Prime Minister’s Office, on behalf of the owner, the CEO is not a member of the Board, but attends the Board meetings. The retirement age for the CEO and his deputy is 63 years.

The CEO may have a deputy, who will attend to the duties of the CEO when the CEO is prevented from fulfilling his or her duties.

In 2010Salaries and remunerations paid to the CEO in 2010 amounted to EUR 0.3 million.

Executive Management Team The company’s Executive Management Team (EMT) comprises the CEO as Chairman; CFO; SVP, HR; SVP, Industrial Services and Supply Chain; SVP, Brands; and SVP, Trading. The Executive Management Team is responsible for preparing and monitoring the Group strategy, annual plans and budgets. The Team convenes at least four times a year.

Business UnitsThe heads of the Business Units are responsible for their Business Units and the heads of Support Functions for their Support Functions. The business units pursue their agreed strategies within the frames set by the CEO and the Executive Management Team. In executing their strategies and carrying on business operations, the Business Units operate within the line organisation. The heads of the Business Units may form management or advisory teams to support them in their duties. Forming of such teams, however, does not affect the agreed individual reporting responsibilities.

BOARD COMMITTEES Audit CommitteeThe purpose of the Board’s Audit Committee is to ensure that the Board receives a true and fair view of the company’s finan-cial situation and, therefore, is able to carry out its monitoring responsibilities. The committee members shall review the company’s internal and external auditing work, the company’s financial policies and risk management in greater detail than is possible for the entire Board.

The Audit Committee comprises a minimum of three members of the Board. At least one of the committee members must have financial administration expertise and knowledge and experience in accounting standards and principles applicable to the company.

The committee convenes regularly a minimum of four times a year. The Chairman of the Audit Committee presents the Board with a report of each of the Audit Committee’s meetings. The Audit Committee’s tasks, responsibilities and procedures are defined in the Audit Committee charter approved by the Board.

Normally also the auditor responsible for the external auditing, the CEO and the CFO attend the meetings.

In 2010The Audit Committee comprised during January 1 – April 28 the Chairman Jarmo Leppiniemi, and members Riitta Vermas, and Markku Rönkkö, and thereafter, the Audit Committee nominated on May 4, 2011 by the Board, Chairman Cata-rina Fagerholm, and members Ainomaija Haarla, Jarmo Leppiniemi and Markku Rönkkö. The Audit Committee convened five times during the year.

Nomination and Compensation CommitteeThe committee’s task is to prepare recommendations to the Board regarding new nominations and compensation princi-ples applicable to the executive and senior management. The committee Chairman presents the Board with the committee’s proposals. The committee holds an adequate number of meet-ings per year. The committee’s tasks and responsibilities are defined in its charter approved by the Board. If required, the committee can cooperate with the company’s HR unit.

The nomination and compensation committee comprises the Chairman of the Board and one other Board member, as well as the CEO, who presents the recommendations.

In 2010The Nomination and Remuneration Committee comprised Chairman Jarmo Leppiniemi and member Ilkka Puro. The Nomination and Remuneration Committee convened eight times during the year.

The Auditors and Supervisory SystemAccording to the Articles of Association, the company has to have one to two auditors appointed by the Annual General Meeting. The auditor must be an individual auditor or an entity of Certified Public Accountants approved by the Central Chamber of Commerce in Finland. Any individual auditor must be under 65 years of age.

External auditors audit annually the accounting records for each quarter, the annual accounts and the corporate govern-ance of the company.

In 2010The Group’s auditor was the APA firm of accountants KPMG Oy Ab and responsible auditor was APA Pekka Pajamo. The auditing fees paid in 2010 amounted to EUR 0.3 million.


In addition to the statutory audit, Altia Group acquired Due Diligence, taxation and other consulting services from KPMG Oy Ab to a total amount of EUR 0.5 million.

The main focus in planning and monitoring the Group companies and business areas is on business strategies. The Board approves the Group’s strategy and budget. Appropriate reporting systems are used within the company in the follow-up of business operations and control of financial management.

