- Net sales for the fourth quarter EUR 148.2 million (EUR 115.4 million);
operating profit EUR 12.1 million (EUR 10.3 million); earnings per share EUR
0.20 (EUR 0.18)
- Net sales for the year 2007 EUR 554.6 million (EUR 436.0 million); operating
profit EUR 48.8 million (EUR 50.2 million); earnings per share EUR 0.83 (EUR
0.90); operating profit excluding non-recurring and imputed items EUR 54.3
million (EUR 47.3 million)
- A dividend of EUR 0.55 per share is proposed.
- Net sales for the year 2008 are expected to increase in line with the
long-term target, which is more than 10%, and earnings are expected to improve
clearly. Also the operating profit excluding non-recurring and imputed items is
expected to improve.
GROUP NET SALES AND FINANCIAL PERFORMANCE
Fourth quarter net sales and financial performance
Net sales for the final quarter stood at EUR 148.2 million (EUR 115.4 million).
This represented an increase of 28.4%, 17.9 percentage points of which came from
corporate acquisitions. The operating profit was EUR 12.1 million (EUR 10.3
million), which is 8.2% (8.9%) of net sales. The operating profit excluding
non-recurring and imputed items was EUR 13.3 million (EUR 9.3 million).
The fourth-quarter result was improved by strong organic growth, successful
management of production and lower than expected social security costs. The
operating profit was burdened by non-recurring expenses arising from the
integration of Salvor's business (EUR 0.5 million), as well as imputed changes
in the fair values of oil derivatives purchased for hedging the oil re-refinery
business to be started in 2008 (EUR -0.7 million). In the comparison period,
non-recurring income of EUR 1.0 million was recognised.
Net sales and financial performance for 2007
The full-year net sales increased by 27.2% and stood at EUR 554.6 million (EUR
436.0 million), 18.3 percentage points of this growth coming from corporate
acquisitions. Earnings per share were EUR 0.83 (EUR 0.90). The operating profit
totalled EUR 48.8 million (EUR 50.2 million). The operating profit excluding
non-recurring and imputed items was EUR 54.3 million (EUR 47.3 million).
Organic growth exceeded market growth, and the company's market position
strengthened. This was primarily attributable to well-functioning product
development, marketing and sales operations, as well as improved customer
satisfaction. Several new service products were introduced to the market, and
new outsourcing deals were signed particularly in the forest industry. The
operating profit was burdened by losses in Salvor (EUR 2.3 million), as well as
imputed changes in the fair values of oil derivatives (EUR -2.8 million). In the
previous year, non-recurring income of EUR 2.9 million was recognised.
--------------------------------------------------------------------------------
| Financial summary | 10-12 | 10-12 | Change | 1-12 | 1-12 | Change |
| | /2007 | /2006 | % | /2007 | /2006 | % |
--------------------------------------------------------------------------------
| Net sales, EUR | 148.2 | 115.4 | 28.4 | 554.6 | 436.0 | 27.2 |
| million | | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 13.3 | 9.3 | 43.0 | 54.3 | 47.3 | 14.8 |
| excl. | | | | | | |
| non-recurring and | | | | | | |
| imputed items EUR | | | | | | |
| million* | | | | | | |
--------------------------------------------------------------------------------
| Operating profit, | 12.1 | 10.3 | 17.3 | 48.8 | 50.2 | -2.8 |
| EUR million | | | | | | |
--------------------------------------------------------------------------------
| Operating margin, | 8.2 | 8.9 | | 8.8 | 11.5 | |
| % | | | | | | |
--------------------------------------------------------------------------------
| Profit before | 10.9 | 10.0 | 8.9 | 44.5 | 48.5 | -8.3 |
| tax, EUR million | | | | | | |
--------------------------------------------------------------------------------
| Earnings per | 0.20 | 0.18 | 11.1 | 0.83 | 0.90 | -7.8 |
| share, EUR | | | | | | |
--------------------------------------------------------------------------------
| Dividend/share | | | | 0.55** | 0.55 | |
--------------------------------------------------------------------------------
| EVA, EUR million | 4.6 | 4.6 | | 23.0 | 28.6 | -19.6 |
--------------------------------------------------------------------------------
* Breakdown of operating profit excluding non-recurring and imputed items is
presented at the end of the explanatory statement.
** Proposal by the Board of Directors
NET SALES AND FINANCIAL PERFORMANCE BY DIVISION
Environmental Services
October to December
The net sales of Environmental Services (waste management, recycling services,
L&T Biowatti, environmental products) in the fourth quarter amounted to EUR 74.8
million (EUR 53.8 million), an increase of 39.1%. The operating profit was EUR
8.4 million (EUR 7.1 million).
Organic growth in waste management and recycling services was strong both in
Finland and in other countries. The financial performance of waste management
improved clearly, due to increased net sales and improved productivity.
Recycling services exceeded its target even though the mild start to the winter
held down the level of recovered fuel deliveries.
At the Joensuu recycling plant and the extension to the Turku plant, which were
introduced into production early in the autumn, degrees of utilisation quickly
rose to the planned levels. The planning of an extension to the Kerava plant is
underway. The completion of the Dubna plant in Russia has been postponed to the
latter half of 2008 due to slowpermitting processes. A landfill for industrial
waste will be constructed in Kotka and completed in the latter half of 2008.
The net sales and earnings of L&T Biowatti were burdened by the mild start to
the winter and production restrictions in the mechanical forest industry. The
delivery ability was further improved through the construction of new terminals
and improvements to resources used for acquiring forest processed chips. L&T
Biowatti will build a wood pellet plant at Suonenjoki, with expected completion
in late 2008.
International business developed favourably. Operations in Russia expanded
according to plan. Price increases substantially improved the profitability of
operations in Latvia but the high Latvian inflation rate will impose challenges
on profitability.
Environmental products' financial performance improved as a result of strong
growth in net sales.
Year 2007
Environmental Services' net sales for 2007 amounted to EUR 279.8 million (EUR
204.8 million), an increase of 36.6%. The operating profit was EUR 35.0 million
(EUR 32.8 million).
Organic growth was strong and customer loyalty was good. The profitability of
waste management was burdened by proportional growth in the number of municipal
contracts. The volume of recycling services increased thanks to new sales and
added plant capacity. The Bajamaja rental service clearly increased its net
sales and improved profitability. Losses on Salvor's landfill construction
operations substantially weakened the earnings of recycling services. A part of
Salvor's business was sold to the joint venture partner, joint holding was
dissolved, and Salvor transferred to L&T's sole ownership on 1 September 2007.
Salvor's remaining business was integrated into Industrial Services.
During the year, additional capacity for the recycling of waste material and
by-products was built and introduced at Turku, Tampere and Valkeakoski, and a
completely new recycling plant was built in Joensuu. The situation with
environmental permits developed favourably even though appeals against
environmental permits are slowing down plant and processing site projects to
some extent. The planning and implementation of new plants and processing sites
will continue in Finland as well as in Russia. The largest project is related to
expanding the capacity of the Kerava plant. The first stage is expected to be
completed in the latter half of 2009.
A majority holding in Biowatti Oy was acquired on 1 February 2007. L&T Biowatti
is the leading bioenergy company utilising renewable sources of energy in
Finland. It engages in the procurement, processing, marketing and delivery of
wood-based fuels for customers. L&T Biowatti's net sales and earnings developed
almost as planned. It has improved its procurement and delivery capacity through
constructing new terminals and strengthening its procurement organisation. In
late 2007, a decision was made to expand L&T Biowatti's operations to the
production of wood pellets.
Waste management operations in the Moscow region expanded to a new town in May
with the commencement of a gradual transfer of waste management in the town of
Sergiev Posad to L&T's responsibility. L&T currently has waste management
operations at two locations in Russia: Dubna and Sergiev Posad. However, the
operations are going to be expanded to larger cities in a controlled manner.
The net sales and earnings of environmental products improved clearly. Net sales
increased in Finland as well as in other countries. Particular effort abroad was
put into expanding the Russian operations.
Property and Office Support Services
October to December
The net sales of Property and Office Support Services (property maintenance and
cleaning services) in the fourth quarter totalled EUR 54.8 million (EUR 44.6
million), an increase of 22.9%. The operating profit was EUR 4.0 million (EUR
1.2 million).
Net sales in Finland increased thanks to acquisitions in the beginning of June
and good organic growth particularly in property maintenance. Day-to-day
operations went well in both product lines, with a clear improvement in
earnings. Cleaning services were particularly successful in Finland. Earnings
were improved by low social security costs. Sales of additional services were
successful. The profitability of maintenance of technical systems improved
clearly on the comparison period. During the period, new outsourcing contracts
were signed particularly with the forest industry.
Net sales from international operations increased and the loss was smaller than
in the previous year. The winning of new customers in Russia, which had
developed in a promising fashion, continued further. The challenge in Latvia is
high cost inflation, the impact of which could not be fully transferred to sales
prices.
