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Lassila & Tikanoja Oyj

Quarterly Report Oct 28, 2008

3274_10-q_2008-10-28_c137be94-9c0f-44df-9a4d-a2584025b894.pdf

Quarterly Report

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LASSILA & TIKANOJA PLC INTERIM REPORT 1 JANUARY – 30 SEPTEMBER 2008

  • Net sales for the third quarter EUR 151.2 million (EUR 138.6 million); operating profit EUR 17.6 million (EUR 15.5 million); operating profit excluding non-recurring and imputed items EUR 16.3 million (EUR 16.9 million); earnings per share EUR 0.31 (EUR 0.28)
  • Net sales for January–September EUR 452.9 million (EUR 406.4 million); operating profit EUR 50.6 million (EUR 36.7 million); operating profit excluding non-recurring and imputed items EUR 36.4 million (EUR 41.0 million); earnings per share EUR 0.99 (EUR 0.63)
  • Full-year net sales are expected to increase by approximately 10%. Operating profit is expected to be somewhat lower than in the previous year. Due to the capital gain from Ekokem shares, earnings will exceed those for the previous year.
  • The equity ratio is expected to remain healthy and the financing for 2009 has been secured.

GROUP NET SALES AND FINANCIAL PERFORMANCE

Third quarter

Lassila & Tikanoja's net sales for the third quarter totalled EUR 151.2 million (EUR 138.6 million), showing an increase of 9.1%. The growth was entirely organic. The operating profit was EUR 17.6 million (EUR 15.5 million), representing 11.6% (11.2%) of net sales. The operating profit excluding non-recurring and imputed items was EUR 16.3 million (EUR 16.9 million). Earnings per share were EUR 0.31 (EUR 0.28).

Strong organic growth continued. However, the general increase in costs and the reduction in recycling volumes hampered financial performance in the third quarter. Measures to boost production efficiency continued in order to adapt to increased production costs, and prices were revised. Changes in the fair values of oil derivatives raised operating profit by EUR 1.3 million (EUR -0.5 million).

January–September

The nine-month net sales increased by 11.4% to EUR 452.9 million (EUR 406.4 million), with corporate acquisitions accounting for 2.0 percentage points of this growth. Operating profit amounted to EUR 50.6 million (EUR 36.7 million), representing 11.2% (9.0%) of net sales. The operating profit excluding nonrecurring and imputed items was EUR 36.4 million (EUR 41.0 million). Earnings per share were EUR 0.99 (EUR 0.63).

Organic growth outperformed market growth, and new service products were introduced to the market. Operating profit fell due to a rise in the general cost level, particularly in the prices of transport fuels. Similarly, the reduction in recycling volumes and the decreased demand for recovered fuels and biofuels attributable to the mild winter burdened financial performance. Changes in the fair values of oil derivatives decreased operating profit by EUR 0.1 million (EUR 2.1 million).

A capital gain of EUR 14.3 million from the sale of Ekokem shares in January increased the operating profit.

Financial summary

7-9/ 7-9/ Change 1-9
/
1-9
/
Change 1-1
2/
2007
554.6
16.9 -3.6 41.0 -11.2 54.3
48.8
8.8
14.2 14.5 33.6 40.4 44.5
0.31 0.28 10.7 0.99 0.63 57.1 0.83
9.7 8.8 10.2 28.3 18.5 53.0 23.0
2008
151.2
16.3
17.6
11.6
16.2
2007
138.6
15.5
11.2
%
9.1
13.6
2008
452.9
36.4
50.6
11.2
47.2
2007
406.4
36.7
9.0
%
11.4
38.0

* Breakdown of operating profit excluding non-recurring and imputed items is presented at th nd of th explanatory statement. e e e

NET SALES AND FINANCIAL PERFORMANCE BY DIVISION

Environ s mental Service

July–September

The net sales of Environmental Service te manageme s &T Biow tti, environm ducts) rose by 8.6% to EUR 73.7 million (EUR 67.9 million). The operating ofit was EUR 9.7 million (EUR 9.7 million), and the operating profit excluding non-recurring and imputed items was EUR 9.7 million (EUR 9.9 million). s (was nt, recycling service , L a ental pro pr

Strong ued. Price ere rev and measures to boost pr uction efficiency continued. The profitability of recycling services weakened due to smaller transport and processing volumes resulting from the slowdown in construction and to the decrease in the sales prices of recycled raw materials. organic growth contin s w ised od

Construc dded capacity at the Kerava recycling plant proceeded in schedule, and the first stage (recycled timber unit) is expected to be on line early next year. Construction of the second stage (construction waste recycling plant) is about to begin, and the plant is expected to be complet in about a year. tion of a ed

L&T Biowatti reached its targets thanks to an increase in the demand for biofuels during the p riod. However, the rising costs affected its operations, and production limitations in the mechanical forest industry hampered the procurement of byproducts for raw ma rial. The wood pellet plant in L umäki with an annual capacity of about 20,000 tonnes was introduced at the beginning of October. e te u

International operations within Environmental Services expan d, and performance develope Profitability development was particularly good in Latvia thanks to production efficiency measures and decreased costs. de d favourably.