The annual performance bonus system used within the Group is based on performance targets approved by the Board and it applies to all Altia personnel. Altia’s long-term incentive system targets are based on the company’s approved strategy and its implementation. Altia’s top management as defined by the Board is included in the share-based incentive system.

Persons belonging to Altia Plc’s management and their related parties are not involved in business relationships with the company.

Supervising promotes and monitors the achievement of performance targets. Management and supervisors are responsible for monitoring operations.

The principal tools of internal control are action plans, performance follow-up, risk management principles and risk evaluation, organisation charts, allocation of responsibilities, function and job descriptions, budgets, financial management, as well as internal and external auditing.

The Group’s financial situation is reviewed in Board meetings.

The internal auditing function operates under the CEO with the aim of ensuring supervision at different organisational levels, preventing risks from arising and increasing the Group’s efficiency. The internal auditing function also reports to the auditors, the audit committee and the CFO.

Shareholder’s statusThe State as a shareholder has no responsibilities in the Group, other than its shareholder’s equity investment.

Board of Directors 2010 in Altia Plc – participation and remunerations (in EUR)

NameBoard meetings,

participation

Nominations and Compensation

CommitteeAudit

CommitteeTotal monthly

remunerationsTotal meeting

remunerations TotalChairmanJarmo Leppiniemi 11/11 8/8 4/5 33,000 13,800 46,800Vice Chairman from January 1 to March 24Riitta Vermas 3/3 1/1 7,200 2,400 9,600Vice Chairman from May 4 to December 31Catarina Fagerholm 11/11 4/4 20,200 9,000 29,200MembersAinomaija Haarla 11/11 4/4 17,400 9,000 26,400Ilkka Puro 11/11 8/8 17,400 11,400 28,800Markku Rönkkö 11/11 5/5 17,400 9,600 27,000Ulla Sydänoja-Wallin 3/3 1,800 1,800Annikka Hurme 7/8 11,600 4,200 15,800Mikael Aro 2/4 5,800 1,200 7,000


Jarmo Leppiniemi b. 1948 D.Sc. (Econ.)

Professor, the Aalto University School of Economics

Independent Member of the Board of Altia since 2004, Chairman of the Board since 2006, Chairman of the Nomination and Remunera-tion Committee, Member of the Audit Committee

Mortgage Society of Finland and AsuntoHypoPankki, Chairman of the Board of Directors Auditing Board of the State, Member of the Board The Parish Union of Helsinki, Joint Parish Council and Joint Parish Board, Vice Chairman

Main work experience: Different positions within the Helsinki School of Economics (currently the Aalto University School of Economics) since 1972, Professor since 1990

Catarina Fagerholm b. 1963 M.Sc. (Econ.)

CEo, Instru optiikka Oy

Independent Member of the Board of Altia since 2008, Vice Chairman of the Board as of 28 April 2010, Chairman of the Audit Committee

Luottokunta, Member of the Supervisory Board

Main work experience: CEO, Bosch and Siemens Home Appliances Oy (1998–2005) Country Manager of Finland, Russia, Estonia, Latvia and Lithuania, AEG Home Appliances (1996–1998)

Mikael Aro b. 1965 eMBA

CEO, VR Group

Independent Member of the Board of Altia as of 25 August 2010

Varma Mutual Pension Insurance Company, Member of the Board of Directors Finnish-Russian Chamber of Commerce, Member of the Board of Directors Corenet Oy, Chairman of the Board of Directors VR Track Ltd, Chairman of the Board of Directors Avecra Oy, Chairman of the Board of Directors

Main work experience: Senior Vice President, Northern Europe Carlsberg Breweries AS, (2007–2009) CEO, Oy Sinebrychoff Ab (2005–2007) Commercial Director, Oy Sinebrychoff Ab (2003–2005)

Ainomaija Haarla b. 1953 D.Sc. (Tech.), MBA

President and CEO, Technology Academy Foundation

Independent Member of the Board of Altia since 2008, Member of the Audit Committee

Korona Invest Oy, Chairman of the Board of Directors Neste Oil Corporation, Member of the Board of Directors and Member of the Personnel and Remuneration Committee Biohit Oyj, Member of the Board of Directors

