LASSILA & TIKANOJA PLC INTERIM REPORT 26 October 2010 8.00 am
LASSILA & TIKANOJA PLC INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2010
- Net sales for the third quarter EUR 143.8 million (EUR 140.7 million);
operating profit EUR 16.3 million (EUR 16.9 million); operating profit excluding
non-recurring items EUR 16.8 million (EUR 16.6 million); earnings per share EUR
0.28 (EUR 0.30)
- Net sales for January-September EUR 446.7 million (EUR 434.3 million);
operating profit EUR 31.7 million (EUR 41.8 million); operating profit excluding
non-recurring items EUR 36.4 million (EUR 42.6 million); earnings per share EUR
0.54 (EUR 0.71)
- Revised prospects: Full-year net sales are expected to remain at the same
level as in 2009. Operating profit excluding non recurring items is expected to
be slightly lower than in 2009.
GROUP NET SALES AND FINANCIAL PERFORMANCE
Third quarter
Lassila & Tikanoja's net sales for the third quarter increased by 2.2% to EUR
143.8 million (EUR 140.7 million). Operating profit was EUR 16.3 million (EUR
16.9 million), representing 11.3% (12.0%) of net sales. Operating profit
excluding non-recurring items was EUR 16.8 million (EUR 16.6 million). Earnings
per share were EUR 0.28 (EUR 0.30).
The increase in net sales from the comparison period's level could be attributed
to the rise in the Environmental Services division's industrial clients'
operating rates and successful sales work in Property Maintenance. Meanwhile net
sales of Renewable Energy Sources (L&T Biowatti) were clearly below the previous
year's level.
The result for the quarter remained at the previous year's level even though
profitability was taxed by the weak demand for wood-based fuels and the
higher-than-expected costs arising from the start-up of a new production line at
the Kerava recycling plant.
January-September
Nine-month net sales came to EUR 446.7 million (EUR 434.3 million), showing an
increase of 2.9%. Operating profit was EUR 31.7 million (EUR 41.8 million),
representing 7.1% (9.6%) of net sales. Operating profit excluding non-recurring
items fell to EUR 36.4 million (EUR 42.6 million). Earnings per share were EUR
0.54 (EUR 0.71).
An increase in commissioned and contract assignments in property maintenance
boosted net sales. The demand for Environmental Services picked up particularly
in the third quarter. Meanwhile net sales of Renewable Energy Sources (L&T
Biowatti) were clearly below the previous year's level.
The losses recorded by L&T Biowatti and the operating profit of Environmental
Services, which was smaller than a year earlier, taxed the performance in
January-September. In the comparison period, a large hazardous waste service
contract improved the operating profit recorded by Environmental Services.
Costs recognised in the first half included non-recurring restructuring costs of
EUR 1.5 million and the EUR 3.0 million cost item associated with the
discontinuation of the wood pellet business.
FINANCIAL SUMMARY
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| | 7-9/ | 7-9/ | Chang | 1-9/ | 1-9/ | Change | 1-12/ |
| | 2010 | 2009 | e | 2010 | 2009 | % | 2009 |
| | | | % | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales, EUR million | 143. | 140. | 2.2 | 446. | 434.3 | 2.9 | 582.3 |
| | 8 | 7 | | 7 | | | |
--------------------------------------------------------------------------------
| Operating profit | 16.8 | 16.6 | 1.4 | 36.4 | 42.6 | -14.5 | 51.3 |
| excluding | | | | | | | |
| non-recurring items, | | | | | | | |
| EUR million* | | | | | | | |
--------------------------------------------------------------------------------
| Operating profit, EUR | 16.3 | 16.9 | -3.7 | 31.7 | 41.8 | -24.2 | 50.3 |
| million | | | | | | | |
--------------------------------------------------------------------------------
| Operating margin, % | 11.3 | 12.0 | | 7.1 | 9.6 | | 8.6 |
--------------------------------------------------------------------------------
| Profit before tax, EUR | 15.0 | 15.7 | -4.2 | 28.4 | 37.6 | -24.4 | 45.0 |
| million | | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | 0.28 | 0.30 | -6.7 | 0.54 | 0.71 | -23.9 | 0.85 |
| EUR | | | | | | | |
--------------------------------------------------------------------------------
| EVA, EUR million | 8.8 | 8.2 | 7.3 | 8.9 | 16.6 | -46.4 | 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
Third quarter
The division's net sales for the third quarter increased by 5.2% to EUR 75.8
million (EUR 72.1 million). The operating profit was EUR 10.9 million (EUR 11.8
million), and operating profit excluding non-recurring items was EUR 10.9
million (EUR 11.5 million).