Year 2007
The full-year net sales of Property and Office Support Services totalled EUR
204.1 million (EUR 168.4 million), an increase of 21.2%. The operating profit
was EUR 11.0 million (EUR 8.8 million).
Organic growth continued in Finland, with net sales growing particularly in
property maintenance. Additional sales to existing customers were successfully
increased. Both product lines improved their profitability thanks to good
management of day-to-day operations.
Kiinteistöhuolto Jauhiainen Oy and Siivouspalvelu Ta-Bu Oy were acquired in the
beginning of June. Kiinteistöhuolto Jauhiainen Oy is a property maintenance
company operating in the Helsinki region that posted net sales of EUR 6.5
million in 2006. Siivouspalvelu Ta-Bu Oy operates in the Helsinki and Varkaus
regions. Its net sales in 2006 amounted to EUR 5.3 million. The operations of
the acquired companies have been integrated into L&T's business. Skånsk All
Service AB, which operates in Sweden and Norway and specialises in food hygiene
services, was acquired in the beginning of the year. Its net sales in 2006
amounted to EUR 10.8 million.
Net sales from international operations increased substantially, in Sweden as a
consequence of the acquisition in January, and in Latvia and Russia through
organic growth. The operations in Latvia and Russia were reorganised, including
recalculations of customer sites and price increases. Sales performance has been
good and an earnings improvement is expected. The focus in Sweden is still on
integrating the acquired companies into one and building a sales organisation.
The division's operations abroad were still running at a loss.
Industrial Services
October to December
The fourth-quarter net sales of Industrial Services (hazardous waste management,
industrial solutions, damage repair services and wastewater services) amounted
to EUR 19.9 million (EUR 18.3 million), an increase of 8.8%. The operating
profit was EUR 0.2 million (EUR 3.0 million). The division's operating profit
was burdened by imputed changes in the fair values of oil derivatives (EUR -0.7
million), compared to an earnings improvement of EUR 0.7 million from
corresponding changes in the comparison period. Earnings were also burdened by
the integration of Salvor's operations (EUR 0.5 million).
Weather was warm for the time of the year, and together with the repairs of
major flood damage, this upheld strong demand. Net sales increased in all
product lines except hazardous waste management. The growth was entirely
organic. Contracts with all major industrial customers were successfully renewed
for periods of several years.
The division's fourth-quarter profitability was weakened by the fact that the
general rise in costs could generally not be transferred to customer prices
before the beginning of 2008. The proportion of expensive rented labour was
successfully reduced, with increases in in-house staff according to plan, but
this caused some overlapping costs during the transition stage. Raw material
procurement by the joint venture L&T Recoil clearly outperformed the
expectations, which increased storage costs.
As Salvor became fully owned by L&T, its operations were integrated into
hazardous waste management and industrial cleaning. The industrial cleaning
product line was renamed industrial solutions.
Year 2007
Full-year net sales for Industrial Services stood at EUR 75.5 million (EUR 66.8
million), an increase of 12.9%. The operating profit was EUR 4.8 million (EUR
9.3 million). The division's operating profit was burdened by imputed changes in
the fair values of oil derivatives (EUR -2.8 million), compared to an earnings
improvement of EUR 0.7 million from corresponding changes in the previous year.
All product lines were successful in increasing their net sales and improving
market share, with particular success in damage repair services. Sales of
recycled fuels declined as oil suitable for re-refining was put into storage in
expectation of the plant to be completed in 2008. Re-refining will substantially
improve the value added for waste oil. A new alternative liquid fuel (ALF) was
introduced to the market in the spring to replace waste oil that is routed to
re-refining.
The division's growth and earnings were somewhat burdened by the lack of human
and equipment resources. Insufficient number of staff increased the costs of
overtime and rented labour, and not even rented resources were sufficient to
fully satisfy the demand during the season. The division's operating result was
in line with the targets. Wastewater services were the only product line to fall
short of its targets, with production difficulties particularly in the first
half of the year. Profitability for damage repair services improved.
In hazardous waste management, the construction of a plant for the joint venture
L&T Recoil progressed. The general increase in construction costs and stricter
safety requirements have increased the costs of construction. The construction
schedule has, to some extent, proved to be too tight. The procurement of raw
material exceeded the expectations, which resulted in an increase in storage
costs that burden the earnings. Supply agreements have practically eliminated
the raw material risk. A production interruption of more than three months due
to a fire at the Tuusula production plant also increased the costs of logistics
and waste disposal.
FINANCING
At the end of the period, interest-bearing liabilities amounted to EUR 39.9
million more than a year earlier. Net interest-bearing liabilities, totalling
EUR 86.4 million, increased by EUR 33.9 million. Increase in net liabilities was
reduced when the shares of Ekokem Oy Ab which were sold in January 2008 were
transferred from available-for-sale non-current investments into current
investments and were recognised at fair value.
Net finance costs exceeded those for the comparison period by EUR 0.9 million
for the fourth quarter, and by EUR 2.6 million for the whole year. In the fourth
quarter, interest expenses increased by EUR 0.8 million as a result of the
growth in interest-bearing liabilities and a rise in the interest rate level.
The increase in liabilities was due to net cash used in investment activities,
which exceeded those for the previous year by EUR 49.6 million.
Due to changes in the fair values of interest rate swaps, EUR 0.2 million was
recognised in finance costs in October-December, while EUR 0.1 million was
recognised in finance income in the comparison period. With regard to changes in
the fair value of interest rate swaps in January-December, EUR 0.3 million was
recognised in finance costs, compared to EUR 0.5 million recognised in finance
income for the comparison year. Net finance costs were 0.8% (0.4%) of net sales
and 8.9% (3.4%) of operating profit.
A total of EUR 0.1 million arising from the change in the fair value of interest
rate swaps to which hedge accounting under IAS 39 is applied, was recognised in
equity.
The equity ratio was 46.6% (50.4%) and the gearing rate 42.7 (29.7). Net cash
from operating activities amounted to EUR 55.4 million (EUR 69.9 million), and
EUR 13.2 million were tied up in the working capital (EUR 2.5 million were
released). A significant part of the increase in the working capital was
generated by increasing the stocks of L&T Biowatti and L&T Recoil.
CAPITAL EXPENDITURE
Capital expenditure for the year 2007 totalled EUR 93.2 million (EUR 47.2
million. EUR 46.6 million were spent on business acquisitions. The combined
annual net sales of the acquired companies totalled EUR 90.6 million. In
addition, production plants were built, machinery and equipment were purchased
and information systems were replaced.
The following acquisitions were made in the first quarter:
In 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 for
Environmental Services. The acquisition became effective on 1 February 2007
after the approval of the competition authority. L&T Biowatti is the leading
Finnish bio energy supplier utilising renewable energy sources, operating in the
procurement, processing, marketing and delivery of wood-based fuels. The main
products are by-products of forest and wood processing industries and logging
chips. The net sales of Biowatti for the year 2006 amounted to EUR 64.2 million.
Bio fuel sales account for two thirds and industrial raw materials sales for one
third of the net sales.
A Swedish cleaning services company Skånsk All Service AB together with
subsidiaries Hygienutveckling AB and Hygieneutvikling A/S operating in Norway
were acquired in January for Property and Office Support Services. The
consolidated net sales of the group totalled EUR 10.8 million in 2006, most of
which came from hygiene services for the food industry. Kiinteistöhuolto Pentti
Nissinen Oy was acquired for property maintenance services.
The remaining portion of the shares of Suomen Keräystuote Oy was purchased for
recycling services within Environmental Services. Lassila & Tikanoja held
already 94.5% of Suomen Keräystuote shares.
The following acquisitions were made in the second quarter:
In early June, Kiinteistöhuolto Jauhiainen Oy and Siivouspalvelu Ta-Bu Oy were
acquired.
Kiinteistöhuolto Jauhiainen Oy specialises in property maintenance services in
the Helsinki region, and its net sales for the year 2006 amounted to EUR 6.5
million. It employs 65 people. Siivouspalvelu Ta-Bu Oy is a cleaning services
company operating both in the Helsinki region and in Varkaus in Central Finland.
Its net sales for the year 2006 amounted to EUR 5.3 million, and it employs some
200 people.
The following acquisitions were made in the third quarter:
In the beginning of June, L&T acquired half of the minority share in L&T
Muoviportti (16.5%). The operations of Kuljetus Kummunmäki Oy were acquired for
waste management on 1 July. In the beginning of September L&T obtained the full
ownership of Salvor Oy when it acquired the remaining 50 percent of the shares.
PERSONNEL
In 2007, the average number of employees converted into full-time equivalents
was 7,819 (6,775). At the end of the year, the total number of full-time and
part-time employees was 9,387 (8,328). Of them 2,401 (1,822) people worked
outside Finland.