Main work experience: CEO, ProConsilium Ltd (2007–2009) different management positions, UMP-Kymmene Oyj (in Germany 2002–2005) Marketing Director, Metso Oyj

Annikka Hurme b. 1964 M.Sc. (Food Sciences)

Director, Nordic Sales and Distribution, Valio Ltd

Independent Member of the Board of Altia as of 28 April 2010

Main work experience: Valio Ltd, Director, Perishable Goods and Domestic Sales and Marketing (2007–2010) Valio Ltd, Director, Marketing (2000–2007)

Ilkka Puro b. 1946 M.Sc. (Pol.)

Senior Financial Counsellor, Prime Minister’s Office

Independent Member of the Board of Altia since 2006, Member of the Nomination and Remuneration Committee

Main work experience: Industrial Counsellor, Ministry of Trade and Industry (1998–2007) Director, Finnish Export Credit Ltd (Leonia Corporate Finance) (1988–1998) Advisor to Executive Director, Washington, International Monetary Fund (IMF) (1985–1988) Head of Office, Bank of Finland (1975–1985)

Markku Rönkkö b. 1951 M.Sc. (Econ.)

CEO, Järvi-Suomen Portti Oy

Independent Member of the Board of Altia since 2006, Member of the Audit Committee

Digital Foodie Oy, Member of the Board of Directors Osuuskunta KPY, Vice Chairman of the Board of Directors Profile Vehicles Oy, Chairman of the Board of Directors Tulikivi Oyj, Member of the Board of Directors and Member of the Audit Committee Voimatel Oy, Chairman of the Board of Directors

Main work experience: CEO, Järvi-Suomen Portti Osuuskunta (2008–2010) CEO, Karelia-Upofloor Oy (2006–2007) CEO, Savon Voima Oyj (2004–2006) CEO, Olvi Plc (1985–2004) Part-time auditor (APA) (1984–2003)

Board of Directors


Executive Management Team

Antti Pankakoski b. 1954 M.Sc. (Laws)

CEO

Finnish Food and Drink Industries’ Federation, Member of the Board of Directors Finnlines Oyj, Member of the Board of Directors HOK-Elanto, Member of the Board of Directors

Main work experience: CEO, Silja Line Oy (2003–2006) Director, Nordea Corporate Finance (2000–2002) Director, Kvärner A/S (1998–2000) CEO, Cunard Line Ltd (1996–1997)

Joacim Hultin b.1967 Bachelor of Arts in Economy

Senior Vice President, Trading

Main work experience: Brand Manager, Purchasing Manager, Commercial Manager and Managing Director, Bibendum AB (1996–2007) Product and Store Consultant, Systembolaget, (1995–1996)

Kari Lampinen b. 1961 M.Sc. (Econ.)

Senior Vice President, Brands

Main work experience: Country Manager, Fresh Bakery Products, Marketing and Sales Director, Vaasan Oy (1999–2009) Marketing Director, HK Ruokatalo Oyj (1994–1999) Director, Marketing, Sales and Product Development, Broilertalo Oy/Kariniemi Oy (1989–1994) Product Manager and Key Account Manager, Vaasanmylly Oy (Cultor Oyj) (1985–1989)

Tomi Tanninen b. 1967 M.Sc. (Econ.)

CFO

Main work experience: Finance Director, Gustav Paulig Ltd (1999–2008) Business Controller, Gustav Paulig Ltd (1996–1998) Finance Manager, Paulig Export Ltd (1995–1996)

Hannu Tuominen b. 1958 M.Sc. (Eng.)

Senior Vice President, Industrial Services and Supply Chain

Main work experience: Production Director and Division Director, Vaisala Oyj (1992–2007) Business Controller, Marketing Manager and Production Director, Fiskars Power Systems Oyj, (1986–1992)

Altia PlcPorkkalankatu 22 AFI-00180 HelsinkiP. O. Box 350, 00101 HelsinkiTel. +358 207 013 013firstname.lastname@altiacorporation.comwww.altiacorporation.com

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