Interim report 1 January-31 March 2012

Lassila & Tikanoja plc
Interim Report
26 April 2012 8.00 am


  Interim Report 1-3/2012

- Net sales for the first quarter EUR 171.3 million (EUR 159.5 million)
- Operating profit EUR 4.9 million (EUR 6.5
 million)
- Operating profit excluding non-recurring items EUR 5.0 million (EUR
6.8 million)
- Earnings per
share EUR 0.07 (EUR 0.10)
- Full-year net sales in 2012 are expected remain at the 2011 level. Operating profit, excluding non-recurring items, is expected to remain at the 2011 level or improve slightly.


CEO PEKKA OJANPÄÄ:

“Our performance in the first quarter was disappointing. We will therefore adopt an accelerated schedule of profitability-enhancement measures, such as planned price increases and fixed cost cuts. Key projects associated with logistics and production optimisation, as well as with the development of procurement operations, will be carried out as scheduled during 2012.



GROUP NET SALES AND FINANCIAL PERFORMANCE

Lassila & Tikanoja’s net sales for the first quarter increased by 7.4% to EUR 171.3 million (EUR 159.5 million).
Operating profit was EUR 4.9 million (EUR 6.5 million), representing 2.9% (4.1%) of net sales, and operating
profit excluding non-recurring items was EUR 5.0 million (EUR 6.8 million). Earnings per share were EUR 0.07
(EUR 0.10).

Acquisitions made in the previous year contributed to the growth in net sales.


Financial performance was adversely affected by higher fuel, repair and overtime costs than in the comparison period, as well as declining profitability in international operations. Price competition taxed the profitability of commissioned wintertime assignments in property maintenance services. Similarly, the performance of the joint venture L&T Recoil weakened from the comparison period. Thanks to smaller depreciation and a trimmer cost structure, Renewable Energy Sources was able to improve its profitability.


Financial summary

 

1-3/
2012

1-3/
2011

Change
%

1-12/
2011

Net sales, EUR million

171.3

159.5

7.4

652.1

Operating profit excluding non-recurring items, EUR million*

5.0

6.8

-26.5

44.3

Operating profit, EUR million

4.9

6.5

-23.7

25.6

Operating margin, %

2.9

4.1

 

3.9

Profit before tax, EUR million

4.0

5.4

-26.4

21.0

Earnings per share, EUR

0.07

0.10

-30.0

0.44

EVA, EUR million

-1.5

-0.2

 

-2.2

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


NET SALES AND FINANCIAL PERFORMANCE BY DIVISION

Environmental Services

The division’s net sales for the first quarter were up by 6.3% to EUR 77.0 million (EUR 72.4 million). Operating
profit totalled EUR 3.0 million (EUR 4.2 million) and operating profit excluding non-recurring items was EUR 3.0
million (EUR 4.2 million).

The division’s net sales growth could be primarily attributed to waste management services, half of this growth being organic.

Recycled raw material volumes remained healthy in the first quarter, as did the prices of secondary raw materials (fibres, plastics, metals). Meanwhile, demand for services provided to the industry, especially process cleaning services, was weaker than anticipated.

The quarter’s operating profit decreased from the comparison period due to higher fuel and repair costs and weaker profitability in international operations (Latvia, Russia). The rise in cost levels can be transferred to service prices during 2012.

The joint venture L&T Recoil also saw its performance deteriorate from the comparison period, due to the two-week shutdown in March. However, the plant’s reliability and operating rate improved from the comparison period.


Cleaning and Office Support Services

The division’s net sales for the first quarter totalled EUR 39.3 million (EUR 34.9 million), showing an increase of
12.8%. Operating profit totalled EUR 0.9 million (EUR 1.5 million) and operating profit excluding non-recurring
items was EUR 1.0 million (EUR 1.5 million).


Acquisitions made in the previous spring contributed to net sales growth.

Swedish operations were in the red, which significantly taxed the division’s operating profit. The result from Finnish operations was at the comparison period’s level, even though profitability was eroded by an increase in labour costs, which could not be fully transferred to service prices.

At the beginning of April, reorganisation of the Swedish operations and a savings programme were launched to improve profitability.

