Quarterly Report • Apr 27, 2011
Quarterly Report
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27 April 2011 1
Lassila & Tikanoja's net sales for the first quarter increased by 3.6% to EUR 159.5 million (EUR 153.9 million). Operating profit was EUR 6.5 million (EUR 6.6 million), representing 4.1% (4.3%) of net sales, and operating profit excluding non-recurring items was EUR 6.8 million (EUR 7.8 million). Earnings per share were EUR 0.10 (EUR 0.11).
Environmental Services and Property Maintenance saw their net sales grow from the comparison period. Meanwhile lower volumes of wood-based fuels were supplied than a year earlier due to a suspension in the payment of power plants' electricity production subsidy.
High salary, subcontracting and repair costs as well as the increase in the price of diesel oil and price competition eroded profitability. The joint venture L&T Recoil's operating profit improved significantly from the comparison period.
| 1-3/ | 1-3/ | Change | 1-12/ | |
|---|---|---|---|---|
| 2011 | 2010 | % | 2010 | |
| Net sales, EUR million | 159.5 | 153.9 | 3.6 | 598.2 |
| Operating profit excluding non-recurring items, | ||||
| EUR million* | 6.8 | 7.8 | -13.3 | 45.5 |
| Operating profit, EUR million | 6.5 | 6.6 | -2.6 | 40.2 |
| Operating margin, % | 4.1 | 4.3 | 6.7 | |
| Profit before tax, EUR million | 5.4 | 5.6 | -3.3 | 36.0 |
| Earnings per share, EUR | 0.10 | 0.11 | -9.1 | 0.68 |
| EVA, EUR million | -0.2 | -1.1 | 10.1 |
* Breakdown of operating profit excluding non-recurring items is presented below the division reviews.
The division's net sales for the first quarter were up by 12.1% to EUR 72.4 million (EUR 64.6 million). Operating profit totalled EUR 4.2 million (EUR 4.4 million) and operating profit excluding non-recurring items was EUR 4.2 million (EUR 4.8 million).
Waste management services and the joint venture L&T Recoil boosted the Environmental Services division's net sales growth. In addition, the prices of secondary raw materials (fibres, plastics, metals) rose significantly.
Lower-than-expected operating rates of recycling plants, the steep increase in the price of diesel oil and the higher salary, subcontracting and repair costs undermined profitability. The division was unable to adapt the process cleaning and waste water services operations to fluctuations in demand. Special attention will be paid to project work planning.
Although the operating rate of the joint venture L&T Recoil's re-refinery improved, production reliability and base oil supply still haven't reached a satisfactory level. Action will be taken in connection with the maintenancerelated shutdown in August to improve technical reliability. The joint venture's operating result for the quarter saw a major improvement from the comparison period and showed a slight profit.
The net sales and profitability of the Environmental Services division's international operations declined from the comparison period, largely due to the competitive situation in Latvia.
The division's net sales for the first quarter totalled EUR 34.9 million (EUR 34.7 million), showing an increase of 0.5%. Operating profit totalled EUR 1.5 million (EUR 1.0 million) and operating profit excluding non-recurring items was EUR 1.5 million (EUR 1.2 million).
Net sales in domestic operations remained at the previous year's level. In Sweden, sales to new customers were successful.
The EUR 0.7 million credit loss recorded for Russian operations taxed the operating profit for the comparison period. The start-up costs of new projects in Finland burdened the operating profit more than a year earlier.
The division's net sales for the first quarter were up by 5.6% to EUR 38.9 million (EUR 36.9 million). Operating profit totalled EUR 1.9 million (EUR 2.8 million) and operating profit excluding non-recurring items was EUR 1.9 million (EUR 2.9 million).
The healthy work load for damage repair services and the stronger demand for maintenance services for technical systems boosted the division's net sales.
The decrease in operating profit could be attributed to the demanding winter weather conditions, which raised the division's subcontracting and overtime costs. Due to the price competition, the profitability of snow-related commissioned assignments was weaker than a year earlier.
First quarter net sales of Renewable Energy Sources (L&T Biowatti) were down by 20.4% to EUR 16.0 million (EUR 20.1 million). The division recorded an operating loss of EUR 0.7 million (a loss of EUR 0.9 million), and an operating loss excluding non-recurring items of EUR 0.4 million (a loss of EUR 0.9 million).
The suspension in the payment of the electricity production subsidy weakened the demand for wood-based fuels from the comparison period. As a result, several power plant customers used fossil fuels for energy production instead of renewable energy sources. Payment of the subsidy re-commenced at the end of the period.