Net sales from domestic business grew from the previous year's level, thanks to
the recovery of operating rates in the industry and of the secondary raw
materials markets. Demand for industrial process cleaning and hazardous waste
services improved as a result of maintenance-related shutdowns in the industry
that were more extensive than expected, which, however, increased subcontracting
costs.
The division's profitability was negatively affected by the higher-than-expected
costs arising from the start-up of the new production line at the Kerava
recycling plant. The plant has been completed and is expected to be in
production use by the end of the year, which will significantly increase the
recovery rate for the trade and industry waste processed at the plant.
The result of joint venture L&T Recoil was significantly in the red because of
an investment shutdown conducted to improve operations' reliability.
In early October, L&T announced the cancellation of a preliminary business
rearrangement agreement between Lassila & Tikanoja plc and EcoStream Oy due to
EcoStream Oy's inability to complete the financing arrangements as agreed in the
preliminary agreement. Nevertheless, the companies will continue to work
together to develop the business.
Both the division's net sales from international operations and profitability
remained at the previous year's level.
January-September
Environmental Services net sales for January-September grew by 1.4% to EUR 216.0
million (EUR 213.0 million). The operating profit was EUR 25.5 million (EUR 29.2
million), and operating profit excluding non-recurring items was EUR 25.8
million (EUR 29.8 million).
Waste volumes grew, thanks to the recovery of industrial operations and
construction. Similarly, secondary raw material demand and prices improved from
the previous year's levels. Demand for process cleaning and hazardous waste
services perked up after a time of sluggish demand in the first half, and
partnership agreements were renewed with industrial clients.
Heavy snowfall in the winter strained the production efficiency of waste
management in the first half and affected the demand for industrial services.
Net sales and profitability in the comparison period were boosted by major
project-based assignments.
Joint venture L&T Recoil's re-refinery experienced some technical problems in
the first half, and an investment shutdown was carried out at the plant in
August-September. Because of the interruptions to production, L&T Recoil's
January-September result was clearly negative. However, the quality of the end
product has been good and the price has gone up.
Net sales for international operations remained at the previous year's level and
profitability improved, even though the challenging market conditions in Latvia
have held back business development.
Net sales and profitability for environmental products remained at the previous
year's level.
Cleaning and Office Support Services
Third quarter
The Cleaning and Office Support Services division's net sales for the third
quarter fell by 1.9% to EUR 35.7 million (EUR 36.3 million). The operating
profit was EUR 4.1 million (EUR 4.1 million), and operating profit excluding
non-recurring items was EUR 4.3 million (EUR 4.1 million).
Net sales for domestic operations fell slightly from the previous year's level,
but the volume of commissioned assignments was almost the same as a year
earlier. Profitability remained healthy, thanks to improved production
efficiency and measures to control fixed costs.
The result from international operations was positive, thanks to successful new
sales and commissioned assignments in Sweden. Meanwhile in Latvia, the
challenging market situation hampered operational development. The loss-making
cleaning business in Russia was divested at the end of the quarter.
January-September
The division's net sales for January-September fell by 1.4% to EUR 106.0 million
(EUR 107.6 million). The operating profit was EUR 7.3 million (EUR 8.6 million),
and operating profit excluding non-recurring items was EUR 7.7 million (EUR 8.8
million).
Net sales from Finnish operations declined slightly from the previous year's
figure as a result of continued market challenges. Despite fierce price
competition, commissioned assignments sold well. The division was able to retain
a healthy profit level.