Property Maintenance

The division’s net sales for the first quarter were up by 3.5% to EUR 40.3 million (EUR 38.9 million). Operating
profit totalled EUR 0.8 million (EUR 1.9 million) and operating profit excluding non-recurring items was EUR 0.8
million (EUR 1.9 million).

Expansion of the damage repair service network and the resulting increase in workload contributed to the year-on-year increase in the division’s net sales.

Increasingly tough price competition and the rise in subcontracting and overtime costs eroded the operating profit in property maintenance services.


Renewable Energy Sources

First quarter net sales of Renewable Energy Sources (L&T Biowatti) were up by 9.8% to EUR 17.6 million
(EUR 16.0 million). The division recorded an operating profit of EUR 0.8 million (a loss of EUR 0.7 million), and
an operating profit excluding non-recurring items of EUR 0.8 million (a loss of EUR 0.4 million).

Net sales increased from the comparison period thanks to successful new sales. In the comparison period, a suspension in the payment of electricity production subsidy to power plants had a negative effect on the demand for wood-based fuels. 

Thanks to smaller depreciation and a trimmer cost structure, there was a marked improvement in the operating profit excluding non-recurring items.

BREAKDOWN OF OPERATING PROFIT EXCLUDING NON-RECURRING ITEMS

EUR million

1-3/
2012

1-3/
2011

1-12/
2011

Operating profit

4.9

6.5

25.6

Non-recurring items:

 

 

 

Impairment of L&T Biowatti

 

 

17.1

Discontinuation of wood pellet production of L&T Biowatti

 

0.1

0.1

Restructuring costs

0.1

0.2

1.5

Operating profit excluding non-recurring items

5.0

6.8

44.3



FINANCING

Cash flows from operating activities amounted to EUR 8.9 million (EUR 10.5 million). EUR 2.5 million was tied up in the working capital (EUR 1.9 million).

At the end of the period, interest-bearing liabilities amounted to EUR 159.0 million (EUR 141.8 million). Net interest-bearing liabilities amounted to EUR 151.2 million, showing an increase of EUR 24.0 million from the beginning of the year and an increase of EUR 19.2 million from the comparison period.

Net finance costs showed a slight decrease in January-March and amounted to EUR 1.0 million (EUR 1.1 million). Net finance costs were 0.6% (0.7%) of net sales.
The average interest rate on long-term loans (with interest-rate hedging) was 3.1% (3.2%). Long-term loans totalling EUR 19.9 million will mature during the rest of the year.

The equity ratio was 39.7% (42.4%) and the gearing rate 75.4 (63.9). Liquid assets at the end of the period amounted to EUR 7.8 million (EUR 9.8 million).

Of the EUR 100 million commercial paper programme, EUR 46 million (EUR 25 million) was in use at the end of the period. Committed limits totalling EUR 45 million, were not in use, as was the case in the comparison period.


DISTRIBUTION OF ASSETS

The Annual General Meeting held on March 15 2012 resolved that the profit for 2011 be placed in retained earnings and that no dividend be paid. A capital repayment of EUR 0.55 per share would be paid for the financial year 2011. The capital repayment, totalling EUR 21.3 million, was paid to the shareholders on 27 March 2012.


CAPITAL EXPENDITURE

Capital expenditure totalled EUR 11.5 million (EUR 12.9 million) and was mainly comprised of machine and equipment purchases.

In the first quarter the property maintenance operations of IK Kiinteistöpalvelu Oy, the business of Jyvässeudun Talonmiehet Oy and Kiinteistöhuolto Markku Hyttinen Oy were acquired into Property Maintenance.


PERSONNEL

In January-March the average number of employees converted into full-time equivalents was 8,119 (7,520). The total number of full-time and part-time employees at the end of the period was 9,229 (8,725). Of them 7,257 (6,989) people worked in Finland and 1,972 (1,736) people in other countries.


SHARE AND SHARE CAPITAL


Traded volume and price
The volume of trading excluding the shares held by the company in Lassila & Tikanoja plc shares on NASDAQ OMX Helsinki in January-March was
2,728,251 which is 7.1% (8.5%) of the average number of outstanding shares. The value of trading was EUR 31.4 million (EUR 44.1 million). The trading price varied between EUR 10.70 and EUR 12.15. The closing price was EUR 11.03. At the end of the period, the company held 113,305 of its own shares. The market capitalisation excluding the shares held by the company was EUR 426.7 million (EUR 492.0 million) at the end of the period.
Own shares
At the end of the period the company held 113,305 of its own shares, representing 0.3% of all shares and votes.
Share capital and number of shares
The company’s registered share capital amounts to EUR 19,399,437, and the number of outstanding shares to 38,685,569 shares. The average number of shares excluding the shares held by the company totalled 38,685,569.