Net sales for environmental products increased considerably and financial performance improved.

anuary–September J

nvironmental Services' net sales for January–September totalled EUR 225.9 million (EUR 205.1 million); (EUR 26.6 million), and the operating rofit excluding non-recurring and imputed items was EUR 26.3 million (EUR 27.8 million). E an increase of 10.1%. The operating profit was EUR 26.3 million p

ue to the steep rise in the general cost level and transport fuel prices, prices were revised. Financial rticularly the slowdown in construction lowered the amount of intake volumes at oduction D uncertainty and pa recycling plants. Measures to enhance production efficiency were launched to adjust to higher pr costs.

onstruction of substantial added capacity began at the Kerava recycling plant, which will double the costs f the year. C plant's capacity to almost 400,000 tonnes by 2010. At the same time, the recovery rate will increase significantly. Due to the reduced capacity of the landfill at the Kerava plant for technical reasons, the of disposal of plant reject will increase. The industrial landfill site constructed in Kotka will be opened before the end o

ild racting sing and transport equipment. The production of wood pellets was launched at the beginning of the nal quarter. The demand for L&T Biowatti's biofuels fell clearly short of the expected level due to the exceptionally m winter. The mild winter also hampered the collection of forest processed chips and raised subcont costs. L&T Biowatti will revise its organisation, expand its service offerings, and invest in its own collecting, proces fi

nal Business in Russia and Latvia developed as planned. Resources were increased to expand internatio operations.

ll units of Lassila & Tikanoja plc's Environmental Services received certificates for quality, environmental A management, occupational health and safety. The objective of certification is to improve service and reinforce shared operating procedures.

et sales for environmental products increased and performance development was positive. N

roperty and Office Support Services P

July–September

ew UR 4.2 illion), and the operating profit excluding non-recurring and imputed items was EUR 4.8 million (EUR 4.6 The net sales of Property and Office Support Services (property maintenance and cleaning services) gr by 8.4% to EUR 56.3 million (EUR 52.0 million). The operating profit was EUR 4.8 million (E m million).

s sold well in both product lines. Prices were revised. Net sales from international operations creased in Russia and Latvia. The division's strong organic growth continued, particularly in property maintenance, and additional service in

eded The division's performance improved as a result of profit improvement in property maintenance and smaller losses from international operations. Production efficiency improvement measures continued to respond to rising production costs, and the action programme to improve profitability in Sweden proce according to plans.

JanuarySeptember

The January–September net sales of Property and Office Support Services increased by 13.2% to EUR 169.0 million (EUR 149.3 million). The operating profit was EUR 7.6 million (EUR 7.0 million), and the operating profit excluding non-recurring and imputed items was EUR 7.6 million (EUR 7.4 million).

ontract revenue increased, and the sales of additional services in both product lines were successful. osts, and prices were revised. C Production costs rose and price competition remained intense. Operations were adapted to increased production c

ncept provides customers the opportunity to carry out concrete nvironment-friendly actions. New service products were introduced to the market. New products in cleaning services included the L&T® EcoCleaning concept, which received the Nordic Ecolabel, also known as the Swan label, as the first product of the industry in Finland. The co e

he holding in Blue Service Partners was sold to the joint venture partner in the beginning of February. T

oss from international operations declined, and operations in Russia and Latvia developed as planned. In ive action programme has been launched to improve profitability. L Sweden an extens

l Services Industria

July–September

air s) went up by 15.2% to EUR 22.9 million (EUR 19.9 million). The perating profit was EUR 3.7 million (EUR 2.1 million), and the operating profit excluding non-recurring and The net sales of Industrial Services (hazardous waste management, industrial solutions, damage rep services and wastewater service o imputed items EUR 2.4 million (EUR 3.0 million).

the production adjustment perspective. Demand for damage repair service was low the third quarter. Net sales increased in all product lines, and prices were revised. Fluctuation in demand continued, which was challenging from in

yed ntil next spring because of a design flaw in the piping. Changes in the fair value of oil derivatives raised There were several coinciding shutdowns in the industry, which resulted in increased subcontracting. Furthermore, costs associated with the storage of raw materials for the L&T Recoil re-refinery and the starting of operations burdened the financial performance. The completion of the facility will be dela u operating profit by EUR 1.3 million (EUR -0.5 million).

industrial solutions business. New partner agreements were signed in the

Key priorities in operations included profitability improvement and production adjustment to the forthcoming slower winter season.

JanuarySeptember

he January–September net sales of Industrial Services totalled EUR 62.3 million (EUR 55.6 million); an xcluding non-recurring and imputed items EUR 4.1 million (EUR 7.3 million). T increase of 12.1%. The operating profit was EUR 4.0 million (EUR 4.6 million), and the operating profit e

nd for Industrial ervices. Earnings were also adversely affected by recycled fuel delivery difficulties early this year. Changes in the fair values of oil derivatives amounted to EUR -0.1 million (EUR -2.1 million). Production could not be adapted quickly enough to the rapid fluctuations in the dema S

New partner agreements were made in damage repair services, and the service network was expanded.

Prices were revised, and profitability improvement measures were initiated in all product lines.

FINANCING

At the end of the period, interest-bearing liabilities amounted to EUR 10.9 million more than a year earlier. Net interest-bearing liabilities, totalling EUR 117.6 million, increased by EUR 6.5 million from the comparison period and by EUR 31.3 million from the beginning of the year. Net finance costs exceeded those for the comparison period by EUR 0.1 million in the third quarter and by EUR 0.4 million in January– September. Interest expenses increased by EUR 0.2 million in the third quarter and by EUR 0.6 million in January–September as a result of the growth in interest-bearing liabilities and a rise in the interest rate level.

An expense of EUR 0.1 million arising from changes in the fair values of interest rate swaps was recognised in the finance costs in the third quarter, equalling to the amount for the comparison period. In January–September, an expense of EUR 0.2 million arising from the change in the fair value of interest rate swaps was recognised this year as well as in the comparison period.

Net finance costs were 0.8% (0.8%) of net sales and 6.8% (8.4%) of operating profit. The equity ratio was 44.9% (42.6%) and the gearing rate 57.3 (61.7). Cash flows from operating activities in January– September amounted to EUR 41.8 million (EUR 34.4 million), and EUR 8.5 million (EUR 17.7 million) were tied up in the working capital.

