LASSILA & TIKANOJA PLC STOCK EXCHANGE RELEASE 6 FEBRUARY 2007 8.00 A.M.
- Net sales for the fourth quarter EUR 115.4 million, growth 18.8%; operating
profit EUR 10.3 million, growth 13.9%; earnings per share EUR 0.18 (EUR 0.16)
- Full-year net sales EUR 436.0 million, growth 15.5%; operating profit EUR 50.2
million, growth 27.8 %; earnings per share EUR 0.90 (EUR 0.70)
- In 2007, the growth in net sales is estimated to clearly exceed 20% and
financial performance is estimated to improve.
The financial statements release has been prepared in accordance with the
accounting and valuation principles of IFRS. No audit report has been submitted.
GROUP NET SALES AND FINANCIAL PERFORMANCE
Fourth quarter net sales and financial performance
Net sales for the final quarter stood at EUR 115.4 million (EUR 97.1 million).
This represented an increase of 18.8%, 7.5 percentage points of which came from
corporate acquisitions. The operating profit was EUR 10.3 million (EUR 9.1
million), which is 8.9% (9.3%) of net sales.
Strong organic growth continued in all divisions thanks to successful new and
additional sales. Exceptionally warm weather had a positive effect on the
earnings of Environmental Services and Industrial Services.
Net sales and financial performance for 2006
The full-year net sales increased by 15.5% and stood at EUR 436.0 million (EUR
377.4 million), 5.8 percentage points of this growth coming from corporate
acquisitions. Earnings per share were EUR 0.90 (EUR 0.70).
Organic growth was strong, which was attributable to good sales management,
successful sales work and improved customer satisfaction. In the latter half of
the year, the efficiency of product development was improved and several new
service products were launched on the market. L&Ts market position
strengthened. Sweden was introduced as a new operating country. Recycling plant
investments were held back by delays in obtaining environmental permits.
The emphasis for management in 2006 was on improving productivity and cost-based
management. Industrial Services and Environmental Services were particularly
successful in improving their efficiency, and the profitability of both
divisions improved substantially. The Finnish operations of Property and Office
Support Services achieved their targets, but the expansion of international
operations caused an earnings burden that exceeded that planned. Centralisation
of customer service improved cost-efficiency. Non-recurring sales gains
amounting to almost EUR 2 million improved earnings.
Financial summary
10-12 10-12 Change 1-12 1-12 Change
/2006 /2005 % /2006 /2005 %
Net sales, EUR million
115.4 97.1 18.8 436.0 377.4 15.5
Operating profit, EUR
million 10.3 9.1 13.9 50.2 39.3 27.8
Operating margin, % 8.9 9.3 11.5 10.4
Profit before taxes, EUR
million 10.0 9.0 11.1 48.5 37.5 29.4
Earnings per share, EUR 0.18 0.16 12.5 0.90 0.70 28.6
EVA, EUR million 4.6 3.4 35.3 28.6 18.3 56.3
NET SALES AND FINANCIAL PERFORMANCE BY DIVISION
Environmental Services
October to December
The net sales of Environmental Services (waste management, recycling services,
environmental products) in the fourth quarter amounted to EUR 55.5 million (EUR
47.3 million), an increase of 17.2%. The operating profit was EUR 7.4 million
(EUR 5.9 million).
Strong organic growth continued and production conditions were good. The volume
of recycling services increased and production costs were successfully kept
under control, which resulted in a substantial earnings improvement. The joint
venture, Salvor Oy, was also able to increase its net sales and improve
performance.
Year 2006
Environmental Services net sales for the entire year amounted to EUR 207.3
million (EUR 180.7 million), an increase of 14.7%. The operating profit was EUR
32.5 million (EUR 24.0 million).
Investments in improving productivity and recycling plants were continued.
Together with strong organic growth, they resulted in a substantial improvement
in profitability. The efficiency of recycling plants was improved, and the
company was able to process its increasing production volumes at the planned
costs. Measures to improve productivity will be continued by increasing training
in economical driving, introducing a driving guidance and monitoring system
based on vehicle computers and starting the phased introduction of a new
production management system.
A fairly large recycling plant was built in Turku, and Suomen Keräystuote Oy was
acquired. An extension to Suomen Keräystuote Oys processing plant will be
completed during the first quarter of 2007. Suomen Keräystuote is a wholesaler
of recycled paper and board, as well as a recycled paper producer organisation.
Appeals filed against environmental permits caused some delays in recycling
plant investments. However, currently valid and pending permits will also enable
the construction of new recycling plants in 2007. A few plants are currently
under construction and several are being planned.
