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Lassila & Tikanoja plc Interim Report 1 January - 31 March 2010

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LASSILA & TIKANOJA PLC INTERIM REPORT 29 April 2010 8.00 am                     


LASSILA & TIKANOJA PLC INTERIM REPORT 1 JANUARY - 31 MARCH 2010                 

- Net sales EUR 153.9 million (EUR 146.4 million)                               
- Operating profit EUR 6.6 million (EUR 10.0 million)                           
- Operating profit excluding non-recurring items EUR 7.8 million (EUR 11.2      
million)                                                                        
- Earnings per share EUR 0.11 (EUR 0.16)                                        
- 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                                       
Lassila & Tikanoja's net sales for the first quarter increased by 5.1% to EUR   
153.9 million (EUR 146.4 million). Operating profit was EUR 6.6 million (EUR    
10.0 million), representing 4.3% (6.8%) of net sales. Operating profit excluding
non-recurring items was EUR 7.8 million (EUR 11.2 million). Earnings per share  
were EUR 0.11 (EUR 0.16).                                                       

Net sales increased thanks to a larger number of commissioned assignments in    
Property and Office Support Services due to heavy snowfalls. Meanwhile,         
profitability declined mainly as a result of the losses sustained by L&T Recoil,
a joint venture, as well as the weak profitability of L&T Biowatti and the      
credit loss provision recognised for the Russian cleaning business.             

Fixed costs were decreased to improve operational efficiency, leading to        
non-recurring restructuring costs of EUR 1.2 million.                           

Events after the review period                                                  

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        
preliminary selling price totals EUR 2.5 million paid in cash and a potential   
additional selling price of a maximum of EUR 1.0 million, plus slightly under   
20% of EcoStream's share capital.                                               

Lassila & Tikanoja currently estimates that it will recognise a gain on sale of 
around EUR 25 million on the arrangement, once it is finalised. The             
arrangement's cash flow effect is estimated to be some EUR 20 million positive, 
involving the repayment of capital loans and the cash portion of the share      
transaction price. The transaction related to the preliminary agreement is      
intended to be completed by the end of June 2010, on condition that the         
financing and the share issue needed for the transaction by EcoStream will be   
completed.                                                                      

	                                                                               
FINANCIAL SUMMARY                                                               
--------------------------------------------------------------------------------
|                                      |   1-3/ |   1-3/ |    Change |   1-12/ |
|                                      |   2010 |   2009 |         % |    2009 |
--------------------------------------------------------------------------------
| Net sales, EUR million               |  153.9 |  146.4 |       5.1 |   582.3 |
--------------------------------------------------------------------------------
| Operating profit excluding           |    7.8 |   11.2 |     -30.7 |    51.3 |
| non-recurring items, EUR million*    |        |        |           |         |
--------------------------------------------------------------------------------
| Operating profit, EUR million        |    6.6 |   10.0 |     -33.5 |    50.3 |
--------------------------------------------------------------------------------
| Operating margin, %                  |    4.3 |    6.8 |           |     8.6 |
--------------------------------------------------------------------------------
| Profit before tax, EUR million       |    5.6 |    8.3 |     -32.7 |    45.0 |
--------------------------------------------------------------------------------
| Earnings per share, EUR              |   0.11 |   0.16 |           |    0.85 |
--------------------------------------------------------------------------------
| EVA, EUR million                     |   -1.1 |    2.0 |           |    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                                                          
Net sales of Environmental Services fell by 3.4% to EUR 64.6 million in the     
first quarter (EUR 66.9 million). Operating profit was EUR 4.4 million (EUR 6.4 
million), and operating profit excluding non-recurring items was EUR 4.8 million
(EUR 7.4 million).                                                              

Net sales from the waste management business shrank slightly from the previous  
year, due to the reduction in waste volumes. Heavy snowfalls during the winter  
had an adverse impact on production conditions, thereby weakening production    
efficiency. By contrast, net sales grew in the recycling business. A few major  
material recovery assignments were performed during the period. Demand for, and 
the prices of, secondary raw materials showed a moderate improvement but volumes
remained low.                                                                   

