Annual / Quarterly Financial Statement • Feb 2, 2012
Annual / Quarterly Financial Statement
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Lassila & Tikanoja's net sales for the final quarter increased by 10.2% to EUR 167.0 million (EUR 151.5 million). Operating losses totalled EUR 7.9 million (operating profit EUR 8.6 million), representing 4.7% (5.6%) of net sales. Operating profit excluding non-recurring items was EUR 9.6 million (EUR 9.1 million). Earnings per share were EUR 0.18 negative (earnings per share EUR 0.14).
With the exception of Renewable Energy Sources, all divisions reported continued net sales growth, approximately half of this growth being organic. Increased waste and recycling volumes and the sustained healthy workload in Property Maintenance prompted demand. In the cleaning business, growth was generated by acquisitions made in the first half.
The year-on-year improvement in operating profit excluding non-recurring items could be primarily attributed to the healthy workload in maintenance services for technical systems and damage repair services. Operating losses excluding non-recurring items sustained by the Renewable Energy Sources division and the joint venture L&T Recoil, grew from the comparison period.
An impairment loss of EUR 17.1 million for the goodwill and other assets of the Renewable Energy Sources division was recognised as a non-recurring cost in the final quarter (an impairment of EUR 17.8 million was announced on 15 December 2011). The impairment loss is due to the weakening competitiveness of woodbased fuels in the long term and a significant decline in government subsidies for promoting the use of forest energy.
Lassila & Tikanoja's full-year net sales grew by 9.0% to EUR 652.1 million (EUR 598.2 million). Operating profit was EUR 25.6 million (EUR 40.2 million), representing 3.9% (6.7%) of net sales, and operating profit excluding non-recurring items was EUR 44.3 million (EUR 45.5 million). Earnings per share were EUR 0.44 (EUR 0.68).
Net sales grew from the comparison period, as demand for Environmental Services and industrial cleaning services perked up. The workload for Property Maintenance remained strong throughout the year. In addition, the acquisitions made in the first half boosted net sales. Acquisitions generated almost half of net sales growth. Meanwhile, the sale of wood-based fuels fell clearly short of the comparison period's level, due to their weak competitiveness.
Full-year operating profit excluding non-recurring items remained at the comparison period's level. Higher salary, subcontracting and fuel costs, as well as the temporary rise in waste disposal costs in the first half, eroded profitability. All divisions implemented price increases to match the rise in costs.
Full-year operating profit was taxed by the non-recurring impairment loss of EUR 17.1 million recognised for the goodwill and other assets of the Renewable Energy Sources division (an impairment of EUR 17.8 million was announced on 15 December 2011). In the comparison period, non-recurring costs of EUR 3.4 million were recognised for the discontinuation of the wood-pellet business.
The Group's tax rate was 19.2 per cent. A general decrease in the tax rate in Finland, as well as the Administrative Court's decision on the tax deductibility of dissolution loss write-off, lowered the tax rate.
| 10-12/ | 10-12/ | Change | 1-12/ | 1-12/ | Change | |
|---|---|---|---|---|---|---|
| 2011 | 2010 | % | 2011 | 2010 | % | |
| Net sales, EUR million | 167.0 | 151.5 | 10.2 | 652.1 | 598.2 | 9.0 |
| Operating profit excluding non-recurring items, | ||||||
| EUR million* | 9.6 | 9.1 | 5.4 | 44.3 | 45.5 | -2.7 |
| Operating profit, EUR million | -7.9 | 8.6 | 25.6 | 40.2 | -36.4 | |
| Operating margin, % | -4.7 | 5.6 | 3.9 | 6.7 | ||
| Profit before tax, EUR million | -9.0 | 7.6 | 21.0 | 36.0 | -41.7 | |
| Earnings per share, EUR | -0.18 | 0.14 | 0.44 | 0.68 | -35.3 | |
| Capital repayment, EUR | 0.55** | 0.55*** | ||||
| EVA, EUR million | -14.9 | 1.2 | -2.2 | 10.1 |
* Breakdown of operating profit excluding non-recurring items is presented below the division reviews. ** Proposal by the Board of Directors
*** Dividend/share, EUR
The division's net sales for the final quarter increased by 13.5% to EUR 84.0 million (EUR 74.0 million). Operating profit amounted to EUR 8.3 million (EUR 8.2 million), and operating profit excluding non-recurring items was EUR 8.3 million (EUR 8.2 million).
All services were able to grow their net sales, thanks to higher waste volumes and service demand. Recycling volumes remained robust, even though prices of secondary raw materials fell somewhat from the previous quarter.
New long-term service agreements were signed during the quarter. Of particular importance was expansion of the coverage of an agreement on the recycling of beverage containers with a refund value. The renewed agreement will enter into force in the first half of 2012.
The division's operating profit remained at the comparison period's level, primarily due to volume growth. In waste management, prices of services were revised at the turn of the year to match higher production costs.
The performance of the joint venture L&T Recoil deteriorated from the comparison period due to reduced demand for the end-product and lower prices. However, the plant's reliability improved following a scheduled maintenance shutdown in early autumn.
Although net sales generated by the division's international operations remained largely unchanged from the comparison period, profitability declined mainly due to weaker profitability in Latvia.
The division's full-year net sales increased by 12.4% to EUR 325.9 million (EUR 290.0 million). Operating profit amounted to EUR 34.0 million (EUR 33.7 million), and operating profit excluding non-recurring items was EUR 34.0 million (EUR 34.0 million).
The division's net sales growth was primarily organic and could be attributed to the increase in waste volumes and healthy demand for industrial services. Similarly, the volumes and price level of secondary raw materials improved until the early autumn, but prices started to fall slightly at the year-end. The acquisition of Papros Oy in the second quarter strengthened the division's position in the recycled fibre markets.
The division's operating profit was at the comparison period's level. In the first half, profitability was affected by lower than planned operating rates of recycling plants, a temporary increase in waste disposal costs, and increased production costs. The division did not entirely succeed in adapting its process cleaning services to fluctuations in demand, but extensive service shutdown-related assignments in the summer months were completed successfully.
The joint venture L&T Recoil was able to improve its net sales from the comparison period. The plant's operating rate and reliability improved towards the year-end, even though the end-product supply failed to reach the target level. The joint venture was able to decrease its losses from the comparison period despite two, almost month-long maintenance shutdowns during the year.
The division's year-on-year net sales from international operations remained unchanged but operating profit declined slightly. The competitive environment for Environmental Services in Latvia has become increasingly tight, which hampered business development and eroded profitability.
During the year, several extensive service agreements were signed with retail chains and producer liability organisations. A new Managreen service was successfully launched on the market. This concept offers customers the ability to manage their environmental management agreements and the related network partners.
The division's net sales for the final quarter totalled EUR 40.1 million (EUR 34.6 million); an increase of 16.0%. Operating profit amounted to EUR 0.9 million (EUR 0.2 million), and operating profit excluding non-recurring items was EUR 1.1 million (EUR 0.3 million).
The division's net sales growth could be attributed to acquisitions made in the first half. Furthermore, commissioned assignments in Finland sold better than a year earlier.
The division's operating profit rose from the comparison period, thanks to the Finnish operations. Meanwhile, the result from international operations was clearly in the red, due to the integration costs affecting Swedish operations and because of lost customers. A new operational enhancement programme was launched in Sweden, with the objective of improving profitability and operational efficiency.