International operations made good progress, and greater efficiency in
production and price increases in Latvia and Russia brought a clear improvement
to the financial performance. In the late summer, a new recycling plant began
operating in Latvia. A decision has been made to build the first recycling plant
in Russia, scheduled to begin operating at the beginning of 2008. The company
also intends to expand its operations by other means in the northern part of the
Moscow region.
Environmental Products financial performance improved as a result of
reorganisation and efficiency measures. Environmental Products established a
dedicated sales organisation in Russia.
The joint venture, Salvor Oy, increased its net sales substantially but clearly
fell short of its earnings target. Its performance improved in the fourth
quarter, but the full-year result showed a loss.
Property and Office Support Services
October to December
The net sales of Property and Office Support Services (property maintenance and
cleaning services) totalled EUR 44.6 million (EUR 36.5 million), an increase of
22.0%. The operating profit was EUR 1.2 million (EUR 2.4 million).
The division met its targets in Finland. New sales and additional sales to
contract customers continued strongly. The costs of cleaning operations abroad
burdened earnings, while non-recurring costs were attributable to units outside
Finland. New sales in Russia and Latvia have started according to plan. Mild
weather did not improve performance much, because snow ploughing is mainly
covered by advance agreements with fixed prices with subcontractors. There were
no snow transports that would have provided for additional invoicing.
Year 2006
The full-year net sales of Property and Office Support Services totalled EUR
168.4 million (EUR 142.9 million), an increase of 17.9%. Their operating profit
was EUR 8.8 million (EUR 11.9 million).
Price competition in Finland was intense during the first half of the year, but
the situation normalised during the second half, and new sales were very
successful. Lost contracts in the first half of the year were successfully
replaced by additional sales to existing customers, and cleaning services within
Finland exceeded their earnings target. The first outsourcing agreements for
support services were made with forest industry customers. Employment pension
costs regained typical levels after having been exceptionally low in 2005.
Most of the net sales growth in cleaning services occurred abroad. However,
investment in expanding business operations abroad had a detrimental effect on
the divisions financial performance. Cleaning operations abroad ran at a loss.
Earnings were burdened by the costs of initiating operations and certain other
non-recurring items.
Cleaning operations in Sweden were started through the acquisitions of Allied
Service Partners AB (ASP) and All Clean & Consulting Entrepreneur i Sverige AB
(Accent). At the beginning of 2007, L&T acquired the food industry hygiene
services company, Skånsk Allservice AB, with its subsidiaries. Through these
acquisitions, L&T achieved its targeted position in the Swedish market and is
now the third largest commercial operator in the Swedish cleaning market.
During 2007, the focus in Sweden will be on integrating acquisitions, seeking
organic growth and improving financial performance. Lassila & Tikanoja now
provides cleaning services in Sweden, Latvia, Russia and Norway.
We reorganised our cleaning services in Moscow, reallocating their resources.
New sales gained momentum in Moscow and Latvia during the latter half of the
year.
Net sales for property maintenance increased through organic growth and the
financial performance improved. In a fairly demanding competitive situation, the
product line outperformed market growth. It was able to improve cost control and
sell additional services to contract customers. In particular, the maintenance
of technical systems showed clear growth, and operations expanded to new
locations.
The division was renamed Property and Office Support Services. This new name
better describes the expanded service offering. Property services refer to the
maintenance, servicing and operation of buildings, equipment and rooms, while
office support services help the users of premises focus on their core business.
Office support services include reception, mailing, attendant, security and
catering services, as well as the administration of premises. These extensive
service packages are either provided by L&T itself, or by networking with the
leading company in each sector.
Industrial Services
October to December
The net sales of Industrial Services (hazardous waste management, industrial
cleaning, damage repair services and wastewater services) in the fourth quarter
totalled EUR 16.6 million (EUR 14.4 million), an increase of 15.3%. The
operating profit was EUR 2.7 million (EUR 0.9 million).
The net sales of all product lines increased, and all growth was organic.
Favourable weather conditions increased demand. Demand for hazardous waste
management increased and has remained at a healthy level since August. The net
sales of industrial cleaning increased, even though this was the first year with
no maintenance shutdowns in the fourth quarter. The largest proportional
increase in net sales was seen in damage repair services.
The earnings of Industrial Services improved substantially, mainly due to the
improved performance of hazardous waste management. Industrial cleaning was able
to adapt its costs to seasonal variations in demand.
During the period, EUR 0.7 million was recognised in other income due to a
change in the fair value of oil derivatives purchased by L&T Recoil in October.
Changes in the fair value of oil derivatives have a quarterly earnings effect.
