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Lassila & Tikanoja plc Interim Report 1 January - 30 June 2010

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LASSILA & TIKANOJA PLC INTERIM REPORT 27 July 2010 8.00 am                      


LASSILA & TIKANOJA PLC INTERIM REPORT 1 JANUARY - 30 JUNE 2010                  

- Net sales for the second quarter EUR 149.0 million (EUR 147.1 million);       
operating profit EUR 8.8 million (EUR 14.9 million); operating profit excluding 
non-recurring items EUR 11.8 million (EUR 14.8 million); earnings per share EUR 
0.14 (EUR 0.26)                                                                 
- Net sales for January-June EUR 302.9 million (EUR 293.5 million); operating   
profit EUR 15.4 million (EUR 24.9 million); operating profit excluding          
non-recurring items EUR 19.6 million (EUR 26.0 million); earnings per share EUR 
0.25 (EUR 0.42)                                                                 
- Full-year net sales and operating profit excluding non-recurring items are    
expected to remain at the 2009 level.                                           


GROUP NET SALES AND FINANCIAL PERFORMANCE                                       
Second quarter                                                                  
Lassila & Tikanoja's net sales for the second quarter increased by 1.3% to EUR  
149.0 million (EUR 147.1 million). Operating profit was EUR 8.8 million (EUR    
14.9 million), representing 5.9% (10.1%) of net sales, and operating profit     
excluding non-recurring items was EUR 11.8 million (EUR 14.8 million). Earnings 
per share were EUR 0.14 (EUR 0.26).                                             

The healthy demand for commissioned property maintenance assignments boosted net
sales, resulting in a slight growth from the comparison period. However,        
profitability declined from the previous year in all divisions, particularly in 
Renewable Energy Sources (L&T Biowatti) due to the weak demand for wood-based   
fuels.                                                                          

A non-recurring expense of EUR 3.0 million was recognised in the second quarter 
for the discontinuation of L&T Biowatti's wood pellet business.                 

January-June                                                                    
Six-month net sales amounted to EUR 302.9 million (EUR 293.5 million), showing  
an increase of 3.2%. Operating profit was EUR 15.4 million (EUR 24.9 million),  
representing 5.1% (8.5%) of net sales. Operating profit excluding non-recurring 
items fell to EUR 19.6 million (EUR 26.0 million). Earnings per share were EUR  
0.25 (EUR 0.42).                                                                

Net sales grew due to commissioned property maintenance assignments. Demand for 
services and secondary raw materials began to normalise, which helped raise the 
net sales of the Environmental Services division to the previous year's level.  
L&T Biowatti and the joint venture L&T Recoil recorded losses, which taxed the  
performance in the first half.                                                  

Costs recognised in the first half included non-recurring restructuring costs of
EUR 1.2 million and an EUR 3.0 million cost associated with the discontinuation 
of the wood pellet business.                                                    

	                                                                               
FINANCIAL SUMMARY                                                               

--------------------------------------------------------------------------------
|                        | 4-6/ | 4-6/ | Chang | 1-6/ |  1-6/ | Change | 1-12/ |
|                        | 2010 | 2009 |    e  | 2010 |  2009 |      % |  2009 |
|                        |      |      |     % |      |       |        |       |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales, EUR million | 149. | 147. |   1.3 | 302. | 293.5 |    3.2 | 582.3 |
|                        |    0 |    1 |       |    9 |       |        |       |
--------------------------------------------------------------------------------
| Operating profit       | 11.8 | 14.8 | -20.2 | 19.6 |  26.0 |  -24.7 |  51.3 |
| excluding              |      |      |       |      |       |        |       |
| non-recurring items,   |      |      |       |      |       |        |       |
| EUR million*           |      |      |       |      |       |        |       |
--------------------------------------------------------------------------------
| Operating profit, EUR  |  8.8 | 14.9 | -41.1 | 15.4 |  24.9 |  -38.1 |  50.3 |
| million                |      |      |       |      |       |        |       |
--------------------------------------------------------------------------------
| Operating margin, %    |  5.9 | 10.1 |       |  5.1 |   8.5 |        |   8.6 |
--------------------------------------------------------------------------------
| Profit before tax, EUR |  7.8 | 13.6 | -42.5 | 13.4 |  21.9 |  -38.8 |  45.0 |
| million                |      |      |       |      |       |        |       |
--------------------------------------------------------------------------------
| Earnings per share,    | 0.14 | 0.26 | -46.2 | 0.25 |  0.42 |  -40.5 |  0.85 |
| EUR                    |      |      |       |      |       |        |       |
--------------------------------------------------------------------------------
| EVA, EUR million       |  1.2 |  6.4 |       |  0.1 |   8.4 |        |  16.5 |
--------------------------------------------------------------------------------
* Breakdown of operating profit excluding non-recurring items is presented below
the division reviews.                                                           


NET SALES AND FINANCIAL PERFORMANCE BY DIVISION                                 

Environmental Services                                                          

Second quarter                                                                  
The division's net sales for the second quarter increased by 2.0% to EUR 75.6   
million (EUR 74.1 million). Operating profit was EUR 10.1 million (EUR 10.9     
million), and operating profit excluding non-recurring items was EUR 10.1       
million (EUR 10.9 million).                                                     

Net sales from domestic business grew somewhat from the previous year due to the
recovery of operating rates in the industry and the recovery of the             
construction. Waste volumes picked up from the comparison period, and secondary 
raw material demand and prices also improved. The additional costs arising from 
the ERP system implementation project taxed the quarter's performance.          

