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Lassila & Tikanoja plc Interim Report 1 January - 30 June 2009

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LASSILA & TIKANOJA PLC       INTERIM REPORT      28 July 2009 8.00 am           
					                                                                           
LASSILA & TIKANOJA PLC INTERIM REPORT 1 JANUARY - 30 JUNE 2009 
                 
- Net sales for the second quarter EUR 147.1 million (EUR 154.4 million);       
operating profit EUR 14.9 million (EUR 10.2 million); operating profit excluding
non-recurring and imputed items EUR 14.8 million (EUR 11.3 million); earnings   
per share EUR 0.26 (EUR 0.17)                                                   
- Net sales for January-June EUR 293.5 million (EUR 301.7 million); operating   
profit EUR 24.9 million (EUR 33.0 million); operating profit excluding          
non-recurring and imputed items EUR 26.0 million (EUR 20.1 million); earnings   
per share EUR 0.42 (EUR 0.68)                                                   
- Revised prospects: Full-year net sales are expected to reach the previous     
year's level and full-year operating profit, excluding non-recurring and imputed
items, is expected to reach the same level or show slight improvement. This     
requires that production operations will be launched at the L&T Recoil plant in 
the early autumn.   
                                                            
GROUP NET SALES AND FINANCIAL PERFORMANCE  
                                     
Second quarter                                                                  
Lassila & Tikanoja's net sales for the second quarter totalled EUR 147.1 million
(EUR 154.4 million), showing a decrease of 4.7%. Operating profit amounted to   
EUR 14.9 million (EUR 10.2 million), representing 10.1% (6.6%) of net sales.    
Operating profit excluding non-recurring and imputed items was EUR 14.8 million 
(EUR 11.3 million). Earnings per share rose to EUR 0.26 (EUR 0.17).             

Net sales fell due to the sustained low prices of secondary raw materials and   
low demand for wood-based fuels. Profitability improved, thanks to effective    
production efficiency improvement measures.                                     

Non-recurring expenses of EUR 0.4 million associated with the closure of the    
Luumäki wood pellet plant were recorded for the quarter as well as non-recurring
income of EUR 0.5 million from the refund of the supplementary insurance fund of
the former Lassila & Tikanoja.                                                  

January-June                                                                    
Six-month net sales amounted to EUR 293.5 million (EUR 301.7 million); down by  
2.7%. Operating profit was EUR 24.9 million (EUR 33.0 million), representing    
8.5% (10.9%) of net sales. Operating profit excluding non-recurring and imputed 
items rose to EUR 26.0 million (EUR 20.1 million). Earnings per share were EUR  
0.42 (EUR 0.68). The capital gain of EUR 14.3 million from the sale of Ekokem   
shares boosted the operating profit and net sales in the comparison period.     

The net sales of Property and Office Support Services and Industrial Services   
reached their previous year's level while Environmental Services saw a decline  
in net sales. Operating profit excluding non-recurring and imputed items saw a  
marked improvement, thanks to production efficiency improvement measures.       
Despite these improvements, the lower market prices of secondary raw materials  
and weakened demand continued to erode the net sales and profitability of       
recycling services. L&T Biowatti was adversely affected by the reduced demand   
for wood-based fuels and the lower operating rates in the forest industry.      

Financial summary                                                               
--------------------------------------------------------------------------------
|                         | 4-6/ | 4-6/ | Chang | 1-6/ | 1-6/ | Change | 1-12/ |
|                         | 2009 | 2008 |     e | 2009 | 2008 |      % | 2008  |
|                         |      |      |     % |      |      |        |       |
--------------------------------------------------------------------------------
| Net sales, EUR million  | 147. | 154. |  -4.7 | 293. | 301. |   -2.7 | 606.0 |
|                         |    1 |    4 |       |    5 |    7 |        |       |
--------------------------------------------------------------------------------
| Operating profit        | 14.8 | 11.3 |  31.0 | 26.0 | 20.1 |   29.4 |  45.0 |
| excluding non-recurring |      |      |       |      |      |        |       |
| and imputed items, EUR  |      |      |       |      |      |        |       |
| million*                |      |      |       |      |      |        |       |
--------------------------------------------------------------------------------
| Operating profit, EUR   | 14.9 | 10.2 |  45.8 | 24.9 | 33.0 |  -24.8 |  55.5 |
| million                 |      |      |       |      |      |        |       |
--------------------------------------------------------------------------------
| Operating margin, %     | 10.1 |  6.6 |       |  8.5 | 10.9 |        |   9.2 |
--------------------------------------------------------------------------------
| Profit before tax, EUR  | 13.6 |  9.2 |  48.1 | 21.9 | 30.9 |  -29.1 |  50.7 |
| million                 |      |      |       |      |      |        |       |
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.26 | 0.17 |  52.9 | 0.42 | 0.68 |  -38.2 |  1.03 |
--------------------------------------------------------------------------------
| EVA, EUR million        |  6.4 |  2.8 |       |  8.4 | 18.6 |        |  25.0 |
--------------------------------------------------------------------------------
* Breakdown of operating profit excluding non-recurring and imputed items is    
presented below the division reviews.                                           

NET SALES AND FINANCIAL PERFORMANCE BY DIVISION                                 

Environmental Services                                                          

Second quarter                                                                  
The net sales of Environmental Services (waste management, recycling services,  
L&T Biowatti, environmental products) in the second quarter shrank by 7.3% to   
EUR 71.0 million (EUR 76.6 million). Operating profit was EUR 8.9 million (EUR  
8.2 million), and operating profit excluding non-recurring and imputed items was
EUR 9.4 million (EUR 8.2 million).                                              