The Cleaning and Office Support Services division's full-year net sales grew by 11.8% to EUR 157.3 million (EUR 140.6 million). Operating profit amounted to EUR 7.1 million (EUR 7.5 million), and operating profit excluding non-recurring items was EUR 7.5 million (EUR 8.0 million).
The division's year-on-year net sales growth could be primarily attributed to acquisitions made in the first half (Hansalaiset in Finland and Östgöta Städ in Sweden). Sales of commissioned assignments also grew from the comparison period.
Start-up costs of new projects in the first half and higher-than-expected integration costs associated with the acquisitions made in the second quarter had a negative impact on the division's profitability.
In the comparison period, the EUR 0.7 million credit loss recognised for Russian operations weakened the operating profit.
The division's net sales for the final quarter increased by 5.9% to EUR 33.5 million (EUR 31.6 million). Operating profit amounted to EUR 1.9 million (EUR 0.6 million), and operating profit excluding non-recurring items was EUR 1.9 million (EUR 0.6 million).
Strong demand for maintenance services for technical systems and in damage repair services contributed to sustained net sales growth. In property maintenance, the lack of snow in early winter restricted demand for commissioned assignments.
Operating profit improved clearly from the comparison period, thanks to demand for maintenance services for technical systems and damage repair services.
The Property Maintenance division's full-year net sales increased by 9.0% to EUR 134.6 million (EUR 123.5 million). Operating profit amounted to EUR 8.2 million (EUR 7.8 million), and operating profit excluding nonrecurring items was EUR 8.2 million (EUR 7.9 million).
The division's net sales grew from the comparison period, thanks to successful sales of commissioned assignments of property maintenance in the first half and the strong workload in maintenance services for technical systems and damage repair services. Heavy snowfall in the first half and more extensive partnerships with insurance companies helped boost sales of commissioned assignments.
The division's full-year operating profit rose despite increased production and overtime costs. The profitability of commissioned assignments was also weaker than a year earlier.
Final-quarter net sales for Renewable Energy Sources (L&T Biowatti) were down by 17.6%, to EUR 12.6 million (EUR 15.3 million). Operating loss amounted to EUR 18.2 million (a loss of EUR 0.4 million), and operating loss excluding non-recurring items was EUR 1.1 million (EUR 0.0 million).
Wood-based fuels continued to generate weak net sales in the final quarter, due to intense competition and the mild and humid weather.
The division's operating profit excluding non-recurring items fell, even though fixed costs were clearly lower than in the comparison period. In addition to low demand, higher subcontracting costs also taxed profitability.
An impairment loss of EUR 17.1 million for goodwill and other assets was recognised as a non-recurring cost for the quarter. The impairment is due to the weakening competitiveness of wood-based fuels in the long term and a significant decline in government subsidies for promoting the use of forest energy.
The full-year net sales of Renewable Energy Sources (L&T Biowatti) were down by 17.6% to EUR 45.4 million (EUR 55.1 million). Operating loss amounted to EUR 21.3 million (a loss of EUR 6.6 million), and operating loss excluding non-recurring items was EUR 3.8 million (a loss of EUR 3.1 million).
The competitiveness of wood-based fuels was weak throughout the year. In the first half of the year, power plant customers did not receive any subsidy for electricity generation from forest processed chips. As a result, several power plants replaced forest processed chips with fossil fuels. The warm weather in the autumn and in the early winter also curbed demand for forest processed chips. Besides lower demand, profitability was also eroded by higher collection and logistics costs.
A reorganisation programme involving fixed cost cuts and operational efficiency enhancement measures was launched to improve the division's competitiveness.
An impairment loss of EUR 17.1 million for the division's goodwill and other assets was recognised as a nonrecurring cost. In the comparison period, the non-recurring costs of EUR 3.4 million related to the discontinuation of the wood-pellet business reduced operating profit.
| 10-12/ | 10-12/ | 1-12/ | 1-12/ | |
|---|---|---|---|---|
| EUR million | 2011 | 2010 | 2011 | 2010 |
| Operating profit | -7.9 | 8.6 | 25.6 | 40.2 |
| Non-recurring items: | ||||
| Impairment of L&T Biowatti | 17.1 | 17.1 | ||
| Discontinuation of wood pellet production of L&T Biowatti | 0.4 | 0.1 | 3.4 | |
| Discontinuation of cleaning business in Moscow | 0.1 | 0.4 | ||
| Restructuring costs | 0.4 | 1.5 | 1.5 | |
| Operating profit excluding non-recurring items | 9.6 | 9.1 | 44.3 | 45.5 |
Cash flows from operating activities amounted to EUR 74.5 million (EUR 63.8 million). EUR 3.2 million was released from the working capital (EUR 2.2 million tied up).
At the end of the year, interest-bearing liabilities amounted to EUR 135.2 million (EUR 126.8 million). Net interest-bearing liabilities amounted to EUR 127.2 million, showing an increase of EUR 14.8 million from the beginning of the year.
Net finance costs in 2011 amounted to EUR 4.6 million (EUR 4.2 million). Net finance costs were 0.7% (0.7%) of net sales. The average interest rate on long-term loans (with interest-rate hedging) was 3.1% (3.3%). Longterm loans totalling EUR 24.5 million will mature during 2012.
The equity ratio was 44.5% (46.5%) and the gearing rate 58.3 (50.3). Liquid assets at the end of the period amounted to EUR 8.1 million (EUR 14.5 million).
The commercial paper programme was expanded to EUR 100 million (previously EUR 50 million) during the second half of the year. Of the commercial paper programme, EUR 17 million (EUR 5.0 million) was in use at the end of the year.
A new three-year EUR 30 million committed limit agreement was signed during last quarter. The earlier EUR 15.0 million committed limit will mature in June 2012. Committed limits were not in use, as was the case in the comparison period.
The Annual General Meeting held on 17 March 2011 resolved on a dividend of EUR 0.55 per share. The dividend, totalling EUR 21.3 million, was paid to the shareholders on 29 March 2011.
Capital expenditure totalled EUR 70.6 million (EUR 39.3 million) in 2011, a third of this consisting of acquisitions.
In the first quarter, Pentti Laurila Ky and businesses of Matti Hossi Ky and PPT Luttinen Oy were acquired into Environmental Services. The business of Kestosiivous Oy was acquired into Cleaning and Office Support Services and the business of KH-Kiinteistöhuolto Oy was acquired into Property Maintenance.
In the second quarter, the Environmental Services division acquired Papros Oy and Full House Oy. The Cleaning and Office Support Services division acquired Savon Kiinteistöhuolto- ja Siivouspalvelu Oy, Varkauden Kiinteistönhoito ja Siivouspalvelu Oy, Jo-Pe Huolto Oy, Östgöta Städ Ab and WTS-Palvelut Oy. The Cleaning and Office Support Services and the Property Maintenance divisions acquired the Hansalaiset Oy group including its subsidiaries.
In the final quarter the Environmental Services division acquired Paraisten Puhtaanapito Oy. The Cleaning and Office Support Services division acquired Palvelusiivous Ulla Haavisto Oy and the Property Maintenance division acquired Nastolan Talohuolto Oy.
After the period, the Property Maintenance division acquired the property mainantenance businesses of IK Kiinteistöpalvelu Oy and the business of Jyvässeudun Talonmiehet Oy and Kiinteistöhuolto Markku Hyttinen Oy.