Year 2006
Industrial Services net sales for the entire year amounted to EUR 64.4 million
(EUR 57.6 million), an increase of 11.9%. The operating profit was EUR 9.6
million (EUR 4.7 million). All product lines were able to increase their net
sales, with damage repair services accounting for the greatest improvement. The
divisions growth was completely organic and its market position strengthened.
The divisions financial performance improved clearly, due to increased net
sales and improved productivity. An increased volume was managed with lower
fixed costs. All product lines clearly improved their performance. The most
significant part of the performance improvement was attributable to a
reorganisation programme carried out in industrial cleaning in 2005.
Within hazardous waste management, L&T managed to raise the rate of waste
recovery, which further reduced the expensive delivery of hazardous waste for
destruction by a third party. The industrial cleaning market established itself
and demand increased after a very difficult year in 2005. There were many fires
and other accidents in 2006 that increased the net sales of damage repair
services. Demand for wastewater services remained at an equally strong level for
the entire year.
In September, L&T and key personnel from GT Trading Oy established the joint
venture, L&T Recoil Oy, which will build a waste oil re-refinery in Hamina.
L&Ts share of ownership is 50%. The plant will be completed in early 2008 and
the total value of the investment exceeds EUR 20 million. This plant is a step
forward in the hazardous waste processing chain in accordance with the companys
strategy. It will also present new opportunities for growth and
internationalisation.
FINANCING
Interest-bearing liabilities amounted to EUR 6.4 million less than a year
earlier. Net interest-bearing liabilities, totalling EUR 52.5 million, decreased
by EUR 24.0 million. The exceptionally high amount of liquid assets at the end
of the year was attributable to very positive cash flow from operations during
the fourth quarter, as well as an arrangement carried out just before the year
end through which L&T sold a major part of its lightweight vehicle fleet to a
leasing company.
In October-December, interest expenses exceeded those in the comparison period
by EUR 0.1 million. In January-December they were on the same level as in the
previous year.
EUR 0.1 million (EUR 0.4 million) resulting from changes in the fair values of
interest rate swaps was recognised in the income statement under finance income
in October-December. The total income for the whole year amounted to EUR 0.5
million (EUR 0.8 million). Net finance costs for the whole year decreased by
5.7%, being 0.4% (0.5%) of net sales and 3.4% (4.6%) of operating profit.
A total of EUR 0.4 million arising from the changes in the fair value of an
interest rate swap to which hedge accounting under IAS 39 is applied, was
recognised in equity in 2006.
The equity ratio was 50.4% (49.5%). The gearing rate was 29.7 (49.3). Cash flow
from operating activities amounted to EUR 69.9 million (EUR 48.9 million). EUR
1.7 million were released from the working capital (EUR 3.3 million were tied
up).
CAPITAL EXPENDITURE
Capital expenditure totalled EUR 47.2 million (EUR 60.9 million). Approximately
EUR 13 million were spent on nine corporate acquisitions. The combined annual
net sales of the acquired companies totalled EUR 28.8 million.
In October a Swedish company All Clean & Consulting Entrepreneur i Sverige AB
(Accent) providing cleaning and office support services was acquired. The net
sales of Accent amounted to about EUR 9.2 million in 2005, and it employs 180
persons. The property maintenance and cleaning operations of Sisä-Suomen
Kiinteistöapu Oy LKV were also acquired.
The following acquisitions were made in the third quarter:
A Latvian Property and Office Support Services company SIA Evus was acquired for
Property and Office Support Services in August. The net sales for Evus amounted
to 0.6 million euros in 2005, and it employs around 100 people. In September,
the business operations of Kiimingin Kiinteistöpalvelu Oy, a minor property and
office support services company, were acquired.
The following acquisitions were made in the second quarter:
In April majority of the shares of Suomen Keräystuote Oy was acquired, and the
company, being previously an associate, became a group company. L&T holds
presently 100 per cent of the shares. Suomen Keräystuote Oy is a marketing
company of Finnish paper collection companies. It supplies collected recoverable
paper and board to industry. The net sales for Suomen Keräystuote amounted to
EUR 7 million in 2005, but the effect on the group net sales on annual level is
only EUR 3.8 million due to intra-group net sales. In addition, the rental
operations of WeeCee Finland Oy were acquired.
The following acquisitions were made in the first quarter:
Hämeenlinnan Puhtaanapito Oy, a waste management company, was acquired for
Environmental Services. Its net sales totalled EUR 4.4 million in 2005 and it
employed 36 people. Allied Service Partners AB (ASP), a Swedish company
specialising in property maintenance services, was acquired for Property and
Office Support Services. ASP operates in Stockholm and Gothenburg. The net sales
of ASP were EUR 10.3 million in 2005, and it employs 390 people. The property
maintenance operations of Kempeleen Kiinteistöhuolto Oy were also acquired.