Demand for industrial process cleaning and hazardous waste services perked up as
expected after a period of sluggish demand in the first quarter. New agreements 
were signed with industrial clients and existing agreements were renewed        
successfully.                                                                   

Operational reliability of L&T Recoil's production improved during the second   
quarter. The price of the plant's end-product, base oil, has been rising,       
following the crude oil price hikes. Nonetheless, operations made a loss in the 
second quarter.                                                                 

In April, Lassila & Tikanoja plc and EcoStream Oy signed a preliminary agreement
on a business arrangement based on which L&T will sell its share of L&T Recoil  
to EcoStream. At the end of the quarter, the time given for the transaction was 
extended and the arrangement is now intended to be completed by the end of      
September 2010, on condition that, among others, the financing and the share    
issue needed by EcoStream for the transaction will be completed. Due to the     
preliminary agreement, L&T Recoil's assets are recognised as held-for-sale      
assets and related liabilities.                                                 

Net sales and profitability of the division's international operations remained 
on the previous year's level.                                                   

January-June                                                                    
The net sales of Environmental Services for January-June decreased by 0.5% to   
EUR 140.2 million (EUR 141.0 million). Operating profit was EUR 14.5 million    
(EUR 17.4 million), and operating profit excluding non-recurring items was EUR  
14.9 million (EUR 18.4 million).                                                

The expected increase in waste volumes in the first half could be attributed to 
the recovery of operating rates in the industry and the recovery of the         
construction industry. Similarly, secondary raw material demand and prices      
strengthened in comparison to the previous year. Heavy snowfall in the winter   
strained waste management production efficiency in the first half, and          
contributed to the decrease in demand for industrial services. Net sales and    
profitability in the comparison period were boosted by major project-based      
assignments.                                                                    

The joint venture L&T Recoil's re-refinery suffered from technical problems in  
the first half. Production restart-up was delayed until the beginning of the    
second quarter, which had a considerable negative impact on the division's      
profitability.                                                                  

The second stage of the Kerava recycling plant's investment programme proceeded 
as planned. A new combined recycling plant for construction waste and trade and 
industrial waste will be brought on line in the second half of the year, which  
will significantly raise the recovery rate of the waste processed at the Kerava 
plant.                                                                          

Net sales and profitability for international operations remained at the        
previous year's level even though the uncertainty of the Latvian economy has    
been a challenge for business development.                                      

Net sales and profitability for environmental products declined.                


Property and Office Support Services                                            

Second quarter                                                                  
The net sales of Property and Office Support Services (property maintenance and 
cleaning services) grew by 5.3% to EUR 63.7 million (EUR 60.5 million) in the   
second quarter. Operating profit was EUR 3.3 million (EUR 4.3 million), and     
operating profit excluding non-recurring items was EUR 3.3 million (EUR 4.3     
million).                                                                       

The division's net sales growth could be attributed to successful sales of      
commissioned property maintenance assignments and to the great work load in     
damage repair services. Net sales from cleaning services in Finland remained at 
the previous year's level. Although operating profit from domestic operations   
fell due to the higher cost of subcontracting, a strict fixed cost control      
helped retain healthy profitability.                                            

Net sales from international operations remained at the previous year's level   
but overall result was slightly in the red. New sales were successful in Sweden 
but in Latvia the economic instability hampered new sales.                      

January-June                                                                    
The January-June net sales of Property and Office Support Services totalled EUR 
135.2 million (EUR 121.7 million); an increase of 11.1%. Operating profit was   
EUR 7.1 million (EUR 7.7 million), and operating profit excluding non-recurring 
items was EUR 7.4 million (EUR 7.9 million).                                    

The division's net sales growth can almost entirely be attributed to the large  
number of commissioned property maintenance assignments, due to the             
exceptionally cold and snowy winter. Both product lines were able to renew their
contracts and new partnerships with insurance companies were signed. In domestic
operations, profitability was slightly lower than in the comparison period due  
to the additional costs associated with commissioned assignments.               

Net sales from international operations in the first half were at the comparison
period's level. New sales continued to be successful in Sweden in the second    
quarter. Nonetheless, the result from international operations was negative. An 
EUR 0.7 million credit loss was recognised for the first half in Russian        
operations.                                                                     


Renewable Energy Sources                                                        

Second quarter                                                                  
Second quarter net sales of Renewable Energy Sources (L&T Biowatti) were down by
17.7% to EUR 12.1 million (EUR 14.7 million). The division recorded an operating
loss of EUR 3.9 million (EUR 0.3 million), and an operating loss excluding      
non-recurring items of EUR 0.9 million (a profit of EUR 0.2 million).           