Net sales from international operations were at the comparison period's level,
but the result continued to be negative. In Sweden, sales to new customers were
successful. A credit loss of EUR 0.7 million was recorded in Russia in the first
half, and the business was divested at the end of the period.
Property Maintenance
Third quarter
The division's net sales for the third quarter increased by 13.4% to EUR 26.9
million (EUR 23.7 million). The operating profit was EUR 3.3 million (EUR 3.2
million), and operating profit excluding non-recurring items was EUR 3.3 million
(EUR 3.2 million).
The division's net sales growth could be attributed to successful sales work and
to the larger order book for damage repair services. Operating profit remained
at the previous year's level.
January-September
Net sales of the division for January-September totalled EUR 91.9 million (EUR
74.3 million); an increase of 23.6%. The operating profit was EUR 7.1 million
(EUR 6.3 million), and operating profit excluding non-recurring items was EUR
7.2 million (EUR 6.4 million).
A larger contract portfolio and the commissioned assignments caused by the
exceptionally cold and snowy weather in the first half boosted the division's
net sales. The order book for damage repair services remained healthy throughout
the period. Service contracts were renewed, and new partnership agreements with
insurance companies were signed.
The heavy snowfall in the winter had a negative effect on sales margin, but the
operating profit improved thanks to growth in net sales and fixed cost
management.
Renewable Energy Sources
Third quarter
Third-quarter net sales for Renewable Energy Sources (L&T Biowatti) were down by
28.6% to EUR 7.6 million (EUR 10.7 million). The division recorded an operating
loss of EUR 1.4 million (EUR -1.0 million), and an operating loss excluding
non-recurring items of EUR 1.4 million (EUR -1.2 million).
The division's net sales declined as a result of the weak demand for wood-based
fuels. The low prices of fossil fuels and the warm autumn weakened demand.
January-September
The Renewable Energy Sources division's net sales for January-September amounted
to EUR 39.8 million (EUR 46.4 million); a decrease of 14.2%. The operating loss
was EUR 6.2 million (EUR -0.6 million), and the operating loss excluding
non-recurring items was EUR 3.2 million (EUR -0.3 million).
The demand for L&T Biowatti's biofuels and their competitiveness declined from
the comparison period because of the low prices of emission rights and fossil
fuels (peat, coal and oil).
A decision was made to discontinue the wood pellet business as a result of 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
in the second quarter.
BREAKDOWN OF OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS
--------------------------------------------------------------------------------
| EUR million | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ |
| | 2010 | 2009 | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit | 16.3 | 16.9 | 31.7 | 41.8 | 50.3 |
--------------------------------------------------------------------------------
| Non-recurring items: | | | | | |
--------------------------------------------------------------------------------
| Discontinuation of wood | | | 3.0 | | |
| pellet production of L&T | | | | | |
| Biowatti | | | | | |
--------------------------------------------------------------------------------
| Discontunuation of cleaning | 0.2 | | 0.2 | | |
| business in Moscow | | | | | |
--------------------------------------------------------------------------------
| Discontinuation of soil | | -0.4 | | -0.4 | -0.4 |
| washing services | | | | | |
--------------------------------------------------------------------------------
| Restructuring costs | 0.3 | 0.2 | 1.5 | 1.4 | 1.6 |
--------------------------------------------------------------------------------
| Closure of wood pellet plant | | -0.1 | | 0.3 | 0.3 |
| in Luumäki | | | | | |
--------------------------------------------------------------------------------
| Refund of supplementary | | | | -0.5 | -0.5 |
| insurance fund of former | | | | | |
| Lassila & Tikanoja | | | | | |
--------------------------------------------------------------------------------
| Operating profit excluding | 16.8 | 16.6 | 36.4 | 42.6 | 51.3 |
| non-recurring items | | | | | |
--------------------------------------------------------------------------------
FINANCING
Cash flows from operating activities amounted to EUR 42.9 million (EUR 45.9
million). EUR 8.2 million was tied up in the working capital (EUR 16.5 million).