In addition to corporate acquisitions, machinery and equipment were replaced,
production premises were expanded, and new information systems were built.
Depreciation and amortisation amounted to EUR 28.2 million (EUR 24.8 million) in
January-December.
Capital expenditure by division was as follows: Environmental Services EUR 22.0
million (EUR 40.5 million), Property and Office Support Services EUR 19.5
million (EUR 11.5 million), and Industrial Services EUR 5.7 million (EUR 8.8
million).
In December an agreement was signed on the acquisition of the majority (70%) of
the shares of Biowatti Oy from the acting management of the company for
Environmental Services. L&T also made a commitment to redeem the remaining
thirty percent of the shares by the end of the year 2011. The acquisition price
for the seventy percent portion was EUR 30.1 million. No interest-bearing
liabilities were transferred in the acquisition. Biowatti is the leading Finnish
bio energy supplier utilising renewable energy sources, operating in the
procurement, processing, marketing and delivery of bio fuels. The main products
are by-products of forest and wood processing industries and logging chips. The
net sales of Biowatti for the year 2006 amounted to EUR 64.2 million. Bio fuel
sales account for two thirds and industrial raw materials sales for one third of
the net sales. The acquisition became effective on 1 February 2007.
In the consolidated financial statements the whole acquisition price (100%) of
Biowatti is recognised as acquisition cost. No minority interest is separated
from the profit or equity, but the estimated acquisition price of the remaining
30 percent (EUR 6 million) is recognised as interest-bearing non-current
liability. The final price of the 30 percent portion will be determined based on
the future earnings of Biowatti.
In early January 2007, Skånsk Allservice AB together with subsidiaries
Hygienutveckling AB and Hygienutvickling A/S operating in Norway were acquired.
The consolidated net sales of the group totalled about EUR 10 million in 2006,
most of which came from hygiene services for the food industry.
PERSONNEL
In 2006, the average number of employees converted into full-time equivalents
was 6,775 (5,918). At year end the total number of full-time and part-time
employees was 8,328 people (7,512). Of them 1,822 people (1,222) worked
outside Finland.
PROPOSAL FOR THE DISTRIBUTION OF PROFIT
According to the financial statements, Lassila & Tikanoja plcs distributable
assets amount to EUR 40,900,168.17, of which EUR 24,648,860.77 constitutes
profit for the financial period. There were no substantial changes in the
financial standing of the company after the end of the financial period, and the
solvency test referred to in Chapter 13, Section 2 of the Companies Act does not
affect the amount of distributable assets. The Board of Directors proposes to
the General Meeting of Shareholders that distributable assets be used as
follows:
A dividend of EUR 0.55 per share will be paid on
each of the 38,549,719 shares, totalling EUR 21,202,345.45
To be retained and carried forward EUR 19,697,822.72
Total EUR 40,900,168.17
In accordance with the resolution of the Board of Directors, the record date is
29 March 2007. The Board of Directors proposes to the Annual General Meeting
that the dividend be paid on 5 April 2007.
Earnings per share amounted to EUR 0.90. The proposed dividend is 61.1% of the
earnings per share.
SHARES AND SHARE CAPITAL
Traded volume and price
The volume of trading in Lassila & Tikanoja plc shares on the Helsinki Stock
Exchange during the year 2006 was 12,807,684, which is 33.3% (40.0) of the
average number of shares. The value of trading was EUR 217.6 million. The
trading price varied between EUR 14.75 and EUR 22.46. The closing price was EUR
21.66. The market capitalisation went up by 45.9% and was EUR 834.5 million (EUR
571.8 million) at year end.
Share capital
At the beginning of the year the companys registered share capital amounted to
EUR 19,188,887. During the year 2006, a total of 150,400 shares were subscribed
for pursuant to the 2002B and 2002C options rights. After these subscriptions,
the companys share capital amounts to EUR 19,264,087 and the number of the
shares is 38,528,174.
On 5 February 2007, the Board approved the subscriptions of 21,545 new shares
made pursuant to the 2002C share options. As a result of these subscriptions,
the companys registered share capital will increase by EUR 10.772,50 to EUR
19,274,859.50 and the number of the shares will increase to 38,549,719 shares
after the increase has been entered in the Trade Register.
Dividend for the financial year 2005
The Annual General Meeting held on 23 March 2006 resolved on a dividend of EUR
0.40 per share for the financial year 2005. The dividend, totalling EUR 15.4
million, was paid on 4 April 2006.