The net sales of waste management remained at the same level as last year while 
the net sales of recycling services declined due to shrinking volumes of        
recyclable waste materials and falling prices of secondary raw materials. The   
division's profitability improved thanks to production efficiency enhancement   
measures. Construction of added capacity at the Kerava recycling plant          
continued, and the new wood shredding unit was completed at the end of the      
second quarter.                                                                 

L&T Biowatti failed to reach its targets due to clearly lower than anticipated  
demand for wood-based fuels.  Factors contributing to the decline in demand     
included low wholesale prices of electricity and several customers' annual      
maintenance shutdowns. Energy wood procurement for the coming winter proceeded  
according to plans. The wood pellet plant in Luumäki was closed due to weak     
availability of raw material and high prices. Non-recurring expenses of EUR 0.4 
million were recorded for the discontinuation.                                  

Operational adjustment measures were taken in Latvia in response to the changed 
market situation, which helped maintain a healthy profitability level.          

January-June                                                                    
Environmental Services' net sales for January-June decreased by 5.8% to EUR     
143.3 million (EUR 152.1 million). Operating profit was EUR 15.7 million (EUR   
16.6 million), and operating profit excluding non-recurring and imputed items   
was EUR 17.1 million (EUR 16.6 million).                                        

In waste management, net sales remained at the previous year's level despite the
reduction in waste volumes resulting from the slowdown particularly in new      
construction. Active renovation operations, however, helped offset the decline  
in waste volumes. Profitability improved in the waste management business,      
thanks to production efficiency improvement measures.                           

The market prices of secondary raw materials (plastics, fibres, metals) and     
their demand remained low in the first half. The investment programme covering  
the construction of additional capacity for the Kerava recycling plant was      
changed, leaving the investment smaller than was originally planned. The current
project involves the construction of a combined plant that will be able to      
handle both construction waste and trade and industrial waste. The plant is     
scheduled to be completed in 2010.                                              

The demand for the biofuels supplied by L&T Biowatti declined in the first half 
as a result of lower than expected electricity production volumes and the       
decline in the operating rates in the forest industry. The low price of emission
rights eroded the competitiveness of wood-based fuels against coal and oil. A   
forestry service organisation focusing on energy wood procurement launched      
operations in January, and the Luumäki wood pellet plant was closed in May.     

In April, waste management operations in Russia were extended to cover the city 
of Noginsk. Although the growing uncertainty of the Latvian economy poses       
challenges for business development, it has also improved the availability of   
labour and lowered labour costs.                                                

Net sales for environmental products declined from the comparison period while  
profitability improved.                                                         

Property and Office Support Services                                            

Second quarter                                                                  
The net sales of Property and Office Support Services (property maintenance and 
cleaning services) amounted to EUR 60.5 million (EUR 61.0 million) in the second
quarter. At EUR 4.3 million, the operating profit showed a clear improvement    
(EUR 1.2 million). Operating profit excluding non-recurring and imputed items   
was EUR 4.3 million (EUR 1.2 million).                                          

In Finland, both product lines were able to increase their net sales.           
Profitability in Finnish operations showed a clear improvement thanks to        
production efficiency enhancement measures and fixed cost reductions.           

Net sales from international operations declined from last year primarily as a  
result of the weakening of the Swedish krona and the Russian rouble. In Latvia, 
the scopes of cleaning services have been downsized in response to growing      
economic uncertainty. Action taken to boost production efficiency helped improve
the result from international operations, but operations continued to make a    
slight loss.                                                                    

January-June                                                                    
The January-June net sales of Property and Office Support Services totalled EUR 
121.7 million (EUR 120.2 million); an increase of 1.2%. Operating profit rose to
EUR 7.7 million (EUR 2.8 million), and operating profit excluding non-recurring 
and imputed items was EUR 7.9 million (EUR 2.8 million).                        

Contract revenue in Finland grew in both product lines despite the fierce price 
competition. The economic recession had a particularly negative impact on the   
sales of additional services, and the slowdown in construction reflected on the 
demand for maintenance services for technical systems.                          

Measures taken to boost production efficiency and to trim fixed costs were      
successful. Prolonged economic uncertainty resulted in considerably lower       
employee turnover, particularly in cleaning services. The damage repair services
business handled a few major accidents in the first half, and new partnership   
agreements were signed with insurance companies.                                

Loss from international operations declined. The Russian and Latvian operations 
recorded a positive result. In Sweden, the reorganisation programme proceeded as
planned but operations continued to make a loss nonetheless. In March, the      
Russian cleaning services were awarded a certificate for compliance with the ISO
9001 quality standards.                                                         

Industrial Services                                                             

Second quarter                                                                  
The net sales of Industrial Services (hazardous waste management, industrial    
solutions, wastewater services, L&T Recoil) were down by 3.4% to EUR 17.6       
million (EUR 18.2 million). Operating profit was EUR 1.7 million (EUR 1.1       
million), and operating profit excluding non-recurring and imputed items was EUR
1.7 million (EUR 2.3 million).                                                  

The division's net sales fell due to lower operating rates in the industry, and 
adjusting production to the changed market environment continued to be          
challenging. Major project-type assignments that began in the first quarter     
continued in April-May.                                                         

The joint venture L&T Recoil's re-refinery for used lubricating oil in Hamina   
was completed in May. The refinery is expected to reach a production stage in   
the early autumn. Production start-up costs and raw material storage costs taxed
the quarter's performance.                                                      

In other product lines, performance was on a par with the previous year thanks  
to production efficiency enhancement measures.                                  