At the end of the period, interest-bearing liabilities amounted to EUR 133.2
million (EUR 150.3 million). Net interest-bearing liabilities amounted to EUR
119.9 million, showing a decrease of EUR 9.4 million from the comparison period
and an increase of EUR 3.6 million from the turn of the year. The average
interest rate of loans (with interest rate hedging) was 3.2%. Long-term loans
totalling EUR 3.8 million will mature by the end of the year.
Because of the cancellation of L&T Recoil's business rearrangement, the assets
and liabilities of the joint venture L&T Recoil are no longer presented as
held-for-sale assets and related liabilities.
Net finance costs in January-September amounted to EUR 3.2 million which is EUR
1.0 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. In January-September, a total of EUR -0.1 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.
The equity ratio was 45.6% (43.3%) and the gearing rate 55.2 (61.2). Liquid
assets at the end of the period amounted to EUR 13.4 million (EUR 21.0 million).
Of the EUR 50 million commercial paper programme, EUR 6.0 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 in the comparison period.
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 26.9 million (EUR 34.1 million) in
January-September. The most significant construction project was the Kerava
combined recycling plant, which is scheduled to be in production use at
year-end.
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-September, the average number of employees converted into full-time
equivalents was 7,798 (8,254). The total number of full-time and part-time
employees at the end of the period was 8,550 (9,101). Of them 6,855 (6,885)
people worked in Finland and 1,695 (2,216) 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 (Environmental Services, Property and
Office Support Services and Renewable Energy Sources (L&T Biowatti)) at the
beginning of 2010.
As of 1 July 2010, Property and Office Support Services was divided into two
divisions: Cleaning and Office Support Services and Property Maintenance. The
company's financial reporting segments reflect the new divisions as of 1 July
2010. The financial reporting segments are Environmental Services, Cleaning and
Office Support Services, Property Maintenance and Renewable Energy Sources (L&T
Biowatti).
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 September 2010
was 4,947,398, which is 12.8% (21.9%) of the average number of outstanding
shares. The value of trading was EUR 71.8 million (EUR 102.1 million). The
trading price varied between EUR 12.94 and EUR 16.20. The closing price was EUR
13.89. The company holds 60,758 own shares. The market capitalisation excluding
the shares held by the company was EUR 538.1 million (EUR 635.8 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-September, the average
number of shares excluding the shares held by the company totalled 38,752,198.
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. 33 key persons hold 168,000
options and L&T Advance Oy 62,000 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 168,000 new shares, which is 0.4% 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 8,890 (7,245) shareholders.
Nominee-registered holdings accounted for 10.3% (9.3%) 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
1 October 2010, the company announced that the reorganisation of the business
will be cancelled as financing needed for the transaction by EcoStream could not
be completed as agreed in the preliminary agreement. Therefore, the preliminary
agreement expired.
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.
In a release published on 31 August 2010, the company announced that Laura
Aarnio, Accounting Director, leaves the Group Executive team of Lassila &
Tikanoja plc. She took up other duties within the company.
In a release published on 18 October 2010, the company announced that the
full-year operating profit excluding non-recurring items is estimated to be
slightly lower than in the previous year. Previously the company estimated that
the full-year financial performance will remain at the same level as in 2009.
Full-year net sales are estimated to remain at the 2009 level as estimated
previously.
NEAR-TERM UNCERTAINTIES
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 as well as the low prices
of emission rights undermine the competitiveness of L&T Biowatti's wood-based
fuels. The scope and level of the planned government support measures for
renewable fuels will have a considerable effect on the demand for wood-based
fuels in the future.
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 report of the Board of Directors, and in the consolidated
financial statements.
PROSPECTS FOR THE REST OF THE YEAR
The outlook for the Environmental Services division's waste management and
recycling business is stable. The increase in waste volumes and the secondary
raw materials market are expected to recover moderately. The operating rates in
the industry have been rising since the first half; this is expected to help
keep the demand for hazardous waste and process cleaning services at a healthy
level.
The costs arising from the start-up of a new production line at the Kerava
recycling plant will continue to tax the result in the final quarter. The plant
is expected to be in full production use at the start of the new year.
The markets for Cleaning and Office Support Services and for Property
Maintenance are expected to remain unchanged as year-end nears.