Option plans 2002 and 2005
The subscription periods for 2002A and 2002B share options have ended. The
subscription period for the 2002B-options ended on 30 October 2006, and 255,800
shares were subscribed for. The rest 200 outstanding options and the 4,000
options held by L&T Advance Oy expired.
280,000 2002C options have been issued. 274,000 have been granted to key persons
of the company. Until 29 January 2007, a total of 39,245 shares have been
subscribed for pursuant to the 2002C options. Pursuant to the remaining
outstanding 2002C options a maximum of 234,755 shares can be subscribed for,
which is 0.6% of the current number of shares. The subscription period ends on
30 October 2007. The share subscription price is EUR 11.46. The 2002C options
have been listed on the Helsinki Stock Exchange since 2 May 2006.
In 2005, 600,000 share options were issued, each entitling its holder to
subscribe for one share of Lassila & Tikanoja plc. Presently, 26 key persons
hold 165,000 2005A options and 35 key persons hold 195,000 2005B options. L&T
Advance Oy, a wholly-owned subsidiary of Lassila & Tikanoja plc, holds 8,000
2005A options, 7,000 2005B options and 230,000 2005C options.
The share subscription price for the 2005A options is EUR 14.22, and for 2005B
options EUR 16.98.The options issued under the share option plan 2005 entitle
their holders to subscribe for a maximum of 1.6% of the current number of
shares.
Notifications on major holdings
On 10 April 2006, Tapiola Group reported that its holding in the share capital
and votes of Lassila & Tikanoja plc had decreased to 4.6%.
Authorisation for the Board of Directors
The Board of Directors is not authorised to effect any share issues or to launch
a convertible bond or a bond with warrants. Neither is the Board authorised to
decide on the repurchase nor disposal of the companys own shares.
BOARD OF DIRECTORS AND AUDITORS
The Annual General Meeting of Shareholders held on 23 March 2006 confirmed five
as the number of the members of the Board of Directors. The following Board
members were re-elected to the Board until the end of the following AGM: Heikki
Hakala, Lasse Kurkilahti, Juhani Lassila, Juhani Maijala and Soili Suonoja.
PricewaterhouseCoopers Oy, Authorised Public Accountants, were elected auditors.
Principal Auditor is Heikki Lassila, Authorised Public Accountant.
In a meeting held after the Annual General Meeting the Board of Directors re-
elected Juhani Maijala as Chairman of the Board and Heikki Hakala as Vice
Chairman.
SUMMARY OF STOCK EXCHANGE RELEASES PURSUANT TO ARTICLE 7, CHAPTER 2 OF THE
SECURITIES MARKETS ACT
On 23 March 2006, the Board of Directors resolved to apply for listing of 2002C
share option rights on the main list of the Helsinki Stock Exchange starting
from 2 May 2006.
EVENTS AFTER THE BALANCE SHEET DATE
An agreement to acquire a majority holding of Biowatti Oy was signed in
December. The acquisition was subject to approval of the competition authority.
The approval was given on 18 January 2007, and the acquisition became effective
on 1 February 2007.
NEAR-TERM UNCERTAINTIES
The most significant uncertainty factor in the near term is that the performance
of foreign units within Property and Office Support Services may not improve on
the planned schedule. The slowness of environmental and other permit procedures
may cause delays in the implementation of planned recycling plant investments in
Finland as well as Russia. Changes in the fair value of oil derivatives related
to L&T Recoils operations depend on the development of world market prices for
oil. This may have a substantial effect on the earnings of Industrial Services.
PROSPECTS FOR THE YEAR 2007
The prospects in Lassila & Tikanojas markets are good, and the companys market
position has strengthened. Among other things, the demand for Environmental
Services in Finland will be increased by the fact that many landfills will have
to be closed down towards the end of the year due to new EU regulations. The
forest energy market should develop favourably, due to a continuing trend
towards increasing the use of renewable energy sources. The market outlook for
Property and Office Support Services in Finland is better than last year, and
the competitive situation has normalised. The market outlook for Industrial
Services is quite positive. Strong demand seems to be continuing, and the
companys position in the market has clearly improved. Clear growth will also be
seen in markets outside Finland.
Successful new sales in the latter half of 2006 provided the preconditions for
continuing strong organic growth. Corporate acquisitions, Biowatti in
particular, will strongly increase net sales. Biowattis operations require very
little capital and do not call for an operating profit level as high as that of
other operations within Environmental Services. This will decrease the operating
profit of Environmental Services in comparison with net sales.