In 2011 the average number of employees converted into full-time equivalents was 8,513 (7,835). The total number of full-time and part-time employees at the end of the period was 9,357 (8,732). Of them 7,381 (6,849) people worked in Finland and 1,976 (1,883) people in other countries.
According to the financial statements, Lassila & Tikanoja plc's unrestricted equity amount to EUR 111,645,234.28 with the operating profit for the period representing EUR 11,521,380.63. There were no substantial changes in the financial standing of the company after the end of the period, and the solvency test referred to in Chapter 13, section 2 of the Companies Act does not affect the amount of distributable assets.
The Board of Directors proposes to the Annual General Meeting that the profit for 2011 be placed in retained earnings and that no dividend be paid.
The Board of Directors proposes to the Annual General Meeting that, based on the balance sheet to be adopted for 2011, a capital repayment of EUR 0.55 per share be made. Capital is repaid from the reserve for invested unrestricted equity. Capital is repaid to shareholders included in the company shareholder register maintained by Euroclear Finland Oy on the record date, 20 March 2012. The Board proposes to the Annual General Meeting that the capital repayment be made on 27 March 2012.
No dividend shall be paid on shares held by the company on the dividend payment record date of 20 March 2012. On the day the proposal for the distribution of assets was made, the number of shares entitling to capital repayment was 38,685,569, which means the total amount of the capital repayment would be EUR 21,277,062.95.
The volume of trading excluding the shares held by the company in Lassila & Tikanoja plc shares on NASDAQ OMX Helsinki in 2011 was 8,915,140 which is 23.0% (20.0%) of the average number of outstanding shares. The value of trading was EUR 108.2 million (EUR 111.1 million). The trading price varied between EUR 9.49 and EUR 15.18. The closing price was EUR 11.49. At the end of the period, the company held 113,305 of its own shares. The market capitalisation excluding the shares held by the company was EUR 444.5 million (EUR 570.6 million) at the end of the period.
At the beginning of the period, the company held 60,758 of its own shares and at the end 113,305 of its own shares, representing 0.3% of all shares and votes. Based on the authorisation given by the Annual General Meeting 2010, the company repurchased 50,000 shares in the period from 12 September to 23 September 2011 at a total acquisition cost of EUR 0.5 million. On 5 April 2011, a total of 2,547 shares of Lassila & Tikanoja plc were returned to the company free of consideration, by virtue of the terms of the share-based incentive programme of 2009.
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 38,721,908.
The exercise period for the 2005C options ended on 31 May 2011.
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 16.20. It was reduced by EUR 0.07 as of 22 March 2011. 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 is 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. The 2008 options have been listed on NASDAQ OMX Helsinki since 1 November 2010.
Lassila & Tikanoja plc's Board of Directors decided on 24 March 2009 on a share-based incentive programme. The programme included three earnings periods one year each, of which the first one began on 1 January 2009 and the last one ended on 31 December 2011. No rewards were paid for the year 2011. Rewards were based on the EVA result of Lassila & Tikanoja group. The programme covered 23 persons.
Lassila & Tikanoja plc's Board of Directors decided on 14 December 2011 on a new share-based incentive programme. Rewards will be based on the EVA result of Lassila & Tikanoja group without L&T Recoil. They will be paid partly as shares and partly in cash. The part paid in cash will cover the taxes caused by the reward. Based on the programme a maximum of 65,520 shares of the company can be granted. The company will buy the shares from the stock market. The programme covers 22 persons.
At the end of the financial period, the company had 9,365 (9,151) shareholders. Nominee-registered holdings accounted for 13.0% (12.2%) of the total number of shares.
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.
The Board of Directors is authorised to transfer a maximum of 500,000 company shares, which is 1.3% of the total number of shares. The share issue authorisation will be effective for four years and it revokes the authorisation to issue shares issued by the Annual General Meeting 2009. The authorisation for the repurchase of the company's own shares has ended.
The Board of Directors is not authorised to launch a convertible bond or share option rights.
The Extraordinary General Meeting of Lassila & Tikanoja plc, which was held on 8 September 2011, resolved on decreasing the share premium reserve of the balance sheet at 31 December 2010 by EUR 50,672,564.52 by transferring all the funds in the share premium reserve to the unrestricted equity reserve. The resolutions of the Extraordinary General Meeting were announced in more detail in a stock exchange release on 8 September 2011.
The Annual General Meeting of Lassila & Tikanoja plc, which was held on 17 March 2011, adopted the financial statements for the financial year 2010 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 per share, a total of EUR 21.3 million, as proposed by the Board of Directors, be paid for the financial year 2010. The dividend payment date was resolved to be 29 March 2011.
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 Miikka Maijala. Sakari Lassila was elected as a new member for the same term.
PricewaterhouseCoopers Oy, Authorised Public Accountants, was elected auditor.
The resolutions of the Annual General Meeting were announced in more detail in a stock exchange release on 17 March 2011.
The members of the Board of Directors are Heikki Bergholm, Eero Hautaniemi, Matti Kavetvuo (until 27 December 2011), Hille Korhonen, Sakari Lassila and Miikka Maijala. In its constitutive meeting the Board elected Heikki Bergholm as Chairman of the Board and Matti Kavetvuo 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 Matti Kavetvuo and Hille Korhonen as members of the committee.
Matti Kavetvuo, Vice Chairman of the Board, announced his resignation from the Board of Directors on 27 December 2011 and Eero Hautaniemi was elected as the new Vice Chairman of the Board.
On 13 June 2011, the Board of Directors of Lassila & Tikanoja plc appointed Pekka Ojanpää as President and CEO of the company. Mr Ojanpää assumed his position as Lassila & Tikanoja's President and CEO on 1 November 2011. Ville Rantala, CFO of Lassila & Tikanoja, appointed as acting President and CEO as of 13 June. Other changes in the management of the company are presented below.
In a release published on 22 March 2011, the company announced that M.Sc. (Econ.) Ville Rantala has been appointed as Managing Director of L&T Biowatti Oy and Vice President, Renewable Energy Sources division, as of 22 March 2011. Rantala will also continue as CFO of Lassila & Tikanoja plc. Tomi Salo, Managing Director of L&T Biowatti, will not continue in the company.
In a release published on 5 April 2011, the company announced that a total of 2,547 shares of Lassila & Tikanoja plc have been returned to the company free of consideration, by virtue of the terms of the share-based incentive programme of 2009.
In a release published on 13 June 2011, the company announced that the Board of Directors of Lassila & Tikanoja plc has appointed Pekka Ojanpää as President and CEO. Pekka Ojanpää acts as President of Kemira's Municipal & Industrial segment. He previously worked as President of the Kemira Performance Chemicals business area, and has held various executive positions at Nokia Corporation. On 27 October 2011, the company announced that Mr Ojanpää assumed his position as Lassila & Tikanoja's President and CEO on 1 November 2011. The Board of Directors and Jari Sarjo, former President and CEO, agreed that Sarjo will leave his position as President and CEO immediately. Ville Rantala, CFO of Lassila & Tikanoja, was appointed as acting President and CEO as of 13 June.
In a release published on 7 December, the company announced that as of 1 January 2012, Kirsi Matero has been appointed HR Director and Group Executive of Lassila & Tikanoja plc. Inkeri Puputti, current HR Director, will leave the company.
In a release published on 15 December the company announced that it will recognise an impairment loss of EUR 17.8 million for the goodwill of business operations and other assets of the Renewable Energy Sources division in the final quarter. The impairment loss is due to the weakening competitiveness of wood-based fuels in the long term and a remarkable decline in government subsidies for promoting the use of forest energy. The impairment loss is treated as a non-recurring expense and it does not have cash flow effect.