The demand for L&T Biowatti's wood-based fuels will fall to below the previous
year's level. Furthermore, the low prices of emission rights and fossil fuels
will continue to undermine the competitiveness of renewable fuels.
Full-year net sales are expected to remain at the same level as in 2009.
Operating profit excluding non recurring items is expected to be slightly lower
than in 2009. (earlier forecast: 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 SEPTEMBER 2010
CONSOLIDATED INCOME STATEMENT
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| EUR 1000 | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ |
| | 2 | 200 | 201 | 200 | 2009 |
| | 010 | 9 | 0 | 9 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 143 | 140 739 | 446 686 | 434 265 | 582 306 |
| | 770 | | | | |
--------------------------------------------------------------------------------
| Cost of sales | -122 | -117 933 | -393 305 | -373 212 | -505 |
| | 237 | | | | 699 |
--------------------------------------------------------------------------------
| Gross profit | 21 533 | 22 806 | 53 381 | 61 053 | 76 607 |
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| Other operating income | 49 | 652 | 1 070 | 1 996 | 2 425 |
--------------------------------------------------------------------------------
| Selling and marketing | -3 036 | -3 028 | -9 975 | -10 794 | -14 636 |
| costs | | | | | |
--------------------------------------------------------------------------------
| Administrative expenses | -2 316 | -3 006 | -8 259 | -8 538 | -11 705 |
--------------------------------------------------------------------------------
| Other operating expenses | 45 | -515 | -1 919 | -1 957 | -2 427 |
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| Impairment | | | -2 632 | | |
--------------------------------------------------------------------------------
| Operating profit | 16 275 | 16 909 | 31 666 | 41 760 | 50 264 |
--------------------------------------------------------------------------------
| Finance income | 82 | 237 | 730 | 1 066 | 1 290 |
--------------------------------------------------------------------------------
| Finance costs | -1 354 | -1 479 | -3 972 | -5 226 | -6 528 |
--------------------------------------------------------------------------------
| Profit before tax | 15 003 | 15 667 | 28 424 | 37 600 | 45 026 |
--------------------------------------------------------------------------------
| Income tax expense | -3 975 | -4 152 | -7 532 | -9 964 | -11 881 |
--------------------------------------------------------------------------------
| Profit for the period | 11 028 | 11 515 | 20 892 | 27 636 | 33 145 |
--------------------------------------------------------------------------------
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| Attributable to: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | 11 025 | 11 509 | 20 878 | 27 629 | 33 140 |
| company | | | | | |
--------------------------------------------------------------------------------
| Minority interest | 3 | 6 | 14 | 7 | 5 |
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Earnings per share for profit attributable to the equity holders of the company:
--------------------------------------------------------------------------------
| Basic earnings per share, | 0.28 | 0.30 | 0.54 | 0.71 | 0.85 |
| EUR | | | | | |
--------------------------------------------------------------------------------
| Diluted earnings per | 0.28 | 0.30 | 0.54 | 0.71 | 0.85 |
| share, EUR | | | | | |
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
--------------------------------------------------------------------------------
| EUR 1000 | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ |
| | 2 | 2009 | 2010 | 2009 | 2009 |
| | 010 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period | 11 028 | 11 515 | 20 892 | 27 636 | 33 145 |
--------------------------------------------------------------------------------
| Other comprehensive income, | | | | | |
| after tax | | | | | |
--------------------------------------------------------------------------------
| Hedging reserve, change in | 136 | -106 | -90 | -441 | -343 |
| fair value | | | | | |
--------------------------------------------------------------------------------
| Current available-for-sale | | | | | |
| investments | | | | | |
--------------------------------------------------------------------------------
| Gains in the period | 1 | -17 | -55 | -24 | -21 |
--------------------------------------------------------------------------------
| Current available-for-sale | 1 | -17 | -55 | -24 | -21 |
| investments | | | | | |
--------------------------------------------------------------------------------
| Currency translation | -603 | 146 | 549 | 124 | 324 |
| differences | | | | | |
--------------------------------------------------------------------------------
| Other comprehensive income, | -466 | 23 | 404 | -341 | -40 |
| after tax | | | | | |
--------------------------------------------------------------------------------
| Total comprehensive income, | 10 562 | 11 538 | 21 296 | 27 295 | 33 105 |
| after tax | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: |
--------------------------------------------------------------------------------