Although the weather conditions weakened demand for industrial process cleaning 
and hazardous waste services, the recovery of operating rates within the        
industry began to feed through into demand, particularly towards the end of the 
period. Fluctuations in demand continued to present a challenge to production   
adjustment. During the comparison period, net sales were boosted by major       
project-based assignments.                                                      

Net sales and profitability of the Environmental Services division's            
international operations improved.                                              

Technical problems were experienced in the re-refinery of the joint venture, L&T
Recoil, the production start-up being delayed until the end of the period. This 
had a considerable negative effect on the division's profitability. After these 
initial problems, the plant has been operating as planned and the quality of the
end-product has been high.                                                      

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 completed in the second half of the year, resulting in 
a marked increase in the recovery rate of the waste processed at the Kerava     
plant.                                                                          

Property and Office Support Services                                            

The net sales of Property and Office Support Services (property maintenance and 
cleaning services) grew by 16.9% to EUR 71.5 million (EUR 61.1 million) in the  
first quarter. Operating profit was EUR 3.8 million (EUR 3.4 million) and       
operating profit excluding non-recurring items was EUR 4.1 million (EUR 3.6     
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. Net sales from cleaning services in Finland
remained at the previous year's level. Both product lines were able to renew    
their contracts, and new partnerships with insurance companies were signed. In  
domestic operations, operating profit improved from the previous year thanks to 
the larger number of commissioned assignments, although due to the costs        
associated with snow-clearing work the growth of operating profit was clearly   
slower than net sales growth.                                                   

Net sales from international operations remained at the previous year's level.  
New sales were successful in the Swedish operations. On the whole, the result   
from international operations was mainly negative due to the EUR 0.9 million    
credit loss provision recognised in Russian operations.                         

Renewable Energy Sources                                                        

First quarter net sales of Renewable Energy Sources (L&T Biowatti) were down by 
4.4% to EUR 20.1 million (EUR 21.1 million). The division recorded an operating 
loss of EUR 0.9 million (a profit of EUR 0.7 million), and an operating loss    
excluding non-recurring items of EUR 0.9 million (a profit of EUR 0.7 million). 

The division's net sales and profitability declined from the previous year,     
because of decreased demand for wood-based fuels. Factors restricting demand    
included sustained low operating rates in the industry and the weakened         
competitiveness of wood-based fuels, compared to fossil fuels such as coal, peat
and oil. In addition, the prices of emission rights were low. Costs associated  
with discontinuing the procurement of raw materials from abroad also eroded the 
division's profitability.                                                       


BREAKDOWN OF OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS                     

--------------------------------------------------------------------------------
| EUR million                              |      1-3/ |      1-3/ |     1-12/ |
|                                          |      2010 |      2009 |      2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit                         |       6.6 |      10.0 |      50.3 |
--------------------------------------------------------------------------------
| Non-recurring items:                     |           |           |           |
--------------------------------------------------------------------------------
| Discontinuation of soil washing services |           |           |      -0.4 |
--------------------------------------------------------------------------------
| Restructuring costs                      |       1.2 |       1.2 |       1.6 |
--------------------------------------------------------------------------------
| Discontinuation of wood pellet           |           |           |       0.3 |
| production in Luumäki                    |           |           |           |
--------------------------------------------------------------------------------
| Refund of supplementary insurance fund   |           |           |      -0.5 |
| of former Lassila & Tikanoja             |           |           |           |
--------------------------------------------------------------------------------
| Operating profit excluding non-recurring |       7.8 |      11.2 |      51.3 |
| items                                    |           |           |           |
--------------------------------------------------------------------------------


FINANCING                                                                       

Cash flows from operating activities amounted to EUR 13.9 million (EUR 15.7     
million). EUR 0.4 million were tied up in the working capital (EUR 2.6 million),
which resulted from the increse in account receivables.                         