January-June                                                                    
Industrial Services generated net sales of EUR 32.4 million (EUR 31.9 million)  
in January-June, showing an increase of 1.7%. Operating profit was EUR 2.0      
million (EUR 0.2 million), and operating profit excluding non-recurring and     
imputed items was EUR 2.1 million (EUR 1.6 million).                            

Lower operating rates in the industry reflected particularly strongly on        
hazardous waste volumes. Nevertheless, the division's net sales and             
profitability picked up from the previous year, thanks to large projects in the 
first half and continued production efficiency improvement measures. Damage     
repair services were transferred to the Property and Office Support Services    
division at the beginning of the year.                                          

Net sales of wastewater services grew from the comparison period but            
profitability declined. New industrial partnerships were launched in industrial 
solutions.                                                                      

Start-up of the L&T Recoil re-refinery began at the end of the period. The      
target set for the joint venture remains unchanged: To produce one-third of the 
plant's 60,000-ton annual capacity during the second half. The global market    
price of the base oil produced by the re-refinery has been following crude oil  
price developments with a delay, as expected.                                   

BREAKDOWN OF OPERATING PROFIT EXCLUDING NON-RECURRING AND IMPUTED ITEMS         
--------------------------------------------------------------------------------
| EUR million                        |  4-6/ | 4-6/ |  1-6/ |  1-6/ |    1-12/ |
|                                    |  2009 | 2008 |  2009 |  2008 |     2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit                   |  14.9 | 10.2 |  24.9 |  33.0 |     55.5 |
--------------------------------------------------------------------------------
| Non-recurring items                |       |      |       |       |          |
--------------------------------------------------------------------------------
| Impairment loss on goodwill of     |       |      |       |       |      3.1 |
| business in Sweden                 |       |      |       |       |          |
--------------------------------------------------------------------------------
| Discontinuation of soil washing    |       |      |       |       |      2.6 |
| services                           |       |      |       |       |          |
--------------------------------------------------------------------------------
| Loss on sale of business in Norway |       |      |       |       |      1.1 |
--------------------------------------------------------------------------------
| Gain on sale of the shares of      |       |      |       | -14.3 |    -14.3 |
| Ekokem                             |       |      |       |       |          |
--------------------------------------------------------------------------------
| Oil derivatives                    |       |  1.1 |       |   1.4 |     -3.0 |
--------------------------------------------------------------------------------
| Restructuring expenses             |       |      |   1.2 |       |          |
--------------------------------------------------------------------------------
| Discontinuation of wood pellet     |   0.4 |      |   0.4 |       |          |
| production in Luumäki              |       |      |       |       |          |
--------------------------------------------------------------------------------
| Refund of supplementary insurance  |  -0.5 |      |  -0.5 |       |          |
| fund of the former Lassila &       |       |      |       |       |          |
| Tikanoja                           |       |      |       |       |          |
--------------------------------------------------------------------------------
| Operating profit excluding         |  14.8 | 11.3 |  26.0 |  20.1 |     45.0 |
| non-recurring and imputed items    |       |      |       |       |          |
--------------------------------------------------------------------------------

FINANCING                                                                       

At the end of the period, interest-bearing liabilities amounted to EUR 32.5     
million more than a year earlier. Net interest-bearing liabilities, totalling   
EUR 129.4 million, increased by EUR 17.6 million from the comparison period and 
by EUR 8.9 million from the beginning of the year.                              

The amount of net finance costs in the second quarter exceeded that of the      
comparison period by EUR 0.2 million and in January-June by EUR 0.8 million     
regardless of the decline in the interest rate level. The costs increased as a  
result of growth in the interest-bearing liabilities. Interest expenses         
increased by EUR 0.2 million in the second quarter and by EUR 0.6 million in    
January-June. Net finance costs were 1.0% (0.7%) of net sales and 11.7% (6.3%)  
of operating profit.                                                            

In January-June, a total of EUR -0.3 million (EUR 0.4 million) arising from the 
changes in the fair values of interest rate swaps to which hedge accounting     
under IAS 39 is applied was recognised in other comprehensive income, after tax.

In January-June, new long-term loans totalling EUR 24.0 million were drawn and  
EUR 20.8 million were repaid. During the last six months of the year, repayments
of long-term loans totalling EUR 8.4 million (EUR 4.8 million) will fall due. At
30 June 2009, the weighted average of effective interest rates of long-term     
loans was 3.10% (5.10%). At the end of the period, the amount of liquid assets  
was EUR 23.4 million (EUR 8.5 million) and a committed limit of EUR 15.0 million
was not in use (EUR 4.0 million in use).                                        

The equity ratio was 41.6% (44.5%) and the gearing rate 64.9 (57.7). Cash flows 
from operating activities amounted to EUR 36.2 million (EUR 25.9 million), and  
EUR 2.3 million were tied up in the working capital (EUR 2.3 million).          


DIVIDEND                                                                        

The Annual General Meeting held on 24 March 2009 resolved on a dividend of EUR  
0.55 per share. The dividend, totalling EUR 21.3 million, was paid to the       
shareholders on 3 April 2009.                                                   


CAPITAL EXPENDITURE                                                             

Capital expenditure totalled EUR 24.5 million (EUR 31.4 million). The largest   
construction projects were L&T Recoil re-refinery and the extension of the      
Kerava recycling plant.                                                         

In the second quarter, the property maintenance services business of            
Valkeakosken Talohuolto Ky was acquired into Property and Office Support        
Services. The net sales of the acquired business totalled EUR 0.7 million.      