The division's net sales and profitability declined due to the weak demand for  
wood-based fuels. The low prices of competing fuels (peat, coal and oil) had a  
negative effect on demand. Furthermore, the prices of emission rights continued 
to be low.                                                                      

A decision was made to discontinue the wood pellet business due to the          
unfavourable market conditions and the poor availability of raw materials. A    
non-recurring expense of EUR 3.0 million was recognised for the discontinuation.

January-June                                                                    
The Renewable Energy Sources division's net sales for January-June amounted to  
EUR 32.2 million (EUR 35.8 million), showing a decrease of 9.9%. Operating loss 
totalled EUR 4.8 million (a profit of EUR 0.4 million), and operating loss      
excluding non-recurring items was EUR 1.7 million (a profit of EUR 0.8 million).

The demand for L&T Biowatti's biofuels and their competitiveness declined in the
first half due to the low prices of emission rights and fossil fuels (peat, coal
and oil). Profitability improvement has been the division's key priority.       


BREAKDOWN OF OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS                     

--------------------------------------------------------------------------------
| EUR million                   |   4-6/ |   4-6/ |   1-6/ |    1-6/ |   1-12/ |
|                               |   2010 |   2009 |   2010 |    2009 |    2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit              |    8.8 |   14.9 |   15.4 |    24.9 |    50.3 |
--------------------------------------------------------------------------------
| Non-recurring items:          |        |        |        |         |         |
--------------------------------------------------------------------------------
| Discontinuation of wood       |    3.0 |        |    3.0 |         |         |
| pellet production of L&T      |        |        |        |         |         |
| Biowatti                      |        |        |        |         |         |
--------------------------------------------------------------------------------
| Discontinuation of soil       |        |        |        |         |    -0.4 |
| washing services              |        |        |        |         |         |
--------------------------------------------------------------------------------
| Restructuring costs           |        |        |    1.2 |     1.2 |     1.6 |
--------------------------------------------------------------------------------
| Closure of wood pellet plant  |        |    0.4 |        |     0.4 |     0.3 |
| in Luumäki                    |        |        |        |         |         |
--------------------------------------------------------------------------------
| Refund of supplementary       |        |   -0.5 |        |    -0.5 |    -0.5 |
| insurance fund of former      |        |        |        |         |         |
| Lassila & Tikanoja            |        |        |        |         |         |
--------------------------------------------------------------------------------
| Operating profit excluding    |   11.8 |   14.8 |   19.6 |    26.0 |    51.3 |
| non-recurring items           |        |        |        |         |         |
--------------------------------------------------------------------------------


FINANCING                                                                       

Cash flows from operating activities amounted to EUR 30.4 million (EUR 36.2     
million). EUR 2.1 million was released from the working capital (EUR 2.3 million
tied up). Liquid assets at the end of the period amounted to EUR 14.4 million   
(EUR 23.4 million).                                                             

The assets and liabilities of the joint venture L&T Recoil are presented as     
held-for-sale assets and related liabilities, which is why interest-bearing     
liabilities fell to EUR 112.6 million (EUR 152.8 million). The interest-bearing 
liabilities associated with L&T Recoil amounted to EUR 20.9 million and are not 
included in the interest-bearing liabilities referred to above. The equity ratio
was 43.8% (41.6%) and the gearing rate 47.5 (64.9). Net interest-bearing        
liabilities amounted to EUR 98.2 million, showing a decrease of EUR 31.2 million
from the comparison period and EUR 18.1 million from the turn of the year.      
Of the EUR 50 million commercial paper programme, EUR 4.0 million (EUR 0.0      
million) was in use. The EUR 15.0 million committed limit, renewed in June for  
two years, was not in use, as was the case a year earlier.                      

Net finance costs in January-June amounted to EUR 2.0 million which is EUR 0.9  
million below the amount of the comparison period. Net finance costs were 0.7%  
(1.0%) of net sales. The decrease resulted from the decrease in the             
interest-bearing liabilities and the decline in the interest rate level. In     
January-June, a total of EUR -0.2 million (EUR -0.3 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.

The average interest rate of loans (with interest rate hedging) was 3.3%.       
Long-term loans totalling EUR 10.1 million will mature by the end of the year.  


DIVIDEND                                                                        

The Annual General Meeting held on 31 March 2010 resolved on a dividend of EUR  
0.55 per share. The dividend, totalling EUR 21.3 million, was paid to the       
shareholders on 14 April 2010.                                                  


CAPITAL EXPENDITURE                                                             

Capital expenditure totalled EUR 16.1 million (EUR 24.5 million) in             
January-June. The most significant construction project is the Kerava combined  
recycling plant, which is scheduled to be completed in autumn 2010.             

In the second quarter, the property maintenance services business of            
Kiinteistöpalvelu Oy Hollola was acquired into Property and Office Support      
Services. The net sales of the acquired business totalled EUR 1.6 million.      