In a release published on 16 December the company announced that Tuomas Mäkipeska has been appointed Business Development Director and Group Executive of Lassila & Tikanoja plc as of 16 February 2012, at the latest.
In a release published on 13 January the company announced that Antti Tervo has been appointed Chief Procurement Officer and Group Executive of Lassila & Tikanoja plc as of 14 February 2012.
Economic uncertainty may cause remarkable changes in the Environmental Services division's secondary raw material markets and in industrial customer relationships.
Any disturbances in L&T Recoil plant's production could have a negative effect on the Environmental Services division's performance. End-product and raw material price fluctuations, as well as the plant's supply volumes, have a major effect on L&T Recoil's performance.
Uncertainties associated with the government subsidies for renewable fuels and 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 2010, in the report of the Board of Directors, and in the consolidated financial statements.
The markets in which L&T primarily operates are mainly low-cyclical, and the majority of the company's net sales comes from long-term service agreements. However, general economic developments reflect on L&T's operations, particularly commissioned environmental and support service assignments.
Despite the economic uncertainty, the outlook for Environmental Services is, by and large, stable. The secondary raw material price development and the operational reliability of L&T Recoil's plant in particular will affect the division's profitability.
Prospects for Cleaning and Office Support Services and for Property Maintenance are stable, but economic uncertainty is keeping competition tough in both divisions.
Demand for L&T Biowatti's wood-based fuels is expected to grow slightly and the division's profitability is expected to improve. Any changes in the government subsidies for renewable fuels could, however, impact L&T Biowatti's raw material procurement costs and demand for the end-product.
Full-year net sales is expected to remain at the 2011 level and operating profit excluding non-recurring items is expected to remain at the 2011 level or to improve slightly in 2012.
| EUR 1000 | 10-12/2011 | 10-12/2010 | 1-12/2011 | 1-12/2010 |
|---|---|---|---|---|
| Net sales | 167 001 | 151 507 | 652 130 | 598 193 |
| Cost of sales | -151 706 | -137 761 | -584 152 | -531 066 |
| Gross profit | 15 295 | 13 746 | 67 978 | 67 127 |
| Other operating income | 1 026 | 1 638 | 3 038 | 2 708 |
| Selling and marketing costs | -3 926 | -3 804 | -15 217 | -13 779 |
| Administrative expenses | -2 818 | -2 260 | -11 408 | -10 519 |
| Other operating expenses | -422 | -767 | -1 733 | -2 686 |
| Impairment, non-current assets | -5 677 | -5 677 | -2 632 | |
| Impairment, goodwill and other intangible | ||||
| assets | -11 384 | -11 384 | ||
| Operating profit | -7 906 | 8 553 | 25 597 | 40 219 |
| Finance income | 329 | 323 | 1 041 | 1 053 |
| Finance costs | -1 428 | -1 310 | -5 644 | -5 282 |
| Profit before tax | -9 005 | 7 566 | 20 994 | 35 990 |
| Income tax expense | 2 140 | -2 254 | -4 030 | -9 786 |
| Profit for the period | -6 865 | 5 312 | 16 964 | 26 204 |
| Attributable to: | ||||
| Equity holders of the company | -6 865 | 5 310 | 16 960 | 26 188 |
| Non-controlling interest | 0 | 2 | 4 | 16 |
| Earnings per share for profit attributable to the equity holders of the company: | ||||
| Basic earnings per share, EUR | -0.18 | 0.14 | 0.44 | 0.68 |
| Diluted earnings per share, EUR | -0.18 | 0.14 | 0.44 | 0.68 |
| 10-12/ | 10-12 | 1-12/ | 1-12/ | |
|---|---|---|---|---|
| EUR 1000 | 2011 | /2010 | 2011 | 2010 |
| Profit for the period | -6 865 | 5 312 | 16 964 | 26 204 |
| Other comprehensive income, after tax | ||||
| Hedging reserve, change in fair value | 928 | 314 | -487 | 224 |
| Revaluation reserve | ||||
| Gains in the period | -13 | -3 | -4 | -58 |
| Current available-for-sale financial assets | -13 | -3 | -4 | -58 |
| Currency translation differences | 645 | 236 | 111 | 777 |
| Currency translation differences, non-controlling | ||||
| interest | 7 | 6 | -11 | 14 |
| Other comprehensive income, after tax | 1 567 | 553 | -391 | 957 |
| Total comprehensive income, after tax | -5 298 | 5 865 | 16 573 | 27 161 |
| Attributable to: | ||||
| Equity holders of the company | -5 305 | 5 856 | 16 580 | 27 130 |
| Non-controlling interest | 7 | 9 | -7 | 31 |
| 31.12.2011 | 31.12.2010 | |||||||
|---|---|---|---|---|---|---|---|---|
| EUR 1 000 | Before tax |
Tax expense/ benefit |
After tax |
Before tax |
Tax expense/be nefit |
After tax | ||
| Hedging reserve, change in fair value |
-623 | 136 | -487 | 302 | -78 | 224 | ||
| Revaluation reserve Current available-for-sale |
||||||||
| financial assets | -5 | 1 | -4 | -60 | 2 | -58 | ||
| Currency translation differences Currency translation differences |
169 | -58 | 111 | 1 275 | -498 | 777 | ||
| non-controlling interest | -11 | -11 | 14 | 14 | ||||
| Components of other comprehensive income |
-470 | 79 | -391 | 1 531 | -574 | 957 |
| EUR 1000 | 12/2011 | 12/2010 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Intangible assets | ||
| Goodwill | 119 509 | 113 467 |
| Customer contracts arising from acquisitions | 10 591 | 4 736 |
| Agreements on prohibition of competition | 3 162 | 10 023 |
| Other intangible assets arising from business acquisitions | 78 | 1 229 |
| Other intangible assets | 11 149 | 13 226 |
| 144 489 | 142 681 | |
| Property, plant and equipment | ||
| Land | 4 589 | 4 671 |
| Buildings and constructions | 78 217 | 78 908 |
| Machinery and equipment | 120 015 | 111 733 |
| Other | 85 | 85 |
| Prepayments and construction in progress | 4 616 | 5 303 |
| 207 522 | 200 700 | |
| Other non-current assets | ||
| Available-for-sale investments | 605 | 598 |
| Finance lease receivables | 3 578 | 3 547 |
| Deferred tax assets | 6 323 | 3 924 |
| Other receivables | 3 315 | 3 401 |
| 13 821 | 11 470 | |
| Total non-current assets | 365 832 | 354 851 |
| Current assets | ||
| Inventories | 27 953 | 27 957 |
| Trade and other receivables | 91 629 | 85 662 |
| Derivative receivables | 419 | 407 |
| Prepayments | 438 | 317 |
| Current available-for-sale financial assets | 2 299 | 9 895 |
| Cash and cash equivalents | 5 770 | 4 653 |
| Total current assets | 128 508 | 128 891 |
| TOTAL ASSETS | 494 340 | 483 742 |
| EUR 1000 | 12/2011 | 12/2010 |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Equity attributable to equity holders of the company | ||
| Share capital | 19 399 | 19 399 |
| Share premium reserve | 50 673 | |
| Other reserves | -2 469 | -2 141 |
| Unrestricted equity reserve | 50 658 | |
| Retained earnings | 133 125 | 128 597 |
| Profit for the period | 16 960 | 26 188 |
| 217 673 | 222 716 | |
| Non-controlling interest | 271 | 278 |