In the beginning of June, the business of Environmental Services' unit in Virrat
was sold.                                                                       


PERSONNEL                                                                       

In January-June, the average number of employees converted into full-time       
equivalents was 8,039 (7,972). At the end of the period, the total number of    
full-time and part-time employees was 9,524 (10,087). Of them 7,409 (7,694)     
people worked in Finland and 2,115 (2,393) people in other countries.           


NEW DIVISIONS                                                                   

As of 1 June 2009, Lassila & Tikanoja's business operations were regrouped into 
three divisions: Environmental Services, Property and Office Support Services   
and Renewable Energy Sources (L&T Biowatti). The Industrial Services division   
was combined with the Environmental Services division.                          

By the regrouping L&T aims at a more cost-efficient and customer orientated     
operating model. The combining of the organisations of Environmental Services   
and Industrial Services allows more efficient use of resources.                 

The company's internal reporting, as well as the segments reported externally,  
will be changed to reflect the new divisions at the beginning of 2010. In 2009, 
the financial reporting segments are Environmental Services, Property and Office
Support Services and Industrial Services.                                       


SHARE AND SHARE CAPITAL                                                         

Traded volume and price                                                         
The volume of trading in Lassila & Tikanoja plc shares on NASDAQ OMX Helsinki   
from January through June was 6,676,707, which is 17.2% (32.1%) of the average  
number of shares. The value of trading was EUR 74.6 million (EUR 217.9 million).
The trading price varied between EUR 9.16 and EUR 13.15. The closing price was  
EUR 12.80. During the review period the company repurchased 30,000 own shares.  
The market capitalisation was EUR 496.2 million (EUR 604.1 million) at the end  
of the period.                                                                  

Share capital and number of shares                                              
The company's registered share capital amounts to EUR 19,399,437, and the number
of the shares to 38,798,874 shares. In January-June, the average number of      
shares excluding the shares held by the company totalled 38,792,498.            

Share option scheme 2005                                                        
In 2005, 600,000 share option rights were issued, each entitling its holder to  
subscribe for one share of Lassila & Tikanoja plc. In the beginning of the      
exercise period, 32 key persons held 176,000 2005B options. 37 key persons hold 
200,000 2005C options. L&T Advance Oy, a wholly-owned subsidiary of Lassila &   
Tikanoja plc, holds 24,000 2005B options and 30,000 2005C options and these     
options will not be exercised.                                                  

The exercise price for the 2005B options is EUR 16.98 and for 2005C options EUR 
26.87. The exercise period for 2005B options is 3 November 2008 to 31 May 2010, 
and for 2005C options 2 November 2009 to 31 May 2011. The exercise period for   
the 2005A options ended on 29 May 2009.                                         

As a result of the exercise of the outstanding 2005 share options, the number of
shares may increase by a maximum of 376,000 new shares, which is 1.0% of the    
current number of shares. The 2005B options have been listed on NASDAQ OMX      
Helsinki since 2 January 2009.                                                  

Share option scheme 2008                                                        
In 2008, 230,000 share option rights were issued, each entitling its holder to  
subscribe for one share of Lassila & Tikanoja plc. 38 key persons hold 199,000  
options and L&T Advance Oy 31,000 options.                                      

The exercise price for the 2008 options is EUR 16.27. The exercise price of the 
share options shall, as per the dividend record date, be reduced by the amount  
of dividend which exceeds 70% of the profit per share for the financial period  
to which the dividend applies. However, only such dividends whose distribution  
has been agreed upon after the option pricing period and which have been        
distributed prior to the share subscription are deducted from the subscription  
price. The exercise price shall, however, always amount to at least EUR 0.01.   
The exercise period will be from 1 November 2010 to 31 May 2012.                
As a result of the exercise of the outstanding 2008 share options, the number of
shares may increase by a maximum of 199,000 new shares, which is 0.5% of the    
current number of shares.                                                       

Share-based incentive programme                                                 
Lassila & Tikanoja plc's Board of Directors decided at a meeting held on 24     
March 2009 on a share-based incentive programme. The programme includes three   
earnings periods one year each, of which the first one began on 1 January 2009  
and the last one ends on 31 December 2011. The basis for the determination of   
the reward is decided annually. Potential rewards to be paid for the year 2009  
will be based on the EVA result of Lassila & Tikanoja group. Potential rewards  
will be paid partly as shares and partly in cash. The proportion paid in cash   
will cover taxes arising from the reward. In the starting phase the programme   
covers 28 persons.                                                              

A maximum total of 180,000 Lassila & Tikanoja plc shares may be paid out on the 
basis of the programme. The shares will be obtained in public trading, and      
therefore the incentive programme will have no diluting effect on the share     
value.                                                                          

Shareholders                                                                    
At the end of the financial period, the company had 6,927 (6,123) shareholders. 
Nominee-registered holdings accounted for 8.8% (9.8%) of the total number of    
shares.                                                                         

Notifications on major holdings                                                 
On 30 April 2009, Ilmarinen Mutual Pension Insurance Company announced that its 
holding of the shares and votes in Lassila & Tikanoja plc had fallen to 7.6%.   

On 12 May 2009, OP-Pohjola Group announced that its holding of the shares and   
votes in Lassila & Tikanoja plc had risen to 5.2%.                              