The equity ratio is expected to remain healthy, and financing for 2009 has already been secured.

IVIDEND D

he Annual General Meeting held on 1 April 2008 resolved on a dividend of EUR 0.55 per share. The UR 21.3 million, was paid to the shareholders on 11 April 2008. T dividend, totalling E

CAPITAL EXPENDITURE

apital expenditure totalled EUR 52.2 million (EUR 77.6 million). Production plants were built and C machinery and equipment were purchased and information systems were replaced.

r the property maintenance services business of Rantakylän Talonhuolto Oy and in e first quarter the cleaning services business of Siivouspalvelu Siivoset Oy and the cleaning services ess al In the second quarte th business of Siivousliike Lainio Oy were acquired into Property and Office Support Services. The busin of Obawater Oy was acquired into waste water services within Industrial Services. The combined annu net sales of the acquired businesses totalled EUR 0.7 million.

PERSONNEL

ll-time equivalents was 8,177 ,723). At the end of the period, the total number of full-time and part-time employees was 9,625 (9,226). In January–September, the average number of employees converted into fu (7 Of them 7,326 (6,989) people worked in Finland and 2,299 (2,237) people in other countries.

PITAL SHARE AND SHARE CA

Traded volume and price

inki from January through eptember was 15,370,189 which is 39.6% (39.0%) of the average number of shares. The value of trading e he The volume of trading in Lassila & Tikanoja plc shares on NASDAQ OMX Hels S was EUR 261.4 million. The trading price varied between EUR 12.88 and EUR 23.00. The closing pric was EUR 13.80. The market capitalisation was EUR 535.4 million (EUR 876.9 million) at the end of t period.

Share capital

t the beginning of the year the company's registered share capital amounted to EUR 19,392,187. Since ons. After ese subscriptions the share capital is EUR 19,399,437, and the number of the shares 38,798,874 shares. A the beginning of the year, 14,500 shares have been subscribed for pursuant to 2005A share opti th

scheme 2005 Share option

2005, 600,000 share options were issued, each entitling its holder to subscribe for one share of Lassila dvance ns In & Tikanoja plc. In the beginning of the exercise period, 25 key persons held 162,000 2005A options. 32 key persons hold 176,000 2005B options and 40 key persons hold 221,500 2005C options. L&T A Oy, a wholly-owned subsidiary of Lassila & Tikanoja plc, holds 8,000 2005A options, 24,000 2005B optio and 8,500 2005C options and these options will not be exercised.

EUR 26,87. The exercise period for 2005A options is 2 November 2007 to 29 May 2009, for 2005B ptions 3 November 2008 to 31 May 2010, and for 2005C options 2 November 2009 to 31 May 2011. The exercise price for the 2005A options is EUR 14.22, for 2005B options EUR 16.98 and for 2005C options o

The outstanding options issued under the share option plan 2005 entitle their holders to subscribe for a maximum of 1.4% of the current number of shares. The 2005A options have been listed on NASDAQ OMX Helsinki since 2 November 2007.

hare option scheme 2008 S

ling 20,500 options and &T Advance Oy 9,500 options. The Annual General Meeting of the year 2008 resolved to issue 230,000 share option rights, each entit its holder to subscribe for one share of Lassila & Tikanoja plc. 41 key persons hold 2 L

ns is EUR 16.27. The exercise price of the share options shall, as per e dividend record date, be reduced by the amount of dividend which exceeds 70% of the profit per share ion has r to the share ubscription are deducted from the subscription price. The exercise price shall, however, always amount to The exercise price for the 2008 optio th for the financial period to which the dividend applies. However, only such dividends whose distribut been agreed upon after the option pricing period and which have been distributed prio s 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 220,500 new shares, which is 0.6% of the current number of shares.

hareholders S

financial period, the company had 5,978 (5,050) shareholders. Nominee-registered oldings accounted for 10.7% (13.3%) of the total number of shares. At the end of the h

Notifications on major holdings

the shares nd votes in Lassila & Tikanoja plc had fallen to 4.52%. On 26 March 2008, Varma Mutual Pension Insurance Company announced that its holding of a

l Pension Insurance Company announced that its holding of the shares nd votes in Lassila & Tikanoja plc had exceeded the threshold of 10%. On 20 May 2008, Ilmarinen Mutua a

Authorisation for the Board of Directors

The Board of Directors is not authorised to effect any share issues or to launch a convertible bond or a bond with warrants. Neither is the Board authorised to decide on the repurchase nor disposal of the company's own shares.

ANNUAL GENERAL MEETING RESOLUTIONS BY THE

e President and CEO from liability. The AGM resolved that a dividend of EUR 0.55, a total of EUR 21.3 ard of Directors, be paid for the financial year 2007. The dividend payment The Annual General Meeting of Lassila & Tikanoja plc, which was held on 1 April 2008, adopted the financial statements for the financial year 2007 and released the members of the Board of Directors and th million, as proposed by the Bo date was 11 April 2008.

ikki Bergholm and Matti Kavetvuo were lected as new members for the same term. 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: Eero Hautaniemi, Lasse Kurkilahti, Juhani Lassila and Juhani Maijala. He e

PricewaterhouseCoopers Oy, Authorised Public Accountants, were elected auditors with Heikki Lassila, Authorised Public Accountant, acting as Principal Auditor.