PROPOSAL FOR THE DISTRIBUTION OF PROFIT
According to the financial statements, Lassila & Tikanoja plc's distributable
assets amount to EUR 44,312,723.09, of which EUR 24,602,737.17 constitutes
profit for the financial period. There were no substantial changes in the
financial standing of the company after the end of the financial 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 General Meeting of Shareholders that distributable assets be used as
follows:
--------------------------------------------------------------------------------
| A dividend of EUR 0.55 per share will be paid on | EUR 21,338,280.70 |
| each of the 38,796,874 shares, totalling | |
--------------------------------------------------------------------------------
| To be retained and carried forward | EUR 22,974,442.39 |
--------------------------------------------------------------------------------
| Total | EUR 44,312,723.09 |
--------------------------------------------------------------------------------
In accordance with the resolution of the Board of Directors, the record date is
4 April 2008. The Board of Directors proposes to the Annual General Meeting that
the dividend be paid on 11 April 2008.
Earnings per share amounted to EUR 0.83. The proposed dividend is 66.7% of the
earnings per share.
SHARES AND SHARE CAPITAL
Traded volume and price
The volume of trading in Lassila & Tikanoja plc shares on OMX Nordic Exchange in
Helsinki in the year 2007 was 19,802,194, which is 51.2% (33.3%) of the average
number of shares. The value of trading was EUR 467.2 million. The trading price
varied between EUR 20.03 and EUR 27.96. The closing price was EUR 22.70. The
market capitalisation was EUR 880.4 million (EUR 834.5 million) at the end of
the period.
Share capital
At the beginning of the year the company's registered share capital amounted to
EUR 19,264,087. During the year, 256,200 shares were subscribed for pursuant to
2002C options. After these subscriptions the share capital is EUR 19,392,187,
and the number of the shares 38,784,374. The subscription period for the share
options issued in 2002 ended on 30 October 2007.
On 4 February 2008, the Board approved the subscriptions of 12,500 new shares
made pursuant to the 2005A share options. As a result of these subscriptions,
the company's registered share capital will increase by EUR 6,250 to EUR
19,398,437 and the number of the shares will increase to 38,796,874 shares after
the increase has been entered in the Trade Register.
Option plan 2005
In 2005, 600,000 share options were issued, each entitling its holder to
subscribe for one share of Lassila & Tikanoja plc. At the beginning of the
exercise period, 25 key persons held 162,000 2005A options. 33 key persons hold
178,000 2005B options and 43 key persons hold 228,500 2005C options. L&T Advance
Oy, a wholly-owned subsidiary of Lassila & Tikanoja plc, holds 8,000 2005A
options, 22,000 2005B options and 1,500 2005C options.
The share subscription price for 2005A options is EUR 14.22, for 2005B options
EUR 16.98 and for 2005C options EUR 26.87. 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. 2005A options have been listed on the OMX
Nordic Exchange since 2 November 2007.
Shareholders
At the end of the financial period, the company had 4,985 (4,535) shareholders.
Nominee-registered holdings accounted for 13.9% (10.4%) of the total number of
shares.
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.
RESOLUTIONS BY THE ANNUAL GENERAL MEETING
The Annual General Meeting of Lassila & Tikanoja plc, which was held on 26 March
2007, adopted the financial statements for the financial year 2006 and released
the members of the Board of Directors and the President and CEO from liability.
The AGM resolved that a dividend of EUR 0.55, a total of EUR 21.2 million, as
proposed by the Board of Directors, be paid for the financial year 2006. The
dividend payment date was 5 April 2007.
The Annual General Meeting confirmed the number of the members of the Board of
Directors five (5). The following Board members were re-elected to the Board
until the end of the following AGM: Lasse Kurkilahti, Juhani Lassila, Juhani
Maijala and Soili Suonoja. Eero Hautaniemi was elected as a new member for the
same term.
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 of Directors' proposal to amend
the Articles of Association in order to align them with the new Finnish
Companies Act. The provisions on minimum and maximum share capital as well as on
minimum and maximum number of shares were also removed.
At its organising meeting following the Annual General Meeting, the Board of
Directors re-elected Juhani Maijala as Chairman of the Board and Juhani Lassila
as Vice Chairman.
SUMMARY OF STOCK EXCHANGE RELEASES PURSUANT TO ARTICLE 7, CHAPTER 2 OF THE
SECURITIES MARKETS ACT
In a release disclosed on 23 July 2007, the company announced that the full-year
financial result was estimated to be lower than in the previous year, though the
operative result for the final half of the year was expected to remain on the
same level as in the previous year. Previously the company had estimated that
the full-year financial performance will improve. Full-year net sales were still
estimated to increase by clearly more than 20%.
On 14 September 2007, the Board of Directors resolved to apply for listing of
2005A share option rights on the OMX Nordic Exchange in Helsinki starting from 2
November 2007.
EVENTS AFTER THE BALANCE SHEET DATE
On 22 January 2008, Lassila & Tikanoja sold its holding in the shares of Ekokem
Oy Ab to Ilmarinen Mutual Pension Insurance Company. Lassila & Tikanoja had
obtained possession of the shares over a 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-free capital gain arising from the
sale will be recognised in the financial statements for the first quarter of the
year 2008. The positive effect of the sale on the operating profit and the
profit for the period will be EUR 14.2 million.
NEAR-TERM UNCERTAINTIES
Changes in the fair values of oil derivatives associated with L&T Recoil's
business depend on the development of world market prices for oil, and may have
a substantial effect on the operating profit of Industrial Services. The costs
of procuring raw material for renewable fuels produced by L&T Biowatti have
increased due to reasons such as poor forest felling conditions. The continuing
mild winter will further impact the supply of forest processed chips. L&T
Biowatti strives to mitigate the impact by strengthening its procurement
resources for chips. A planned amendment to Latvian waste legislation may have
adverse effects on the competition situation for waste management in Riga
towards the end of 2008.
PROSPECTS FOR THE YEAR 2008
The prospects for Lassila & Tikanoja's markets remain mostly good. Organic
growth is expected to remain strong. Full-year net sales are expected to
increase in line with the long-term target, which is more than 10%, and earnings
are expected to improve clearly. Operating profit excluding non-recurring and
imputed items is also expected to improve.
Environmental Services will continue to be in demand. Increased plant capacity
and a versatile service offering will probably improve L&T's market position.
Increasing the capacity of recycling plants and new landfills will continue
along with geographical expansion in Russia.
Actions of EU climate policy will have a positive effect on the demand for L&T's
renewable fuels but this will be allocated over several years. The prices for
raw material and subcontracted services required by L&T Biowatti have increased
strongly. The second mild winter in a row makes forest felling more difficult
and increases the costs. L&T Biowatti will invest in strengthening its
procurement organisation for wood chips and build one or two pellet plants that
will be completed at the end of the year. Operating profit of Environmental
Services is expected to increase.
The market outlook for Property and Office Support Services remains unchanged in
Finland, and L&T's competitiveness is quite good. The outsourcing of support
services will continue in the forest industry but the municipal market will only
be opened up at a slow pace. Earnings from international operations are expected
to improve but the full-year result is expected to remain slightly negative.
Increasing net sales are a focal point for improving the profitability of
international operations. The division's operating profit is expected to
increase.
The market outlook for Industrial Services is good for the time being. Strong
demand seems to continue, and L&T has managed to increase its market shares.
Wastewater services and damage repair will increase their capacity and improve
their service ability in Finland. The completion of L&T Recoil's re-refinery
will be postponed towards the end of the year due to problems with the supply of
critical components. The plant construction costs have exceeded the budget but
simultaneously its recovery rate has improved in comparison to the original
design level.
Operating profit for Industrial Services is expected to increase clearly
provided that the world market price of crude oil will not rise substantially.
Comparable operating profit excluding the effect of changes in the value of oil
derivatives is also expected to increase. Imputed changes in the fair values of
oil derivatives weakened the earnings by EUR 2.8 million in 2007.
Investments in 2008 will go into recycling plants, landfills, pellet plants and
increases in machinery and transport capacity. Investments are expected to be
smaller than in 2007. The focus is on organic growth.