Authorisation for the Board of Directors                                        
The Annual General Meeting held on 24 March 2009 authorised Lassila & Tikanoja  
plc's Board of Directors to make decisions on the repurchase of the company's   
own shares using the company's unrestricted equity and on the issuance of these 
shares. Shares will be repurchased otherwise than in proportion to the existing 
shareholdings of the company's shareholders in public trading on the NASDAQ OMX 
Helsinki Ltd at the market price quoted at the time of the repurchase.          

The Board of Directors is authorised to repurchase and transfer a maximum of    
500,000 company shares, which is 1.3% of the total number of shares. The        
repurchase authorisation will be effective for 18 months and the share issue    
authorisation for four years.                                                   

The Board of Directors is not authorised to launch a convertible bond or share  
option rights.                                                                  

Own shares                                                                      
At the end of the period Lassila & Tikanoja plc held 30,000 of its own shares   
which represent 0.1% of shares and votes. The shares were repurchased based on  
the authorisation given by the Annual General Meeting on 20-26 May 2009 at a    
total price of EUR 356 thousand.                                                


RESOLUTIONS BY THE ANNUAL GENERAL MEETING                                       

The Annual General Meeting of Lassila & Tikanoja plc, which was held on 24 March
2009, adopted the financial statements for the financial year 2008 and released 
the members of the Board of Directors and the President and CEO from liability. 
The AGM resolved that a dividend of EUR 0.55, a total of EUR 21.3 million, as   
proposed by the Board of Directors, be paid for the financial year 2008. The    
dividend payment date was resolved to be 3 April 2009.                          

The Annual General Meeting confirmed the number of the members of the Board of  
Directors six. The following Board members were re-elected to the Board until   
the end of the following AGM: Heikki Bergholm, Eero Hautaniemi, Matti Kavetvuo, 
Juhani Lassila and Juhani Maijala. Hille Korhonen was elected as a new member   
for the same term.                                                              

PricewaterhouseCoopers Oy, Authorised Public Accountants, were elected auditors 
with Heikki Lassila, Authorised Public Accountant, acting as Principal Auditor. 

The Annual General Meeting approved the Board's proposals to amend article 11 of
the Articles of Association and to authorise the Board of Directors to          
repurchase the company's own shares and to issue shares.                        

The resolutions of the Annual General Meeting were announced in more detail in a
stock exchange release on 25 March 2009.                                        


BOARD OF DIRECTORS                                                              

The members of the Board of Directors are Heikki Bergholm, Eero Hautaniemi,     
Matti Kavetvuo, Hille Korhonen, Juhani Lassila and Juhani Maijala. In its       
constitutive meeting the Board re-elected Juhani Maijala as Chairman of the     
Board and Juhani Lassila as Vice Chairman. The Board decided to establish an    
audit committee. From among its members, the Board elected Juhani Lassila as    
chairman and Eero Hautaniemi and Hille Korhonen as members of the audit         
committee.                                                                      


SUMMARY OF STOCK EXCHANGE RELEASES PURSUANT TO ARTICLE 7, CHAPTER 2 OF THE      
SECURITIES MARKETS ACT                                                          

In a release published on 25 March 2009, the company announced that Lassila &   
Tikanoja plc's Board of Directors decided on a share-based incentive programme. 
More details of the programme are given above in the chapter Share and share    
capital.                                                                        

In a release published on 12 May 2009, the company announced that as of 1 June  
2009 its business operations will be regrouped into three divisions:            
Environmental Services, Property and Office Support Services and Renewable      
Energy Sources (L&T Biowatti). The Industrial Services division will be combined
to the Environmental Services division. The company's internal reporting, as    
well as the segments reported externally, will be changed to reflect the new    
divisions at the beginning of 2010.                                             


NEAR-TERM UNCERTAINTIES                                                         
                                                                                
A deeper and prolonged economic recession may further reduce transport and      
recycling volumes and the number of assignments. Indeed, the slowdown in the    
construction business has already translated into lower construction waste      
volumes. If the market price instability of secondary raw materials persists and
demand remains low, this will continue to have a negative effect on the         
profitability of recycling services. Rapid fluctuations in demand for services  
purchased by the industry and the lowering operating rates may hamper the       
planning and implementation of work.                                            

Delays in the start-up of L&T Recoil will affect the Industrial Services        
division's operating profit. Operating profit will also decline if the price of 
crude oil falls, because the price of base oil follows crude oil price          
developments with a slight delay.                                               

If the operating rates in the forest industry continue to be low, this may      
hamper L&T Biowatti's procurement of by-products for raw material. The low      
prices of coal and oil will undermine the competitiveness of wood-based fuels.  

The uncertain outlook of the Latvian economy and more intense competition may   
prove detrimental to the profitability of Riga's waste management business.     

If the H1N1 influenza epidemic turns out to be serious, potential consequences  
include higher sick day costs and production disruptions, which could weaken    
financial performance.                                                          

More detailed information on L&T's risks and risk management is available in the
Annual Report 2008 in the Board of Directors' Report and consolidated financial 
statements.                                                                     


PROSPECTS FOR THE REST OF THE YEAR                                              

Although the markets in which L&T primarily operates are not highly cyclical,   
the prolonged economic recession is reflecting on the demand for L&T's services.