Share option scheme 2008
In 2008, 230,000 share option rights were issued, each entitling its holder to subscribe for one share of Lassila & Tikanoja plc. 33 key persons hold 168,000 options and L&T Advance Oy 62,000 options.

The exercise price is EUR 15.65. It was reduced by EUR 0.55 as of 20 March 2012. The price was reduced with the amount of capital repayment in accordance with the terms and conditions of the share option scheme. The exercise period in NASDAQ OMX Helsinki is from 1 November 2010 to 31 May 2012.


As a result of the exercise of the outstanding 2008 share options, the number of shares may increase by a maximum of 168,000 new shares, which is 0.4% of the current number of shares.

Share-based incentive programme 2012
Lassila & Tikanoja plc’s Board of Directors decided on 14 December 2011 on a new share-based incentive programme. Rewards will be based on the EVA result of Lassila & Tikanoja group without L&T Recoil. They will be paid partly as shares and partly in cash. The part paid in cash will cover the taxes caused by the reward.  Based on the programme a maximum of 65,520 shares of the company can be granted. The company will buy the shares from the stock market. The programme covers 22 persons.

Shareholders
At the end of the period, the company had 9,460 (
9,665) shareholders. Nominee-registered holdings accounted for 15.1% (11.2%) of the total number of shares.

Notifications on major holdings
On 8 March 2012, Tapiola Mutual Pension Insurance Company announced that its holding of the shares and votes in Lassila & Tikanoja plc had fallen to 3.9%. 

Authorisation for the Board of Directors
The Annual General Meeting held on 15 March 2012 authorised Lassila & Tikanoja plc’s Board of Directors to make decisions on the repurchase of the company’s own shares using the company’s unrestricted equity.

The Board of Directors is authorised to purchase a maximum of 500,000 company shares, which is 1.3% of the total number of shares. The share issue authorisation will be effective for 18 months


RESOLUTIONS BY THE GENERAL MEETING


The Annual General Meeting of Lassila & Tikanoja plc, which was held on 15 March 2012, adopted the financial statements for the financial year 2011 and released the members of the Board of Directors and the Presidents and CEOs from liability.

The AGM resolved that the profit for 2011 be placed in retained earnings and that no dividend be paid. A capital repayment of EUR 0.55 per share, as proposed by the Board of Directors, would be paid for the financial year 2011 on the basis of the balance sheet adopted. The capital repayment, totalling EUR 21.3 million, payment date was resolved to be on 27 March 2012.

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

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

The resolutions of the Annual General Meeting were announced in more detail in a stock exchange release on 15 March 2012.


BOARD OF DIRECTORS

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

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


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

In a release published on 13 January 2012 the company announced that Antti Tervo has been appointed Chief Procurement Officer and Group Executive of Lassila & Tikanoja plc as of 14 February 2012.

In a release on 9 February 2012 the company announced that Lassila & Tikanoja plc has redeemed the remaining 30 percent of share capital of L&T Biowatti Oy as agreed in an agreement signed 18 December 2006.


EVENTS AFTER THE PERIOD

In a release published on 26 April 2012 the company announced that Lassila & Tikanoja is launching a new operational enhancement programme to improve its profitability and to adapt operations to the current market environment. The planned actions are estimated to improve profitability at least by EUR 4 million annually, over half of this in 2012.

The programme involves fixed cost cuts, price increases, holiday pay arrangements and other efficiency improvement measures.

L&T will record approximately EUR 1.0 million in non-recurring adjustment costs associated with the programme for the second quarter.


NEAR-TERM UNCERTAINTIES

Economic uncertainty may cause remarkable changes in the Environmental Services division’s secondary raw material markets and in industrial customer relationships.