Interest-bearing liabilities amounted to EUR 139.1 million (EUR 172.6 million). 
Net interest-bearing liabilities amounted to EUR 106.2 million, showing a       
decrease of EUR 10.0 million from comparison period as well as from the turn of 
the year. The average interest rate of loans (with interest rate hedging) was   
3.3%. Long-term loans totalling EUR 15.5 million will mature by the end of the  
year.                                                                           
Net finance costs in the first quarter amounted to EUR 1.1 million which is EUR 
0.6 million below the amount of the comparison period. Net finance costs were   
0.7% (1.2%) of net sales. The decrease resulted from the decline in the interest
rate level and the decrease in the interest-bearing liabilities. In             
January-March, a total of EUR -0.2 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 40.3% (37.1%) and the gearing rate 52.9 (61.4). Liquid     
assets at the end of the period amounted to EUR 32.9 million (EUR 56.3 million).
After the end of the period on 14 April 2010, the dividend totalling EUR 21.3   
million (EUR 21.3 million) was paid.                                            


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 5.5 million (EUR 12.3 million). The largest    
construction project was the extension of the Kerava recycling plant.           


PERSONNEL                                                                       

In January-March, the average number of employees converted into full-time      
equivalents was 7,668 (8,069). The total number of full-time and part-time      
employees at the end of the period was 8,599 (9,112). Of them 6,723 (7,001)     
people worked in Finland and 1,876 (2,111) 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 of Lassila & Tikanoja   
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.                         


SHARE AND SHARE CAPITAL                                                         

Traded volume and price                                                         
The volume of trading in Lassila & Tikanoja plc shares on NASDAQ OMX Helsinki   
from January through March 2010 was 1,433,298, which is 3.7% (3.7%) of the      
average number of outstanding shares. The value of trading was EUR 22.3 million 
(EUR 15.3 million). The trading price varied between EUR 14.87 and EUR 16.20.   
The closing price was EUR 15.46. The company holds 30,000 own shares. The market
capitalisation excluding the shares held by the company was EUR 598.9 million   
(EUR 365.5 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 38,768,874 shares. In January-March, the average number
of shares excluding the shares held by the company totalled 38,768,874.         

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

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

As a result of the exercise of the outstanding 2005 share options, the number of
shares may increase by a maximum of 376,000 new shares, which is 1.0% of the    
current number of shares. The 2005B options have been listed on NASDAQ OMX      
Helsinki since 2 January 2009 and 2005C options 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 for the 2008 options is EUR 16.27. The exercise price of the 
share options shall, as per the dividend record date, be reduced by the amount  
of dividend which exceeds 70% of the profit per share for the financial period  
to which the dividend applies. However, only such dividends whose distribution  
has been agreed upon after the option pricing period and which have been        
distributed prior to the share subscription are deducted from the subscription  
price. The exercise price shall, however, always amount to at least EUR 0.01.   
The exercise period will be from 1 November 2010 to 31 May 2012.                
As a result of                                                                  
the exercise of the outstanding 2008 share options, the number of shares may    
increase by a maximum of 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 8,336 (6,476) shareholders. 
Nominee-registered holdings accounted for 9.3% (8.7%) 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 Lassila & Tikanoja plc held 30,000 of its own shares   
which represent 0.1% of shares and votes.                                       


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.                                                                    


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 may undermine the         
competitiveness of L&T Biowatti's wood-based fuels. 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                                              

The outlook for the Environmental Services division's waste management services 
is stable.  In the current economic conditions, waste material transport volumes
are expected to remain at the present level while rising operating rates in the 
industry are expected to boost demand for hazardous waste and process cleaning  
services. In the recycling business, secondary raw material prices are expected 
to normalise at a moderate pace. Production operations at L&T Recoil's plant are
expected to stabilise at the intended level.                                    
                                                                                
The markets for Property and Office Support Services are expected to remain     
unchanged. The current economic conditions will presumably increase competitive 
bidding and reduce orders for additional services.                              