PERSONNEL                                                                       

In January-June, the average number of employees converted into full-time       
equivalents was 7,522 (8,039). The total number of full-time and part-time      
employees at the end of the period was 9,420 (9,524). Of them 7,496 (7,409)     
people worked in Finland and 1,924 (2,115) people in other countries.           


NEW DIVISIONS                                                                   

The company's internal reporting, as well as the segments reported externally,  
were changed to reflect the new divisions at the beginning of 2010. The         
financial reporting segments are Environmental Services, Property and Office    
Support Services and Renewable Energy Sources (L&T Biowatti).                   

As of 1 July 2010, Property and Office Support Services was divided into two    
divisions: Property Maintenance, and Cleaning and Office Support Services. The  
company's financial reporting segments reflect the new divisions as of 1 July   
2010.                                                                           


SHARE AND SHARE CAPITAL                                                         

Traded volume and price                                                         
The volume of trading excluding the shares held by the company in Lassila &     
Tikanoja plc shares on NASDAQ OMX Helsinki from January through June 2010 was   
3,392,446, which is 8.8% (17.2%) of the average number of outstanding shares.   
The value of trading was EUR 50.8 million (EUR 74.6 million). The trading price 
varied between EUR 12.94 and EUR 16.20. The closing price was EUR 13.20. The    
company holds 60,758 own shares. The market capitalisation excluding the shares 
held by the company was EUR 511.3 million (EUR 496.2 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 outstanding shares to 38,738,116 shares. In January-June, the average number 
of shares excluding the shares held by the company totalled 38,759,356.         

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, 37 key persons held 200,000 2005C options. L&T Advance Oy, a   
wholly-owned subsidiary of Lassila & Tikanoja plc, holds 30,000 2005C options   
and these options will not be exercised. The exercise period for the 2005A has  
ended on 29 May 2009 and for the 2005B options on 31 May 2010.                  

The exercise price for the 2005C options is EUR 26.87. The exercise period for  
2005C options is 2 November 2009 to 31 May 2011.                                

As a result of the exercise of the outstanding 2005 share options, the number of
shares may increase by a maximum of 200,000 new shares, which is 0.5% of the    
current number of shares. The 2005C options have been listed on NASDAQ OMX      
Helsinki since 2 November 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. 36 key persons hold 193,000  
options and L&T Advance Oy 37,000 options.                                      
The exercise price 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 193,000 new shares, which is 0.5% of the current number of shares.   

Share-based incentive programme                                                 
Lassila & Tikanoja plc's Board of Directors decided 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. Rewards to be paid for the year 2010 will be based on the EVA 
result of Lassila & Tikanoja group. They will be paid partly as shares and      
partly in cash. The proportion paid in cash will cover taxes arising from the   
reward. The programme covers 25 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 8,439 (6,927) shareholders. 
Nominee-registered holdings accounted for 10.3% (8.8%) of the total number of   
shares.                                                                         

Authorisation for the Board of Directors                                        
The Annual General Meeting held on 31 March 2010 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. These authorisations revoke the authorisation for 
the repurchase of the company's own shares and the authorisation to issue shares
issued by the Annual General Meeting 2009.                                      

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

Own shares                                                                      
At the end of the period, the company held 60,758 of its own shares,            
representing 0.2% of all shares and votes. Based on the authorisation given by  
the Annual General Meeting, the company repurchased 80,000 shares in the period 
from 17 May to 2 June 2010 at a total acquisition cost of EUR 1.1 million. On 25
May 2010, the Board of Directors decided on a directed bonus issue involving the
issue, in which a total of 49,242 shares held by the company were issued to the 
company's key personnel on 4 June 2010, as a part of the rewards for the year   
2009 of the share-based incentive programme.                                    


RESOLUTIONS BY THE ANNUAL GENERAL MEETING                                       

The Annual General Meeting of Lassila & Tikanoja plc, which was held on 31 March
2010, adopted the financial statements for the financial year 2009 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 2009. The    
dividend payment date was resolved to be 14 April 2010.                         

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, 
Hille Korhonen and Juhani Lassila. Miikka Maijala was elected as a new member   
for the same term.                                                              

PricewaterhouseCoopers Oy, Authorised Public Accountants, were elected auditors.

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 31 March 2010.                                        


BOARD OF DIRECTORS                                                              

The members of the Board of Directors are Heikki Bergholm, Eero Hautaniemi,     
Matti Kavetvuo, Hille Korhonen, Juhani Lassila and Miikka Maijala. In its       
constitutive meeting the Board elected Matti Kavetvuo as Chairman of the Board  
and Juhani Lassila as Vice Chairman.                                            

From among its members, the Board elected Juhani Lassila as Chairman and Eero   
Hautaniemi and Miikka Maijala as members of the audit committee.                

The Board decided to establish a remuneration committee. From among its members,
the Board elected Matti Kavetvuo as Chairman and Heikki Bergholm and Hille      
Korhonen as members of the remuneration committee.                              