The division's competitiveness will be improved by a reorganisation programme involving fixed cost cuts and operational efficiency enhancement, and by sales price hikes.
| 1-3/ | 1-3/ | 1-12/ |
|---|---|---|
| 2010 | ||
| 40.2 | ||
| 3.4 | ||
| 0.4 | ||
| 0.2 | 1.2 | 1.5 |
| 6.8 | 7.8 | 45.5 |
| 2011 6.5 0.1 |
2010 6.6 |
Cash flows from operating activities amounted to EUR 10.5 million (EUR 13.9 million). EUR 1.9 million was tied up in the working capital (EUR 0.4 million).
At the end of the period, interest-bearing liabilities amounted to EUR 141.8 million (EUR 139.1 million). Net interest-bearing liabilities amounted to EUR 132.0 million, showing an increase of EUR 25.8 million from the comparison period.
Net finance costs in January–March amounted to EUR 1.1 million which is on a par with the amount of the comparison period. Net finance costs were 0.7% (0.7%) of net sales. Long-term loans totalling EUR 17.3 million will mature during the rest of the year. The average interest rate of loans (with interest rate hedging) was 3.2% (3.3%).
The equity ratio was 42.4% (40.3%) and the gearing rate 63.9 (52.9). Liquid assets at the end of the period amounted to EUR 9.8 million (EUR 32.9 million). The dividend, totalling EUR 21.3 million, was paid at the end of the period. In the comparison period the dividend was paid in the second quarter.
Of the EUR 50 million commercial paper programme, EUR 25.0 million (EUR 0.0 million) was in use. The EUR 15.0 million committed limit was 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 12.9 million (EUR 5.5 million), approximately half of it 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 January–March, the average number of employees converted into full-time equivalents was 7,520 (7,668). The total number of full-time and part-time employees at the end of the period was 8,725 (8,599). Of them 6,989 (6,723) people worked in Finland and 1,736 (1,876) people in other countries.
The volume of trading excluding the shares held by the company in Lassila & Tikanoja plc shares on NASDAQ OMX Helsinki in January–March was 3,301,780 which is 8.5% (3.7%) of the average number of outstanding shares. The value of trading was EUR 44.1 million (EUR 22.3 million). The trading price varied between EUR 12.40 and EUR 15.18. The closing price was EUR 12.70. At the end of the period, the company held 60,758 of its own shares. The market capitalisation excluding the shares held by the company was EUR 492.0 million (EUR 598.9 million) at the end of the period.
The company's registered share capital amounts to EUR 19,399,437, and the number of outstanding shares to 38,738,116 shares. The average number of shares excluding the shares held by the company totalled 38,738,116.
In 2005, 600,000 share option rights were issued, each entitling its holder to subscribe for one share of Lassila & Tikanoja plc. In the beginning of the exercise period, 37 key persons held 200,000 2005C options. L&T Advance Oy, a wholly-owned subsidiary of Lassila & Tikanoja plc, holds 30,000 2005C options and these options will not be exercised. The exercise period for the 2005A has ended on 29 May 2009 and for the 2005B options on 31 May 2010.
The exercise price for the 2005C options is EUR 26.80 as of 22 March 2011. The exercise period for 2005C options is 2 November 2009 to 31 May 2011.
As a result of the exercise of the outstanding 2005 share options, the number of shares may increase by a maximum of 200,000 new shares, which is 0.5% of the current number of shares. The 2005C options have been listed on NASDAQ OMX Helsinki since 2 November 2009.
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 includes three earnings periods one year each, of which the first one began on 1 January 2009 and the last one ends on 31 December 2011. The basis for the determination of the reward is decided annually. Rewards to be paid for the year 2011 will be based on the EVA result of Lassila & Tikanoja group. They will be paid partly as shares and partly in cash. The proportion paid in cash will cover taxes arising from the reward. The programme covers 23 persons.
A maximum total of 180,000 Lassila & Tikanoja plc shares may be paid out on the basis of the programme. The shares will be obtained in public trading, and therefore the incentive programme will have no diluting effect on the share value.
At the end of the financial period, the company had 9,665 (7,668) shareholders. Nominee-registered holdings accounted for 11.2% (9.3%) 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. Shares will be repurchased otherwise than in proportion to the existing shareholdings of the company's shareholders in public trading on the NASDAQ OMX Helsinki Ltd at the market price quoted at the time of the repurchase.
The Board of Directors is authorised to repurchase and transfer a maximum of 500,000 company shares, which is 1.3% of the total number of shares. The repurchase authorisation will be effective for 18 months and the share issue authorisation for four years. These authorisations revoke the authorisation for the repurchase of the company's own shares and the authorisation to issue shares issued by the Annual General Meeting 2009.
The Board of Directors is not authorised to launch a convertible bond or share option rights.
At the end of the period, the company held 60,758 of its own shares, representing 0.2% of all shares and votes.
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 Annual General Meeting resolved on decreasing the share premium reserve by EUR 50,672,564.52 by transferring all the funds in the share premium reserve to the unrestricted equity reserve. The resolution was not registered at the appointed time and therefore the arrangement cannot be implemented.