BREAKDOWN OF OPERATING PROFIT EXCLUDING NON-RECURRING AND IMPUTED ITEMS
--------------------------------------------------------------------------------
| EUR million | 10-12 | 10-12 | 1-12 | 1-12 |
| | /2007 | /2006 | /2007 | /2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit | 12.1 | 10.3 | 48.8 | 50.2 |
--------------------------------------------------------------------------------
| Non-recurring items: | | | | |
--------------------------------------------------------------------------------
| Loss on sale of landfill operations | 0.5 | | 2.3 | |
| of Salvor and integration of the | | | | |
| remaining Salvor's operations | | | | |
--------------------------------------------------------------------------------
| Reorganisation of Property and office | | | 0.4 | |
| support services operations in Russia | | | | |
--------------------------------------------------------------------------------
| Gain on sale of a property | | | | -1.9 |
--------------------------------------------------------------------------------
| Gain on sale of a leasing arrangement | | -0.3 | | -0.3 |
--------------------------------------------------------------------------------
| Oil derivatives | 0.7 | -0.7 | 2.8 | -0.7 |
--------------------------------------------------------------------------------
| Operating profit excluding | 13.3 | 9.3 | 54.3 | 47.3 |
| non-recurring and imputed items | | | | |
--------------------------------------------------------------------------------
CONDENSED FINANCIAL STATEMENTS 1 JANUARY - 31 DECEMBER 2007
ACCOUNTING POLICIES
This financial statements report is in compliance with IAS 34, Interim Financial
Reporting Standard. The same accounting policies as in the annual financial
statements of 31 December 2007 have been applied. These financial statements
have been prepared in accordance with the IFRS standards and interpretations
being effective. The new IFRIC interpretations (7-11) that became effective in
2007 did not affect the consolidated financial statements. IFRS 7 (effective as
of 1 January 2007) does not affect these interim financial statements, because
they are condensed.
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 statement report has not been audited.
--------------------------------------------------------------------------------
| INCOME STATEMENT | 10-12 | 10-12 | 1-12 | 1-12 |
| EUR 1000 | /2007 | /2006 | /2007 | /2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET SALES | 148 172 | 115 362 | 554 613 | 436 004 |
--------------------------------------------------------------------------------
| Cost of goods sold | -129 432 | -100 226 | -478 151 | -367 968 |
--------------------------------------------------------------------------------
| GROSS PROFIT | 18 740 | 15 136 | 76 462 | 68 036 |
--------------------------------------------------------------------------------
| Other operating income | 1 162 | 1 673 | 3 834 | 4 702 |
--------------------------------------------------------------------------------
| Selling and marketing costs | -3 750 | -3 739 | -14 616 | -12 844 |
--------------------------------------------------------------------------------
| Administrative expenses | -2 928 | -2 445 | -11 614 | -8 660 |
--------------------------------------------------------------------------------
| Other operating expenses | -1 125 | -313 | -5 291 | -1 049 |
--------------------------------------------------------------------------------
| OPERATING PROFIT | 12 099 | 10 312 | 48 775 | 50 185 |
--------------------------------------------------------------------------------
| Finance income | 624 | 453 | 1 661 | 1 509 |
--------------------------------------------------------------------------------
| Finance costs | -1 871 | -819 | -5 978 | -3 208 |
--------------------------------------------------------------------------------
| Share of profit of associates | | 18 | | 18 |
--------------------------------------------------------------------------------
| PROFIT BEFORE TAX | 10 852 | 9 964 | 44 458 | 48 504 |
--------------------------------------------------------------------------------
| Income tax expense | -3 217 | -2 956 | -12 291 | -13 249 |
--------------------------------------------------------------------------------
| PROFIT FOR THE PERIOD | 7 635 | 7 008 | 32 167 | 35 255 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | 7 631 | 6 858 | 31 909 | 34 613 |
--------------------------------------------------------------------------------
| Minority interest | 4 | 150 | 258 | 642 |
--------------------------------------------------------------------------------
Earnings per share for profit attributable to the equity holders of the parent:
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.20 | 0.18 | 0.83 | 0.90 |
--------------------------------------------------------------------------------
| Earnings per share, EUR - | 0.19 | 0.18 | 0.82 | 0.90 |
| diluted | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| BALANCE SHEET | 12/2007 | 12/2006 |
| EUR 1000 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | | |
--------------------------------------------------------------------------------
| Non-current assets | | |
--------------------------------------------------------------------------------
| Intangible assets | | |
--------------------------------------------------------------------------------
| Goodwill | 119 946 | 106 611 |
--------------------------------------------------------------------------------
| Intangible assets arising from business | 30 600 | 9 893 |
| combinations | | |
--------------------------------------------------------------------------------
| Other intangible assets | 11 571 | 7 903 |
--------------------------------------------------------------------------------
| Total | 162 117 | 124 407 |
--------------------------------------------------------------------------------
| Property, plant and equipment | | |
--------------------------------------------------------------------------------
| Land | 3 532 | 3 215 |
--------------------------------------------------------------------------------
| Buildings and constructions | 39 594 | 38 239 |
--------------------------------------------------------------------------------
| Machinery and equipment | 103 832 | 90 397 |
--------------------------------------------------------------------------------
| Other | 82 | 174 |
--------------------------------------------------------------------------------
| Advance payments and construction in progress | 4 830 | 2 013 |
--------------------------------------------------------------------------------
| Total | 151 870 | 134 038 |
--------------------------------------------------------------------------------
| Other non-current assets | | |
--------------------------------------------------------------------------------
| Investments in associates | | 3 |
--------------------------------------------------------------------------------
| Available-for-sale investments | 410 | 2 954 |
--------------------------------------------------------------------------------
| Finance lease receivables | 3 823 | 3 174 |
--------------------------------------------------------------------------------
| Deferred income tax assets | 924 | 425 |
--------------------------------------------------------------------------------
| Other receivables | 236 | 229 |
--------------------------------------------------------------------------------
| Total | 5 393 | 6 785 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total non-current assets | 319 380 | 265 230 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | |
--------------------------------------------------------------------------------
| Inventories | 14 350 | 4 315 |
--------------------------------------------------------------------------------
| Trade and other receivables | 71 824 | 54 561 |
--------------------------------------------------------------------------------
| Derivative receivables | 1 189 | 3 533 |
--------------------------------------------------------------------------------
| Advance payments | 774 | 155 |
--------------------------------------------------------------------------------
| Available-for-sale investments | 21 287 | 13 955 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 9 521 | 10 835 |
--------------------------------------------------------------------------------
| Total current assets | 118 945 | 87 354 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS | 438 325 | 352 584 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | |
--------------------------------------------------------------------------------
| EQUITY | | |
--------------------------------------------------------------------------------
| Equity attributable to equity holders of the | | |
| parent | | |
--------------------------------------------------------------------------------
| Share capital | 19 392 | 19 264 |
--------------------------------------------------------------------------------
| Share premium reserve | 50 474 | 47 666 |
--------------------------------------------------------------------------------
| Other reserves | 14 055 | 326 |
--------------------------------------------------------------------------------
| Retained earnings | 86 327 | 72 291 |
--------------------------------------------------------------------------------
| Profit for the period | 31 909 | 34 613 |
--------------------------------------------------------------------------------
| Total | 202 157 | 174 160 |
--------------------------------------------------------------------------------
| Minority interest | 187 | 2 709 |
--------------------------------------------------------------------------------
| TOTAL EQUITY | 202 344 | 176 869 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABILITIES | | |
--------------------------------------------------------------------------------
| Non-current liabilities | | |
--------------------------------------------------------------------------------
| Deferred income tax liabilities | 29 842 | 22 350 |
--------------------------------------------------------------------------------
| Pension obligations | 542 | 352 |
--------------------------------------------------------------------------------
| Provisions | 953 | 936 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 81 411 | 59 031 |
--------------------------------------------------------------------------------
| Other liabilities | 500 | 431 |
--------------------------------------------------------------------------------
| Total | 113 248 | 83 100 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 35 757 | 18 231 |
--------------------------------------------------------------------------------
| Trade and other payables | 85 183 | 73 174 |
--------------------------------------------------------------------------------
| Derivative liabilities | 897 | 0 |
--------------------------------------------------------------------------------
| Tax liabilities | 794 | 938 |
--------------------------------------------------------------------------------
| Provisions | 102 | 272 |
--------------------------------------------------------------------------------
| Total | 122 733 | 92 615 |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES | 235 981 | 175 715 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES | 438 325 | 352 584 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CASH FLOW STATEMENT | 12/2007 | 12/2006 |
| EUR 1000 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CASH FLOWS FROM OPERATING ACTIVITIES | | |
--------------------------------------------------------------------------------
| Profit for the period | 32 167 | 35 255 |
--------------------------------------------------------------------------------
| Adjustments | | |
--------------------------------------------------------------------------------
| Income tax expense | 12 291 | 13 249 |
--------------------------------------------------------------------------------
