Lassila & Tikanoja plc: Interim Report 1 January - 31 March 2013

Helsinki, Finland, 2013-04-24 07:00 CEST (GLOBE NEWSWIRE) --

Net sales for the first quarter EUR 167.7 million (EUR 171.3 million)
Operating profit EUR 6.3 million (EUR 4.9 million)
Operating profit excluding non-recurring items EUR 6.8 million (EUR 5.0 million)
Earnings per share EUR 0.12 (EUR 0.07)
Full-year net sales in 2013 are expected to remain at the 2012 level. Operating profit, excluding non-recurring items, is expected to remain at the 2012 level or improve slightly.

CEO PEKKA OJANPÄÄ:

“Operating profit excluding non-recurring items was in line with our expectations, and we saw a significant improvement in our cash flow from operating activities.

 Comparable net sales remained at the previous year’s level. In the first quarter, the efficiency enhancement measures set in our strategy continued, affecting both business operations and working capital. The financial uncertainty affects our business volumes. We will continue to focus on profitability improvement.”

GROUP NET SALES AND FINANCIAL PERFORMANCE

Lassila & Tikanoja’s net sales for the first quarter decreased by 2.1% to EUR 167.7 million (EUR 171.3 million). Operating profit was EUR 6.3 million (EUR 4.9 million), representing 3.8% (2.9%) of net sales, and operating profit excluding non-recurring items was EUR 6.8 million (EUR 5.0 million). Earnings per share were EUR 0.12 (EUR 0.07).

Comparable net sales includes EUR 4.0 million worth of net sales generated by L&T Recoil and the divested parts of the eco product business.

Operating profit grew by EUR 1.4 million from the comparison period to EUR 6.3 million.
Operating profit was reduced by the non-recurring reorganisation costs of EUR 0.5 million (EUR 0.1 million).

Financial summary

* Breakdown of operating profit excluding non-recurring items is presented below the division reviews.

NET SALES AND FINANCIAL PERFORMANCE BY DIVISION

Environmental Services
The division’s net sales for the first quarter were down by 8.0% to EUR 60.2 million (EUR 65.5 million). Operating profit totalled EUR 6.2 million (EUR 4.3 million) and operating profit excluding non-recurring items was EUR 6.2 million (EUR 4.3 million).

The division’s net sales fell following the slowdown in construction, which reduced the demand for interchangeable platforms and the construction waste recycling volumes. Meanwhile in waste management, demand has remained normal. Recycled raw material volumes decreased in the first quarter following a decline in retail sales.

Comparable net sales includes EUR 4.0 million worth of net sales generated by L&T Recoil and the divested parts of the eco product business.

Profitability improved thanks to efficiency improvement measures taken in 2012.

Industrial Services
The division’s net sales for the first quarter totalled EUR 13.7 million (EUR 12.9 million), showing an increase of 6.2%. Operating loss totalled EUR 0.5 million (operating loss EUR 1.3 million) and operating profit excluding non-recurring items was EUR 0.5 million (operating loss EUR 1.3 million).

Healthy demand for process cleaning boosted net sales. The late arrival of spring had a negative effect on the demand for sewer maintenance services and environmental construction in the first quarter.

Although the division recorded a loss, as expected, the loss was smaller than in the comparison period thanks to the healthy profitability in hazardous waste recycling services.

Facility Services
The division’s net sales for the first quarter were down by 4.8% to EUR 75.8 million (EUR 79.6 million). Operating profit totalled EUR 0.4 million (EUR 1.6 million) and operating profit excluding non-recurring items was EUR 0.8 million (EUR 1.7 million).

The division’s net sales declined from the comparison period due to lower demand for damage repair services.

The decrease in net sales in technical systems services and damage repair services, resulting from the smaller number of damage repair orders than in the comparison period, had a negative impact on the division's profitability. The Facility Services division is currently taking efficiency enhancement measures designed to improve profitability. Profitability of the cleaning business improved from the comparison period.

Renewable Energy Sources
First quarter net sales of Renewable Energy Sources (L&T Biowatti) were up by 23.8% to EUR 21.8 million (EUR 17.6 million). The division recorded an operating profit of EUR 1.0 million (EUR 0.8 million), and an operating profit excluding non-recurring items of EUR 1.0 million (EUR 0.8 million).