Any disturbances in L&T Recoil plant’s production could have a negative effect on the Environmental Services division’s performance. End-product and raw material price fluctuations, as well as the plant's supply volumes, have a major effect on L&T Recoil’s performance.

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

More detailed information on L&T's risks and risk management is available in the Annual Report for 2011, in the report of the Board of Directors, and in the consolidated financial statements.


OUTLOOK FOR THE REST OF THE YEAR

Despite the economic uncertainty, the outlook for Environmental Services is, by and large, stable, but any weakening in demand for industrial services and in new construction may give a reason to make operational adjustments. Secondary raw material price developments and the operational reliability of L&T Recoil’s plant in particular will affect the division’s profitability.

The business environment for Cleaning and Office Support Services and Property Maintenance is expected to remain stable, though price competition is expected to remain tough.

Demand for L&T Biowatti's wood-based fuels is expected to grow slightly from the comparison period, and the division's profitability is likely to improve.

Full-year net sales in 2012 are expected remain at the 2011 level. Operating profit excluding non-recurring items, is expected to remain at the 2011 level or improve slightly.

 

CONDENSED FINANCIAL STATEMENTS 1 JANUARY-31 MARCH 2012


CONSOLIDATED INCOME STATEMENT


EUR 1000

1-3/2012

1-3/2011

Change %

1-12/2011

Net sales

171 286

159 474

7.4

652 130

Cost of sales

-159 711

-146 658

8.9

-584 152

Gross profit

11 575

12 816

-9.7

67 978

Other operating income

548

680

-19.4

3 038

Selling and marketing costs

-4 091

-3 796

7.8

-15 217

Administrative expenses

-3 008

-2 966

1.4

-11 408

Other operating expenses

-91

-270

-66.3

-1 733

Impairment, non-current assets

 

 

 

-5 677

Impairment, goodwill and other intangible assets

 

 

 

-11 384

Operating profit

4 933

6 464

-23.7

25 597

Finance income

355

299

18.7

1 041

Finance costs

-1 315

-1 363

-3.5

-5 644

Profit before tax

3 973

5 400

-26.4

20 994

Income tax expense

-1 209

-1 404

-13.9

-4 030

Profit for the period

2 764

3 996

-30.8

16 964

Attributable to:

 

 

 

 

Equity holders of the company

2 769

3 994

 

16 960

Non-controlling interest

-5

2

 

4


Earnings per share for profit attributable to the equity holders of the company:

Basic earnings per share, EUR

0.07

0.10

 

0.44

Diluted earnings per share, EUR

0.07

0.10

 

0.44



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

EUR 1000

1-3/
2012

1-3/
2011

1-12/
2011

Profit for the period

2 764

3 996

16 964

Other comprehensive income, after tax

 

 

 

Hedging reserve, change in fair value

309

921

-487

Revaluation reserve

 

 

 

Gains in the period

3

-2

-4

Current available-for-sale financial assets

3

-2

-4

Currency translation differences

681

32

111

Currency translation differences, non-controlling interest

18

 

-11

Other comprehensive income, after tax

1 011

951

-391

Total comprehensive income, after tax

3 775

4 947

16 573

Attributable to:

 

 

 

Equity holders of the company

3 762

4 943

16 580

Non-controlling interest

13

4

-7



CONSOLIDATED STATEMENT OF FINANCIAL POSITION


EUR 1000

3/2012

3/2011

12/2011

ASSETS

 

 

 

Non-current assets

 

 

 

Intangible assets

 

 

 

Goodwill

119 847

114 670

119 509

Customer contracts arising from acquisitions

9 867

5 753

10 591

Agreements on prohibition of competition

2 918

10 711

3 162

Other intangible assets arising from business acquisitions

73

743

78

Other intangible assets

10 925

13 271

11 149

 

143 630

145 148

144 489

Property, plant and equipment

 

 

 

Land

4 283

4 655

4 589

Buildings and constructions

78 381

78 617

78 217

Machinery and equipment

121 836

112 244

120 015

Other

85

85

85

Prepayments and construction in progress

4 720

5 021

4 616

 

209 305

200 622

207 522

Other non-current assets

 

 

 

Available-for-sale investments

590

589

605

Finance lease receivables

3 808

3 549

3 578

Deferred tax assets

6 273

4 116

6 323

Other receivables

3 306

3 318

3 315

 