The Annual General Meeting approved the Board's proposal to issue 230,000 share options to key personnel of the Lassila & Tikanoja Group and/or to a wholly-owned subsidiary of Lassila & Tikanoja plc.

t its organising meeting following the Annual General Meeting, the Board of Directors re-elected Juhani aijala as Chairman of the Board and Juhani Lassila as Vice Chairman. A M

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

kanoja sold its holding in the shares of Ekokem Oy Ab to Ilmarinen utual Pension Insurance Company. Lassila & Tikanoja had obtained possession of the shares over a On 22 January 2008, Lassila & Ti M period of several years and they no longer had any connection to the business operations of the company and were, consequently, not essential for them. A tax-exempt capital gain arising from the sale was recognised in the financial statements for the first quarter of the year 2008. The positive effect of the sale on the profit for the period will be EUR 14.2 million.

ting profit xcluding non-recurring and imputed items is estimated to be somewhat lower than in the previous year. In a release disclosed on 22 July 2008, the company announced that the full-year opera e Previously the company estimated that the full-year financial performance will remain at the same level as in the previous year.

08, the company announced that the waste oil re-refinery of joint venture L&T Recoil Oy of ne the completion with a few months. On 3 October 20 will not be completed until next spring, while earlier it was expected to be completed towards the end this year. Flaws had been detected in the piping design, which postpo

NEAR-TERM UNCERTAINTIES

lthough the markets in which L&T primarily operates are not highly cyclical, slowdown in economy may nstruction waste, and it is highly ely that further slowdown is in the horizon. Planning and implementing work is more difficult because of strial Services, particularly in forest industry. A reduce transport and recycling volumes and the number of commissioned assignments. The slowdown in the construction business has already translated into lower volumes of co lik the rapid fluctuations in the demand for Indu

l th the business may have a substantial effect on the operating profit of Industrial ervices. If the next winter is mild, this will have a negative impact on L&T Biowatti's earnings evelopment. Heavier forest industry production restrictions are very likely, which will hamper L&T amendment to Latvian waste legislation may ave adverse effects on the competition situation for waste management in Riga. A further postponement in the starting of L&T Recoil's operations and changes in the fair values of oi derivatives associated wi S d Biowatti's supply of by-products for raw material. A planned h

PROSPECTS FOR THE REST OF THE YEAR

pected to increase by approximately 10 per cent. The operating profit excluding on-recurring and imputed items is expected to be somewhat lower than in the previous year. However, Full-year net sales are ex n due to the capital gain from Ekokem shares, earnings will exceed those for the previous year.

outlook for Environmental Services is stable. The full-year perating profit excluding non-recurring and imputed items for Environmental Services is expected to be at In Environmental Services, the slowdown in the construction and forest industries will affect transport and intake volumes. In other respects, the market o a slightly lower level than a year ago.

he market outlook for Property and Office Support Services will remain stable. However, the competitive erformance but still remain in the red. The full-year operating profit excluding non-recurring and imputed T environment will remain challenging, and the financial uncertainties may reflect in the number of commissioned assignments. The division's international operations are expected to improve their p items from Property and Office Support Services is expected to fall somewhat short of the previous year's level due to higher social costs.

s will continue. After the end of the period, a decision has been made to iscontinue the division's soil washing services which have been making a loss. As a result, a non-Strong fluctuations in the demand for Industrial Services are likely to continue in the final quarter, and production adjustment measure d recurring expense amounting to approximately EUR 2.6 million will be recognised for the final quarter. The division's full-year operating profit excluding non-recurring and imputed items will fall short of last year's level.

Operations will focus on profitability improvement. Investments will be lower than in the previous year.

E
UR million
7-9/
2008
7-9/
2007
1-9
/
2008
1-9/
2007
1-12/
2007
Operating profit 17.6 15.5 50.6 36.7 48.
8
Non-recurring items
Loss on sale of landfill operations of Salvor and
integration of the remaining Salvor's operations 0.5 1.8 2.3
Reorganisation of Property and O
ffice Support
Services operations in Russia 0.4 0.4 0.4
Gain on sale of the shares of Ekokem -14.3
Oil derivatives -1.3 0.5 0.1 2.1 2.8
Operating profit excluding non-recurring and
imputed items 16.3 16.9 36.4 41.0 54.3

BREAKDOWN OF OPERATING PROFIT EXCLUDING NON-RECURRING AND IMPUTED ITEMS

CONDENSED FINANCIAL STATEMENTS 1 JANUARY–30 SEPTEMBER 2008

ACCOUNTING POLICIES

ting policies as in the annual financial statements for the year 2007 have been applied. These terim financial statements have been prepared in accordance with the IFRS standards and ccounting policies in Annual Report 2007. Income tax expense is based on the estimated average annual come tax rate excluding the tax-exempt gain on sale of Ekokem shares. This interim financial report is in compliance with IAS 34, Interim Financial Reporting Standard. The same accoun in interpretations as adopted by the EU. Forthcoming standards and interpretations are presented in the a in

ch stimates and assumptions that affect the carrying amounts at the balance sheet date for the assets and liabilities and the amounts of revenues and expenses. Judg nts ar mad pplyi e licies. Actual results may differ from the estim and assumptio The preparation of financial statements in accordance with IFRS require the management to make su e eme e also e in a ng th accounting po ates ns.

cial statements have not been audited. The interim finan

IN COME STATEMENT

E
UR 1000
7-9/2008 7-9/2007 1-9/ 2008 1-9/2007 1-12
/200
7
Net sales 151 243 13
8 56
9
452
938
406
441
554 613
Cost of goods sold -129 016 -116 792 -396 756 -348 719 -478 151
Gross profit 22 227 21 777 56 182 57 722 76 46
2
Other operating income 2 016 1 044 17 888 2 672 3 834
Selling and marketing costs -3 491 -3 156 -11 711 -10 866 -14 616
Administrative expenses -2 941 -2 797 -9 232 -8 686 -11 614
Other operating expenses -228 -1 393 -2 510 -4 166 -5 291
Operating profit 17 583 15 475 50 617 36 676 48 775
Finance income 373 258 1 189 1 037 1 661
Finance costs -1 719 -1 552 -4 625 -4 107 -5 978
Profit before tax 16 237 14 181 47 181 33 606 44 458
Income tax expense -4 303 -3 499 -8 745 -9 074 -12 291
Profit for the period 11 934 10 682 38 436 24 532 32 167
Attributable to:
Equity holders of the company 11 929 10 680 38 432 24 278 31 909
Minority interest 5 2 4 254 258
Earnings per share for profit attributable to the equity holders of the company:
Earnings per share, EUR 0.31 0.28 0.99 0.63 0.83
Earnings per share, EUR - diluted 0.31 0.27 0.99 0.63 0.82