Demand for wood-based fuels is anticipated to be lower than a year earlier.     
Furthermore, low prices of emission rights and fossil fuels will undermine the  
competitiveness of renewable fuels. While planned government support measures to
increase the use of renewable fuels will have a positive impact in the long     
term, it 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 - 31 MARCH 2010                        


CONSOLIDATED INCOME STATEMENT                                                   

--------------------------------------------------------------------------------
| EUR 1000                     |  1-3/2010 |  1-3/2009 |  Change % | 1-12/2009 |
--------------------------------------------------------------------------------
|                              |           |           |           |           |
--------------------------------------------------------------------------------
| Net sales                    |   153 902 |   146 432 |       5.1 |   582 306 |
--------------------------------------------------------------------------------
| Cost of sales                |  -139 945 |  -129 230 |       8.3 |  -505 699 |
--------------------------------------------------------------------------------
| Gross profit                 |    13 957 |    17 202 |     -18.9 |    76 607 |
--------------------------------------------------------------------------------
| Other operating income       |       318 |       351 |      -9.4 |     2 425 |
--------------------------------------------------------------------------------
| Selling and marketing costs  |    -3 469 |    -4 069 |     -14.7 |   -14 636 |
--------------------------------------------------------------------------------
| Administrative expenses      |    -3 055 |    -2 681 |      14.0 |   -11 705 |
--------------------------------------------------------------------------------
| Other operating expenses     |    -1 115 |      -818 |      36.3 |    -2 427 |
--------------------------------------------------------------------------------
| Operating profit             |     6 636 |     9 985 |     -33.5 |    50 264 |
--------------------------------------------------------------------------------
| Finance income               |       338 |       411 |     -17.8 |     1 290 |
--------------------------------------------------------------------------------
| Finance costs                |    -1 391 |    -2 096 |     -33.6 |    -6 528 |
--------------------------------------------------------------------------------
| Profit before tax            |     5 583 |     8 300 |     -32.7 |    45 026 |
--------------------------------------------------------------------------------
| Income tax expense           |    -1 452 |    -2 200 |     -34.0 |   -11 881 |
--------------------------------------------------------------------------------
| Profit for the period        |     4 131 |     6 100 |     -32.3 |    33 145 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to:             |           |           |           |           |
--------------------------------------------------------------------------------
| Equity holders of the        |     4 127 |     6 104 |           |    33 140 |
| company                      |           |           |           |           |
--------------------------------------------------------------------------------
| Minority interest            |         4 |        -4 |           |         5 |
--------------------------------------------------------------------------------

Earnings per share for profit attributable to the equity holders of the company:
--------------------------------------------------------------------------------
| Basic earnings per share,    |      0.11 |      0.16 |           |      0.85 |
| EUR                          |           |           |           |           |
--------------------------------------------------------------------------------
| Diluted earnings per share,  |      0.11 |      0.16 |           |      0.85 |
| EUR                          |           |           |           |           |
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                                  