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, 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.
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. He will report to Jari Sarjo, President and CEO. 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. The current total number of own shares held by Lassila & Tikanoja plc is 63,305, the returned shares included.
L&T Recoil's production has not yet fully stabilised, and any further disturbances in the plant's production could have a negative effect on the Environmental Services division's performance. End-product and raw material price fluctuations would have a major effect on L&T Recoil's performance.
The government support for renewable fuels will have a positive effect on the demand for wood-based fuels in the future, but with some delay. Changes in the prices of emission rights will affect the competitiveness of L&T Biowatti's wood-based fuels.
More detailed information on L&T's risks and risk management is available in the Annual Report, in the report of the Board of Directors, and in the consolidated financial statements.
Higher operating rates in the industry will increase waste volumes and the demand for process cleaning and polluted soil and materials utilisation. Higher prices of secondary raw materials and a rise in waste tax improve the outlook for the recycling business.
The production reliability of L&T Recoil's facility will affect the Environmental Services division's profitability. Raising the operating rate of the facility and improving the supply of base oil continue to be the key priorities.
The markets for Cleaning and Office Support Services and for Property Maintenance are expected to remain challenging, and the fierce price competition is expected to continue.
The demand for L&T Biowatti's wood-based fuels is expected to strengthen. The government support measures targeting renewable fuels will have a positive effect on the demand for wood-based fuels and on their price level in the second half.
The net sales will grow more than estimated previously due to the acquisitions.
Full-year net sales will grow slightly from 2010 and operating profit excluding non-recurring items is expected to remain at the 2010 level. Previous estimate: Net sales and operating profit excluding non-recurring items in 2011 are expected to remain at the 2010 level.
| 1-3/ | 1-3/ | Change | 1-12/ | |
|---|---|---|---|---|
| EUR 1000 | 2011 | 2010 | % | 2010 |
| Net sales | 159 474 | 153 902 | 3.6 | 598 193 |
| Cost of sales | -146 658 | -139 945 | 4.8 | -531 066 |
| Gross profit | 12 816 | 13 957 | -8.2 | 67 127 |
| Other operating income | 680 | 318 | 113.8 | 2 708 |
| Selling and marketing costs | -3 796 | -3 469 | 9.4 | -13 779 |
| Administrative expenses | -2 966 | -3 055 | -2.9 | -10 519 |
| Other operating expenses | -270 | -1 115 | -75.8 | -2 686 |
| Impairment | -2 632 | |||
| Operating profit | 6 464 | 6 636 | -2.6 | 40 219 |
| Finance income | 299 | 338 | -11.5 | 1 053 |
| Finance costs | -1 363 | -1 391 | -2.0 | -5 282 |
| Profit before tax | 5 400 | 5 583 | -3.3 | 35 990 |
| Income tax expense | -1 404 | -1 452 | -3.3 | -9 786 |
| Profit for the period | 3 996 | 4 131 | -3.3 | 26 204 |
| Attributable to: | ||||
| Equity holders of the company | 3 994 | 4 127 | 26 188 | |
| Non-controlling interest | 2 | 4 | 16 | |
| Earnings per share for profit attributable to the equity holders of the company: | ||||
| Basic earnings per share, EUR | 0.10 | 0.11 | 0.68 | |
| Diluted earnings per share, EUR | 0.10 | 0.11 | 0.68 | |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
| 1-3/ | 1-3/ | 1-12/ | |
|---|---|---|---|
| EUR 1000 | 2011 | 2010 | 2010 |
| Profit for the period | 3 996 | 4 131 | 26 204 |
| Other comprehensive income, after tax | |||
| Hedging reserve, change in fair value | 921 | -195 | 223 |
| Current available-for-sale investments | |||
| Gains in the period | -2 | -58 | |
| Current available-for-sale investments | -2 | -58 | |
| Currency translation differences | 32 | 807 | 792 |
| Other comprehensive income, after tax | 951 | 612 | 957 |
| Total comprehensive income, after tax | 4 947 | 4 743 | 27 161 |