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

In a release published on 25 January 2010, the company announced that it has    
concluded statutory employer-employee negotiations which began on 8 December    
2009. As a result of these negotiations, L&T will reduce 110 salaried employee  
positions in Finland. The reductions will be realised partly through natural    
attrition. The reductions form part of the measures currently undertaken in     
order to reduce fixed costs and to adapt business activities to meet current and
future market situation.                                                        

In a release published on 1 April 2010, the company announced that, as of 1 July
2010, Property and Office Support Services are to be divided into two divisions:
Property Maintenance, and Cleaning and Office Support Services. The company's   
financial reporting segments will be changed to reflect the new divisions as of 
1 July 2010.                                                                    

In a release published on 29 April 2010, the company announced that Lassila &   
Tikanoja plc and EcoStream Oy have signed a preliminary agreement on a business 
arrangement based on which Lassila & Tikanoja will sell its 50 percent holding  
in the joint venture L&T Recoil Oy to EcoStream, a co-owner. The transaction    
related to the preliminary agreement was intended to be completed by the end of 
June 2010. In a release published on 22 June 2010, the company announced that   
the time given to the transaction has been extended and the transaction is      
intended to be completed by the end of September 2010.                          

In a release published on 26 May 2010, the company announced that L&T Biowatti  
Oy, a subsidiary of Lassila & Tikanoja plc, will discontinue its wood pellet    
business. Construction of a pellet plant in Suonenjoki, Finland, is almost      
completed but market situation and difficulties in availability of suitable raw 
material have postponed the start-up of the plant. The construction of the plant
will not be completed.                                                          


NEAR-TERM UNCERTAINTIES                                                         

In Property and Office Support Services, the number of commissioned assignments 
may fall despite the economic recovery. Rapid fluctuations in demand for        
services purchased by the industry may hamper the planning and implementation of
work.                                                                           

If the operating rate target set for L&T Recoil's production is not reached,    
this will have a negative impact on the Environmental Services division's       
performance. Its performance could also be adversely affected by the potential  
fall in the price of crude oil, since the price of base oil follows crude oil   
price developments with a slight delay.                                         

Low prices of fossil fuels such as coal, oil and peat undermines the            
competitiveness of L&T Biowatti's wood-based fuels. Similarly, the low wholesale
price of electricity and low price of emission rights will weaken demand.       

Intensifying competition and changes in legislation in Latvia may prove         
detrimental to the profitability of the waste management business.              

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


PROSPECTS FOR THE REST OF THE YEAR                                              

In the Environmental Services division, the market outlook for waste management 
and recycling services for the rest of the year has improved. Waste volumes are 
expected to grow. The demand for secondary raw materials and the market prices  
are expected to recover moderately. In light of the rising operating rates in   
the industry, it is fair to assume that the demand for hazardous waste and      
process cleaning services will grow.                                            

An approximately one-month maintenance shut-down at the joint venture L&T       
Recoil's plant scheduled to start in August will improve the plant's reliability
and raise the degree of processing. The plant was not yet in operation in the   
second half last year, and the joint venture recorded significant losses.       
                                                                                
The markets for Property and Office Support Services are expected to remain     
unchanged towards the year-end. However, in the current economic conditions the 
competitive situation will remain fierce.                                       

The demand for L&T Biowatti's wood-based fuels is estimated to remain weak.     
Furthermore, low prices of emission rights and fossil fuels will undermine the  
competitiveness of renewable fuels. While the planned government support        
measures to increase the use of renewable fuels are expected to have a positive 
impact in the long term, they will not affect this year's performance.          

Full-year net sales and operating profit excluding non-recurring items are      
expected to remain at the same level as in 2009.                                


CONDENSED FINANCIAL STATEMENTS 1 JANUARY - 30 JUNE 2010                         


CONSOLIDATED INCOME STATEMENT                                                   

--------------------------------------------------------------------------------
| EUR 1000                 |   4-6/ |     4-6/ |     1-6/ |     1-6/ |  1-12/  |
|                          |      2 |     2009 |     2010 |     2009 |    2009 |
|                          |    010 |          |          |          |         |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales                |    149 |  147 094 |  302 916 |  293 526 | 582 306 |
|                          |    014 |          |          |          |         |
--------------------------------------------------------------------------------
| Cost of sales            |   -131 | -126 049 | -271 068 | -255 279 |    -505 |
|                          |    123 |          |          |          |     699 |
--------------------------------------------------------------------------------
| Gross profit             | 17 891 |   21 045 |   31 848 |   38 247 |  76 607 |
--------------------------------------------------------------------------------
| Other operating income   |    703 |      993 |    1 021 |    1 344 |   2 425 |
--------------------------------------------------------------------------------
| Selling and marketing    | -3 470 |   -3 697 |   -6 939 |   -7 766 | -14 636 |
| costs                    |        |          |          |          |         |
--------------------------------------------------------------------------------
| Administrative expenses  | -2 888 |   -2 851 |   -5 943 |   -5 532 | -11 705 |
--------------------------------------------------------------------------------
| Other operating expenses |   -849 |     -624 |   -1 964 |   -1 442 |  -2 427 |
--------------------------------------------------------------------------------
| Impairment               | -2 632 |          |   -2 632 |          |         |
--------------------------------------------------------------------------------
| Operating profit         |  8 755 |   14 866 |   15 391 |   24 851 |  50 264 |
--------------------------------------------------------------------------------
| Finance income           |    310 |      418 |      648 |      829 |   1 290 |
--------------------------------------------------------------------------------
| Finance costs            | -1 227 |   -1 651 |   -2 618 |   -3 747 |  -6 528 |
--------------------------------------------------------------------------------
| Profit before tax        |  7 838 |   13 633 |   13 421 |   21 933 |  45 026 |
--------------------------------------------------------------------------------
| Income tax expense       | -2 105 |   -3 612 |   -3 557 |   -5 812 | -11 881 |
--------------------------------------------------------------------------------
| Profit for the period    |  5 733 |   10 021 |    9 864 |   16 121 |  33 145 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to:         |        |          |          |          |         |
--------------------------------------------------------------------------------
| Equity holders of the    |  5 726 |   10 016 |    9 853 |   16 120 |  33 140 |
| company                  |        |          |          |          |         |
--------------------------------------------------------------------------------
| Minority interest        |      7 |        5 |       11 |        1 |       5 |
--------------------------------------------------------------------------------