ALANCE SHEET B

EU
R 1000
9/2008 9/2007 12/2007
ASSETS
Non-current assets
Intangible assets
Goodwill 119 498 120 167 119 946
Intangible assets arising from business combinations 26 081 32 324 30 6
00
Other intangible assets 12 270 9 425 11 571
Total 157
849
161 916 162 117
Property, plant and equipment
Land 3 690 3 519 3 53
2
Buildings and constructions 38 218 37 950 39 594
Machinery and equipment 109 693 98 168 103 83
2
Other 114 275 82
Advance payments and construction in progress 26 582 6 098 4 830
Total 178 297 146 010 151 870
Other non-current assets
Investments in associates 3
Available-for-sale investme
nts
502 2 978 410
Finance lease receivables 4 827 3 605 3 823
Deferred i
ncome tax assets
1 373 596 924
Other receivables 644 252 236
Total 7 346 7
434
5 393
Total non-current assets 343
4
92
3
15 3
60
319 38
0
Current assets
Inventories 17
26
1
14
197
14 350
Trade and other receivables 84
82
7
87 2
59
71 824
Derivative receivab
les
1
0
69
4
40
1 189
Advance paymen
ts
2
99
4
2 06
8
774
Available-for-sa
le investments
5
98
8
1 9
96
21 287
Cash and cash equ
ivalents
8
8
83
8 4
95
9 521
Total current assets 121
02
2
1
14
455
118 94
5
TOTAL ASSETS 464 514 429 815 438 325
EUR 1000 9/2008 9/2007 12/2007
EQUITY AND LIABILITIES
Equity
Equity attributable
to equity holders of the company
Share cap
ital
19 399 19 376 19 392
Share premium reserve 50 673 50 115 50 474
Other reserves -757 -3 14 055
Reta
ined earnings
97 556 86 166 86 327
Profit for the period 38 432 24 278 31 909
T
otal
20
5 303
17
9 932
20
2 157
M
inority interest
189 186 187
T
otal equity
205 492 1
80 118
202 344
L
iabilities
Non-c
urrent liabilities
Deferred income tax liabili
ties
29 952 29 504 29 842
P
ension obligations
632 51
0
542
P
rovisions
1
128
928 953
In
terest-bearing liabilities
7
8 425
6
5 276
8
1 411
O
ther liabilities
870 488 500
T
otal
111
007
96
706
113
248
Current liabilities
Interest-bearing liabilities 54 092 56 335 35 757
T
rade and other payables
92 601 95 022 85 183
Derivative liabilitie
s
1 078 440 897
Tax liabilities 244 1 044 794
Provisions 150 102
Total 14
8 015
152
991
12
2 733
Total liabilities 25
9 022
24
9 697
235
981
TOTAL EQUITY AND LIABI
LITIES
46
4 514
42
9 815
43
8 325

CASH FLOW STATEMENT

EUR 1000 9/2008 9/2007 12/2007
Cash flows from operating activities
Profit for
the period
38 436 24 532 32 167
Adjustments
Income tax expense 8 745 9 074 12 291
Depreciation and amortis
ation and impairment
28 067 24 540 33 432
Finance income
and costs
3 436 3 0
70
4 317
Oil derivatives 81 2 215 2 947
Gain on sale of share
s
-14 258
Othe
r
-906 -583 -859
Net cash generat
ed from operating activities before change in working
capital 63 601 62 848 84 295
Change in wo
rking capital
Change in trade and o
ther receivables
-17 965 -4 903
-14 113
Change in inventories -2 925 -6 135 -6 824
Change in trade an
d other payables
8 525 6
385
-1
450
Change in wo
rking capital
-8 513 -17
715
-13
177
Interest paid -3 554 -2
424
-5
104
Interes
t received
1 093 747 1 460
In
come tax paid
-10 858 -9 056 -12 041
Net cash from ope
rating activities
41 769 34 400 55 433
Cash flows from investin
g activities
Acquisition of subs
idiaries and businesses, net of cash acquired
-420 -39
716
-37
050
Proceeds fro
m sale of subsidiaries and businesses, net of sold cash
1
878
Purchase
s of property, plant and equipment and intangible assets
-53 285 -32
157
-49
109
Proc
eeds from sale of property, plant and equipment and intangible
assets 1 734 3 777 2 261
Purchases of available-for-sale investments -110 -75 -147
Change in other non-current receiva
bles
-6 26 1
Proceeds from sale of available-for-sale investments 16 813 942 1 098
Dividends received 3 1 4
Net cash used in investment activities -35 271 -67 202 -81 064
Cash flows from financing activities
Proceeds from share issue 206 2 561 2 936
Change in short-term borrowings 7 365 24 488 23 011
Proceeds from long-term borrowings 20 000 30 000 50 302
Repayments of long-term borrowings -11 864 -17 092 -39 909
Dividends paid -21 315 -21 361 -21 360
Net cash generated from financing activities -5 608 18 596 14 980
Net change in liquid assets 890 -14 206 -10 651
Liquid assets at beginning of period 14 008 24 790 24 790
Effect of changes in foreign exchange rates -35 -92 -131
Change in fair value of current available-for-sale investments 8 -1
Liquid assets at end of period 14 871 10 491 14 008
Liquid assets
EUR 1000 9/2008 9/2007 12/2007
Cash 8 883 8 495 9 521
Certificates of deposit and commercial papers 5 988 1 996 4 487
Total 14 871 10 491 14 008