| Attributable to: | |||
| Equity holders of the company | 4 943 | 4 717 | 27 130 |
| Non-controlling interest | 4 | 26 | 31 |
| EUR 1000 | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | |||
| Goodwill | 114 670 | 113 371 | 113 467 |
| Customer contracts arising from acquisitions | 5 753 | 5 800 | 4 736 |
| Agreements on prohibition of competition | 10 711 | 11 122 | 10 023 |
| Other intangible assets arising from business acquisitions | 743 | 2 704 | 1 229 |
| Other intangible assets | 13 271 | 13 608 | 13 226 |
| 145 148 | 146 605 | 142 681 | |
| Property, plant and equipment | |||
| Land | 4 655 | 4 075 | 4 671 |
| Buildings and constructions | 78 617 | 71 399 | 78 908 |
| Machinery and equipment | 112 244 | 107 612 | 111 733 |
| Other | 85 | 82 | 85 |
| Prepayments and construction in progress | 5 021 | 15 174 | 5 303 |
| 200 622 | 198 342 | 200 700 | |
| Other non-current assets | |||
| Available-for-sale investments | 589 | 525 | 598 |
| Finance lease receivables | 3 549 | 4 159 | 3 547 |
| Deferred tax assets | 4 116 | 2 477 | 3 924 |
| Other receivables | 3 318 | 644 | 3 401 |
| 11 572 | 7 805 | 11 470 | |
| Total non-current assets | 357 342 | 352 752 | 354 851 |
| Current assets | |||
| Inventories | 24 146 | 28 214 | 27 957 |
| Trade and other receivables | 95 829 | 87 645 | 85 662 |
| Derivative receivables | 1 413 | 407 | |
| Prepayments | 6 334 | 3 302 | 317 |
| Available-for-sale investments | 2 497 | 24 479 | 9 895 |
| Cash and cash equivalents | 7 277 | 8 440 | 4 653 |
| Total current assets | 137 496 | 152 080 | 128 891 |
| TOTAL ASSETS | 494 838 | 504 832 | 483 742 |
| EUR 1000 | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Equity attributable to equity holders of the company | |||
| Share capital | 19 399 | 19 399 | 19 399 |
| Share premium reserve | 50 673 | 50 673 | 50 673 |
| Other reserves | -1 138 | -2 494 | -2 141 |
| Unrestricted equity reserve | -52 | ||
| Retained earnings | 133 559 | 128 852 | 128 597 |
| Profit for the period | 3 994 | 4 127 | 26 188 |
| 206 435 | 200 557 | 222 716 | |
| Non-controlling interest | 282 | 273 | 278 |
| Total equity | 206 717 | 200 830 | 222 994 |
| Liabilities | |||
| Non-current liabilities | |||
| Deferred tax liabilities | 33 829 | 32 918 | 33 718 |
| Retirement benefit obligations | 630 | 613 | 615 |
| Provisions | 2 755 | 2 486 | 2 748 |
| Borrowings | 90 969 | 116 231 | 95 563 |
| Other liabilities | 478 | 1 496 | 364 |
| 128 661 | 153 744 | 133 008 | |
| Current liabilities | |||
| Borrowings | 50 819 | 22 915 | 31 261 |
| Trade and other payables | 107 768 | 123 794 | 94 891 |
| Derivative liabilities | 665 | 1 336 | 1 173 |
| Tax liabilities | 18 | 1 667 | 15 |
| Provisions | 190 | 546 | 400 |
| 159 460 | 150 258 | 127 740 | |
| Total liabilities | 288 121 | 304 002 | 260 748 |
| TOTAL EQUITY AND LIABILITIES | 494 838 | 504 832 | 483 742 |
| EUR 1000 | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit for the period | 3 996 | 4 131 | 26 204 |
| Adjustments | |||
| Income tax expense | 1 404 | 1 452 | 9 786 |
| Depreciation, amortisation and impairment | 10 568 | 10 295 | 43 937 |
| Finance income and costs | 1 064 | 1 053 | 4 229 |
| Other | -739 | 342 | 1 570 |
| Net cash generated from operating activities before change in working | |||
| capital | 16 293 | 17 273 | 85 726 |
| Change in working capital | |||
| Change in trade and other receivables | -16 343 | -13 041 | -6 118 |
| Change in inventories | 3 810 | 4 620 | 4 874 |
| Change in trade and other payables | 10 657 | 7 991 | -918 |
| Change in working capital | -1 876 | -430 | -2 162 |
| Interest paid | -1 566 | -266 | -5 409 |
| Interest received | 254 | 211 | 914 |
| Income tax paid | -2 623 | -2 912 | -15 259 |
| Net cash from operating activities | 10 482 | 13 876 | 63 810 |
| Cash flows from investing activities | |||
| Acquisition of subsidiaries and businesses, net of cash acquired | -5 331 | -1 655 | |
| Proceeds from sale of subsidiaries and businesses, net of sold cash | 199 | ||
| Purchases of property, plant and equipment and intangible assets | -5 860 | -5 004 | -36 003 |