Earnings per share for profit attributable to the equity holders of the company:
--------------------------------------------------------------------------------
| Basic earnings per share, |  0.14 |     0.26 |     0.25 |     0.42 |    0.85 |
| EUR                       |       |          |          |          |         |
--------------------------------------------------------------------------------
| Diluted earnings per      |  0.14 |     0.26 |     0.25 |     0.42 |    0.85 |
| share, EUR                |       |          |          |          |         |
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                                  

--------------------------------------------------------------------------------
| EUR 1000                        |  4-6/ |  4-6/ |    1-6/ |    1-6/ |  1-12/ |
|                                 |  2010 |  2009 |    2010 |    2009 |   2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period           | 5 733 |    10 |   9 864 |  16 121 | 33 145 |
|                                 |       |   021 |         |         |        |
--------------------------------------------------------------------------------
| Other comprehensive income,     |       |       |         |         |        |
| after tax                       |       |       |         |         |        |
--------------------------------------------------------------------------------
| Hedging reserve, change in fair |   -31 |    99 |    -226 |    -335 |   -343 |
| value                           |       |       |         |         |        |
--------------------------------------------------------------------------------
| Current available-for-sale      |       |       |         |         |        |
| investments                     |       |       |         |         |        |
--------------------------------------------------------------------------------
| Gains in the period             |   -56 |   -80 |     -56 |      -7 |    -21 |
--------------------------------------------------------------------------------
| Current available-for-sale      |   -56 |   -80 |     -56 |      -7 |    -21 |
| investments                     |       |       |         |         |        |
--------------------------------------------------------------------------------
| Currency translation            |   345 |   287 |   1 152 |     -22 |    324 |
| differences                     |       |       |         |         |        |
--------------------------------------------------------------------------------
| Other comprehensive income,     |   258 |   306 |     870 |    -364 |    -40 |
| after tax                       |       |       |         |         |        |
--------------------------------------------------------------------------------
| Total comprehensive income,     | 5 991 |    10 |  10 734 |  15 757 | 33 105 |
| after tax                       |       |   327 |         |         |        |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to:                                                             |
--------------------------------------------------------------------------------
| Equity holders of the company   | 5 974 |    10 |  10 691 |  15 766 | 33 020 |
|                                 |       |   318 |         |         |        |
--------------------------------------------------------------------------------
| Minority interest               |    17 |     9 |      43 |      -9 |     85 |
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF FINANCIAL POSITION                                    
--------------------------------------------------------------------------------
| EUR 1000                                   |   6/2010 |   6/2009 |   12/2009 |
--------------------------------------------------------------------------------
|                                            |          |          |           |
--------------------------------------------------------------------------------
| ASSETS                                     |          |          |           |
--------------------------------------------------------------------------------
|                                            |          |          |           |
--------------------------------------------------------------------------------
| Non-current assets                         |          |          |           |
--------------------------------------------------------------------------------
| Intangible assets                          |          |          |           |
--------------------------------------------------------------------------------
| Goodwill                                   |  112 768 |  115 495 |   113 771 |
--------------------------------------------------------------------------------
| Customer contracts arising from            |    5 499 |    6 454 |     6 232 |
| acquisitions                               |          |          |           |
--------------------------------------------------------------------------------
| Agreements on prohibition of competition   |   10 766 |   12 250 |    11 641 |
--------------------------------------------------------------------------------
| Other intangible assets arising from       |    2 212 |    4 188 |     3 194 |
| business acquisitions                      |          |          |           |
--------------------------------------------------------------------------------
| Other intangible assets                    |   11 694 |   13 218 |    13 579 |
--------------------------------------------------------------------------------
|                                            |  142 939 |  151 605 |   148 417 |
--------------------------------------------------------------------------------
| Property, plant and equipment              |          |          |           |
--------------------------------------------------------------------------------
| Land                                       |    4 356 |    4 015 |     4 015 |
--------------------------------------------------------------------------------
| Buildings and constructions                |   43 698 |   61 872 |    72 072 |
--------------------------------------------------------------------------------
| Machinery and equipment                    |  105 882 |  114 982 |   110 817 |
--------------------------------------------------------------------------------
| Other                                      |       83 |       79 |        81 |
--------------------------------------------------------------------------------
| Prepayments and construction in progress   |   14 741 |   20 303 |    14 666 |
--------------------------------------------------------------------------------
|                                            |  168 760 |  201 251 |   201 651 |
--------------------------------------------------------------------------------
| Other non-current assets                   |          |          |           |
--------------------------------------------------------------------------------
| Available-for-sale investments             |      525 |      522 |       525 |
--------------------------------------------------------------------------------