13 977

11 572

13 821

Total non-current assets

366 912

357 342

365 832

Current assets

 

 

 

Inventories

26 916

24 146

27 953

Trade and other receivables

105 079

95 829

91 629

Derivative receivables

405

1 413

419

Prepayments

5 690

6 334

438

Current available-for-sale financial assets

1 999

2 497

2 299

Cash and cash equivalents

5 800

7 277

5 770

Total current assets

145 889

137 496

128 508

TOTAL ASSETS

512 801

494 838

494 340

 




EUR 1000

3/2012

3/2011

12/2011

EQUITY AND LIABILITIES

 

 

 

Equity

 

 

 

Equity attributable to equity holders of the company

 

 

 

Share capital

19 399

19 399

19 399

Share premium reserve

 

50 673

 

Other reserves

-1 476

-1 138

-2 469

Unrestricted equity reserve

29 403

-52

50 658

Retained earnings

150 133

133 559

133 125

Profit for the period

2 769

3 994

16 960

 

200 228

206 435

217 673

Non-controlling interest

284

282

271

Total equity

200 512

206 717

217 944

Liabilities

 

 

 

Non-current liabilities

 

 

 

Deferred tax liabilities

29 126

33 829

29 389

Retirement benefit obligations

670

630

628

Provisions

2 569

2 755

2 500

Borrowings

88 236

90 969

92 914

Other liabilities

1 123

478

960

 

121 724

128 661

126 391

Current liabilities

 

 

 

Borrowings

70 801

50 819

42 319

Trade and other payables

118 140

107 768

105 751

Derivative liabilities

1 490

665

1 850

Tax liabilities

14

18

85

Provisions

120

190

 

 

190 565

159 460

150 005

Total liabilities

312 289

288 121

276 396

TOTAL EQUITY AND LIABILITIES

512 801

494 838

494 340


CONSOLIDATED STATEMENT OF CASH FLOWS

EUR 1000

3/2012

3/2011

12/2011

Cash flows from operating activities

 

 

 

Profit for the period

2 764

3 996

16 964

Adjustments

 

 

 

Income tax expense

1 209

1 404

4 030

Depreciation, amortisation and impairment

10 826

10 568

61 548

Finance income and costs

959

1 064

4 602

Other

-459

-739

-858

Net cash generated from operating activities before change in working capital

15 299

16 293

86 286

Change in working capital

 

 

 

Change in trade and other receivables

-16 993

-16 343

-7 843

Change in inventories

1 033

3 810

9

Change in trade and other payables

13 476

10 657

11 055

Change in working capital

-2 484

-1 876

3 221

Interest paid

-1 311

-1 566

-6 165

Interest received

257

254

1 020

Income tax paid

-2 854

-2 623

-9 896

Net cash from operating activities

8 907

10 482

74 466

Cash flows from investing activities

 

 

 

Acquisition of subsidiaries and businesses, net of cash acquired

-746

-5 331

-24 430

Proceeds from sale of subsidiaries and businesses, net of sold cash

 

 

 

Purchases of property, plant and equipment and intangible assets

-10 940

-5 860

-45 503

Proceeds from sale of property, plant and equipment and intangible assets

223

727

1 850

Purchases of available-for-sale investments

 

 

-20

Change in other non-current receivables

10

91

98

Proceeds from sale of available-for-sale investments

 

 

 

Dividends received

 

 

 

Net cash used in investing activities

-11 453

-10 373

-68 005

Cash flows from financing activities

 

 

 

Change in short-term borrowings

28 483

19 558

8 712

Proceeds from long-term borrowings

 

 

20 000

Repayments of long-term borrowings

-5 007

-4 677

-19 761

Dividends paid and other asset distribution

-21 254

-19 773

-21 284

Repurchase of own shares

 

 

-517

Net cash generated from financing activities

2 222

-4 892

-12 850

 

EUR 1000

3/2012

3/2011

12/2011

 

Net change in liquid assets

-324

-4 783

-6 389

 

Liquid assets at beginning of period

8 069

14 548

14 548

 

Effect of changes in foreign exchange rates

54

9

-90

 

Change in fair value of current available-for-sale investments

 

 

 

 

Liquid assets at end of period

7 799

9 774

8 069

 