| Total equity | 217 944 | 222 994 |
| Liabilities | ||
| Non-current liabilities | ||
| Deferred tax liabilities | 29 389 | 33 718 |
| Retirement benefit obligations | 628 | 615 |
| Provisions | 2 500 | 2 748 |
| Borrowings | 92 914 | 95 563 |
| Other liabilities | 960 | 364 |
| 126 391 | 133 008 | |
| Current liabilities | ||
| Borrowings | 42 319 | 31 261 |
| Trade and other payables | 105 751 | 94 891 |
| Derivative liabilities | 1 850 | 1 173 |
| Tax liabilities | 85 | 15 |
| Provisions | 400 | |
| 150 005 | 127 740 | |
| Total liabilities | 276 396 | 260 748 |
| TOTAL EQUITY AND LIABILITIES | 494 340 | 483 742 |
| EUR 1000 | 12/2011 | 12/2010 |
|---|---|---|
| Cash flows from operating activities | ||
| Profit for the period | 16 964 | 26 204 |
| Adjustments | ||
| Income tax expense | 4 030 | 9 786 |
| Depreciation, amortisation and impairment | 61 548 | 43 937 |
| Finance income and costs | 4 602 | 4 229 |
| Other | -858 | 1 570 |
| Net cash generated from operating activities before change in working capital | 86 286 | 85 726 |
| Change in working capital | ||
| Change in trade and other receivables | -7 843 | -6 118 |
| Change in inventories | 9 | 4 874 |
| Change in trade and other payables | 11 055 | -918 |
| Change in working capital | 3 221 | -2 162 |
| Interest paid | -6 165 | -5 409 |
| Interest received | 1 020 | 914 |
| Income tax paid | -9 896 | -15 259 |
| Net cash from operating activities | 74 466 | 63 810 |
| Cash flows from investing activities | ||
| Acquisition of subsidiaries and businesses, net of cash acquired | -24 430 | -1 655 |
| Proceeds from sale of subsidiaries and businesses, net of sold cash | 199 | |
| Purchases of property, plant and equipment and intangible assets | -45 503 | -36 003 |
| Proceeds from sale of property, plant and equipment and intangible assets | 1 850 | 3 655 |
| Purchases of available-for-sale investments | -20 | -74 |
| Change in other non-current receivables | 98 | -2 673 |
| Dividends received | 1 | |
| Net cash used in investing activities | -68 005 | -36 550 |
| Cash flows from financing activities | ||
| Change in short-term borrowings | 8 712 | 5 091 |
| Proceeds from long-term borrowings | 20 000 | |
| Repayments of long-term borrowings | -19 761 | -23 166 |
| Dividends paid | -21 284 | -21 301 |
| Repurchase of own shares | -517 | -1 125 |
| Net cash generated from financing activities | -12 850 | -40 501 |
| EUR 1000 | 12/2011 | 12/2010 |
|---|---|---|
| Net change in liquid assets | -6 389 | -13 241 |
| Liquid assets at beginning of period | 14 548 | 27 583 |
| Effect of changes in foreign exchange rates | -90 | 206 |
| Liquid assets at end of period | 8 069 | 14 548 |
| Liquid assets | ||
| EUR 1000 | 12/2011 | 12/2010 |
| Cash and cash equivalents | 5 770 | 4 653 |
|---|---|---|
| Available-for-sale financial assets | 2 299 | 9 895 |
| Total | 8 069 | 14 548 |
| Cur | Equity attribut |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| rency | able | |||||||||
| Share | transla | Invested | Re | to equity | ||||||
| pre | tion | Reva | unrestric | tained | holders | Non | ||||
| Share | mium | differ | luation | Hedging | ted equity | ear | of the | controlling | Total | |
| EUR 1000 | capital | reserve | ences | reserve | reserve | reserve | nings | company | interest | equity |
| Equity at | ||||||||||
| 1.1.2011 | 19 399 | 50 673 | -1 523 | -48 | -570 | 0 | 154 785 | 222 716 | 278 | 222 994 |
| Expense recogni | ||||||||||
| tion of share | ||||||||||
| based benefits | 183 | 183 | 183 | |||||||
| Repurchase of | ||||||||||
| own shares | -553 | -553 | -553 | |||||||
| Dividends paid | -21 290 | -21 290 | -21 290 | |||||||
| Transfer from | ||||||||||
| revaluation re | ||||||||||
| serve | 52 | -15 | 37 | 37 | ||||||
| Transfer from | ||||||||||
| share premium | ||||||||||
| reserve | -50 673 | 50 673 | ||||||||
| Total comprehen | ||||||||||
| sive income | 111 | -4 | -487 | 16 960 | 16 580 | -7 | 16 573 | |||
| Equity at | ||||||||||
| 31.12.2011 | 19 399 | 0 | -1 412 | 0 | -1 057 | 50 658 | 150 085 | 217 673 | 271 | 217 944 |
| Equity at | ||||||||||
| 1.1.2010 | 19 399 | 50 673 | -2 300 | 10 | -794 | 0 | 150 014 | 217 002 | 247 | 217 249 |
| Expense recogni | ||||||||||
| tion of share | ||||||||||
| based benefits | 386 | 386 | 386 | |||||||
| Repurchase of | ||||||||||
| own shares | -489 | -489 | -489 | |||||||
| Dividends paid | -21 313 | -21 313 | -21 313 | |||||||
| Total | ||||||||||
| comprehensive | ||||||||||
| income | 777 | -58 | 224 | 26 187 | 27 130 | 31 | 27 161 | |||
| Equity at | ||||||||||
| 31.12.2010 | 19 399 | 50 673 | -1 523 | -48 | -570 | 0 | 154 785 | 222 716 | 278 | 222 994 |
| 10-12/ | 10-12/ | 1-12/ | 1-12/ | |
|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | |
| Earnings per share, EUR | -0.18 | 0.14 | 0.44 | 0.68 |
| Earnings per share, diluted, EUR | -0.18 | 0.14 | 0.44 | 0.68 |
| Cash flows from operating activities per share, EUR | 0.75 | 0.54 | 1.92 | 1.65 |
| EVA, EUR million | -14.9 | 1.2 | -2.2 | 10.1 |
| Capital expenditure, EUR 1000 | 14 893 | 12 458 | 70 590 | 39 321 |
| Depreciation, amortisation and impairment, EUR 1000 | 28 394 | 10 322 | 61 548 | 43 937 |
| Equity per share, EUR | 5.63 | 5.75 | ||
| Dividend/share, EUR | 0.55 | |||
| Dividend/earnings, % | 81.4 | |||
| Capital repayment / share, EUR | 0.55* | |||
| Capital repayment / earnings, % | 125.0* | |||
| Dividend yield, % | 3.7 | |||
| Capital repayment yield, % | 3.7* | |||
| P/E ratio | 26.2 | 21.8 | ||
| Return on equity, ROE, % | 7.7 | 11.9 | ||
| Return on invested capital, ROI, % | 7.6 | 11.6 | ||
| Equity ratio, % | 44.5 | 46.5 | ||
| Gearing, % | 58.3 | 50.3 | ||
| Net interest-bearing liabilities, EUR 1000 | 127 165 | 112 277 | ||
| Average number of employees in full-time equivalents | 8 513 | 7 835 | ||
| Total number of full-time and part-time employees at end of | ||||
| period | 9 357 | 8 732 | ||
| Number of outstanding shares adjusted for issues, 1000 shares | ||||
| average during the period | 38 722 | 38 749 | ||
| at end of period | 38 686 | 38 738 | ||
| average during the period, diluted | 38 762 | 38 773 | ||
| * Proposal by the board of directors |
This financial statements release is in compliance with IAS 34 standard. The same accounting policies as in the annual financial statements for the year 2010 have been applied. The following new, revised or amended IFRS standards and IFRIC interpretations that have become effective in 2011 have not had an impact on the financial statements:
The preparation of financial statements in accordance with IFRS require the management to make such estimates and assumptions that affect the carrying amounts at the balance sheet date for the assets and liabilities and the amounts of revenues and expenses. Judgements are also made in applying the accounting policies. Actual results may differ from the estimates and assumptions.