| Proceeds from sale of property, plant and equipment and intangible | |||
| assets | 727 | 1 331 | 3 655 |
| Purchases of available-for-sale investments | -3 | -74 | |
| Change in other non-current receivables | 91 | 85 | -2 673 |
| Dividends received | 1 | ||
| Net cash used in investing activities | -10 373 | -3 591 | -36 550 |
| Cash flows from financing activities | |||
| Change in short-term borrowings | 19 558 | 26 | 5 091 |
| Repayments of long-term borrowings | -4 677 | -5 002 | -23 166 |
| Dividends paid | -19 773 | -21 301 | |
| Repurchase of own shares | -1 125 | ||
| Net cash generated from financing activities | -4 892 | -4 976 | -40 501 |
| EUR 1000 | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| Net change in liquid assets | -4 783 | 5 309 | -13 241 |
| Liquid assets at beginning of period | 14 548 | 27 583 | 27 583 |
| Effect of changes in foreign exchange rates | 9 | 27 | 206 |
| Liquid assets at end of period | 9 774 | 32 919 | 14 548 |
| Liquid assets | |||
| EUR 1000 | 3/2011 | 3/2010 | 12/2010 |
| Cash and cash equivalents | 7 277 | 8 440 | 4 653 |
| Money market investments | 2 497 | 24 479 | 9 895 |
| Total | 9 774 | 32 919 | 14 548 |
| Equity | ||||||||
|---|---|---|---|---|---|---|---|---|
| Revalu | attributable | |||||||
| ation | Un | to equity | ||||||
| Share | and | restricted | holders | Non | ||||
| Share | premium | other | equity | Retained | of the | controlling | Total | |
| EUR 1000 | capital | reserve | reserves | reserve | earnings | company | interest | equity |
| Equity at 1.1.2011 | 19 399 | 50 673 | -2 141 | 0 | 154 785 | 222 716 | 278 | 222 994 |
| Expense recognition of | ||||||||
| share-based benefits | 80 | 80 | 80 | |||||
| Dividends paid | -21 306 | -21 306 | -21 306 | |||||
| Transfer from | ||||||||
| revaluation reserve | 52 | -52 | ||||||
| Total comprehensive | ||||||||
| income | 951 | 3 994 | 4 945 | 4 | 4 949 | |||
| Equity at 31.3.2011 | 19 399 | 50 673 | -1 138 | -52 | 137 553 | 206 435 | 282 | 206 717 |
| Equity at 1.1.2010 | 19 399 | 50 673 | -3 084 | 0 | 150 014 | 217 002 | 247 | 217 249 |
| Expense recognition of | ||||||||
| share-based benefits | 161 | 161 | 161 | |||||
| Dividends paid | -21 323 | -21 323 | -21 323 | |||||
| Total comprehensive | ||||||||
| income | 590 | 4 127 | 4 717 | 26 | 4 743 | |||
| Equity at 31.3.2010 | 19 399 | 50 673 | -2 494 | 0 | 132 979 | 200 557 | 273 | 200 830 |
| 1-3/ | 1-3/ | 1-12/ | |
|---|---|---|---|
| 2011 | 2010 | 2010 | |
| Earnings per share, EUR | 0.10 | 0.11 | 0.68 |
| Earnings per share, diluted, EUR | 0.10 | 0.11 | 0.68 |
| Cash flows from operating activities per share, EUR | 0.27 | 0.36 | 1.65 |
| EVA, EUR million | -0.2 | -1.1 | 10.1 |
| Capital expenditure, EUR 1000 | 12 868 | 5 460 | 39 321 |
| Depreciation, amortisation and impairment, EUR 1000 | 10 568 | 10 295 | 43 937 |
| Equity per share, EUR | 5.33 | 5.17 | 5.75 |
| Return on equity, ROE, % | 7.4 | 7.9 | 11.9 |
| Return on invested capital, ROI, % | 7.7 | 8.0 | 11.6 |
| Equity ratio, % | 42.4 | 40.3 | 46.5 |
| Gearing, % | 63.9 | 52.9 | 50.3 |
| Net interest-bearing liabilities, EUR 1000 | 132 015 | 106 227 | 112 277 |
| Average number of employees in full-time equivalents | 7 520 | 7 668 | 7 835 |
| Total number of full-time and part-time employees at end of period | 8 725 | 8 599 | 8 732 |
| Number of outstanding shares adjusted for issues, 1000 shares | |||
| average during the period | 38 738 | 38 769 | 38 749 |
| at end of period | 38 738 | 38 769 | 38 738 |
| average during the period, diluted | 38 769 | 38 769 | 38 773 |
This interim report is in compliance with IAS 34 Interim Financial Reporting standard. The same accounting policies as in the annual financial statements for the year 2010 have been applied. This interim report has been prepared in accordance with the IFRS standards and interpretations as adopted by the EU. The following amendments to standards that have become effective in 2010 have had an impact on the financial statements release:
The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. All acquisitionrelated costs should be expensed.