In the Environmental Services division, waste material transport and recycling  
volumes are expected to decline further. Similarly, the market prices of        
secondary raw materials are expected to remain low and demand to be weak.       
Operating rates in the forest industry are likely to stay low, which will affect
L&T Biowatti's raw material procurement. At the same time, low fossil fuel      
prices and the reduction in the price of emission rights will restrict demand   
for wood-based biofuel.                                                         

Fierce competition and increased competitive bidding is expected to continue to 
affect Property and Office Support Services. The economic uncertainty will hold 
back new and additional sales, and smaller scopes of services are to be expected
when contracts are renewed.                                                     

The Industrial Services division's market conditions are expected to remain     
challenging towards the year-end. Industrial order books continue to be         
exceptionally small, which is likely to translate into further capacity cuts and
production restrictions for customers. Lower operating rates will reduce        
hazardous waste volumes and rapid fluctuations in demand will make production   
adjustment measures more difficult.                                             

Full-year net sales are expected to reach the previous year's level and         
full-year operating profit, excluding non-recurring and imputed items, is       
expected to reach the same level or show slight improvement. This requires that 
production operations will be launched at the L&T Recoil plant in the early     
autumn.                                                                         

Prospects have been revised from the previous interim report, which stated as   
follows: Full-year net sales and operating profit excluding non-recurring and   
imputed items are expected to reach the previous year's level. This requires    
success in the adaptation of operations and costs as well as the start-up of the
operation of L&T Recoil according to plan.                                      

                                                                                
CONDENSED FINANCIAL STATEMENTS 1 JANUARY-30 JUNE 2009                           

CONSOLIDATED INCOME STATEMENT                                                   
--------------------------------------------------------------------------------
| EUR 1000                 |     4-6/ |    4-6/ |    1-6/ |    1-6/ |    1-12/ |
|                          |     2009 |    2008 |    2009 |    2008 |     2008 |
--------------------------------------------------------------------------------
|                          |          |         |         |         |          |
--------------------------------------------------------------------------------
| Net sales                |  147 094 | 154 364 | 293 526 | 301 695 |  605 996 |
--------------------------------------------------------------------------------
| Cost of goods sold       | -126 049 |    -135 | -255 27 |    -267 | -533 681 |
|                          |          |     939 |       9 |     741 |          |
--------------------------------------------------------------------------------
| Gross profit             |   21 045 |  18 425 |  38 247 |  33 954 |   72 315 |
--------------------------------------------------------------------------------
| Other operating income   |      993 |     946 |   1 344 |  15 872 |   21 708 |
--------------------------------------------------------------------------------
| Selling and marketing    |   -3 697 |  -4 329 |  -7 766 |  -8 220 |  -16 228 |
| costs                    |          |         |         |         |          |
--------------------------------------------------------------------------------
| Administrative expenses  |   -2 851 |  -3 216 |  -5 532 |  -6 291 |  -12 105 |
--------------------------------------------------------------------------------
| Other operating expenses |     -624 |  -1 628 |  -1 442 |  -2 282 |   -7 102 |
--------------------------------------------------------------------------------
| Goodwill impairment      |          |         |         |         |   -3 090 |
--------------------------------------------------------------------------------
| Operating profit         |   14 866 |  10 198 |  24 851 |  33 033 |   55 498 |
--------------------------------------------------------------------------------
| Finance income           |      418 |     436 |     829 |     816 |    1 931 |
--------------------------------------------------------------------------------
| Finance costs            |   -1 651 |  -1 426 |  -3 747 |  -2 906 |   -6 737 |
--------------------------------------------------------------------------------
| Profit before tax        |   13 633 |   9 208 |  21 933 |  30 943 |   50 692 |
--------------------------------------------------------------------------------
| Income tax expense       |   -3 612 |  -2 440 |  -5 812 |  -4 442 |  -10 724 |
--------------------------------------------------------------------------------
| Profit for the period    |   10 021 |   6 768 |  16 121 |  26 501 |   39 968 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to:         |          |         |         |         |          |
--------------------------------------------------------------------------------
| Equity holders of the    |   10 016 |   6 778 |  16 120 |  26 502 |   39 969 |
| company                  |          |         |         |         |          |
--------------------------------------------------------------------------------
| Minority interest        |        5 |     -10 |       1 |      -1 |       -1 |
--------------------------------------------------------------------------------

Earnings per share for profit attributable to the equity holders of the company:
--------------------------------------------------------------------------------
| Basic earnings per       |     0.26 |    0.17 |    0.42 |    0.68 |     1.03 |
| share, EUR               |          |         |         |         |          |
--------------------------------------------------------------------------------
| Diluted earnings per     |     0.26 |    0.17 |    0.42 |    0.68 |     1.03 |
| share, EUR               |          |         |         |         |          |
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                                  
--------------------------------------------------------------------------------
| EUR 1000                   | 4-6/ |    4-6/ |      1-6/ |      1-6/ |  1-12/ |
|                            | 2009 |    2008 |      2009 |      2008 |   2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period      |   10 |   6 768 |    16 121 |    26 501 | 39 968 |
|                            |  021 |         |           |           |        |
--------------------------------------------------------------------------------
| Other comprehensive        |      |         |           |           |        |
| income, after tax          |      |         |           |           |        |
--------------------------------------------------------------------------------
| Hedging reserve, change in |   99 |     685 |      -335 |       371 |   -972 |
| fair value                 |      |         |           |           |        |
--------------------------------------------------------------------------------
| Current available-for-sale |      |         |           |           |        |
| investments                |      |         |           |           |        |
--------------------------------------------------------------------------------
| Gains in the period        |  -80 |       2 |        -7 |         1 |     29 |
--------------------------------------------------------------------------------
| Reclassification           |      |         |           |   -14 238 |    -14 |
| adjustments                |      |         |           |           |    238 |
--------------------------------------------------------------------------------
| Current available-for-sale |  -80 |       2 |        -7 |   -14 237 |    -14 |
| investments                |      |         |           |           |    209 |
--------------------------------------------------------------------------------
| Currency translation       |  287 |    -147 |       -22 |      -257 | -1 862 |
| differences                |      |         |           |           |        |
--------------------------------------------------------------------------------
| Other comprehensive        |  306 |     540 |      -364 |   -14 123 |    -17 |
| income, after tax          |      |         |           |           |    043 |
--------------------------------------------------------------------------------
| Total comprehensive        |   10 |   7 308 |    15 757 |    12 378 | 22 925 |
| income, after tax          |  327 |         |           |           |        |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributab |         |                |                     |                |
| le to:     |         |                |                     |                |
--------------------------------------------------------------------------------
| Equity holders of the      |   10 |   7 284 |    15 |        12 351 | 22 950 |
| company                    |  318 |         |   766 |               |        |
--------------------------------------------------------------------------------
| Minority interest          |    9 |      24 |    -9 |            27 |    -25 |
--------------------------------------------------------------------------------
Breakdown of income tax is presented in the notes under ‘Tax effects of         
components of other comprehensive income'.                                      