| Depreciation and amortisation and impairment | 33 432 | 28 155 |
--------------------------------------------------------------------------------
| Finance income and costs | 4 317 | 1 699 |
--------------------------------------------------------------------------------
| Imputed changes in fair values of oil derivatives | 2 947 | -726 |
--------------------------------------------------------------------------------
| Other | -859 | -2 447 |
--------------------------------------------------------------------------------
| Net cash generated from operating activities | 84 295 | 75 185 |
| before change in working capital | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in working capital | | |
--------------------------------------------------------------------------------
| Change in trade and other receivables | -4 903 | -7 654 |
--------------------------------------------------------------------------------
| Change in inventories | -6 824 | 541 |
--------------------------------------------------------------------------------
| Change in trade and other payables | -1 450 | 9 585 |
--------------------------------------------------------------------------------
| Change in working capital | -13 177 | 2 472 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest paid | -5 104 | -2 925 |
--------------------------------------------------------------------------------
| Interest received | 1 460 | 938 |
--------------------------------------------------------------------------------
| Income tax paid | -12 041 | -5 776 |
--------------------------------------------------------------------------------
| NET CASH FROM OPERATING ACTIVITIES | 55 433 | 69 894 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CASH FLOWS FROM INVESTING ACTIVITIES | | |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries and businesses, net | -37 050 | -10 658 |
| of cash | | |
--------------------------------------------------------------------------------
| Sale of subsidiaries and businesses, net of sold | 1 878 | |
| cash | | |
--------------------------------------------------------------------------------
| Purchases of property, plant and equipment and | -49 109 | -34 878 |
| intangible assets | | |
--------------------------------------------------------------------------------
| Proceeds from sale of property, plant and | 2 261 | 13 727 |
| equipment and intangible assets | | |
--------------------------------------------------------------------------------
| Purchases of available-for-sale investments | -147 | |
--------------------------------------------------------------------------------
| Change in other long-term receivables | 1 | -7 |
--------------------------------------------------------------------------------
| Proceeds from sale of available-for sale | 1 098 | 353 |
| investments | | |
--------------------------------------------------------------------------------
| Dividends received | 4 | 9 |
--------------------------------------------------------------------------------
| NET CASH USED IN INVESTMENT ACTIVITIES | -81 064 | -31 454 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CASH FLOWS FROM FINANCING ACTIVITIES | | |
--------------------------------------------------------------------------------
| Proceeds from share issue | 2 936 | 1 018 |
--------------------------------------------------------------------------------
| Change in short-term borrowings | 23 011 | -14 525 |
--------------------------------------------------------------------------------
| Proceeds from long-term borrowings | 50 302 | 15 000 |
--------------------------------------------------------------------------------
| Repayments of long-term borrowings | -39 909 | -7 041 |
--------------------------------------------------------------------------------
| Dividends paid | -21 360 | -15 339 |
--------------------------------------------------------------------------------
| NET CASH GENERATED FROM FINANCING ACTIVITIES | 14 980 | -20 887 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET CHANGE IN LIQUID ASSETS | -10 651 | 17 553 |
--------------------------------------------------------------------------------
| Liquid assets at beginning of period | 24 790 | 7 252 |
--------------------------------------------------------------------------------
| Effect of changes of foreign exchange rates | -131 | -15 |
--------------------------------------------------------------------------------
| LIQUID ASSETS AT END OF PERIOD | 14 008 | 24 790 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liquid assets | 12/2007 | 12/2006 |
| EUR 1000 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash | 9 521 | 10 835 |
--------------------------------------------------------------------------------
| Certificates of deposit and commercial papers | 4 487 | 13 955 |
--------------------------------------------------------------------------------
| Total | 14 008 | 24 790 |
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN EQUITY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR 1000 | Share | Share | Re- | Re- | Equity | Mino- | Total |
| | capita | premiu | valua | tained | attrib. | rity | equity |
| | l | m | - | earn- | to | inter- | |
| | | reserv | tion | ings | equity | est | |
| | | e | and | | holders | | |
| | | | other | | of the | | |
| | | | re- | | parent | | |
| | | | serve | | | | |
| | | | s | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AT | 19 264 | 47 666 | 326 | 106 904 | 174 160 | 2 709 | 176 869 |
| 1.1.2007 | | | | | | | |
--------------------------------------------------------------------------------
| Hedging | | | 136 | | 136 | | 136 |
| fund, | | | | | | | |
| change in | | | | | | | |
| fair | | | | | | | |
| value | | | | | | | |
--------------------------------------------------------------------------------
| Current | | | 14 | | 14 230 | | 14 230 |
| available | | | 230 | | | | |
| for sale | | | | | | | |
| investments | | | | | | | |
| , | | | | | | | |
| change in | | | | | | | |
| fair value | | | | | | | |
--------------------------------------------------------------------------------
| Translation | | | -637 | | -637 | -1 | -638 |
| differences | | | | | | | |
--------------------------------------------------------------------------------
| Items | | | 13 | | 13 729 | -1 | 13 728 |
| recognised | | | 729 | | | | |
| directly | | | | | | | |
| in equity | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | | | | 31 909 | 31 909 | 258 | 32 167 |
| the period | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | 13 | 31 909 | 45 638 | 257 | 45 895 |
| recognised | | | 729 | | | | |
| income and | | | | | | | |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Share | | | | | | | |
| option | | | | | | | |
| remuneratio | | | | | | | |
| n | | | | | | | |
--------------------------------------------------------------------------------
| Subscriptio | 128 | 2 808 | | | 2 936 | | 2 936 |
| ns | | | | | | | |
| pursuant to | | | | | | | |
| 2002 | | | | | | | |
| options | | | | | | | |
--------------------------------------------------------------------------------
| Remuneratio | | | | 613 | 613 | | 613 |
| n | | | | | | | |
| expense of | | | | | | | |
| share | | | | | | | |
| options | | | | | | | |
--------------------------------------------------------------------------------
| Dividends | | | | -21 190 | -21 190 | -180 | -21 370 |
| paid | | | | | | | |
--------------------------------------------------------------------------------
| Purchase of | | | | | | -2 599 | -2 599 |
| a minority | | | | | | | |
--------------------------------------------------------------------------------
| EQUITY AT | 19 392 | 50 474 | 14 | 118 236 | 202 157 | 187 | 202 344 |
| 31.12.2007 | | | 055 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AT | 19 189 | 46 606 | -179 | 87 250 | 152 866 | 2 166 | 155 032 |
| 1.1.2006 | | | | | | | |
--------------------------------------------------------------------------------
| Hedging | | | 384 | | 384 | | 384 |
| fund, | | | | | | | |
| change in | | | | | | | |
| fair | | | | | | | |
| value | | | | | | | |
--------------------------------------------------------------------------------
| Current | | | 10 | | 10 | | 10 |
| available | | | | | | | |
| for sale | | | | | | | |
| investments | | | | | | | |
| , | | | | | | | |
| change in | | | | | | | |
| fair value | | | | | | | |
--------------------------------------------------------------------------------
| Currency | | | 111 | | 111 | -1 | 110 |
| translation | | | | | | | |
| differences | | | | | | | |
--------------------------------------------------------------------------------
| Items | | | 505 | | 505 | -1 | 504 |
| recognised | | | | | | | |
| directly | | | | | | | |
| in equity | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | | | | 34 613 | 34 613 | 642 | 35 255 |
| the period | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | 505 | 34 613 | 35 118 | 641 | 35 759 |
| recognised | | | | | | | |
| income and | | | | | | | |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Share | | | | | | | |
| option | | | | | | | |
| remuneratio | | | | | | | |
| n | | | | | | | |
--------------------------------------------------------------------------------
| Subscriptio | 75 | 1 060 | | | 1 135 | | 1 135 |
| ns | | | | | | | |
| pursuant to | | | | | | | |
| 2002 | | | | | | | |
| options | | | | | | | |
--------------------------------------------------------------------------------
| Remuneratio | | | | 396 | 396 | | 396 |
| n | | | | | | | |
| expense of | | | | | | | |
| share | | | | | | | |
| options | | | | | | | |
--------------------------------------------------------------------------------
| Dividends | | | | -15 355 | -15 355 | -164 | -15 519 |
| paid | | | | | | | |
--------------------------------------------------------------------------------
| Investment | | | | | | 66 | 66 |
| by a | | | | | | | |
| minority | | | | | | | |
| holder | | | | | | | |
--------------------------------------------------------------------------------
| EQUITY AT | 19 264 | 47 666 | 326 | 106 904 | 174 160 | 2 709 | 176 869 |
| 31.12.2006 | | | | | | | |
--------------------------------------------------------------------------------
KEY FIGURES
--------------------------------------------------------------------------------
| | 10-12 | 10-12 | 1-12 | 1-12 |
| | /2007 | /2006 | /2007 | /2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.20 | 0.18 | 0.83 | 0.90 |
--------------------------------------------------------------------------------
| Earnings per share, EUR - diluted | 0.19 | 0.18 | 0.82 | 0.90 |
--------------------------------------------------------------------------------
| Cash flows from operating | 0.54 | 0.72 | 1.43 | 1.82 |
| activities per share, EUR | | | | |
--------------------------------------------------------------------------------
| EVA, EUR million | 4.6 | 4.6 | 23.0 | 28.6 |
--------------------------------------------------------------------------------
| Capital expenditure, EUR 1000 | 15 549 | 15 074 | 93 187 | 47 162 |
--------------------------------------------------------------------------------
| Depreciation and amortisation, EUR | 8 891 | 7 519 | 33 432 | 28 155 |
| 1000 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity per share, EUR | | | 5.21 | 4.52 |
--------------------------------------------------------------------------------
| Dividend per share, EUR | | | 0.55* | 0.55 |
--------------------------------------------------------------------------------
| Dividend/earnings, % | | | 66.7* | 61.1 |
--------------------------------------------------------------------------------
| Dividend yield, % | | | 2.4* | 2.5 |
--------------------------------------------------------------------------------
| P/E ratio | | | 27.5 | 24.1 |
--------------------------------------------------------------------------------
| Return on equity, ROE, % | | | 17.0 | 21.2 |
--------------------------------------------------------------------------------