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 interim report has not been audited.
| 1-3/2011 Inter |
1-3/2010 Inter |
Total net sales, |
|||||
|---|---|---|---|---|---|---|---|
| EUR 1000 | External | division | Total | External | division | Total | change % |
| Environmental | |||||||
| Services | 71 520 | 909 | 72 429 | 63 520 | 1 089 | 64 609 | 12.1 |
| Cleaning and Office | |||||||
| Support Services | 34 549 | 307 | 34 856 | 34 381 | 285 | 34 666 | 0.5 |
| Property | |||||||
| Maintenance | 38 212 | 727 | 38 939 | 36 541 | 316 | 36 857 | 5.6 |
| Renewable Energy | |||||||
| Sources | 15 193 | 818 | 16 011 | 19 460 | 666 | 20 126 | -20.4 |
| Eliminations | -2 761 | -2 761 | -2 356 | -2 356 | |||
| L&T total | 159 474 | 0 | 159 474 | 153 902 | 0 | 153 902 | 3.6 |
| 1-12/2010 Inter |
|||
|---|---|---|---|
| EUR 1000 | External | division | Total |
| Environmental | |||
| Services | 286 260 | 3 771 | 290 031 |
| Cleaning and Office | |||
| Support Services | 139 399 | 1 216 | 140 615 |
| Property | |||
| Maintenance | 121 546 | 1 923 | 123 469 |
| Renewable Energy | |||
| Sources | 50 988 | 4 118 | 55 106 |
| Eliminations | -11 028 | -11 028 | |
| L&T total | 598 193 | 0 | 598 193 |
| 1-3/ | 1-3/ | 1-12/ | ||||
|---|---|---|---|---|---|---|
| EUR 1000 | 2011 | % | 2010 | % | 2010 | % |
| Environmental Services | 4 175 | 5.8 | 4 416 | 6.8 | 33 674 | 11.6 |
| Cleaning and Office Support | ||||||
| Services | 1 475 | 4.2 | 1 037 | 3.0 | 7 524 | 5.4 |
| Property Maintenance | 1 902 | 4.9 | 2 793 | 7.6 | 7 764 | 6.3 |
| Renewable Energy Sources | -651 | -4.1 | -860 | -4.3 | -6 553 | -11.9 |
| Group admin. and other | -437 | -750 | -2 190 | |||
| L&T total | 6 464 | 4.1 | 6 636 | 4.3 | 40 219 | 6.7 |
| Finance costs, net | -1 064 | -1 053 | -4 229 | |||
| Profit before tax | 5 400 | 5 583 | 35 990 |
| EUR 1000 | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| Assets | |||
| Environmental Services | 340 318 | 329 286 | 330 963 |
| Cleaning and Office Support Services | 42 643 | 40 349 | 39 007 |
| Property Maintenance | 42 050 | 40 576 | 38 098 |
| Renewable Energy Sources | 46 035 | 57 395 | 49 113 |
| Group admin. and other | 2 107 | 333 | 1 902 |
| Unallocated assets | 21 685 | 36 893 | 24 659 |
| L&T total | 494 838 | 504 832 | 483 742 |
| Liabilities | |||
| Environmental Services | 56 020 | 54 359 | 50 300 |
| Cleaning and Office Support Services | 26 758 18 812 |
26 561 | 25 654 |
| Property Maintenance Renewable Energy Sources |
6 529 | 16 361 8 277 |
15 784 4 835 |
| Group admin. and other | 2 585 | 21 955 | 1 193 |
| Unallocated liabilities | 177 417 | 176 489 | 162 982 |
| L&T total | 288 121 | 304 002 | 260 748 |
| EUR 1000 | 1-3/2011 | 1-3/2010 | 1-12/2010 |
| Capital expenditure | |||
| Environmental Services | 8 814 | 4 253 | 31 409 |
| Cleaning and Office Support Services | 1 222 | 466 | 2 112 |
| Property Maintenance | 2 631 | 509 | 5 074 |
| Renewable Energy Sources | 88 | 123 | 654 |
| Group admin. and other | 113 | 109 | 72 |
| L&T total | 12 868 | 5 460 | 39 321 |
| Depreciation and amortisation | |||
| Environmental Services | 7 379 | 7 120 | 28 558 |
| Cleaning and Office Support Services | 953 | 1 021 | 4 023 |
| Property Maintenance | 1 069 | 983 | 4 017 |
| Renewable Energy Sources | 1 167 | 1 168 | 4 702 |
| Group admin. and other | 3 | 5 | |
| L&T total | 10 568 | 10 295 | 41 305 |
| Impairment | |||
| Renewable Energy Sources | 2 632 | ||
| L&T total | 0 | 0 | 2 632 |
| EUR 1000 | 1-3/ 2011 |
10-12/ 2010 |
7-9/ 2010 |
4-6/ 2010 |
1-3/ 2010 |
10-12/ 2009 |
7-9/ 2009 |
4-6/ 2009 |
|---|---|---|---|---|---|---|---|---|
| Net sales | ||||||||
| Environmental Services | 72 429 | 73 992 | 75 806 | 75 624 | 64 609 | 71 178 | 72 055 | 74 121 |
| Cleaning and Office | ||||||||
| Support Services | 34 856 | 34 580 | 35 659 | 35 710 | 34 666 | 35 686 | 36 338 | 36 108 |