--------------------------------------------------------------------------------
| EUR 1000                                 |  1-3/2010 |  1-3/2009 | 1-12/2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period                    |     4 131 |     6 100 |    33 145 |
--------------------------------------------------------------------------------
| Other comprehensive income, after tax    |           |           |           |
--------------------------------------------------------------------------------
| Hedging reserve, change in fair value    |      -195 |      -434 |      -343 |
--------------------------------------------------------------------------------
| Current available-for-sale investments   |           |           |           |
--------------------------------------------------------------------------------
| Gains in the period                      |           |        73 |       -21 |
--------------------------------------------------------------------------------
| Current available-for-sale investments   |         0 |        73 |       -21 |
--------------------------------------------------------------------------------
| Currency translation differences         |       807 |      -309 |       324 |
--------------------------------------------------------------------------------
| Other comprehensive income, after tax    |       612 |      -670 |       -40 |
--------------------------------------------------------------------------------
| Total comprehensive income, after tax    |     4 743 |     5 430 |    33 105 |
--------------------------------------------------------------------------------
| Attributable to:                                     |           |           |
--------------------------------------------------------------------------------
| Equity holders of the company       |          4 717 |     5 448 |    33 020 |
--------------------------------------------------------------------------------
| Minority interest                   |             26 |       -18 |        85 |
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF FINANCIAL POSITION                                    
--------------------------------------------------------------------------------
| EUR 1000                                   |   3/2010 |   3/2009 |   12/2009 |
--------------------------------------------------------------------------------
|                                            |          |          |           |
--------------------------------------------------------------------------------
| ASSETS                                     |          |          |           |
--------------------------------------------------------------------------------
|                                            |          |          |           |
--------------------------------------------------------------------------------
| Non-current assets                         |          |          |           |
--------------------------------------------------------------------------------
| Intangible assets                          |          |          |           |
--------------------------------------------------------------------------------
| Goodwill                                   |  113 371 |  115 401 |   113 771 |
--------------------------------------------------------------------------------
| Customer contracts arising from            |    5 800 |    6 869 |     6 232 |
| acquisitions                               |          |          |           |
--------------------------------------------------------------------------------
| Agreements on prohibition of competition   |   11 122 |   12 667 |    11 641 |
--------------------------------------------------------------------------------
| Other intangible assets arising from       |    2 704 |    4 678 |     3 194 |
| business acquisitions                      |          |          |           |
--------------------------------------------------------------------------------
| Other intangible assets                    |   13 608 |   11 794 |    13 579 |
--------------------------------------------------------------------------------
|                                            |  146 605 |  151 409 |   148 417 |
--------------------------------------------------------------------------------
| Property, plant and equipment              |          |          |           |
--------------------------------------------------------------------------------
| Land                                       |    4 075 |    3 832 |     4 015 |
--------------------------------------------------------------------------------
| Buildings and constructions                |   71 399 |   42 599 |    72 072 |
--------------------------------------------------------------------------------
| Machinery and equipment                    |  107 612 |  113 775 |   110 817 |
--------------------------------------------------------------------------------
| Other                                      |       82 |       79 |        81 |
--------------------------------------------------------------------------------
| Prepayments and construction in progress   |   15 174 |   39 368 |    14 666 |
--------------------------------------------------------------------------------
|                                            |  198 342 |  199 653 |   201 651 |
--------------------------------------------------------------------------------
| Other non-current assets                   |          |          |           |
--------------------------------------------------------------------------------
| Available-for-sale investments             |      525 |      502 |       525 |
--------------------------------------------------------------------------------