| Finance lease receivables                  |    3 992 |    4 859 |     4 425 |
--------------------------------------------------------------------------------
| Deferred tax assets                        |    2 663 |    1 376 |     2 147 |
--------------------------------------------------------------------------------
| Other receivables                          |      527 |      705 |       726 |
--------------------------------------------------------------------------------
|                                            |    7 707 |    7 462 |     7 823 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total non-current assets                   |  319 406 |  360 318 |   357 891 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets                             |          |          |           |
--------------------------------------------------------------------------------
| Inventories                                |   23 492 |   21 894 |    32 842 |
--------------------------------------------------------------------------------
| Trade and other receivables                |   81 623 |   76 039 |    77 702 |
--------------------------------------------------------------------------------
| Prepayments                                |    2 050 |    1 873 |       370 |
--------------------------------------------------------------------------------
| Available-for-sale investments             |    5 995 |   16 477 |    18 484 |
--------------------------------------------------------------------------------
| Cash and cash equivalents                  |    8 446 |    6 943 |     9 099 |
--------------------------------------------------------------------------------
| Assets held for sale                       |   34 612 |          |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total current assets                       |  156 218 |  123 226 |   138 497 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS                               |  475 624 |  483 544 |   496 388 |
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
| EUR 1000                                  |   6/2010 |    6/2009 |   12/2009 |
--------------------------------------------------------------------------------
|                                           |          |           |           |
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES                    |          |           |           |
--------------------------------------------------------------------------------
|                                           |          |           |           |
--------------------------------------------------------------------------------
| Equity                                    |          |           |           |
--------------------------------------------------------------------------------
| Equity attributable to equity holders of  |          |           |           |
| the company                               |          |           |           |
--------------------------------------------------------------------------------
| Share capital                             |   19 399 |    19 399 |    19 399 |
--------------------------------------------------------------------------------
| Share premium reserve                     |   50 673 |    50 673 |    50 673 |
--------------------------------------------------------------------------------
| Other reserves                            |   -2 246 |    -3 319 |    -3 084 |
--------------------------------------------------------------------------------
| Retained earnings                         |  128 545 |   116 515 |   116 874 |
--------------------------------------------------------------------------------
| Profit for the period                     |    9 853 |    16 120 |    33 140 |
--------------------------------------------------------------------------------
|                                           |  206 224 |   199 388 |   217 002 |
--------------------------------------------------------------------------------
| Minority interest                         |      290 |       153 |       247 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity                              |  206 514 |   199 541 |   217 249 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities                               |          |           |           |
--------------------------------------------------------------------------------
| Non-current liabilities                   |          |           |           |
--------------------------------------------------------------------------------
| Deferred tax liabilities                  |   32 723 |    32 660 |    33 622 |
--------------------------------------------------------------------------------
| Retirement benefit obligations            |      610 |       680 |       671 |
--------------------------------------------------------------------------------
| Provisions                                |    2 493 |     1 993 |     2 100 |
--------------------------------------------------------------------------------
| Borrowings                                |   90 011 |   116 181 |   120 969 |
--------------------------------------------------------------------------------
| Other liabilities                         |    1 948 |     1 340 |     1 510 |
--------------------------------------------------------------------------------
|                                           |  127 785 |   152 854 |   158 872 |
--------------------------------------------------------------------------------
| Current liabilities                       |          |           |           |
--------------------------------------------------------------------------------
| Borrowings                                |   22 610 |    36 666 |    22 890 |
--------------------------------------------------------------------------------
| Trade and other payables                  |   91 115 |    91 864 |    94 130 |
--------------------------------------------------------------------------------
| Derivative liabilities                    |    1 204 |     1 066 |     1 073 |
--------------------------------------------------------------------------------
| Tax liabilities                           |       22 |     1 242 |     2 119 |
--------------------------------------------------------------------------------
| Provisions                                |      134 |       311 |        55 |
--------------------------------------------------------------------------------
| Liabilities related to assets held for    |   26 240 |           |           |
| sale                                      |          |           |           |
--------------------------------------------------------------------------------
|                                           |  141 325 |   131 149 |   120 267 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities                         |  269 110 |   284 003 |   279 139 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES              |  475 624 |   483 544 |   496 388 |
--------------------------------------------------------------------------------