| Property Maintenance | 38 939 | 31 596 | 26 926 | 28 090 | 36 857 | 25 829 | 23 746 | 24 541 |
| Renewable Energy | ||||||||
| Sources | 16 011 | 15 266 | 7 617 | 12 097 | 20 126 | 17 702 | 10 669 | 14 691 |
| Inter-division net sales | -2 761 | -3 927 | -2 238 | -2 507 | -2 356 | -2 354 | -2 069 | -2 367 |
| L&T total | 159 474 | 151 507 | 143 770 | 149 014 | 153 902 | 148 041 | 140 739 | 147 094 |
| Operating profit | ||||||||
| Environmental Services | 4 175 | 8 204 | 10 930 | 10 124 | 4 416 | 6 793 | 11 816 | 10 937 |
| Cleaning and Office | ||||||||
| Support Services | 1 475 | 181 | 4 088 | 2 218 | 1 037 | 1 697 | 4 076 | 2 597 |
| Property Maintenance | 1 902 | 633 | 3 263 | 1 075 | 2 793 | 1 070 | 3 157 | 1 695 |
| Renewable Energy | ||||||||
| Sources | -651 | -361 | -1 432 | -3 900 | -860 | -321 | -1 029 | -279 |
| Group admin. and other | -437 | -104 | -574 | -762 | -750 | -735 | -1 111 | -84 |
| L&T total | 6 464 | 8 553 | 16 275 | 8 755 | 6 636 | 8 504 | 16 909 | 14 866 |
| Operating margin | ||||||||
| Environmental Services | 5.8 | 11.1 | 14.4 | 13.4 | 6.8 | 9.5 | 16.4 | 14.8 |
| Cleaning and Office | ||||||||
| Support Services | 4.2 | 0.5 | 11.5 | 6.2 | 3.0 | 4.8 | 11.2 | 7.2 |
| Property Maintenance | 4.9 | 2.0 | 12.1 | 3.8 | 7.6 | 4.1 | 13.3 | 6.9 |
| Renewable Energy | ||||||||
| -4.1 | ||||||||
| Sources | -2.4 | -18.8 | -32.2 | -4.3 | -1.8 | -9.6 | -1.9 | |
| L&T total | 4.1 | 5.6 | 11.3 | 5.9 | 4.3 | 5.7 | 12.0 | 10.1 |
| Finance costs, net | -1 064 | -987 | -1 272 | -917 | -1 053 | -1 078 | -1 242 | -1 233 |
| Profit before tax | 5 400 | 7 566 | 15 003 | 7 838 | 5 583 | 7 426 | 15 667 | 13 633 |
| EUR 1000 | Fair values used in consolidation |
|---|---|
| Cash | 3 844 |
| Contingent consideration | 1 487 |
| Total consideration | 5 331 |
| Acquisition-related costs (included in the administrative | |
| expenses in the consolidated financial statements) | 3 |
| Recognised amounts of identifiable assets acquired and liabilities assumed | |
| EUR 1000 | Fair values used in consolidation |
| Property, plant and equipment | 1 693 |
| Customer contracts | 1 526 |
| Agreements on prohibition of competition | 1 236 |
| Other intangible assets | 2 |
| Inventories | 17 |
| Trade and other receivables | 175 |
| Total assets | 4 649 |
| Deferred tax liabilities | 258 |
| Trade and other payables | 192 |
| Total liabilities | 450 |
| Total identifiable net assets | 4 199 |
| Goodwill | 1 132 |
| Total | 5 331 |
On 4 January 2011, the Environmental Services division acquired Pentti Laurila Ky, an environmental management business operating in the Keuruu and Multiala region in Central Finland. Furthermore, on 1 February 2011 the division acquired the Ypäjä-based Matti Hossi Ky, a waste management and interchangeable platform business, as well as the PPT Luttinen Oy waste management business on 1 March 2011. On 1 January 2011, the Cleaning and Office Support Services division acquired the operations of Kestosiivous Oy, a cleaning company operating in the Helsinki region. On 1 March 2011, the Property Maintenance division acquired the operations of KH-Kiinteistöhuolto Oy operating in the Nurmijärvi region.
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 did not change 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 acquisition was KH-Kiinteistöhuolto Oy (EUR 2,372 thousand).
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 1 April 2011, L&T acquired the cleaning and property maintenance businesses of Savon Kiinteistöhuolto- ja Siivouspalvelu Oy, Varkauden Kiinteistönhoito ja Siivouspalvelu Oy and Jo-Pe Huolto Oy, operating in Varkaus region in eastern Finland. On 1 April 2011, L&T acquired Hansalaiset Oy, a cleaning company operating in Helsinki, Turku, Tampere and Oulu, was acquired into Cleaning and Office Support Services. The accounting process for these acquisitions is still in progress.