| Finance lease receivables                  |    4 159 |    4 893 |     4 425 |
--------------------------------------------------------------------------------
| Deferred income tax assets                 |    2 477 |    1 223 |     2 147 |
--------------------------------------------------------------------------------
| Other receivables                          |      644 |      712 |       726 |
--------------------------------------------------------------------------------
|                                            |    7 805 |    7 330 |     7 823 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total non-current assets                   |  352 752 |  358 392 |   357 891 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets                             |          |          |           |
--------------------------------------------------------------------------------
| Inventories                                |   28 214 |   17 729 |    32 842 |
--------------------------------------------------------------------------------
| Trade and other receivables                |   87 645 |   80 815 |    77 702 |
--------------------------------------------------------------------------------
| Derivative receivables                     |          |       29 |           |
--------------------------------------------------------------------------------
| Prepayments                                |    3 302 |    4 103 |       370 |
--------------------------------------------------------------------------------
| Available-for-sale investments             |   24 479 |   36 958 |    18 484 |
--------------------------------------------------------------------------------
| Cash and cash equivalents                  |    8 440 |   19 391 |     9 099 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total current assets                       |  152 080 |  159 025 |   138 497 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS                               |  504 832 |  517 417 |   496 388 |
--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
| EUR 1000                                   |   3/2010 |   3/2009 |   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                             |   -2 494 |   -3 620 |    -3 084 |
--------------------------------------------------------------------------------
| Retained earnings                          |  128 852 |  116 622 |   116 874 |
--------------------------------------------------------------------------------
| Profit for the period                      |    4 127 |    6 104 |    33 140 |
--------------------------------------------------------------------------------
|                                            |  200 557 |  189 178 |   217 002 |
--------------------------------------------------------------------------------
| Minority interest                          |      273 |      144 |       247 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity                               |  200 830 |  189 322 |   217 249 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities                                |          |          |           |
--------------------------------------------------------------------------------
| Non-current liabilities                    |          |          |           |
--------------------------------------------------------------------------------
| Deferred income tax liabilities            |   32 918 |   32 539 |    33 622 |
--------------------------------------------------------------------------------
| Retirement benefit obligations             |      613 |      687 |       671 |
--------------------------------------------------------------------------------
| Provisions                                 |    2 486 |    1 923 |     2 100 |
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| Borrowings                                 |  116 231 |  121 525 |   120 969 |
--------------------------------------------------------------------------------
| Other liabilities                          |    1 496 |    1 177 |     1 510 |
--------------------------------------------------------------------------------
|                                            |  153 744 |  157 851 |   158 872 |
--------------------------------------------------------------------------------
| Current liabilities                        |          |          |           |
--------------------------------------------------------------------------------
| Borrowings                                 |   22 915 |   51 040 |    22 890 |
--------------------------------------------------------------------------------
| Trade and other payables                   |  123 794 |  117 624 |    94 130 |
--------------------------------------------------------------------------------
| Derivative liabilities                     |    1 336 |    1 196 |     1 073 |
--------------------------------------------------------------------------------
| Tax liabilities                            |    1 667 |       45 |     2 119 |
--------------------------------------------------------------------------------
| Provisions                                 |      546 |      339 |        55 |
--------------------------------------------------------------------------------
|                                            |  150 258 |  170 244 |   120 267 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities                          |  304 002 |  328 095 |   279 139 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES               |  504 832 |  517 417 |   496 388 |
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF CASH FLOWS                                            