During the year, two or three new recycling plants and terminals will be built,
including one in Russia. Investments will increase due to completed corporate
acquisitions and other investment decisions.
The management emphasis in 2006 was on improving productivity and cost-based
management. This concept will be further elaborated, particularly in Property
and Office Support Services. We estimate that the growth in net sales will
clearly exceed 20% and financial performance will improve.
INCOME STATEMENT
EUR 1000
10-12/2006 10-12/2005 1-12/2006 1-12/2005
Net sales 115 362 97 097 436 004 377 448
Cost of goods sold -100 226 -83 633 -367 968 -320 536
Gross profit 15 136 13 464 68 036 56 912
Selling and marketing -3 739 -2 988 -12 844 -11 508
costs
Administrative expenses -2 445 -1 614 -8 660 -7 304
Other operating income 1 360 192 3 653 1 154
and expenses
Operating profit 10 312 9 054 50 185 39 254
Finance income 462 577 1 526 1 431
Finance costs -828 -697 -3 225 -3 232
Share of profit of 18 27 18 27
associates
Profit before income tax 9 964 8 961 48 504 37 480
Income tax expense -2 956 -2 585 -13 249 -10 250
Profit for the period 7 008 6 376 35 255 27 230
Attributable to:
Equity holders of the 6 858 6 360 34 613 26 822
parent
Minority interest 150 16 642 408
Earnings per share for profit attributable to the equity holders of the parent:
Earnings per share, EUR 0.18 0.16 0.90 0.70
Earnings per share, EUR 0.18 0.16 0.70
-diluted 0.90
BALANCE SHEET
EUR 1000 12/2006 12/2005
ASSETS
Non-current assets
Goodwill 106 611 99 120
Intangible assets from acquisitions 9 893 9 859
Other intangible assets 7 903 5 893
Property, plant and equipment 134 038 135 404
Other non-current assets 6 785 6 676
Total non-current assets 265 230 256 952
Current assets
Inventories 4 315 4 744
Trade and other receivables 58 249 45 898
Cash and cash equivalents 24 790 7 252
Total current assets 87 354 57 894
TOTAL ASSETS 352 584 314 846
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent
Share capital 19 264 19 189
Share premium reserve 47 666 46 606
Revaluation and other reserves 326 -179
Retained earnings 72 291 60 428
Profit for the period 34 613 26 822
Total equity attributable to equity 174 160 152 866
holders of the parent
Minority interest 2 709 2 166
Total equity 176 869 155 032
Non-current liabilities
Deferred income tax liabilities 22 350 15 768
Pension obligations 352 176
Provisions 936 684
Interest-bearing liabilities 59 031 59 629
Other non-current liabilities 431 224
Total non-current liabilities 83 100 76 481
Current liabilities
Interest-bearing liabilities 18 231 24 077
Trade and other non-interest-bearing 74 112 58 956
payables
Provisions 272 300
Total current liabilities 92 615 83 333
TOTAL EQUITY AND LIABILITIES 352 584 314 846
CASH FLOW STATEMENT
EUR 1000 12/2006 12/2005
Cash generated from operations before 62 490
change in working capital 75 911
Change in working capital 1 746 -3 214
Net finance cost -1 987 -2 880
Taxes -5 776 -7 455
Net cash flows from operating activities 69 894 48 941
Investments in group companies -10 658 -15 801
Other investments -34 885 -40 175
Proceeds from sales of property, plant and 14 089 1 775
equipment
Net cash flows from investing activities -31 454 -54 201
Proceeds from share subscriptions 1 018 1 795
Dividends paid -15 339 -9 525
Change in borrowings -6 566 475
Net cash flows from financing activities -20 887 -7 255
Net change in liquid assets 17 553 -12 515
Liquid assets at beginning of period 7 252 19 759