There was a significant improvement in the division’s net sales from the comparison period, due to increased demand for wood-based fuels.

The increase in operating profit is largely attributed to net sales growth. Meanwhile profitability suffered from the weaker energy content and higher logistics costs.

BREAKDOWN OF OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS
  

FINANCING

Cash flows from operating activities amounted to EUR 27.0 million (EUR 8.9 million). As a result of efficiency enhancement measures, a total of EUR 12.9 million in working capital was released (EUR 2.5 million tied up).

At the end of the period, interest-bearing liabilities amounted to EUR 97.4 million (EUR 159.0 million). L&T Recoil accounted for EUR 17.7 million of the interest-bearing liabilities in the reference period. Guarantees of EUR 16.4 million given by Lassila & Tikanoja to other providers of finance for these liabilities are still in force. In addition L&T had receivables from EcoStream Group of EUR 3.3 million.

Net interest-bearing liabilities amounted to EUR 83.6 million, showing an increase of EUR 1.3 million from the beginning of the year and a decrease of EUR 68.7 million from the comparison period.

Net finance costs decreased significantly in the first quarter and amounted to EUR 0.4 million (EUR 1.0 million). Net finance costs were 0.2% (0.6%) of net sales.

The average interest rate on long-term loans (with interest-rate hedging) was 2.2% (3.1%). Long-term loans totalling EUR 23.4 million will mature during the rest of the year.

The equity ratio was 46.3% (39.7%) and the gearing rate 38.9 (75.4). Liquid assets at the end of the period amounted to EUR 13.8 million (EUR 7.8 million).

Of the EUR 100 million commercial paper programme, EUR 16 million (EUR 46 million) was in use at the end of the period. A committed limit totalling EUR 30.0 million, was not in use, as was the case in the comparison period.

DISTRIBUTION OF ASSETS

The Annual General Meeting held on 12 March 2013 resolved that the profit for 2012 be placed in retained earnings and that no dividend be paid. A capital repayment of EUR 0.60 per share was paid for the financial year 2012. The capital repayment, totalling EUR 23.2 million, was paid to the shareholders on 22 March 2013.

CAPITAL EXPENDITURE

Capital expenditure totalled EUR 5.9 million (EUR 11.5 million) and was mainly comprised of machine and equipment purchases.

PERSONNEL

In January-March the average number of employees converted into full-time equivalents was 7,938 (8,119). The total number of full-time and part-time employees at the end of the period was 8,988 (9,229). Of them 7,074 (7,257) people worked in Finland and 1,914 (1,972) people in other countries.

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 in January-March was 1,900,719 which is 4.9% (7.1%) of the average number of outstanding shares. The value of trading was EUR 23.8 million (EUR 31.4 million). The trading price varied between EUR 11.60 and EUR 13.15. The closing price was EUR 12.54. The market capitalisation excluding the shares held by the company was EUR 485.3 million (EUR 426.7 million) at the end of the period.

Own shares
At the beginning of the year the company held 106,810 of its own share and at the end of the period 92,247 shares, representing 0.2% of all shares and votes.

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 38,685,569 shares. The average number of shares excluding the shares held by the company totalled 38,695,703.

Share-based incentive programme 2013
Lassila & Tikanoja plc’s Board of Directors decided on 17 December 2012 on a new share-based incentive programme. The programme’s earnings period began on 1 January 2013 and ends on 31 December 2013. Potential rewards to be paid for the year 2013 will be based on the EVA result of Lassila & Tikanoja group. Potential rewards will be paid partly as shares and partly in cash. A maximum total of 53,300 Lassila & Tikanoja plc shares may be paid out on the basis of the programme. The programme covers 10 persons.

Shareholders
At the end of the period, the company had 9,759 (9,460) shareholders. Nominee-registered holdings accounted for 16.6% (15.1%) of the total number of shares.

Notifications on major holdings
On 13 March 2013, Nordea Investment Fund Company Finland announced that its holding of the shares and votes in Lassila & Tikanoja plc had risen to 5.5%.

On 10 April 2013, Nordea Investment Fund Company Finland announced that its holding of the shares and votes in Lassila & Tikanoja plc had fallen to 4.98%.

Authorisation for the Board of Directors
The Annual General Meeting held on 12 March 2013 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. In addition, the Annual General Meeting authorised the Board of Directors to decide on the share issue and the issuance of special rights entitling to shares.