Liquid assets

 

 

 

 

EUR 1000

3/2012

3/2011

12/2011

Cash and cash equivalents

5 800

7 277

5 770

Available-for-sale financial assets

1 999

2 497

2 299

Total

7 799

9 774

8 069



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY   

EUR 1000

Share capital

Share pre­mium reserve

Cur­rency transla­tion differ­ences

Reva­luation reserve

Hedging reserve

Invested unrestric­ted equity reserve

Re­tained ear­nings

Equity attribut­able
to equity
holders
of the company

Non-controlling interest

Total equity

Equity at 1.1.2012

19 399

0

-1 412

0

-1 057

50 658

150 085

217 673

271

217 944

Expense recogni­tion of share-based benefits

 

 

 

 

 

 

48

48

 

48

Repurchase of own shares

 

 

 

 

 

 

 

 

 

 

Capital repayment

 

 

 

 

 

-21 255

 

-21 255

 

-21 255

Total comprehen­sive income

 

 

681

3

309

 

2 769

3 762

13

3 775

Equity at 31.3.2012

19 399

0

-731

3

-748

29 403

152 902

200 228

284

200 512

Equity at 1.1.2011

19 399

50 673

-1 523

-48

-570

0

154 785

222 716

278

222 994

Expense recogni­tion of share-based benefits

 

 

 

 

 

 

80

80

 

80

Repurchase of own shares

 

 

 

 

 

 

 

 

 

 

Dividends paid

 

 

 

 

 

 

-21 306

-21 306

 

-21 306

Transfer from revaluation re­serve

 

 

 

52

 

-52

 

 

 

 

Total comprehensive income

 

 

32

-2

921

 

3 994

4 945

4

4 949

Equity at 31.3.2011

19 399

50 673

-1 491

2

351

-52

137 553

206 435

282

206 717



KEY FIGURES
 

 

1-3/
2012

1-3/
2011

1-12/
2011

Earnings per share, EUR

0.07

0.10

0.44

Earnings per share, diluted, EUR

0.07

0.10

0.44

Cash flows from operating activities per share, EUR

0.23

0.27

1.92

EVA, EUR million

-1.5

-0.2

-2.2

Capital expenditure, EUR 1000

11 474

12 868

70 590

Depreciation, amortisation and impairment, EUR 1000

10 826

10 568

61 548

Equity per share, EUR

5.18

5.33

5.63

Return on equity, ROE, %

5.3

7.4

7.7

Return on invested capital, ROI, %

5.9

7.7

7.6

Equity ratio, %

39.7

42.4

44.5

Gearing, %

75.4

63.9

58.3

Net interest-bearing liabilities, EUR 1000

151 239

132 015

127 165

Average number of employees in full-time equivalents

8 119

7 520

8 513

Total number of full-time and part-time employees at end of period

9 229

8 725

9 357

Number of outstanding shares adjusted for issues, 1000 shares

 

 

average during the period

38 686

38 738

38 722

at end of period

38 686

38 738

38 686

average during the period, diluted

38 711

38 769

38 762


ACCOUNTING POLICIES

This financial statements release is in compliance with IAS 34 standard. The same accounting policies as in the annual financial statements for the year 2011 have been applied. The following new, revised or amended IFRS standards and IFRIC interpretations that have become effective in 2012 have not had an impact on the financial statements:

- IFRS 7 (amendment) Financial Instruments: Disclosures - Derecognition
- IAS 12 (amendment) Income taxes - Deferred tax

- annual improvements to IFRS.

The preparation of financial statements in accordance with IFRS require the management to make such estimates and assumptions that affect the carrying amounts at the balance sheet date for the assets and liabilities and the amounts of revenues and expenses. Judgements are also made in applying the accounting policies. Actual results may differ from the estimates and assumptions. 

The interim report has not been audited.