Changes in exchange rates and fair values -15 8
Liquid assets in balance sheet 24 790 7 252
STATEMENT OF CHANGES IN EQUITY
EUR 1000 Share Share Re- Retained Equity Mi-nor- Total
capital premium valua- earnings attrib. ity equity
reserve Trans- tion re- to intere
lation serves equity st
differ- holders
ence of the
reserve parent
Equity at 19 068 44 932 13 69 515 133 239 1 550 134 789
1.1.2005 -289
Current -12 -12 -12
available-for-
sale
investments,
change in
fair value
Currency 109 109
translation 109
differences
Items -12 97 97
recognised 109
directly in
equity
Profit for 26 822 26 822 408 27 230
the period
Total -12 26 822 26 919 408 27 327
recognised
income and 109
expenses
Share option
remuneration
Sub- 121 1 674 1 795 1 795
scriptions
pursuant to
2002 options
Remuneration 448 448 448
expense of
share options
Dividends -9 535 -9 535 -9 535
paid
Investment by 208 208
a minority
holder
Equity at 19 189 46 606 1 87 250 152 866 2 166 155 032
31.12.2005 -180
Equity at 19 189 46 606 1 87 250 152 866 2 166 155 032
1.1.2006 -180
Hedging fund, 384 384 384
change in
fair value
Current 10 10 10
available-for-
sale
investments,
change in
fair value
Currency 111 -1 110
translation 111
differences
Items 394 505 -1 504
recognised 111
directly in
equity
Profit for 34 613 34 613 642 35 255
the period
Total 394 34 613 35 118 641 35 759
recognised
income and 111
expenses
Share option
remuneration
Sub- 75 1 060 1 135 1 135
scriptions
pursuant to
2002 options
Remuneration 396 396 396
expense of
share options
Dividends -15 355 -15 355 -164 -15 519
paid
Investment by 66 66
a minority
holder
Equity at 19 264 47 666 395 106 904 174 160 2 709 176 869
31.12.2006 -69
KEY FIGURES
10-12 10-12 2006 2005
/2006 /2005
Earnings per share, EUR 0.18 0.16 0.90 0.70
Earnings per share, EUR - diluted 0.18 0.17 0.90 0.70
Cash flows from operating 0.72 0.47 1.82 1.28
activities per share, EUR
EVA, EUR million* 4.6 3.4 28.6 18.3
Capital expenditure, EUR 1000 15 074 11 259 47 162 60 852
Depreciation and amortisation, EUR 7 519 6 598 28 155 24 774
1000
Equity per share, EUR 4.52 3.98
Dividend per share, EUR 0.55** 0.40
Dividend/earnings, % 61.1** 57.0
Dividend yield, % 2.5** 2.7
P/E ratio 24.1 21.2
Return on equity, ROE, % 21.2 18.8
Return on invested capital, ROI, % 21.0 17.9
Equity ratio, % 50.4 49.5
Gearing, % 29.7 49.3
Net interest-bearing liabilities 52 471 76 455
Average number of employees in 6 775 5 918
full-time equivalents
Adjusted number of shares, 1000
shares
average during the period 38 445 38 193
at end of period 38 528 38 378
average during period, diluted 38 601 38 421
*EVA = operating profit cost calculated on
invested capital (average of four quarters). WACC
2006: 8.75%; 2005: 9.0%
**Proposal by the Board of Directors
SEGMENT REPORTING
NET SALES
EUR 1000 10-12/ 10-12/ Change 1-12/ 1-12/ Change
2006 2005 % 2006 2005 %
Environmental Services 55 463 47 333 17.2 207 252 180 679 14.7
Property and Office
Support Services 44 584 36 545 22.0 168 403 142 890 17.9
Industrial Services 16 554 14 362 15.3 64 416 57 584 11.9
Group admin. and other 3 92 118 366
Inter-division net -1 242 -1 235 -4 185 -4 071
sales
Total 115 362 97 097 18.8 436 004 377 448 15.5
OPERATING PROFIT
EUR 1000 10-12/ % 10-12/ 1-12/ 1-12/ %
2006 2005 % 2006 % 2005
Environmental 5 862
Services 7 390 13.3 12.4 32 498 15.7 23 986 13.3
Property and
Office Support
Services 1 154 2.6 2 393 6.5 8 758 5.2 11 947 8.4
Industrial
Services 2 739 16.5 909 6.3 9 601 14.9 4 746 8.2
Group admin.