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 | 1-3/2011 | 1-3/2010 | 1-12/2010 |
|---|---|---|---|
| Carrying amount at beginning of period | 142 681 | 148 417 | 148 417 |
| Business acquisitions | 3 894 | -3 | 1 175 |
| Other capital expenditure | 884 | 805 | 2 944 |
| Disposals | -1 | -778 | -1 760 |
| Amortisation and impairment | -2 408 | -2 276 | -9 134 |
| Transfers between items | -4 | ||
| Exchange differences | 98 | 440 | 1 043 |
| Carrying amount at end of period | 145 148 | 146 605 | 142 681 |
| EUR 1000 | 1-3/2011 | 1-3/2010 | 1-12/2010 |
|---|---|---|---|
| Carrying amount at beginning of period | 200 700 | 201 651 | 201 651 |
| Business acquisitions | 1 693 | 500 | |
| Other capital expenditure | 6 397 | 4 656 | 34 628 |
| Disposals | -58 | -465 | -1 711 |
| Depreciation and impairment | -8 160 | -8 019 | -34 803 |
| Transfers between items | 4 | ||
| Exchange differences | 50 | 519 | 431 |
| Carrying amount at end of period | 200 622 | 198 342 | 200 700 |
| EUR 1000 | 1-3/2011 | 1-3/2010 | 1-12/2010 |
|---|---|---|---|
| Intangible assets | 60 | 275 | |
| Property, plant and equipment | 5 489 | 11 356 | 5 106 |
| Total | 5 549 | 11 631 | 5 106 |
| The Group's share of capital commitments | |||
| of joint ventures | 75 | 160 | 0 |
(Joint ventures)
| EUR 1000 | 1-3/2011 | 1-3/2010 | 1-12/2010 |
|---|---|---|---|
| Sales | 309 | 724 | 2 332 |
| Other operating income | 18 | 18 | 74 |
| Interest income | 219 | 103 | 505 |
| Non-current receivables | |||
| Capital loan receivable | 21 646 | 16 896 | 20 646 |
| Current receivables | |||
| Trade receivables | 2 083 | 148 | 2 375 |
| Loan receivables | 1 232 | 641 | 1 034 |
| EUR 1000 | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| Mortgages on rights of tenancy Company mortgages |
42 179 21 460 |
42 179 21 460 |
42 179 21 460 |
| Other securities | 218 | 225 | 222 |
| Bank guarantees required for environmental permits | 4 399 | 3 151 | 4 634 |
Other securities are security deposits.
The Group has given no pledges, mortgages or guarantees on behalf of outsiders.
| EUR 1000 | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| Maturity not later than one year | 8 175 | 7 318 | 8 087 |
| Maturity later than one year and not later than five years | 20 089 | 16 446 | 20 087 |
| Maturity later than five years | 4 252 | 5 294 | 4 509 |
| Total | 32 516 | 29 058 | 32 683 |
| EUR 1000 | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| Nominal values of interest rate swaps | |||
| Maturity not later than one year | 11 716 | 4 629 | 11 010 |
| Maturity later than one year and not later than five years | 47 668 | 30 071 | 49 355 |
| Maturity later than five years | 267 | ||
| Total | 59 384 | 34 700 | 60 632 |
| Fair value | -665 | -1 336 | -1 173 |
The interest rate 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. The fair values of the interest rate swaps are based on the market data at the balance sheet date.
| metric tons | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| Nominal values of diesel swaps | |||
| Maturity not later than one year | 6 333 | 7 596 | |
| Maturity later than one year and not later than five years | 1 908 | 2 544 | |
| Total | 8 241 | 10 140 | |
| Fair value, EUR 1000 | 1 322 | 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 | 3/2011 | 3/2010 | 12/2010 |
|---|---|---|---|
| Volume of forward contracts | |||
| Maturity not later than one year | 161 | 196 | |
| Fair value | 1 | 7 |
Hedge accounting under IAS 39 has not been applied to currency derivatives. 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, 26 April 2011
LASSILA & TIKANOJA PLC Board of Directors
Jari Sarjo President and CEO
For additional information please contact Jari Sarjo, President and CEO, tel. +358 10 636 2810 or 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 and is a leading supplier of wood-based biofuels, recovered fuels and recycled raw materials. With operations in Finland, Sweden, Latvia and Russia, L&T employs 9,400 persons. Net sales in 2010 amounted to EUR 598 million. L&T is listed on NASDAQ OMX Helsinki.
Distribution: NASDAQ OMX Helsinki Major media www.lassila-tikanoja.com
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