| Equity holders of the company | 10 583 | 11 533 | 21 274 | 27 299 | 33 020 |
--------------------------------------------------------------------------------
| Minority interest | -21 | 5 | 22 | -4 | 85 |
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
--------------------------------------------------------------------------------
| EUR 1000 | 9/2010 | 9/2009 | 12/2009 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Intangible assets | | | |
--------------------------------------------------------------------------------
| Goodwill | 113 056 | 115 814 | 113 771 |
--------------------------------------------------------------------------------
| Customer contracts arising from | 5 027 | 6 052 | 6 232 |
| acquisitions | | | |
--------------------------------------------------------------------------------
| Agreements on prohibition of competition | 10 301 | 11 691 | 11 641 |
--------------------------------------------------------------------------------
| Other intangible assets arising from | 1 721 | 3 685 | 3 194 |
| business acquisitions | | | |
--------------------------------------------------------------------------------
| Other intangible assets | 13 236 | 13 187 | 13 579 |
--------------------------------------------------------------------------------
| | 143 341 | 150 429 | 148 417 |
--------------------------------------------------------------------------------
| Property, plant and equipment | | | |
--------------------------------------------------------------------------------
| Land | 4 709 | 4 015 | 4 015 |
--------------------------------------------------------------------------------
| Buildings and constructions | 71 687 | 70 581 | 72 072 |
--------------------------------------------------------------------------------
| Machinery and equipment | 103 649 | 113 958 | 110 817 |
--------------------------------------------------------------------------------
| Other | 84 | 81 | 81 |
--------------------------------------------------------------------------------
| Prepayments and construction in progress | 18 344 | 13 460 | 14 666 |
--------------------------------------------------------------------------------
| | 198 473 | 202 095 | 201 651 |
--------------------------------------------------------------------------------
| Other non-current assets | | | |
--------------------------------------------------------------------------------
| Available-for-sale investments | 525 | 522 | 525 |
--------------------------------------------------------------------------------
| Finance lease receivables | 3 673 | 4 567 | 4 425 |
--------------------------------------------------------------------------------
| Deferred tax assets | 2 894 | 1 736 | 2 147 |
--------------------------------------------------------------------------------
| Other receivables | 491 | 626 | 726 |
--------------------------------------------------------------------------------
| | 7 583 | 7 451 | 7 823 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total non-current assets | 349 397 | 359 975 | 357 891 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | 27 973 | 29 274 | 32 842 |
--------------------------------------------------------------------------------
| Trade and other receivables | 90 277 | 83 031 | 77 702 |
--------------------------------------------------------------------------------
| Prepayments | 1 851 | 1 747 | 370 |
--------------------------------------------------------------------------------
| Available-for-sale investments | 6 492 | 10 989 | 18 484 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 6 878 | 10 004 | 9 099 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total current assets | 133 471 | 135 045 | 138 497 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS | 482 868 | 495 020 | 496 388 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR 1000 | 9/2010 | 9/2009 | 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 | -2 688 | -3 294 | -3 084 |
--------------------------------------------------------------------------------
| Retained earnings | 128 591 | 116 773 | 116 874 |
--------------------------------------------------------------------------------
| Profit for the period | 20 878 | 27 629 | 33 140 |
--------------------------------------------------------------------------------
| | 216 853 | 211 180 | 217 002 |
--------------------------------------------------------------------------------
| Minority interest | 269 | 158 | 247 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity | 217 122 | 211 338 | 217 249 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | |
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 32 478 | 33 233 | 33 622 |
--------------------------------------------------------------------------------
| Retirement benefit obligations | 606 | 673 | 671 |
--------------------------------------------------------------------------------
| Provisions | 2 446 | 2 011 | 2 100 |
--------------------------------------------------------------------------------
| Borrowings | 104 888 | 131 025 | 120 969 |
--------------------------------------------------------------------------------
| Other liabilities | 1 247 | 1 592 | 1 510 |
--------------------------------------------------------------------------------
| | 141 665 | 168 534 | 158 872 |