and other -971 -110 -672 -1 425
Lassila &
Tikanoja 10 312 8.9 9 054 9.3 50 185 11.5 39 254 10.4
OTHER SEGMENT REPORTING
EUR 1000 10-12 10-12 1-12 1-12/
/2006 /2005 /2006 2005
Assets
Environmental Services 199 872 189 844
Property and Office 59 394 50 330
Support Services
Industrial Services 63 508 59 997
Group admin. and other 2 804 5 211
Non-allocated assets 27 006 9 464
Lassila & Tikanoja 352 584 314 846
Liabilities
Environmental Services 33 388 29 947
Property and Office 29 708 20 910
Support Services
Industrial Services 10 367 8 787
Group admin. and other 1 084 269
Non-allocated liabilities 101 168 99 901
Lassila & Tikanoja 175 715 159 814
Capital expenditure
Environmental Services 5 436 7 249 21 940 40 542
Property and Office 7 613 2 622 19 472 11 471
Support Services
Industrial Services 2 025 1 398 5 696 8 785
Group admin. and other -10 54 54
Lassila & Tikanoja 15 074 11 259 47 162 60 852
Depreciation and
amortisation
Environmental Services 4 240 3 595 16 002 13 567
Property and Office 2 045 1 548 7 274 5 674
Support Services
Industrial Services 1 225 1 427 4 796 5 422
Group admin. and other 9 28 83 111
Lassila & Tikanoja 7 519 6 598 28 155 24 774
INCOME STATEMENT BY QUARTER
EUR 1000 10-12 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
/2006 2006 2006 2006 2005 2005 2005 2005
Net sales
Environmental 55 463 52 973 51 692 47 124 47 333 46 588 47 234 39 524
Services
Property and 41 463 41 243 41 113 36 545 35 645 35 955 34 745
Office Support 44 584
Services
Industrial 16 554 18 223 16 513 13 126 14 362 15 838 15 746 11 638
Services
Group admin. and 3 19 26 70 92 91 92 91
other
Inter-division -1 242 -1 030 -1 044 -869 -1 235 -1 064 -966 -806
net sales
Total 115 362 111 648 108 430 100 564 97 097 97 098 98 061 85 192
Operating profit
Environmental 7 390 9 986 7 828 7 294 5 862 7 017 6 390 4 717
Services
Property and 4 833 1 499 1 272 2 393 4 462 2 868 2 224
Office Support 1 154
Services
Industrial 2 739 3 800 2 277 785 909 2 260 1 820 -243
Services
Group admin. and -971 1 233 -547 -388 -110 -439 -524 -352
other
Total 10 312 19 852 11 057 8 963 9 054 13 300 10 554 6 346
Operating margin
Environmental 13,3 18,9 15,1 15,5 12,4 15,1 13,5 11,9
Services
Property and 11,7 3,6 3,1 6,5 12,5 8,0 6,4
Office Support 2,6
Services
Industrial 16,5 20,9 13,8 6,0 6,3 14,3 11,6 -2,1
Services
Group 8,9 17,8 10,2 8,9 9,3 13,7 10,8 7,4
Finance costs, -366 -740 -391 -201 -120 -263 -1 010 -408
net
Share of profits 27
of associates 18
Profit before 9 964 19 112 10 666 8 762 8 961 13 037 9 544 5 938
tax
CONTINGENT LIABILITIES
EUR 1000 12/2006 12/2005
Securities given for own commitments
Real estate mortgages 10 484 105
Corporate mortgages 12 778 500
Other securities 197 188
Bank guarantees required for
environmental permits 2 026 1 969
Other securities are security deposits.
The Group has given no pledges, mortgages or
guarantees on behalf of outsiders.
Operating lease liabilities
EUR 1000 12/2006 12/2005
Maturity not later than one year 6 107 2 809
Maturity later than one year and not 12 742 7 016
later than five years
Maturity later than five years 3 614 4 357
Total 22 463 14 182
Derivative financial instruments
EUR 1000 12/2006 12/2005
Nominal values of interest rate
swaps*
Maturity not later than one year 13 500 6 000
Maturity later than one year and not 44 000
later than five years 30 500
Total 44 000 50 000
Fair value of interest rate swaps 726 237
* Hedge accounting under IAS 39 has not been
applied to these interest rate swaps. Changes in
fair values have been recognised in finance
income and costs.
Nominal value of interest rate
swap**
Maturity not later than one year 1 429
Maturity later than one year and not 5 714
later than five years
Maturity later than five years 7 857
Total 15 000
Fair value of interest rate swap 519
** The interest rate swap is used to hedge cash
flow related to a floating rate loan, and hedge
accounting under IAS 39 has been applied to it.
The hedge has been effective, and the total
change in the fair value has been recognised in
the hedging fund under equity.
12/2006 12/2006
Quantity Fair
1000 bbl value
EUR
1000
Maturity of raw oil put options held
for trading
Later than one year and not later 453 2 288
than five years
Oil derivatives were entered into in order to
hedge the base oil price risk associated with the
re-refinery plant under construction for the
joint venture L&T Recoil. Hedge accounting under
IAS 39 has not been applied, but the changes in
fair values have been recognised in other
operating income and expenses.
The fair values of all derivative contracts are
based on market prices on the balance sheet date.
The fair values of the oil options have been
determined on the basis of a generally used
measurement model.
Helsinki 5 February 2007
LASSILA & TIKANOJA PLC
Board of Directors
Jari Sarjo
President and CEO
For further information, please contact Jari
Sarjo,
President and CEO, tel. +358 10 636 2810.