The Board of Directors is authorised to purchase 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.

The Board of Directors is authorised to decide on issuance of new shares or shares possibly held by the Company through share issue and/or issuance of option rights or other special rights entitling to shares, referred to in Chapter 10, Section 1 of the Finnish Companies Act, so that by virtue of the authorisation altogether 500,000 shares, which is 1.3% of the total number of shares, may be issued and/or conveyed at the maximum. The share issue authorisation will be effective for 18 months.

RESOLUTIONS BY THE GENERAL MEETING

The Annual General Meeting of Lassila & Tikanoja plc, which was held on 12 March 2013, adopted the financial statements for the financial year 2012 and released the members of the Board of Directors and the Presidents and CEO from liability.

The AGM resolved that the profit for 2012 be placed in retained earnings and that no dividend be paid. A capital repayment of EUR 0.60 per share, as proposed by the Board of Directors, would be paid for the financial year 2012 on the basis of the balance sheet adopted. The capital repayment, totalling EUR 23.2 million, payment date was resolved to be on 22 March 2013.

The Annual General Meeting confirmed the number of the members of the Board of Directors five. The following Board members were re-elected to the Board until the end of the following AGM: Heikki Bergholm, Eero Hautaniemi, Hille Korhonen, Sakari Lassila and Miikka Maijala.

KPMG Oy Ab, Authorised Public Accountants, was elected auditor. KPMG Oy Ab has announced that it will name Lasse Holopainen, Authorised Public Accountant, as its principal auditor.

The resolutions of the Annual General Meeting were announced in more detail in a stock exchange release on 12 March 2013.

BOARD OF DIRECTORS

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

From among its members, the Board elected Eero Hautaniemi as Chairman and Sakari Lassila and Miikka Maijala as members of the audit committee. Heikki Bergholm was elected as Chairman of the remuneration committee and Hille Korhonen as member of the committee.

SUMMARY OF STOCK EXCHANGE RELEASES PURSUANT TO ARTICLE 4, CHAPTER 6 OF THE SECURITIES MARKETS ACT

In a release published on 25 March 2013, the company announced the comparable figures for 2012 based on the new business structure.

EVENTS AFTER THE PERIOD

In a release published on 9 April 2013, the company announced that as part of EcoStream Oy’s capital arrangements, Lassila & Tikanoja plc subscribed for EcoStream Oy shares for a total of EUR 2.0 million on 8 April 2013. The subscription price was EUR 3.00 per share. This subscription was financed through a conversion of Lassila & Tikanoja’s remaining sale price receivable from the L&T Recoil Oy divestment, EUR 2.0 million, into EcoStream Oy shares. Consequently, the arrangement had no direct impact on cash flow. Following this arrangement and EcoStream Oy’s other capital arrangements, Lassila & Tikanoja’s ownership in EcoStream Oy fell to approximately 16.4 per cent.

In connection with the arrangement, Lassila & Tikanoja’s Board of Directors decided on a write-down of all shares held by Lassila & Tikanoja plc to EUR 3.00 per share. As a result of this write-down, the company will record an impairment of EUR 5.1 million on EcoStream Oy’s shares for the second quarter.

After the write-down, the balance sheet value of the EcoStream shares held by L&T will be approximately EUR 3.6 million.

The impairment will be treated as a non-recurring cost item, with no impact on cash flow.

NEAR-TERM RISKS AND UNCERTAINTIES

Economic uncertainty may cause major changes in the Environmental Services division’s secondary raw material markets and in the Industrial Services division’s demand.

Uncertainties associated with government subsidies for renewable fuels and with their continuity could affect demand for the Renewable Energy Sources division's services.

More detailed information on L&T's risks and risk management is available in the Annual Report for 2012, in the report of the Board of Directors, and in the consolidated financial statements.

OUTLOOK FOR THE REST OF THE YEAR

Full-year net sales in 2013 are expected to remain at the 2012 level. Operating profit, excluding non-recurring items, is expected to remain at the 2012 level or improve slightly.

CONDENSED FINANCIAL STATEMENTS 1 JANUARY-31 MARCH 2013

CONSOLIDATED INCOME STATEMENT
  

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
  

CONSOLIDATED STATEMENT OF FINANCIAL POSITION