| Return on invested capital, ROI, % | | | 17.6 | 21.0 |
--------------------------------------------------------------------------------
| Equity ratio, % | | | 46.6 | 50.4 |
--------------------------------------------------------------------------------
| Gearing, % | | | 42.7 | 29.7 |
--------------------------------------------------------------------------------
| Net interest-bearing liabilities, | | | 86 360 | 52 471 |
| EUR 1000 | | | | |
--------------------------------------------------------------------------------
| Average number of employees in | | | 7 819 | 6 775 |
| full-time equivalents | | | | |
--------------------------------------------------------------------------------
| Total number of full-time and | | | 9 387 | 8 328 |
| part-time employees at end of | | | | |
| period | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Adjusted number of shares, 1000 | | | | |
| shares | | | | |
--------------------------------------------------------------------------------
| average during the period | | | 38 670 | 38 445 |
--------------------------------------------------------------------------------
| at end of period | | | 38 784 | 38 528 |
--------------------------------------------------------------------------------
| average during period, diluted | | | 38 843 | 38 601 |
--------------------------------------------------------------------------------
* Proposal by the Board of Directors
SEGMENT REPORTING
--------------------------------------------------------------------------------
| NET SALES | 10-12 | 10-12 | Change | 1-12 | 1-12 | Change |
| EUR 1000 | /2007 | /2006 | % | /2007 | /2006 | % |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Environmental | 74 788 | 53 765 | 39.1 | 279 845 | 204 825 | |
| Services | | | | | | |
--------------------------------------------------------------------------------
| Property and | 54 798 | 44 584 | 22.9 | 204 141 | 168 403 | 21.2 |
| Office Support | | | | | | |
| Services | | | | | | |
--------------------------------------------------------------------------------
| Industrial | 19 867 | 18 252 | 8.8 | 75 479 | 66 843 | 12.9 |
| Services | | | | | | |
--------------------------------------------------------------------------------
| Group admin. and | 1 | 3 | | 10 | 118 | |
| other | | | | | | |
--------------------------------------------------------------------------------
| Inter-division | -1 282 | | | -4 862 | -4 185 | |
| net sales | | -1 242 | | | | |
--------------------------------------------------------------------------------
| Lassila & | 148 | 115 | 28.4 | 554 613 | 436 004 | 27.2 |
| Tikanoja | 172 | 362 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING | 10-12 | % | 10-12 | % | 1-12 | % | 1-12 | % |
| PROFIT | /2007 | | /2006 | | /2007 | | /2006 | |
| EUR 1000 | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Environment | 8 372 | 11.2 | 7 104 | 13.2 | 34 977 | 12.5 | 32 762 | 16.0 |
| al Services | | | | | | | | |
--------------------------------------------------------------------------------
| Property | 4 015 | 7.3 | 1 154 | 2.6 | 11 005 | 5.4 | 8 758 | 5.2 |
| and Office | | | | | | | | |
| Support | | | | | | | | |
| Services | | | | | | | | |
--------------------------------------------------------------------------------
| Industrial | 180 | 0.9 | 3 025 | 16.6 | 4 769 | 6.3 | 9 337 | 14.0 |
| Services | | | | | | | | |
--------------------------------------------------------------------------------
| Group | -468 | | -971 | | -1 976 | | -672 | |
| admin. and | | | | | | | | |
| other | | | | | | | | |
--------------------------------------------------------------------------------
| Lassila & | 12 099 | 8.2 | 10 312 | 8.9 | 48 775 | 8.8 | 50 185 | 11.5 |
| Tikanoja | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OTHER SEGMENT | 10-12/2007 | 10-12/2006 | 1-12/2007 | 1-12/2006 |
| REPORTING | | | | |
| EUR 1000 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | | | | |
--------------------------------------------------------------------------------
| Environmental Services | | | 250 980 | 196 994 |
--------------------------------------------------------------------------------
| Property and Office | | | 75 508 | 59 394 |
| Support Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | | | 78 311 | 66 386 |
--------------------------------------------------------------------------------
| Group admin. and other | | | 2 814 | 2 804 |
--------------------------------------------------------------------------------
| Non-allocated assets | | | 30 712 | 27 006 |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | | | 438 325 | 352 584 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | | |
--------------------------------------------------------------------------------
| Environmental Services | | | 36 935 | 33 455 |
--------------------------------------------------------------------------------
| Property and Office | | | 32 447 | 29 708 |
| Support Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | | | 17 046 | 10 300 |
--------------------------------------------------------------------------------
| Group admin. and other | | | 667 | 1 084 |
--------------------------------------------------------------------------------
| Non-allocated | | | 148 886 | 101 168 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | | | 235 981 | 175 715 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital expenditure | | | | |
--------------------------------------------------------------------------------
| Environmental Services | 8 568 | 5 436 | 60 704 | 21 940 |
--------------------------------------------------------------------------------
| Property and Office | 3 099 | 7 613 | 20 040 | 19 472 |
| Support Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | 3 879 | 2 025 | 12 267 | 5 696 |
--------------------------------------------------------------------------------
| Group admin. and other | 3 | 0 | 176 | 54 |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | 15 549 | 15 074 | 93 187 | 47 162 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Depreciation and | | | | |
| amortisation | | | | |
--------------------------------------------------------------------------------
| Environmental Services | 5 393 | 4 108 | 20 330 | 15 671 |
--------------------------------------------------------------------------------
| Property and Office | 2 064 | 2 045 | 7 782 | 7 274 |
| Support Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | 1 433 | 1 357 | 5 315 | 5 127 |
--------------------------------------------------------------------------------
| Group admin. and other | 1 | 9 | 5 | 83 |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | 8 891 | 7 519 | 33 432 | 28 155 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| INCOME STATEMENT BY QUARTER | 10-12 | 7-9 | 4-6 | 1-3 |
| EUR 1000 | /2007 | /2007 | /2007 | /2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | | | | |
--------------------------------------------------------------------------------
| Environmental Services | 74 788 | 67 915 | 71 744 | 65 398 |
--------------------------------------------------------------------------------
| Property and Office Support | 54 798 | 51 963 | 48 660 | 48 720 |
| Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | 19 867 | 19 890 | 19 572 | 16 150 |
--------------------------------------------------------------------------------
| Group admin. and other | 1 | 3 | 3 | 3 |
--------------------------------------------------------------------------------
| Inter-division net sales | -1 282 | -1 202 | -1 220 | -1 158 |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | 148 172 | 138 569 | 138 759 | 129 113 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit | | | | |
--------------------------------------------------------------------------------
| Environmental Services | 8 372 | 9 730 | 8 104 | 8 771 |
--------------------------------------------------------------------------------
| Property and Office Support | 4 015 | 4 213 | 1 690 | 1 087 |
| Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | 180 | 2 133 | 2 595 | -139 |
--------------------------------------------------------------------------------
| Group admin. and other | -468 | -601 | -349 | -558 |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | 12 099 | 15 475 | 12 040 | 9 161 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating margin | | | | |
--------------------------------------------------------------------------------
| Environmental Services | 11.2 | 14.3 | 11.3 | 13.4 |
--------------------------------------------------------------------------------
| Property and Office Support | 7.3 | 8.1 | 3.5 | 2.2 |
| Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | 0.9 | 10.7 | 13.3 | -0.9 |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | 8.2 | 11.2 | 8.7 | 7.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance costs, net | -1 247 | -1 294 | -924 | -852 |
--------------------------------------------------------------------------------
| Share of profits of associates | | | | |
--------------------------------------------------------------------------------
| Profit before tax | 10 852 | 14 181 | 11 116 | 8 309 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR 1000 | 10-12 | 7-9 | 4-6 | 1-3 |
| | /2006 | /2006 | /2006 | /2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | | | | |
--------------------------------------------------------------------------------
| Environmental Services | 53 765 | 52 696 | 51 420 | 46 945 |
--------------------------------------------------------------------------------
| Property and Office Support | 44 584 | 41 463 | 41 243 | 41 113 |
| Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | 18 252 | 18 500 | 16 785 | 13 305 |
--------------------------------------------------------------------------------
| Group admin. and other | 3 | 19 | 26 | 70 |
--------------------------------------------------------------------------------
| Inter-division net sales | -1 242 | -1 030 | -1 044 | -869 |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | 115 362 | 111 648 | 108 430 | 100 564 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit | | | | |
--------------------------------------------------------------------------------
| Environmental Services | 7 104 | 10 056 | 8 100 | 7 503 |
--------------------------------------------------------------------------------
| Property and Office Support | 1 154 | 4 833 | 1 499 | 1 272 |
| Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | 3 025 | 3 730 | 2 005 | 576 |
--------------------------------------------------------------------------------
| Group admin. and other | -971 | 1 233 | -547 | -388 |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | 10 312 | 19 852 | 11 057 | 8 963 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating margin | | | | |
--------------------------------------------------------------------------------
| Environmental Services | 13.2 | 19.1 | 15.8 | 16.0 |
--------------------------------------------------------------------------------
| Property and Office Support | 2.6 | 11.7 | 3.6 | 3.1 |
| Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | 16.6 | 20.2 | 11.9 | 4.3 |
--------------------------------------------------------------------------------
| Lassila & Tikanoja | 8.9 | 17.8 | 10.2 | 8.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance costs, net | -366 | -740 | -391 | -201 |
--------------------------------------------------------------------------------
| Share of profits of associates | 18 | | | |
--------------------------------------------------------------------------------
| Profit before tax | 9 964 | 19 112 | 10 666 | 8 762 |
--------------------------------------------------------------------------------
In 2007, L&T obtained full ownership of Salvor Oy. The business operations of
Salvor were reorganised and most of the operations were transferred from
Environmental Services into Industrial Services. The comparison figures were
adjusted accordingly.