                                                                                
CONSOLIDATED STATEMENT OF CASH FLOWS                                            

--------------------------------------------------------------------------------
| EUR 1000                                  |   6/2010 |    6/2009 |   12/2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from operating activities      |          |           |           |
--------------------------------------------------------------------------------
| Profit for the period                     |    9 864 |    16 121 |    33 145 |
--------------------------------------------------------------------------------
| Adjustments                               |          |           |           |
--------------------------------------------------------------------------------
| Income tax expense                        |    3 557 |     5 812 |    11 881 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and impairment |   23 022 |    19 815 |    40 334 |
--------------------------------------------------------------------------------
| Finance income and costs                  |    1 970 |     2 918 |     5 238 |
--------------------------------------------------------------------------------
| Gain on sale of shares                    |          |           |       -70 |
--------------------------------------------------------------------------------
| Other                                     |      159 |       258 |     1 809 |
--------------------------------------------------------------------------------
| Net cash generated from operating         |   38 572 |    44 924 |    92 337 |
| activities before change in working       |          |           |           |
| capital                                   |          |           |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in working capital                 |          |           |           |
--------------------------------------------------------------------------------
| Change in trade and other receivables     |   -3 101 |    -4 327 |    -4 654 |
--------------------------------------------------------------------------------
| Change in inventories                     |    5 735 |    -3 074 |   -14 022 |
--------------------------------------------------------------------------------
| Change in trade and other payables        |     -508 |     5 065 |     6 689 |
--------------------------------------------------------------------------------
| Change in working capital                 |    2 126 |    -2 336 |   -11 987 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest paid                             |   -1 667 |    -4 074 |    -7 511 |
--------------------------------------------------------------------------------
| Interest received                         |      479 |     1 035 |     1 505 |
--------------------------------------------------------------------------------
| Income tax paid                           |   -9 073 |    -3 363 |    -8 156 |
--------------------------------------------------------------------------------
| Net cash from operating activities        |   30 437 |    36 186 |    66 188 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from investing activities      |          |           |           |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries and           |     -723 |      -320 |    -1 747 |
| businesses, net of cash acquired          |          |           |           |
--------------------------------------------------------------------------------
| Proceeds from sale of subsidiaries and    |          |       197 |       197 |
| businesses, net of sold cash              |          |           |           |
--------------------------------------------------------------------------------
| Purchases of property, plant and          |  -13 405 |   -24 530 |   -42 735 |
| equipment and intangible assets           |          |           |           |
--------------------------------------------------------------------------------
| Proceeds from sale of property, plant and |      688 |     1 196 |     4 328 |
| equipment and intangible assets           |          |           |           |
--------------------------------------------------------------------------------
| Purchases of available-for-sale           |       -3 |       -48 |       -54 |
| investments                               |          |           |           |
--------------------------------------------------------------------------------
| Change in other non-current receivables   |      202 |       -12 |       -13 |
--------------------------------------------------------------------------------
| Proceeds from sale of available-for-sale  |          |        25 |         7 |
| investments                               |          |           |           |
--------------------------------------------------------------------------------
| Dividends received                        |          |         1 |         1 |
--------------------------------------------------------------------------------
| Net cash used in investing activities     |  -13 241 |   -23 491 |   -40 016 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from financing activities      |          |           |           |
--------------------------------------------------------------------------------
| Change in short-term borrowings           |    4 230 |     3 441 |   -12 044 |
--------------------------------------------------------------------------------
| Proceeds from long-term borrowings        |          |    24 000 |    43 000 |
--------------------------------------------------------------------------------
| Repayments of long-term borrowings        |  -12 411 |   -21 511 |   -34 388 |
--------------------------------------------------------------------------------
| Dividends paid                            |  -21 301 |   -21 318 |   -21 318 |
--------------------------------------------------------------------------------
| Repurchase of own shares                  |   -1 125 |      -356 |      -356 |
--------------------------------------------------------------------------------
| Net cash generated from financing         |  -30 607 |   -15 744 |   -25 106 |
| activities                                |          |           |           |
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
| EUR 1000                                   |    6/2010 |   6/2009 |  12/2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net change in liquid assets                |   -13 411 |   -3 049 |    1 066 |
--------------------------------------------------------------------------------
| Liquid assets at beginning of period       |    27 583 |   26 517 |   26 517 |
--------------------------------------------------------------------------------
| Effect of changes in foreign exchange      |       272 |      -38 |       28 |
| rates                                      |           |          |          |
--------------------------------------------------------------------------------
| Change in fair value of current            |           |      -10 |      -28 |
| available-for-sale investments             |           |          |          |
--------------------------------------------------------------------------------
| Liquid assets at end of period             |    14 444 |   23 420 |   27 583 |
--------------------------------------------------------------------------------

Liquid assets                                                                   
--------------------------------------------------------------------------------
| EUR 1000                                   |    6/2010 |   6/2009 |  12/2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents                  |     8 449 |    6 943 |    9 099 |
---------------------------------------