IN EQUITY STATEMENT OF CHANGES

Share Revaluation Equity attributable
Share premium and other Retained to equity
holders of the
Minority Total
EUR 1000 capital reserve reserves earnings company interest equity
Equity at 1.1.2008 19 392 50 474 14 055 118 236 202 157 187 202 344
Hedging reserve,
change in fair value $-46$ $-46$ $-46$
Current available-for-sale
investments, reversal of
change in fair value due to
sale
$-14233$ $-14233$ $-14233$
Translation differences $-533$ $-533$ -2 $-535$
Items recognised
directly in equity $-14812$ $-14812$ $-2$ $-14814$
Profit for the period 38 432 38 4 32 4 38 4 36
Total recognised
income and expenses $-14812$ 38 4 32 23 6 20 2 23 622
Share option remuneration
Subscriptions
pursuant to 2005 options 7 199 206 206
Remuneration expense of 643 643 643
share options
Dividends paid
$-21323$ $-21323$ $-21323$
Equity at 30.9.2008 19 399 50 673 $-757$ 135 988 205 303 189 205 492
Equity at 1.1.2007 19 264 47 666 326 106 904 174 160 2709 176869
Hedging reserve,
change in fair value 92 92 92
Current available-for-sale
investments,
change in fair value -9 -9 -9
Translation differences $-412$ $-412$ 1 $-411$
Items recognised
directly in equity
$-329$ $-329$ 1 $-328$
Profit for the period 24 278 24 278 255 24 533
Total recognised
income and expenses $-329$ 24 278 23 949 256 24 205
Share option remuneration
Subscriptions
pursuant to 2002 options 112 2449 2561 2561
Remuneration expense of
share options 452 452 452
Dividends paid $-21190$ $-21190$ $-180$ $-21370$
Purchase of a minority 19 376 50 115 $-3$ 110 444 179 932 $-2599$
186
$-2599$
180 118
Equity at 30.9.2007

KEY FIGURES

7-9
/
7-9/ 1-9/ 1-9/ 1-12/
2008 2007 2008 2007 2007
Earnings per share, EUR 0.31 0.28 0.99 0.63 0.83
Earnings per share, EUR -
d
iluted
0.31 0.27 0.99 0
.63
0.82
Cash flows from
o
perating activities pe
r share
, EU
R
0.41 0.25 1.08 0
.89
1.43
EVA, EUR million 9.7 8.8 2
8.3
18.5 2
3.0
Capital expenditure, EU
R 1000
20 817 12 937 52 238 77 638 93 187
Depreciation and amor
tisation, EUR 1000
9 448 8 719 28 067 24 540 33 432
Equity per share, EUR 5.29 4.64 5.21
Return on equity, ROE
, %
25.1 18
.3
17.0
Return on investe
d capital, ROI, %
21.0 18.1 17.6
Equity ratio, % 44.9 42
.6
46.6
Gearing, % 57.3 61.
7
42.7
Net interest-bearing lia
bilities, EUR 1000
1
17 646
111 12
1
86 360
Average number of employees in full-tim
e equivalent
s
Total number
of full-time
and part-time employees at
8 177 7 723 7 819
end of period 9
625
9 226 9
387
Adjusted num
ber of shares, 1000 shares
average during
the period
38 795 38 637 38 670
at end of period 38 799 38
752
38 784
average during the perio
d, diluted
38 825 38 837 38 843

RTING SEGMENT REPO

ET SALES N

7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
EUR 1000 2008 2007 % 2008 200
7
% 2007
Environmental Services
Property and Office
Support
73 740 67 915 8.6 225 859 20
5 05
7
10 .1 279 845
Services 5
6 309
51 963 8
.4
168
9
97 14
9
343
13.2 2 04 141
Industrial Services 22 906 19 890 15. 2
62
33
3
5
5
612
12.1 75 479
G
roup admin. and other
3 9 10
Inter-division net sales -1 712 -1 202 -4 251 -3 58
0
-4 862
L&T total 151 243 138 569 9.1 452 938 406 44
1
11 .4 554 613
OPERATING PROFIT
7-9/ 7-9/ 1-9/ 1
-9/
1- 12/
EUR 1000 2008 % 2007 % 2008 % 2007 % 20 0
7
%
Environmental Services
Property and O
ffice Support
9 723 13.2 9 730 1
4.3
26 298 11.6 26 605 13.0 34 977 12.5
S
ervices
4 806 8.5 4 213 8.1 7 571 4.5 6 990 4.7 11 005 5.4
Industrial Services 3 707 16.2 2 133 10.7 3 991 6.4 4 589 8.3 4 769 6.3
Group admin. and other -653 -601 12 757 -
1 508
-1 9 6
7
L&T total 17 583 11.6 15 475 11.2 50 617 11.2 3
6 676
9.
0
48 7 5
7
8.8
OTHER SEGMENT REPORTING
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
EUR 1000 2008 2007 2008 2007 2007
Assets
Environmental Services
Property and Office Support Services
272 673 264 576
74 674
250 980
75 508
Industrial Services 74 500
97 478
74 573 78 311
Group admin. and other 443 2 875 2 814
Non-allocated assets 19 420 13 117 30 712
L&T total 464 514 429 815 438 325
Liabilities
Environmental Services 42 747 51 660 36 935
Property and Office Support Services 30 647 29 918 32 447
Industrial Services 20 337 13 427 17 046
Group admin. and other 651 765 667
Non-allocated liabilities 164 640 153 927 148 886
L&T total 259 022 249 697 235 981
Capital expenditure
Environmental Services 11 003 8 283 25 317 52 136 60 704
Property and Office Support Services 1 336 -394 6 109 16 941 20 040
Industrial Services 8 399 4 918 20 733 8 388 12 267
Group admin. and other 79 130 79 173 176
L&T total 20 817 12 937 52 238 77 638 93 187
Depreciation and amortisation
Environmental Services 5 739 5 199 17 068 14 936 20 330
Property and Office Support Services 2 139 2 200 6 382 5 718 7 782
Industrial Services 1 570 1 318 4 615 3 883 5 315
Group admin. and other 2 2 3 5
L&T total 9 448 8 719 28 067 24 540 33 432