BUSINESS ACQUISITIONS
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 the fair value of the
asset can be determined reliably. 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 has been 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 that cannot
be identified separately in accordance with IAS 38. These unidentified items
include the potential for gaining new customers vested in the acquired
businesses and the opportunities for developing new products and services, as
well as the regionally strong position of an acquired business. These items do
not fulfil the IAS 38 identification criteria in any way. The items cannot be
separated from each other, they are not based on any agreement or legal right
and their value cannot be determined reliably. All business combinations also
create synergy benefits that consist primarily of savings in fixed production
costs. Negative goodwill generated by the acquisition of Salvor Oy will be
recognised as revenue. Negative goodwill was generated, because deferred tax
liabilities related to confirmed losses for prior periods were taken into
account in the equity at the time of acquisition.
Changes in goodwill arising from acquisitions/acquisition costs may arise on the
basis of terms and conditions related to the purchase 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). Acquisition price
adjustments, including also attorney's and consultants' fees attributable to a
business combination, are recognised in goodwill within 12 months from the
acquisition date. Such adjustments related to the businesses acquired in 2007
will probably still be made. Except these portions and the purchase of the
minority holding of Biowatti described below, the allocation calculations are
final.
The consolidated net sales for the year 2007 would have been EUR 570.2 million
and the consolidated profit for the period EUR 32.4 million if all the business
acquisitions had been made on 1 January. 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 on property,
plant and equipment. Synergy benefits have not been accounted for.
The aggregate net sales of the acquired companies totalled EUR 90.6 million.
Biowatti Oy
--------------------------------------------------------------------------------
| EUR 1000 | Fair values used | Carrying amounts |
| | in consolidation | before |
| | | consolidation |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Property, plant and equipment | 1 107 | 1 107 |
--------------------------------------------------------------------------------
| Customer contracts | 72 | |
--------------------------------------------------------------------------------
| Agreements on prohibition of | 14 593 | |
| competition | | |
--------------------------------------------------------------------------------
| Other intangible assets arising from | 8 657 | |
| business combinations | | |
--------------------------------------------------------------------------------
| Other intangible assets | 647 | 647 |
--------------------------------------------------------------------------------
| Inventories | 3 213 | 3 213 |
--------------------------------------------------------------------------------
| Trade and other receivables | 9 768 | 9 768 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 5 251 | 5 251 |
--------------------------------------------------------------------------------
| Total assets | 43 308 | 19 986 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Deferred tax liabilities | -6 442 | -40 |
--------------------------------------------------------------------------------
| Non-current interest-bearing | -5 806 | |
| liabilities | | |
--------------------------------------------------------------------------------
| Trade and other payables | -7 877 | -7 877 |
--------------------------------------------------------------------------------
| Total liabilities | -20 125 | -7 917 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net assets | 23 183 | 12 069 |
--------------------------------------------------------------------------------
| Goodwill arising from acquisitions | 7 762 | |
--------------------------------------------------------------------------------
| Acquisition cost | 30 945 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition cost | 30 945 | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | -5 251 | |
| acquisition date | | |
--------------------------------------------------------------------------------
| Cash flow effect of acquisitions | 25 694 | |
--------------------------------------------------------------------------------
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 thirty percent of the shares
by the beginning of the year 2012. The acquisition price for the seventy percent
portion was EUR 30.9 million, and it was paid in cash. No interest-bearing
liabilities were transferred in the acquisition. The acquisition became
effective on 1 February 2007 after the approval of the competition authority.
L&T Biowatti became a cash-generating unit within the Environmental Services
division.
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 purchase price of the remaining 30 percent,
discounted to the value at the acquisition date (EUR 5,806 thousand), 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. If the estimate needs to be revised, the cost of the combination will be
adjusted accordingly and the amounts of goodwill and interest-bearing
liabilities will be changed.
All property, plant and equipment acquired was measured and their values were
found to correspond to the fair values based on the market prices of similar
assets, taking into account the age of the assets, wear and tear and similar
factors. The property, plant and equipment of Biowatti were already recognised
at fair value due to a former company arrangement.
The value of supply contracts recognised in Other intangible assets was
determined on the basis of estimated duration of supplier relationships and
discounted net cash flows arising from current relationships. Intangible assets
will be amortised over their useful life according to agreement or the
management's estimate.
The net sales of L&T Biowatti for 2007 amounted to EUR 62,816 thousand, and
profit for the period EUR 2,936 thousand.
Other business combinations in aggregate
--------------------------------------------------------------------------------
| EUR 1000 | Fair values used | Carrying amounts |
| | in consolidation | before |
| | | consolidation |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Property, plant and equipment | 4 438 | 3 878 |
--------------------------------------------------------------------------------
| Customer contracts | 2 555 | |
--------------------------------------------------------------------------------
| Agreements on prohibition of | 1 103 | |
| competition | | |
--------------------------------------------------------------------------------
| Other intangible assets arising from | 97 | |
| business combinations | | |
--------------------------------------------------------------------------------
| Other intangible assets | 168 | 168 |
--------------------------------------------------------------------------------
| Other non-current assets | 1 098 | 945 |
--------------------------------------------------------------------------------
| Inventories | 395 | 395 |
--------------------------------------------------------------------------------
| Trade and other receivables | 4 430 | 4 430 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 4 592 | 4 592 |
--------------------------------------------------------------------------------
| Total assets | 18 876 | 14 408 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Deferred tax liabilities | -647 | -402 |
--------------------------------------------------------------------------------
| Non-current interest-bearing | -104 | -104 |
| liabilities | | |
--------------------------------------------------------------------------------
| Trade and other payables | -7 773 | -8 070 |
--------------------------------------------------------------------------------
| Provisions | -40 | |
--------------------------------------------------------------------------------
| Total liabilities | -8 564 | -8 576 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net assets | 10 312 | 5 832 |
--------------------------------------------------------------------------------
| Goodwill arising from acquisitions | 6 504 | |
--------------------------------------------------------------------------------
| Recognition of negative goodwill | -868 | |
--------------------------------------------------------------------------------
| Acquisition cost | 15 948 | |
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
| Acquisition cost | 15 948 | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | -4 592 | |
| acquisition date | | |
--------------------------------------------------------------------------------
| Cash flow effect of acquisitions | 11 356 | |
--------------------------------------------------------------------------------
Acquired business operations denominated in a foreign currency have been
converted into euro at the exchange rate valid on the date of acquisition.
The operations of Kuljetus Kummunmäki Oy were acquired for waste management
within Environmental Services on 1 July 2007. On 1 September 2007, 50.0% of
Salvor Oy, in which L&T already had a holding of 50.0%, were acquired to
recycling services within Environmental Services. Acquisitions for Property and
Office Support Services included the cleaning services group Skånsk All Service
AB on 1 February 2007 and Siivouspalvelu Ta-Bu Oy on 31 May 2007, while
Kiinteistöhuolto Pentti Nissinen Oy was acquired for property management on 1
February 2007 and Kiinteistöhuolto Jauhiainen Oy on 31 May 2007.
The figures for these acquired businesses are stated in aggregate, because none
of them is of material importance. 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.
Individual purchase prices have not been itemised because none of them is of
material importance when considered separately. All share acquisitions have
resulted in a holding of 100% of voting power.