The financial statements release has not been audited.
| 10-12/2011 Inter |
10-12/2010 Inter |
Total net sales, | |||||
|---|---|---|---|---|---|---|---|
| EUR 1000 | External | division | Total | External | division | Total | change % |
| Environmental | |||||||
| Services | 82 960 | 1 054 | 84 014 | 73 020 | 972 | 73 992 | 13.5 |
| Cleaning and Office | |||||||
| Support Services | 39 728 | 373 | 40 101 | 34 259 | 321 | 34 580 | 16.0 |
| Property | |||||||
| Maintenance | 32 901 | 550 | 33 451 | 30 810 | 786 | 31 596 | 5.9 |
| Renewable Energy | |||||||
| Sources | 11 412 | 1 166 | 12 578 | 13 418 | 1 848 | 15 266 | -17.6 |
| Eliminations | -3 143 | -3 143 | -3 927 | -3 927 | |||
| L&T total | 167 001 | 0 | 167 001 | 151 507 | 0 | 151 507 | 10.2 |
| 1-12/2011 | 1-12/2010 |
| Inter | Inter | Total net sales, | ||||
|---|---|---|---|---|---|---|
| External | division | Total | External | division | Total | change % |
| 322 264 | 3 620 | 325 884 | 286 260 | 3 771 | 290 031 | 12.4 |
| 155 817 | 1 454 | 157 271 | 139 399 | 1 216 | 140 615 | 11.8 |
| 132 399 | 2 192 | 134 591 | 121 546 | 1 923 | 123 469 | 9.0 |
| 41 650 | 3 752 | 45 402 | 50 988 | 4 118 | 55 106 | -17.6 |
| -11 018 | -11 018 | -11 028 | -11 028 | |||
| 652 130 | 0 | 652 130 | 9.0 | |||
| 598 193 | 0 | 598 193 |
| 10-12/ | 10-12/ | 1-12/ | 1-12/ | |||||
|---|---|---|---|---|---|---|---|---|
| EUR 1000 | 2011 | % | 2010 | % | 2011 | % | 2010 | % |
| Environmental | ||||||||
| Services | 8 305 | 9.9 | 8 204 | 11.1 | 33 970 | 10.4 | 33 674 | 11.6 |
| Cleaning and Office | ||||||||
| Support Services | 937 | 2.3 | 181 | 0.5 | 7 131 | 4.5 | 7 524 | 5.4 |
| Property Maintenance | 1 928 | 5.8 | 633 | 2.0 | 8 181 | 6.1 | 7 764 | 6.3 |
| Renewable Energy | ||||||||
| Sources | -18 189 | -144.6 | -361 | -2.4 | -21 250 | -46.8 | -6 553 | -11.9 |
| Group admin. and | ||||||||
| other | -887 | -104 | -2 435 | -2 190 | ||||
| L&T total | -7 906 | -4.7 | 8 553 | 5.6 | 25 597 | 3.9 | 40 219 | 6.7 |
| Finance costs, net | -1 099 | -987 | -4 603 | -4 229 | ||||
| Profit before tax | -9 005 | 7 566 | 20 994 | 35 990 |
| EUR 1000 | 12/2011 | 12/2010 | ||
|---|---|---|---|---|
| Assets | ||||
| Environmental Services | 346 224 | 330 963 | ||
| Cleaning and Office Support Services | 54 302 | 39 007 | ||
| Property Maintenance | 45 048 | 38 098 | ||
| Renewable Energy Sources | 27 346 | 49 113 | ||
| Group admin. and other | 2 528 | 1 902 | ||
| Unallocated assets | 18 892 | 24 659 | ||
| L&T total | 494 340 | 483 742 | ||
| Liabilities | ||||
| Environmental Services | 57 367 | 50 300 | ||
| Cleaning and Office Support Services | 29 804 | 25 654 | ||
| Property Maintenance | 15 889 | 15 784 | ||
| Renewable Energy Sources | 3 932 | 4 835 | ||
| Group admin. and other | 1 343 | 1 193 | ||
| Unallocated liabilities | 168 061 | 162 982 | ||
| L&T total | 276 396 | 260 748 | ||
| EUR 1000 | 10-12/2011 | 10-12/2010 | 1-12/2011 | 1-12/2010 |
| Capital expenditure | ||||
| Environmental Services | 10 098 | 9 007 | 43 362 | 31 409 |
| Cleaning and Office Support Services | 629 | 814 | 14 721 | 2 112 |
| Property Maintenance | 4 007 | 2 440 | 11 776 | 5 074 |
| Renewable Energy Sources | 45 | 316 | 454 | 654 |
| Group admin. and other | 114 | -119 | 277 | 72 |
| L&T total | 14 893 | 12 458 | 70 590 | 39 321 |
| Depreciation and amortisation | ||||
| Environmental Services | 7 865 | 7 141 | 30 760 | 28 558 |
| Cleaning and Office Support Services | 1 354 | 980 | 4 928 | 4 023 |
| Property Maintenance | 1 355 | 1 025 | 4 873 | 4 017 |
| Renewable Energy Sources | 758 | 1 176 | 3 919 | 4 702 |
| Group admin. and other | 1 | 7 | 5 | |
| L&T total | 11 333 | 10 322 | 44 487 | 41 305 |
| Impairment | ||||
| Renewable Energy Sources | 17 061 | 17 061 | 2 632 | |
| L&T total | 17 061 | 17 061 | 2 632 |
| EUR 1000 | 10-12/ 2011 |
7-9/ 2011 |
4-6/ 2011 |
1-3/ 2011 |
10-12/ 2010 |
7-9/ 2010 |
4-6/ 2010 |
1-3/ 2010 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 84 014 | |||||||
| Environmental Services Cleaning and Office |
85 906 | 83 535 | 72 429 | 73 992 | 75 806 | 75 624 | 64 609 | |
| Support Services | 40 101 | 41 530 | 40 784 | 34 856 | 34 580 | 35 659 | 35 710 | 34 666 |
| Property Maintenance | 33 451 | 31 322 | 30 879 | 38 939 | 31 596 | 26 926 | 28 090 | 36 857 |
| Renewable Energy | ||||||||
| Sources | 12 578 | 7 213 | 9 600 | 16 011 | 15 266 | 7 617 | 12 097 | 20 126 |
| Inter-division net sales | -3 143 | -2 502 | -2 612 | -2 761 | -3 927 | -2 238 | -2 507 | -2 356 |
| L&T total | 167 001 | 163 469 | 162 186 | 159 474 | 151 507 | 143 770 | 149 014 | 153 902 |
| Operating profit | ||||||||
| Environmental Services | 8 305 | 12 308 | 9 182 | 4 175 | 8 204 | 10 930 | 10 124 | 4 416 |
| Cleaning and Office | ||||||||
| Support Services | 937 | 3 718 | 1 001 | 1 475 | 181 | 4 088 | 2 218 | 1 037 |
| Property Maintenance | 1 928 | 3 582 | 769 | 1 902 | 633 | 3 263 | 1 075 | 2 793 |
| Renewable Energy | ||||||||
| Sources | -18 189 | -1 085 | -1 325 | -651 | -361 | -1 432 | -3 900 | -860 |
| Group admin. and other | -887 | -344 | -767 | -437 | -104 | -574 | -762 | -750 |
| L&T total | -7 906 | 18 179 | 8 860 | 6 464 | 8 553 | 16 275 | 8 755 | 6 636 |
| Operating margin | ||||||||
| Environmental Services | 9.9 | 14.3 | 11.0 | 5.8 | 11.1 | 14.4 | 13.4 | 6.8 |
| Cleaning and Office | ||||||||
| Support Services | 2.3 | 9.0 | 2.5 | 4.2 | 0.5 | 11.5 | 6.2 | 3.0 |
| Property Maintenance | 5.8 | 11.4 | 2.5 | 4.9 | 2.0 | 12.1 | 3.8 | 7.6 |
| Renewable Energy | ||||||||
| Sources | -144.6 | -15.0 | -13.8 | -4.1 | -2.4 | -18.8 | -32.2 | -4.3 |
| L&T total | -4.7 | 11.1 | 5.5 | 4.1 | 5.6 | 11.3 | 5.9 | 4.3 |
| Finance costs, net | -1 099 | -1 277 | -1 163 | -1 064 | -987 | -1 272 | -917 | -1 053 |
| Profit before tax | -9 005 | 16 902 | 7 697 | 5 400 | 7 566 | 15 003 | 7 838 | 5 583 |
In business combinations, all property, plant and equipment acquired is measured at fair value on the basis of the market prices of similar assets, taking into account the age of the assets, wear and tear and similar factors. Tangible assets will be depreciated over their useful life according to the management's estimate, taking into account the depreciation principles observed within the Group.