QUARTER INCOME STATEMENT BY

EUR 1000 7-9/
2008
4-6/
2008
1-3/
2
008
10-12/
2007
7-9/
2
007
4-6/
20 7
0
1-3/
200
7
10-12/
2006
Net sales
Environmental Services 73
740
7
6 6
39
75
480
74
7
88
67
91
5
71 7
44
65 39
8
53 765
Property and Office
Support S
ervices
56
309
5
7 1
14
55
574
54
7
98
51
96
3
48 6
60
48 72
0
44 584
Industrial Services 22
906
2
2 0
52
17
375
19
86
7
19
890
19 5
72
16 15
0
18 252
Group admin. and other 1 3 3 3 3
Inter-division net sales -1 7
12
-
1 4
41
-1
098
-1 282 -1
202
-1 2
20
-1 158 -1 242
L&T total 151
243
15 364
4
147
331
148
1
72
138
56
9
138 7
59
129 113 115 362
Operating profit
Environmental Services
Property and
Office
9 7
23
8 151 8 4
23
8 3
72
9 730 8 10
4
8 77
1
7 104
S
upport Services
4
806
1 156 1 609 4 015 4 213 1 690 1 087 1 154
Industrial Services 3
707
1 16
2
-878 180 2 13
3
2 59
5
-1
39
3 025
Group admin. and other -653 -271 13 681 -468 -601 -349 -558 -971
L&T total 17
583
10 198 22 8 5
3
12
099
15 475 12 04
0
9
1
61
10 312
Operating margin
Environmental Services
P
roperty and Office
13.2 10.6 11.2 11.2 14.
3
11.
3
1
3.4
1
3.2
Support Services 8.5 2.0 2.9 7.3 8.1 3.5 2.2 2.6
In
dustrial Services
16.2 5.3 -5
.1
0.9 10.7 13.3 -0
.9
16.6
L&T total 11.6 6.6 15
.5
8.2 11
.2
8.7 7
.1
8.9
Finance costs. net -1 346 -990 -1 100 -1 247 -1 294 -924 -852 -366
Share of profits of
associates 18
Profit before tax 16 237 9 208 21 735 10 852 14
181
1
1 116
8 30
9
9 964

In September 2007, L&T obtained full ownership of Salvor Oy. The busin ratio vor w d and most of the operations were transferred from Environm rvic ust ervices. The figures for the comparison period were adjusted accordingly. ess ope ns of Sal ere reorganise ental Se es into Ind rial S

BUSINESS ACQUISITIONS

usiness combinations in aggregate B

Fair values used in Carrying amounts
EUR 1000 consolidation before consolidation
Property, plant and equipment 116 116
Customer contracts 158
Agreements on prohibition of competition 81
Trade and other receivables 10 10
Total assets 366 126
Net assets 366 126
Goodwill arising from acquisitions 55
Acquisition cost 420
Acquisition cost 420
Cash flow effect of acquisitions 420

The cleaning services business of Siivousp acq rty and Office 1 January 2008, the cleaning services business of Siivousliike Lainio Oy on 1 March inte serv sin f Ra län Talonhuolto n 1 A 008. was ired i ste wat r services within Industria s on alvelu Siivoset Oy was uired into Prope Support Services on 2008 and the property ma r Oy nance acqu ices bu nto wa ess o e ntaky Oy o l Service pril 2 15 Feb The business of Obawate ruary 2008.

s of the acquired companie lled E 80 t nd. The aggreg cqui UR 420 thousand, of which EUR 55 tho was gnised in goodwill. All itemisations in S 3 are not present ca fig immaterial. The aggregate net sale ost was E s tota usand UR 6 reco housa ate a sition c accordance with IFR ed be use the ures are

huolto Savolainen Oy group was acquired, a company specialising in waste ecycling , with annual net sales of EUR 2.5 million. The compa pr dous waste manage n ia g . O P- Oy to On 1 October 2008, Jäte management and r aste water, hazar services ny also Huolto ovides w ment a d industr l cleanin services ulun TO , a company specialising in property management, was acquired in October through a purchase entering in force on 1 November 2008. The company's annual net sales for 2007 amounted to EUR 2.5 million.

ual Report 2007 under Note 2 f the consolidated financial statements and under Summary on significant accounting policies. The accounting policy concerning business combinations is presented in Ann o

SSETS CHANGES IN INTANGIBLE A

EUR 1000 1-9/2008 1-9/2007 1-12/2007
Carrying amount at beginning of period 16
2 117
1
24
407
124 407
Business acquisitions 294 42 115 41 885
Other capital expenditure 2 937 3 243 5 403
Disposals -122 -2 100 -1 546
Amortisation and impairment -6 790 -5 649 -7 921
Transfers between items 121 228
Exchange differences -587 -221 -339
Carrying amount at end of perio
d
157 849 161 91
6
162
117