CONSOLIDATED STATEMENT OF FINANCIAL POSITION                                    
--------------------------------------------------------------------------------
| EUR 1000                                  |    6/2009 |  6/2008 |    12/2008 |
--------------------------------------------------------------------------------
|                                           |           |         |            |
--------------------------------------------------------------------------------
| ASSETS                                    |           |         |            |
--------------------------------------------------------------------------------
|                                           |           |         |            |
--------------------------------------------------------------------------------
| Non-current assets                        |           |         |            |
--------------------------------------------------------------------------------
| Intangible assets                         |           |         |            |
--------------------------------------------------------------------------------
| Goodwill                                  |   115 495 | 119 900 |    115 451 |
--------------------------------------------------------------------------------
| Customer contracts arising from           |     6 454 |   7 187 |      7 346 |
| acquisitions                              |           |         |            |
--------------------------------------------------------------------------------
| Agreements on prohibition of competition  |    12 250 |  14 128 |     13 270 |
--------------------------------------------------------------------------------
| Other intangible assets arising from      |     4 188 |   6 388 |      5 158 |
| business acquisitions                     |           |         |            |
--------------------------------------------------------------------------------
| Other intangible assets                   |    13 218 |  12 011 |     11 402 |
--------------------------------------------------------------------------------
|                                           |   151 605 | 159 614 |    152 627 |
--------------------------------------------------------------------------------
| Property, plant and equipment             |           |         |            |
--------------------------------------------------------------------------------
| Land                                      |     4 015 |   3 503 |      3 832 |
--------------------------------------------------------------------------------
| Buildings and constructions               |    61 872 |  38 039 |     43 958 |
--------------------------------------------------------------------------------
| Machinery and equipment                   |   114 982 | 106 703 |    113 851 |
--------------------------------------------------------------------------------
| Other                                     |        79 |      82 |         78 |
--------------------------------------------------------------------------------
| Advance payments and construction in      |    20 303 |  17 908 |     35 433 |
| progress                                  |           |         |            |
--------------------------------------------------------------------------------
|                                           |   201 251 | 166 235 |    197 152 |
--------------------------------------------------------------------------------
| Other non-current assets                  |           |         |            |
--------------------------------------------------------------------------------
| Available-for-sale investments            |       522 |     402 |        502 |
--------------------------------------------------------------------------------
| Finance lease receivables                 |     4 859 |   4 472 |      4 694 |
--------------------------------------------------------------------------------
| Deferred income tax assets                |     1 376 |   1 435 |        945 |
--------------------------------------------------------------------------------
| Other receivables                         |       705 |     634 |        689 |
--------------------------------------------------------------------------------
|                                           |     7 462 |   6 943 |      6 830 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total non-current assets                  |   360 318 | 332 792 |    356 609 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets                            |           |         |            |
--------------------------------------------------------------------------------
| Inventories                               |    21 894 |  14 518 |     18 827 |
--------------------------------------------------------------------------------
| Trade and other receivables               |    76 039 |  80 088 |     74 634 |
--------------------------------------------------------------------------------
| Derivative receivables                    |           |   1 550 |        112 |
--------------------------------------------------------------------------------
| Advance payments                          |     1 873 |   2 354 |        986 |
--------------------------------------------------------------------------------
| Available-for-sale investments            |    16 477 |   2 995 |     20 368 |
--------------------------------------------------------------------------------
| Cash and cash equivalents                 |     6 943 |   5 535 |      6 149 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total current assets                      |   123 226 | 107 040 |    121 076 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS                              |   483 544 | 439 832 |    477 685 |
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
| EUR 1000                                  |    6/2009 |  6/2008 |    12/2008 |
--------------------------------------------------------------------------------
|                                           |           |         |            |
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES                    |           |         |            |
--------------------------------------------------------------------------------
|                                           |           |         |            |
--------------------------------------------------------------------------------
| Equity                                    |           |         |            |
--------------------------------------------------------------------------------
| Equity attributable to equity holders of  |           |         |            |
| the company                               |           |         |            |
--------------------------------------------------------------------------------
| Share capital                             |    19 399 |  19 398 |     19 399 |
--------------------------------------------------------------------------------
| Share premium reserve                     |    50 673 |  50 645 |     50 673 |
--------------------------------------------------------------------------------
| Other reserves                            |    -3 319 |     -95 |     -2 964 |
--------------------------------------------------------------------------------
| Retained earnings                         |   116 515 |  97 252 |     97 799 |
--------------------------------------------------------------------------------
| Profit for the period                     |    16 120 |  26 502 |     39 969 |
--------------------------------------------------------------------------------
|                                           |   199 388 | 193 702 |    204 876 |
--------------------------------------------------------------------------------
| Minority interest                         |       153 |     214 |        162 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity                              |   199 541 | 193 916 |    205 038 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities                               |           |         |            |
--------------------------------------------------------------------------------