Intangible assets arising from business combinations are recognised separately from goodwill at fair value at the time of acquisition if they are identifiable. In connection with acquired business operations, the Group mostly has acquired agreements on prohibition of competition and customer relationships. The fair value of customer agreements and customer relationships associated with them has been determined on the basis of estimated duration of customer relationships and discounted net cash flows arising from current customer relationships. The value of agreements on prohibition of competition is calculated in a similar manner through cash flows over the duration of the agreement. Other intangible assets will be amortised over their useful life according to agreement or the management's estimate.
In addition to the skills of the personnel of the acquired businesses, goodwill arising from business combinations comprises other intangible items. These unidentified items include the potential for gaining new customers in the acquired businesses and the opportunities for developing new products and services, as well as the regionally strong position of an acquired business. All business combinations also create synergy benefits that consist primarily of savings in fixed production costs.
Changes in goodwill arising from acquisitions or acquisition costs may arise on the basis of terms and conditions related to the acquisition price in the deeds of sale. In many acquisitions a small portion of the acquisition price is contingent on future events (less than 12 months). These conditional acquisition prices are recorded at fair value at the time of acquisition, and any changes will be recorded through profit or loss in the income statement for the period. Changes in the acquisition prices made in 2009 and for the Biowatti acquisition in 2007 will be recorded in goodwill in line with the old IFRS 3.
The consolidated net sales for the year 2011 would have been EUR 665.7 million and the consolidated profit for the period EUR 17.6 million if all the acquisitions had occurred on 1 January 2011. The realised net sales of the acquired businesses have been added to the consolidated net sales, and their realised profits and losses have been added to the consolidated profit in accordance with interim accounts at the time of acquisition. Profit for the period is stated less the current amortisation on intangible assets and depreciation charges on property, plant and equipment. Synergy benefits have not been accounted for.
The aggregate net sales of the acquired businesses totalled EUR 45.1 million in 2011.
| Consideration | |
|---|---|
| EUR 1000 | Fair values used in consolidation |
| Cash | 27 830 |
| Equity instruments | |
| Contingent consideration | 45 |
| Total consideration transferred | 27 875 |
| Indemnification asset | |
| Fair value of equity interest held before the acquisition | |
| Total consideration | 27 875 |
| Acquisition-related costs (included in the administrative | |
| expenses in the consolidated financial statements) | 27 |
| Recognised amounts of identifiable assets acquired and liabilities assumed | |
| Property, plant and equipment | 4 281 |
| Customer contracts | 9 042 |
| Agreements on prohibition of competition | 3 336 |
| Other intangible assets arising from business acquisitions | 0 |
| Other intangible assets | 160 |
| Non-current available-for-sale financial assets | 122 |
| Inventories | 411 |
| Trade and other receivables | 5 914 |
| Cash and cash equivalents | 3 399 |
| Total assets | 26 666 |
| Deferred tax liabilities | 752 |
| Non-current interest-bearing liabilities | 45 |
| Trade and other payables | 8 475 |
| Retirement benefit obligations | 0 |
| Contingent liability | 0 |
| Total liabilities | 9 272 |
| Total identifiable net assets | 17 394 |
| Non-controlling interest | 0 |
| Goodwill | 10 481 |
| Total | 27 875 |
Acquisitions by Environmental Services
Acquisitions by Cleaning and Office Support Services
Acquisitions by Cleaning and Office Support Services and Property Maintenance
1 April 2011, the Hansalaiset Oy group, including its subsidiaries, providing cleaning and property maintenance services in the Helsinki, Turku, Tampere and Oulu regions.
Acquisitions by Property Maintenance
Acquisitions by Prpperty Maintenance after the financial period
The accounting process for these acquisitions is still in progress.
The figures for these acquired businesses are stated in aggregate, because none of them is of material importance when considered separately. Fair values have been determined as of the time the acquisition was realised. No business operations have been divested as a consequence of any acquisition. All acquisitions have been paid for in cash. With share acquisitions, L&T was able to gain 100% of the voting rights. The conditional consideration is tied to the transfer of the customer contracts to Lassila & Tikanoja plc, and the estimates of the fair values of considerations were determined on the basis of probability-weighted final acquisition price. The estimates for the conditional consideration have not changed between the time of acquisition and the balance sheet date. Trade and other receivables have been recorded at fair value at the time of acquisition. Individual acquisition prices have not been itemised because none of them is of material importance when considered separately.
By annual net sales, the largest acquisitions were Hansalaiset Oy (EUR 11.0 million), Papros Oy (EUR 6.2 million), Full House Oy (EUR 3.2. million) and Östgöta Städ Ab (EUR 11.8 million).
It is not possible to itemise the effects of the acquired businesses on the consolidated net sales and profit for the period, because L&T integrates its acquisitions into the current business operations as quickly as possible to gain synergy benefits.