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Borrowings | 28 359 | 19 247 | 22 890 |
--------------------------------------------------------------------------------
| Trade and other payables | 93 462 | 92 295 | 94 130 |
--------------------------------------------------------------------------------
| Derivative liabilities | 1 195 | 1 205 | 1 073 |
--------------------------------------------------------------------------------
| Tax liabilities | 1 065 | 2 320 | 2 119 |
--------------------------------------------------------------------------------
| Provisions | | 81 | 55 |
--------------------------------------------------------------------------------
| | 124 081 | 115 148 | 120 267 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | 265 746 | 283 682 | 279 139 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES | 482 868 | 495 020 | 496 388 |
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------
| EUR 1000 | 9/2010 | 9/2009 | 12/2009 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Cash flows from operating activities | | | |
--------------------------------------------------------------------------------
| Profit for the period | 20 892 | 27 636 | 33 145 |
--------------------------------------------------------------------------------
| Adjustments | | | |
--------------------------------------------------------------------------------
| Income tax expense | 7 532 | 9 964 | 11 881 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and impairment | 33 615 | 29 916 | 40 334 |
--------------------------------------------------------------------------------
| Finance income and costs | 3 242 | 4 160 | 5 238 |
--------------------------------------------------------------------------------
| Gain on sale of shares | | | -70 |
--------------------------------------------------------------------------------
| Other | 273 | 953 | 1 809 |
--------------------------------------------------------------------------------
| Net cash generated from operating | 65 554 | 72 629 | 92 337 |
| activities before change in working | | | |
| capital | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in working capital | | | |
--------------------------------------------------------------------------------
| Change in trade and other receivables | -11 780 | -11 312 | -4 654 |
--------------------------------------------------------------------------------
| Change in inventories | 4 858 | -10 456 | -14 022 |
--------------------------------------------------------------------------------
| Change in trade and other payables | -1 286 | 5 275 | 6 689 |
--------------------------------------------------------------------------------
| Change in working capital | -8 208 | -16 493 | -11 987 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest paid | -3 026 | -5 398 | -7 511 |
--------------------------------------------------------------------------------
| Interest received | 642 | 1 289 | 1 505 |
--------------------------------------------------------------------------------
| Income tax paid | -12 105 | -6 091 | -8 156 |
--------------------------------------------------------------------------------
| Net cash from operating activities | 42 857 | 45 936 | 66 188 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from investing activities | | | |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries and | -748 | -320 | -1 747 |
| businesses, net of cash acquired | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of subsidiaries and | 199 | 197 | 197 |
| businesses, net of sold cash | | | |
--------------------------------------------------------------------------------
| Purchases of property, plant and equipment | -25 874 | -34 185 | -42 735 |
| and intangible assets | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of property, plant and | 2 823 | 1 506 | 4 328 |
| equipment and intangible assets | | | |
--------------------------------------------------------------------------------
| Purchases of available-for-sale | -2 | -48 | -54 |
| investments | | | |
--------------------------------------------------------------------------------
| Change in other non-current receivables | 237 | 67 | -13 |
--------------------------------------------------------------------------------
| Proceeds from sale of available-for-sale | | 24 | 7 |
| investments | | | |
--------------------------------------------------------------------------------
| Dividends received | 1 | 1 | 1 |
--------------------------------------------------------------------------------
| Net cash used in investing activities | -23 364 | -32 758 | -40 016 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from financing activities | | | |
--------------------------------------------------------------------------------
| Change in short-term borrowings | 3 389 | -14 636 | -12 044 |
--------------------------------------------------------------------------------
| Proceeds from long-term borrowings | | 43 000 | 43 000 |
--------------------------------------------------------------------------------
| Repayments of long-term borrowings | -14 863 | -25 362 | -34 388 |
--------------------------------------------------------------------------------
| Dividends paid | -21 301 | -21 318 | -21 318 |
-------------------------------