| Non-current liabilities                   |           |         |            |
--------------------------------------------------------------------------------
| Deferred income tax liabilities           |    32 660 |  29 726 |     32 898 |
--------------------------------------------------------------------------------
| Pension obligations                       |       680 |     591 |        674 |
--------------------------------------------------------------------------------
| Long-term provisions                      |     1 993 |   1 113 |      1 741 |
--------------------------------------------------------------------------------
| Long-term borrowings                      |   116 181 |  68 558 |    102 487 |
--------------------------------------------------------------------------------
| Other liabilities                         |     1 340 |     690 |      1 083 |
--------------------------------------------------------------------------------
|                                           |   152 854 | 100 678 |    138 883 |
--------------------------------------------------------------------------------
| Current liabilities                       |           |         |            |
--------------------------------------------------------------------------------
| Short-term borrowings                     |    36 666 |  51 766 |     44 569 |
--------------------------------------------------------------------------------
| Trade and other payables                  |    91 864 |  91 102 |     88 298 |
--------------------------------------------------------------------------------
| Derivative liabilities                    |     1 066 |   2 192 |        610 |
--------------------------------------------------------------------------------
| Tax liabilities                           |     1 242 |     153 |        273 |
--------------------------------------------------------------------------------
| Short-term provisions                     |       311 |      25 |         14 |
--------------------------------------------------------------------------------
|                                           |   131 149 | 145 238 |    133 764 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities                         |   284 003 | 245 916 |    272 647 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES              |   483 544 | 439 832 |    477 685 |
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF CASH FLOWS                                            
--------------------------------------------------------------------------------
| EUR 1000                                      |  6/2009 |  6/2008 |  12/2008 |
--------------------------------------------------------------------------------
|                                               |         |         |          |
--------------------------------------------------------------------------------
| Cash flows from operating activities          |         |         |          |
--------------------------------------------------------------------------------
| Profit for the period                         |  16 121 |  26 502 |   39 968 |
--------------------------------------------------------------------------------
| Adjustments                                   |         |         |          |
--------------------------------------------------------------------------------
| Income tax expense                            |   5 812 |   4 442 |   10 724 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and impairment     |  19 815 |  18 618 |   40 985 |
--------------------------------------------------------------------------------
| Finance income and costs                      |   2 918 |   2 090 |    4 806 |
--------------------------------------------------------------------------------
| Oil derivatives                               |         |   1 361 |   -2 221 |
--------------------------------------------------------------------------------
| Gain on sale of shares                        |         | -14 258 |  -14 258 |
--------------------------------------------------------------------------------
| Discontinued operations                       |         |         |    2 616 |
--------------------------------------------------------------------------------
| Other                                         |     258 |  -1 308 |      444 |
--------------------------------------------------------------------------------
| Net cash generated from operating activities  |  44 924 |  37 447 |   83 064 |
| before change in working capital              |         |         |          |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in working capital                     |         |         |          |
--------------------------------------------------------------------------------
| Change in trade and other receivables         |  -4 327 |  -9 407 |    3 502 |
--------------------------------------------------------------------------------
| Change in inventories                         |  -3 074 |    -182 |   -4 492 |
--------------------------------------------------------------------------------
| Change in trade and other payables            |   5 065 |   7 310 |    3 152 |
--------------------------------------------------------------------------------
| Change in working capital                     |  -2 336 |  -2 279 |    2 162 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest paid                                 |  -4 074 |  -2 576 |   -5 953 |
--------------------------------------------------------------------------------
| Interest received                             |   1 035 |     795 |    1 867 |
--------------------------------------------------------------------------------
| Income tax paid                               |  -3 363 |  -7 486 |  -10 716 |
--------------------------------------------------------------------------------
| Net cash from operating activities            |  36 186 |  25 901 |   70 424 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from investing activities          |         |         |          |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries and businesses,   |    -320 |    -420 |   -4 298 |
| net of cash acquired                          |         |         |          |
--------------------------------------------------------------------------------
| Proceeds from sale of subsidiaries and        |     197 |         |       23 |
| businesses, net of sold cash                  |         |         |          |
--------------------------------------------------------------------------------
| Purchases of property, plant and equipment    | -24 530 | -31 180 |  -77 542 |
| and intangible assets                         |         |         |          |
--------------------------------------------------------------------------------
| Proceeds from sale of property, plant and     |   1 196 |   1 278 |      789 |
| equipment and intangible assets               |         |         |          |
--------------------------------------------------------------------------------
| Purchases of available-for-sale investments   |     -48 |         |     -200 |
--------------------------------------------------------------------------------
| Change in other non-current receivables       |     -12 |      -1 |      -11 |
--------------------------------------------------------------------------------
| Proceeds from sale of available-for-sale      |      25 |  16 807 |   16 867 |
| investments                                   |         |         |          |
--------------------------------------------------------------------------------
| Dividends received                            |       1 |       3 |        4 |
--------------------------------------------------------------------------------
| Net cash used in investing activities         | -23 491 | -13 513 |  -64 368 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from financing activities          |         |         |          |
--------------------------------------------------------------------------------
| Proceeds from shares issued                   |         |     178 |      206 |
--------------------------------------------------