The largest acquired companies by annual net sales were Skånsk All Service group
(EUR 10.8 million), Kiinteistöhuolto Jauhiainen Oy (EUR 6.5 million) and
Siivouspalvelu Ta-Bu Oy (EUR 5.3 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.
Furthermore, L&T acquired the remaining 5.5% of Suomen Keräystuote Oy's shares
on 31 January, complementing its existing holding of 94.5%. On 1 July 2007, L&T
acquired 16.5% of the Muoviportti Group of which it previously held 67%. A share
corresponding to 33% was recognised in the consolidated financial statements
because L&T has committed to acquiring the remaining shares. An estimate of the
sales price for 16.5% has been recognised as non-current interest-bearing
liability. These business combinations are not subject to IFRS 3 because they
concern entities under common control.
On 1 January 2008, the cleaning services business operations of Siivoset Oy were
acquired into Property and Office Support Services (annual net sales EUR 0.1
million).
CHANGES IN INTANGIBLE ASSETS
--------------------------------------------------------------------------------
| EUR 1000 | 1-12/2007 | 1-12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount at beginning of period | 124 407 | 114 872 |
--------------------------------------------------------------------------------
| Business acquisitions | 41 885 | 9 885 |
--------------------------------------------------------------------------------
| Other capital expenditure | 5 403 | 3 016 |
--------------------------------------------------------------------------------
| Disposals | -1 546 | -161 |
--------------------------------------------------------------------------------
| Amortisation and impairment | -7 921 | -3 464 |
--------------------------------------------------------------------------------
| Transfers between items | 228 | 0 |
--------------------------------------------------------------------------------
| Exchange difference | -339 | 259 |
--------------------------------------------------------------------------------
| Carrying amount at end of period | 162 117 | 124 407 |
--------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
--------------------------------------------------------------------------------
| EUR 1000 | 1-12/2007 | 1-12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount at beginning of period | 134 038 | 135 404 |
--------------------------------------------------------------------------------
| Business acquisitions | 5 574 | 3 261 |
--------------------------------------------------------------------------------
| Other capital expenditure | 40 147 | 30 677 |
--------------------------------------------------------------------------------
| Disposals | -2 096 | -10 599 |
--------------------------------------------------------------------------------
| Depreciation and impairment | -25 511 | -24 691 |
--------------------------------------------------------------------------------
| Transfers between items | -228 | |
--------------------------------------------------------------------------------
| Exchange difference | -54 | -14 |
--------------------------------------------------------------------------------
| Carrying amount at end of period | 151 870 | 134 038 |
--------------------------------------------------------------------------------
CAPITAL COMMITMENTS
--------------------------------------------------------------------------------
| EUR 1000 | 1-12/2007 | 1-12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Intangible assets | 70 | 150 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 8 646 | 7 199 |
--------------------------------------------------------------------------------
| Total | 8 716 | 7 349 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The Group's share of capital commitments of | 8 584 | |
| joint ventures | | |
--------------------------------------------------------------------------------
RELATED-PARTY TRANSACTIONS
(Joint ventures and associates)
--------------------------------------------------------------------------------
| EUR 1000 | 1-12 | 1-12 |
| | /2007 | /2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales | 1 851 | 1 591 |
--------------------------------------------------------------------------------
| Purchases | 247 | 556 |
--------------------------------------------------------------------------------
| Non-current receivables | | |
--------------------------------------------------------------------------------
| Capital loan receivable | 2 646 | 3 296 |
--------------------------------------------------------------------------------
| Current receivables | | |
--------------------------------------------------------------------------------
| Trade receivables | 110 | 28 |
--------------------------------------------------------------------------------
| Current payables | | |
--------------------------------------------------------------------------------
| Trade payables | | 84 |
--------------------------------------------------------------------------------
CONTINGENT LIABILITIES
--------------------------------------------------------------------------------
| EUR 1000 | 12/2007 | 12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Securities for own commitments | | |
--------------------------------------------------------------------------------
| Real estate mortgages | 10 114 | 10 484 |
--------------------------------------------------------------------------------
| Corporate mortgages | 15 000 | 12 778 |
--------------------------------------------------------------------------------
| Other securities | 182 | 197 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bank guarantees required for environmental | 4 309 | 2 026 |
| permits | | |
--------------------------------------------------------------------------------
Other securities are security deposits.
The Group has given no pledges, mortgages or guarantees on behalf of outsiders.
Operating lease liabilities
--------------------------------------------------------------------------------
| EUR 1000 | 12/2007 | 12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Maturity not later than one year | 7 424 | 6 107 |
--------------------------------------------------------------------------------
| Maturity later than one year and not later | 15 611 | 12 742 |
| than five years | | |
--------------------------------------------------------------------------------
| Maturity later than five years | 3 905 | 3 614 |
--------------------------------------------------------------------------------
| Total | 26 940 | 22 463 |
--------------------------------------------------------------------------------
Derivative financial instruments
Interest rate swaps
--------------------------------------------------------------------------------
| EUR 1000 | 12/2007 | 12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Nominal values of interest rate swaps* | | |
--------------------------------------------------------------------------------
| Maturity not later than one year | 7 500 | 13 500 |
--------------------------------------------------------------------------------
| Maturity later than one year and not later | 15 000 | 30 500 |
| than five years | | |
--------------------------------------------------------------------------------
| Total | 22 500 | 44 000 |
--------------------------------------------------------------------------------
| Fair value | 394 | 726 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Nominal value of interest rate swap ** | | |
--------------------------------------------------------------------------------
| Maturity not later than one year | 3 029 | 1 429 |
--------------------------------------------------------------------------------
| Maturity later than one year and not later | 18 514 | 5 714 |
| than five years | | |
--------------------------------------------------------------------------------
| Maturity later than five years | 12 028 | 7 857 |
--------------------------------------------------------------------------------
| Total | 33 571 | 15 000 |
--------------------------------------------------------------------------------
| Fair value | 703 | 519 |
--------------------------------------------------------------------------------
* 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.
** The interest rate swap is used to hedge cash flow related to a floating rate
loan, and hedge accounting under IAS 39 has been applied to it. The hedge has
been effective, and the total change in the fair value has been recognised in
the hedging fund under equity.
Currency derivatives
--------------------------------------------------------------------------------
| EUR 1000 | 12/2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Nominal values of forward contracts * | |
--------------------------------------------------------------------------------
| Maturity not later than one year | 2 184 |
--------------------------------------------------------------------------------
| Fair value | 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
--------------------------------------------------------------------------------
| 1000 bbl | 12/2007 | 12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Raw oil put options | | |
--------------------------------------------------------------------------------
| Volume maturing not later than one year | 182 | |
--------------------------------------------------------------------------------
| Volume maturing later than one year and not | 226 | 453 |
| later than five years | | |
--------------------------------------------------------------------------------
| Total | 408 | 453 |
--------------------------------------------------------------------------------
| Fair value EUR 1000 | 83 | 2 288 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Volume of sold raw oil futures | | |
--------------------------------------------------------------------------------
| Maturity not later than one year | 42 | |
--------------------------------------------------------------------------------
| Fair value EUR 1000 | -897 | |
--------------------------------------------------------------------------------
Hedge accounting under IAS 39 has not been applied to oil derivatives. Changes
in fair values have been recognised in other operating expenses.
The fair values of the oil options have been determined on the basis of a
generally used measurement model. The fair values of other derivative contracts
are based on market prices at the balance sheet date.
CALCULATION OF KEY FIGURES
Earnings per share:
profit attributable to equity holders of the parent company /adjusted average
number of shares
Cash flows from operating activities/share:
cash flow from operating activities as in the cash flow statement / adjusted
average number of shares
Dividend/share:
dividend for the financial year per share / share issue adjustment factor for
issues made after the financial period x 100
Dividend/earnings %:
dividend per share / earnings per share x 100
Dividend yield %:
dividend per share / share price at year end x 100
EVA:
operating profit - cost calculated on invested capital (average of four
quarters) before taxes
WACC: 8.75 %
Equity/share:
profit attributable to equity holders of the parent company / adjusted number of
shares at year end
Return on equity, % (ROE):
(profit for the period / shareholders' equity (average)) x 100
Return on investment, % (ROI):
(profit before tax + interest expenses and other finance costs) / (balance sheet
total
- non-interest-bearing liabilities (average)) x 100
Equity ratio, %:
shareholders' equity / (balance sheet total - advances received) x 100
Gearing, %:
net interest-bearing liabilities / shareholders' equity x 100
Interest-bearing liabilities:
Interest-bearing liabilities - liquid assets
Helsinki 4 February 2008
LASSILA & TIKANOJA PLC
Board of Directors
Jari Sarjo
President and CEO
For further information, please contact Jari Sarjo,
President and CEO, tel. +358 10 636 2810.