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| EUR 1000                                       | 3/2010 |  3/2009 |  12/2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from operating activities           |        |         |          |
--------------------------------------------------------------------------------
| Profit for the period                          |  4 131 |   6 100 |   33 145 |
--------------------------------------------------------------------------------
| Adjustments                                    |        |         |          |
--------------------------------------------------------------------------------
| Income tax expense                             |  1 452 |   2 200 |   11 881 |
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| Depreciation, amortisation and impairment      | 10 295 |   9 952 |   40 334 |
--------------------------------------------------------------------------------
| Finance income and costs                       |  1 053 |   1 685 |    5 238 |
--------------------------------------------------------------------------------
| Gain on sale of shares                         |        |         |      -70 |
--------------------------------------------------------------------------------
| Other                                          |    342 |      31 |    1 809 |
--------------------------------------------------------------------------------
| Net cash generated from operating activities   | 17 273 |  19 968 |   92 337 |
| before change in working capital               |        |         |          |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in working capital                      |        |         |          |
--------------------------------------------------------------------------------
| Change in trade and other receivables          |    -13 | -11 473 |   -4 654 |
|                                                |    041 |         |          |
--------------------------------------------------------------------------------
| Change in inventories                          |  4 620 |   1 085 |  -14 022 |
--------------------------------------------------------------------------------
| Change in trade and other payables             |  7 991 |   7 822 |    6 689 |
--------------------------------------------------------------------------------
| Change in working capital                      |   -430 |  -2 566 |  -11 987 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest paid                                  |   -266 |  -1 459 |   -7 511 |
--------------------------------------------------------------------------------
| Interest received                              |    211 |     320 |    1 505 |
--------------------------------------------------------------------------------
| Income tax paid                                | -2 912 |    -562 |   -8 156 |
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| Net cash from operating activities             | 13 876 |  15 701 |   66 188 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from investing activities           |        |         |          |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries and businesses,    |        |         |   -1 747 |
| net of cash acquired                           |        |         |          |
--------------------------------------------------------------------------------
| Proceeds from sale of subsidiaries and         |        |         |      197 |
| businesses, net of sold cash                   |        |         |          |
--------------------------------------------------------------------------------
| Purchases of property, plant and equipment and | -5 004 | -12 236 |  -42 735 |
| intangible assets                              |        |         |          |
--------------------------------------------------------------------------------
| Proceeds from sale of property, plant and      |  1 331 |     560 |    4 328 |
| equipment and intangible assets                |        |         |          |
--------------------------------------------------------------------------------
| Purchases of available-for-sale investments    |     -3 |      -1 |      -54 |
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| Change in other non-current receivables        |     85 |     -18 |      -13 |
--------------------------------------------------------------------------------
| Proceeds from sale of available-for-sale       |        |      -4 |        7 |
| investments                                    |        |         |          |
--------------------------------------------------------------------------------
| Dividends received                             |        |         |        1 |
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| Net cash used in investing activities          | -3 591 | -11 699 |  -40 016 |
--------------------------------------------------------------------------------
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| Cash flows from financing activities           |        |         |          |
--------------------------------------------------------------------------------
| Change in short-term borrowings                |     26 |   3 211 |  -12 044 |
--------------------------------------------------------------------------------
| Proceeds from long-term borrowings             |        |  24 000 |   43 000 |
--------------------------------------------------------------------------------
| Repayments of long-term borrowings             | -5 002 |  -1 387 |  -34 388 |
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| Dividends paid                                 |        |         |  -21 318 |
--------------------------------------------------------------------------------
| Repurchase of own shares                       |        |         |     -356 |
--------------------------------------------------------------------------------
| Net cash generated from financing activities   | -4 976 |  25 824 |  -25 106 |
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
| EUR 1000                                       | 3/2010 |  3/2009 |  12/2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net change in liquid assets                    |  5 309 |  29 826 |    1 066 |
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| Liquid assets at beginning of period           | 27 583 |  26 517 |   26 517 |
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| Effect of changes in foreign exchange rates    |     27 |     -93 |       28 |
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| Change in fair value of current                |        |      99 |      -28 |
| available-for-sale investments                 |        |         |          |
--------------------------------------------------------------------------------
| Liquid assets at end of period                 | 32 919 |  56 349 |   27 583 |
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Liquid assets                                                                   
--------------------------------------------------------------------------------
| EUR 1000                                      |  3/2010 |  3/2009 |  12/2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents                     |   8 440 |  19 391 |    9 099 |
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| Certificates of deposit                       |  24 479 |  36 958 |   18 484 |
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| Total                                         |  32 919 |  56 349 |   27 583 |
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                                     