On 18 December 2006, an agreement was signed on the acquisition of the majority (70%) of the shares of Biowatti Oy from the acting management of the company. L&T also made a commitment to redeem the remaining 30 percent of the shares by the beginning of the year 2012. The acquisition price for the 70 percent portion was EUR 30.9 million, and it was settled in cash. No interest-bearing liabilities were transferred in the acquisition. In the consolidated financial statements the whole acquisition price (100%) was recognised as acquisition cost. No minority interest was separated from the profit or equity, but the estimated acquisition price of the remaining 30 percent was recognised as interest-bearing non-current liability. The final price of the 30 percent portion will be determined based on the future earnings of L&T Biowatti. The estimate is assessed annually as of 31 December, or whenever any indication exists. According to the assessment of 31 December 2011, the acquisition price for the remaining 30 percent was reduced by EUR 239 thousand to EUR 2,411 thousand (EUR 2,650 thousand). The adjustment is treated in line with IFRS 3 and it has no impact on the profit or loss, as the adjustment was recognised accordingly under cost of the combination, goodwill and interestbearing liabilities.
The accounting policy concerning business combinations is presented in Annual Report under Note 2 of the consolidated financial statements and under Summary on significant accounting policies.
| EUR 1000 | 1-12/2011 | 1-12/2010 |
|---|---|---|
| Carrying amount at beginning of period | 142 681 | 148 417 |
| Business acquisitions | 22 859 | 1 175 |
| Other capital expenditure | 2 646 | 2 944 |
| Disposals | -18 | -1 760 |
| Amortisation and impairment | -23 865 | -9 134 |
| Transfers between items | -4 | |
| Exchange differences | 186 | 1 043 |
| Carrying amount at end of period | 144 489 | 142 681 |
| EUR 1000 | 1-12/2011 | 1-12/2010 |
|---|---|---|
| Carrying amount at beginning of period | 200 700 | 201 651 |
| Business acquisitions | 4 441 | 500 |
| Other capital expenditure | 40 616 | 34 628 |
| Disposals | -477 | -1 711 |
| Depreciation and impairment | -37 683 | -34 803 |
| Transfers between items | 4 | |
| Exchange differences | -75 | 431 |
| Carrying amount at end of period | 207 522 | 200 700 |
| EUR 1000 | 1-12/2011 | 1-12/2010 |
|---|---|---|
| Intangible assets | 0 | 0 |
| Property, plant and equipment | 4 593 | 5 106 |
| Total | 4 593 | 5 106 |
| The Group's share of capital commitments of joint ventures |
0 | 0 |
(Joint ventures)
| EUR 1000 | 1-12/2011 | 1-12/2010 |
|---|---|---|
| Sales | 2 489 | 2 332 |
| Other operating income | 63 | 74 |
| Interest income | 707 | 505 |
| Non-current receivables | ||
| Capital loan receivable | 24 396 | 20 646 |
| Current receivables | ||
| Trade receivables | 2 710 | 2 375 |
| Loan receivables | 1 633 | 1 034 |
| EUR 1000 | 12/2011 | 12/2010 |
|---|---|---|
| Mortgages on rights of tenancy | 42 186 | 42 179 |
| Company mortgages | 21 460 | 21 460 |
| Other securities | 174 | 222 |
| Bank guarantees required for environmental permits | 5 702 | 4 634 |
| Other securities are security deposits. The Group has given no pledges, mortgages or guarantees on behalf of outsiders. |
||
| Operating lease liabilities | ||
| EUR 1000 | 12/2011 | 12/2010 |
| Maturity not later than one year | 7 708 | 8 087 |
| Maturity later than one year and not later than five years | 15 504 | 20 087 |
| Maturity later than five years | 4 185 | 4 509 |
| Total | 27 397 | 32 683 |
| Liabilities associated with derivative agreements Interest rate and currency swaps |
||
| EUR 1000 | 12/2011 | 12/2010 |
| Nominal values of interest rate and currency swaps* | ||
| Maturity not later than one year | 13 429 | 11 010 |
| Maturity later than one year and not later than five years | 38 033 | 49 355 |
| Maturity later than five years | 267 | |
| Total | 51 462 | 60 632 |
| Fair value | -1 504 | -1 173 |
| Nominal value of interest rate swaps** | ||
| Maturity not later than one year | 4 000 | |
| Maturity later than one year and not later than five years | 19 455 | |
| Maturity later than five years | 4 545 | |
| Total | 28 000 | |
| Fair value | -144 |
* The interest rate and currency swaps are used to hedge cash flow related to a floating rate loan, and hedge accounting under IAS 39 has been applied to it. The hedges have been effective, and the changes in the fair values are shown in the consolidated statement of comprehensive income for the period. On the balance sheet date, the value of foreign currency loans was EUR 0.5 million positive. The fair values of the swap contracts are based on the market data at the balance sheet date.
** Hedge accounting under IAS 39 has not been applied to these interest rate swaps. Changes in fair values have been recognised in finance income and costs.
| Commodity derivatives | ||
|---|---|---|
| metric tons | 12/2011 | 12/2010 |
| Nominal values of diesel swaps | ||
| Maturity not later than one year | 2 544 | 7 596 |
| Maturity later than one year and not later than five years | 636 | 2 544 |
| Total | 3 180 | 10 140 |
| Fair value, EUR 1000 | 419 | 400 |
Commodity derivative contracts were concluded, for hedging of future diesel oil purchases. IAS 39 -compliant hedge accounting will be applied to these contracts, and the effective change in fair value will be recognised in the hedging reserve within equity. The fair values of commodity derivatives are based on market prices at the balance sheet date.
| EUR 1000 | 12/2011 | 12/2010 |
|---|---|---|
| Volume of forward contracts | ||
| Maturity not later than one year | 1 079 | 196 |
| Fair value | -19 | 7 |
Hedge accounting under IAS 39 has not been applied to forward contracts. Changes in fair values have been recognised in finance income and costs.
Earnings per share:
profit attributable to equity holders of the parent company / adjusted average basic number of shares
Earnings per share, diluted:
profit attributable to equity holders of the parent company / adjusted average diluted number of shares
Cash flows from operating activities/share: cash flow from operating activities as in the statement of cash flows / adjusted average number of shares
EVA: operating profit - cost calculated on invested capital (average of four quarters) WACC 2010: 8.7% WACC 2011: 7.7%
Equity per share: equity attributable to equity holders of the parent company / adjusted basic number of shares at end of period
Return on equity, % (ROE): (profit for the period / equity (average)) x 100
Return on investment, % (ROI): (profit before tax + finance costs) / (total equity and liabilities - non-interest-bearing liabilities (average)) x 100
Equity ratio, %: equity / (total equity and liabilities - advances received) x 100
Gearing, %: net interest-bearing liabilities / equity x 100
Net interest-bearing liabilities: interest-bearing liabilities - liquid assets
Operating profit excluding non-recurring items: operating profit +/- non-recurring items
Helsinki, 1 February 2012
LASSILA & TIKANOJA PLC Board of Directors
Pekka Ojanpää President and CEO
For additional information please contact: Pekka Ojanpää, President and CEO, tel. +358 10 636 2810, Ville Rantala, CFO, tel. +358 50 385 1442 or Keijo Keränen, Head of Treasury & IR, tel. +358 50 385 6957.
Lassila & Tikanoja specialises in environmental management and property and plant support services. L&T is a significant supplier of wood-based biofuels, recovered fuels and recycled raw materials. With operations in Finland, Sweden, Latvia and Russia, L&T employs 9,500 persons. Net sales in 2011 amounted to EUR 652 million. L&T is listed on NASDAQ OMX Helsinki.
Distribution: NASDAQ OMX Helsinki Major media www.lassila-tikanoja.com
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