CHANGES IN PROPERTY, PLANT AND EQUIPMENT

EUR 1000 1-9/2008 1
-9/2007
1-12/2007
Carrying amount at beginning of perio
d
151 870 134 03
8
134 038
Business acquisitions 116 5 510 5 574
Other capital expenditure 48 782 27 384 40 147
Disposals -1 009 -1 814 -2 096
Depreciation and impairment -21 277 -18 894 -25 511
Transfers between items -121 -228
Exchange differences -185 -93 -54
Carryin
g amount at end of period
178 297 146 010 151 870

CAPITAL COMMITMENTS

EUR 1000 1-9/2008 1-9/2007 1-12/2007
Intangible assets 1 122 165 70
Property, plant and equipment 16 739 9 762 8 646
Total 17 861 9 927 8 716
The Group's share of capital commitments
of joint ventures
4 093 4 396 5 090

RELATED-PARTY TRANSACTIONS

(Joint ventures)

EUR 1000 1-9/2008 1-9/2007 1-12/2007
Sales 766 1 520 1 851
Purchases 245 247
Non-current receivables
Capital loan receivable 7 646 1 296 2 646
Current receivables
Trade receivables 79 934 110
Current payables
Trade payables

CONTINGENT LIABILITIES

EUR 1000 9/2008 9/2007 12/2007
Securities for own commitments
Real estate mortgages 19
192
10 514 10 114
Corporate mortgages 1
9 000
1
5 000
1
5 000
Other secu
rities
191 153 182
Bank guarantees required
for environmental permits
4 163 3
888
4
309
Other securities are security depos
its.
T
he Group has given no pledges, mortgages or guarantees on behalf of outsiders.
Operating lease liabilities
E
UR 1000
9/2008 9/2007 12/2007
Maturity not later than one year 6 917 6 521 7 424
Maturity later than one year and not later
than five years
15 316 13 976 15 611
Maturity later than five
years
7
188
3 703 3 905
Total 29 421 24 200 26 940
Derivative financial instruments
Interest rate swaps
EUR 1000 9/2008 9/2007 12/2007
Nominal values of interest rate swaps*
Maturity not later than one ye
ar
15 000 15 500 7 500
M
aturity later than one year and not later than five years
15 000 15 000
Total 15 000 30 500 22 500
Fair value 220 563 394
Nominal values of interest rate s
waps**
Maturi
ty not later than one year
4 629 1 429 3 029
M
aturity later than one year and not later than five years
18 514 5 714 18 514
Maturity later than five years 9 000 6 428 12 028
Total 3
2 143
1
3 571
3
3 571
Fair value 641 644 703

ot been applied to these interest rate swaps. Changes in fair recognised in finance income and costs. * Hedge accounting under IAS 39 has n values have been

The interest rate swaps are used to hedge cash flow related to a floating rate loan, and hedge under IAS 39 has been applied to it. The hedges hav fective otal c e fair values has been recognised in the hedging fund under equity. ** accounting e been ef , and the t hange in th

Currency d
erivatives
EUR 1000 9/2008 9/2007 12/2007
Nominal values of forward contracts*
Maturity not later than one year 2 1
60
2 01
9
2 184
Fair value 24 21 7

Hedge accounting under IAS 39 has not been applied to the currency derivatives. Changes in fair values have been recognised in finance income and costs. *

Oil derivatives
1
000 bbl
9/2008 9/2007 12/2007
Volume of crude oil put options
Maturity not later than one year 226 125 182
Maturity later than one y
ear and not later than five years
57 283 2
26
Total 283 408 4
08
Fair value, EUR 1000 184 4
24
83
Volume of sold crude oil futures
M
aturity not later than one year
42 42 42
Fair value, EUR 1000 -1 078 -506 -897

edge accounting under IAS 39 has not been applied to oil derivatives. Changes in fair values have been expenses. H recognised in other operating

he fair values of the oil options have been determined on the basis of a generally used valuation model. contracts are based on market pri the balan et date. T The fair values of other derivative ces at ce she

ULATION OF KEY FIGURES CALC

profit attributable to equity holders of the parent company /adjusted average number of shares Earnings per share:

from operating activities/share: ash flow from operating activities as in the cash flow statement / adjusted average number of shares Cash flows c

EVA:

age of four quarters) before taxes 2007: 8.75% operating profit - cost calculated on invested capital (aver WACC WACC 2008: 9.3%

of the parent company / adjusted number of shar nd of peri Equity/share: profit attributable to equity holders es at e od

for the period / shareholders' equity (average)) x 100 Return on equity, % (ROE): (profit

nvestment, % (ROI): ring Return on i (profit before tax + interest expenses and other finance costs) / (balance sheet total - non-interest-bea liabilities (average)) x 100

Equity ratio, %: shareholders' equity / (balance sheet total - advances received) x 100

es / shareholders' equity x 100 Gearing, %: net interest-bearing liabiliti

ssets Net interest-bearing liabilities: Interest-bearing liabilities - liquid a

ber 2008 Helsinki 27 Octo

ASSILA & TIKANOJA PLC L Board of Directors

rjo Jari Sa President and CEO

ntact Jari Sarjo, l. +358 10 636 2810. For further information, please co President and CEO, te

anagement and property and plant support services and a leading supplier of wood-based biofuels, recovered fuels and recycled raw materials. With operations Lassila & Tikanoja specialises in environmental m is in Finland, Sweden, Latvia, Russia and Norway, L&T employs 9,500 persons. Net sales in 2007 amounted to EUR 555 million. L&T is listed on NASDAQ OMX Helsinki.

ASDAQ OMX Helsinki Distribution: N Major media www.lassila-tikanoja.com

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