--------------------------------------------------------------------------------
| EUR 1000       |  Share | Share | Reval | Retain | Equity | Minori |   Total |
|                | capita | premi | uatio |     ed | attrib |     ty |  equity |
|                |      l |    um |     n | earnin | utable | intere |         |
|                |        | reser |   and |     gs |     to |     st |         |
|                |        |    ve | other |        | equity |        |         |
|                |        |       | reser |        | holder |        |         |
|                |        |       |   ves |        |   s of |        |         |
|                |        |       |       |        |    the |        |         |
|                |        |       |       |        | compan |        |         |
|                |        |       |       |        |      y |        |         |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at      | 19 399 |    50 |    -3 |    150 |    217 |    247 | 217 249 |
| 1.1.2010       |        |   673 |   084 |    014 |    002 |        |         |
--------------------------------------------------------------------------------
| Expense        |        |       |       |    161 |    161 |        |     161 |
| recognition of |        |       |       |        |        |        |         |
| share-based    |        |       |       |        |        |        |         |
| benefits       |        |       |       |        |        |        |         |
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| Dividends paid |        |       |       |    -21 |    -21 |        | -21 323 |
|                |        |       |       |    323 |    323 |        |         |
--------------------------------------------------------------------------------
| Total          |        |       |   590 |  4 127 |  4 717 |     26 |   4 743 |
| comprehensive  |        |       |       |        |        |        |         |
| income         |        |       |       |        |        |        |         |
--------------------------------------------------------------------------------
| Equity at      | 19 399 |    50 |    -2 |    132 |    200 |    273 | 200 830 |
| 31.3.2010      |        |   673 |   494 |    979 |    557 |        |         |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at      | 19 399 |    50 |    -2 |    137 |    204 |    162 | 205 038 |
| 1.1.2009       |        |   673 |   964 |    768 |    876 |        |         |
--------------------------------------------------------------------------------
| Expense        |        |       |       |    193 |    193 |        |     193 |
| recognition of |        |       |       |        |        |        |         |
| share-based    |        |       |       |        |        |        |         |
| benefits       |        |       |       |        |        |        |         |
--------------------------------------------------------------------------------
| Dividends paid |        |       |       |    -21 |    -21 |        | -21 339 |
|                |        |       |       |    339 |    339 |        |         |
--------------------------------------------------------------------------------
| Total          |        |       |  -656 |  6 104 |  5 448 |    -18 |   5 430 |
| comprehensive  |        |       |       |        |        |        |         |
| income         |        |       |       |        |        |        |         |
--------------------------------------------------------------------------------
| Equity at      | 19 399 |    50 |    -3 |    122 |    189 |    144 | 189 322 |
| 31.3.2009      |        |   673 |   620 |    726 |    178 |        |         |
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KEY FIGURES                                                                     
--------------------------------------------------------------------------------
|                                             | 1-3/2010 | 1-3/2009 | 1-12/200 |
|                                             |          |          |        9 |
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|                                             |          |          |          |
--------------------------------------------------------------------------------
| Earnings per share, EUR                     |     0.11 |     0.16 |     0.85 |
--------------------------------------------------------------------------------
| Earnings per share, diluted, EUR            |     0.11 |     0.16 |     0.85 |
--------------------------------------------------------------------------------
| Cash flows from operating activities per    |     0.36 |     0.40 |     1.71 |
| share, EUR                                  |          |          |          |
--------------------------------------------------------------------------------
| EVA, EUR million                            |     -1.1 |      2.0 |     16.5 |
--------------------------------------------------------------------------------
| Capital expenditure, EUR 1000               |    5 460 |   12 287 |   44 882 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and impairment,  |   10 295 |    9 952 |   40 334 |
| EUR 1000                                    |          |          |          |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity per share, EUR                       |     5.17 |     4.88 |     5.60 |
--------------------------------------------------------------------------------
| Return on equity, ROE, %                    |      7.9 |     12.4 |     15.7 |
--------------------------------------------------------------------------------
| Return on invested capital, ROI, %          |      8.0 |     11.6 |     14.5 |
--------------------------------------------------------------------------------
| Equity ratio, %                             |     40.3 |     37.1 |     44.1 |
--------------------------------------------------------------------------------
| Gearing, %                                  |     52.9 |     61.4 |     53.5 |
--------------------------------------------------------------------------------
| Net interest-bearing liabilities, EUR 1000  |  106 227 |  116 216 |  116 276 |
--------------------------------------------------------------------------------
| Average number of employees in full-time    |    7 668 |    8 069 |    8 113 |
| equivalents                                 |          |          |          |
--------------------------------------------------------------------------------
| Total number of full-time and part-time     |    8 599 |    9 112 |    8 743 |
| employees at end of period                  |          |          |          |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of outstanding shares adjusted for   |          |          |          |
| issues, 1000 shares                         |          |          |          |
--------------------------------------------------------------------------------
| average during the period                   |   38 769 |   38 799 |   38 781 |
--------------------------------------------------------------------------------
| at end of period                            |   38 769 |   38 799 |   38 769 |
--------------------------------------------------------------------------------
| average during the period, diluted          |   38 769 |   38 799 |   38 784 |
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ACCOUNTING POLICIES                                                             

This interim financial report is in compliance with IAS 34 Interim Financial    
Reporting standard. The same accounting policies as in the annual financial     
statements for the year 2009 have been applied. These interim financial         
statements have been prepared in accordance with the IFRS standards and         
interpretations as adopted by the EU.                                           

The following amendments to standards that have become effective in 2009 have   
had an impact on the financial statements in this interim report:               

IFRS 3 (Amendment) Business combinations                                        
The standard contains several significant changes to the treatment of business  
combinations effected after the adoption of the amended standard and they have a
material impact on the Group's financial statements. The amendments affect the  
amount of goodwill to be recognised from acquisi