SEGMENT INFORMATION

Net sales

 

1-3/2012

1-3/2011

 

EUR 1000

External

Inter-division

Total

External

Inter-division

Total

Total net sales, change %

Environmental Services

75 961

1 030

76 991

71 520

909

72 429

6.3

Cleaning and Office Support Services

38 901

420

39 321

34 549

307

34 856

12.8

Property Maintenance

39 885

414

40 299

38 212

727

38 939

3.5

Renewable Energy Sources

16 539

1 045

17 584

15 193

818

16 011

9.8

Eliminations

 

-2 909

-2 909

 

-2 761

-2 761

 

L&T total

171 286

0

171 286

159 474

0

159 474

7.4

 

 

1-12/2011

EUR 1000

External

Inter-division

Total

Environmental Services

322 264

3 620

325 884

Cleaning and Office Support Services

155 817

1 454

157 271

Property Maintenance

132 399

2 192

134 591

Renewable Energy Sources

41 650

3 752

45 402

Eliminations

0

-11 018

-11 018

L&T total

652 130

0

652 130



Operating profit


EUR 1000

1-3/
2012

%

1-3/
2011

%

1-12/
2011

%

Environmental Services

3 015

3.9

4 175

5.8

33 970

10.4

Cleaning and Office Support Services

845

2.1

1 475

4.2

7 131

4.5

Property Maintenance

751

1.9

1 902

4.9

8 181

6.1

Renewable Energy Sources

787

4.5

-651

-4.1

-21 250

-46.8

Group admin. and other

-465

 

-437

 

-2 435

 

L&T total

4 933

2.9

6 464

4.1

25 597

3.9

Finance costs, net

-960

 

-1 064

 

-4 603

 

Profit before tax

3 973

 

5 400

 

20 994

 

Other segment information


EUR 1000

3/2012

3/2011

12/2011

Assets

 

 

 

Environmental Services

348 582

340 318

346 224

Cleaning and Office Support Services

58 010

42 643

54 302

Property Maintenance

53 992

42 050

45 048

Renewable Energy Sources

29 966

46 035

27 346

Group admin. and other

2 057

2 107

2 528

Unallocated assets

20 194

21 685

18 892

L&T total

512 801

494 838

494 340

Liabilities

 

 

 

Environmental Services

59 123

56 020

57 367

Cleaning and Office Support Services

32 297

26 758

29 804

Property Maintenance

19 986

18 812

15 889

Renewable Energy Sources

8 592

6 529

3 932

Group admin. and other

1 120

2 585

1 343

Unallocated liabilities

191 171

177 417

168 061

L&T total

312 289

288 121

276 396

EUR 1000

1-3/2012

1-3/2011

1-12/2011

Capital expenditure

 

 

 

Environmental Services

6 182

8 814

43 362

Cleaning and Office Support Services

1 517

1 222

14 721

Property Maintenance

3 675

2 631

11 776

Renewable Energy Sources

97

88

454

Group admin. and other

3

113

277

L&T total

11 474

12 868

70 590

Depreciation and amortisation

 

 

 

Environmental Services

8 006

7 379

30 760

Cleaning and Office Support Services

1 269

953

4 928

Property Maintenance

1 479

1 069

4 873

Renewable Energy Sources

72

1 167

3 919

Group admin. and other

0

 

7

L&T total

10 826

10 568

44 487

Impairment

 

 

 

Renewable Energy Sources

 

 

17 061

L&T total

 

 

17 061


INCOME STATEMENT BY QUARTER


EUR 1000

1-3/
2012

10-12/
2011

7-9/
2011

4-6/
2011

1-3/
2011

10-12/
2010

7-9/
2010

4-6/
2010

Net sales

 

 

 

 

 

 

 

 

Environmental Services

76 991

84 014

85 906

83 535

72 429

73 992

75 806

75 624

Cleaning and Office Support Services

39 321

40 101

41 530

40 784

34 856

34 580

35 659

35 710

Property Maintenance

40 299

33 451

31 322

30 879

38 939

31 596

26 926

28 090

Renewable Energy Sources

17 584

12 578

7 213

9 600

16 011

15 266

7 617

12 097

Inter-division net sales

-2 909

-3 143

-2 502

-2 612

-2 761

-3 927

-2 238

-2 507

L&T total

171 286

167 001

163 469

162 186

159 474

151 507

143 770

149 014

Operating profit

 

 

 

 

 

 

 

 

Environmental Services

3 015

8 305

12 308

9 182

4 175

8 204

10 930

10 124

Cleaning and Office Support Services

845

937

3 718

1 001

1 475

181

4 088

2 218

Property Maintenance

751

1 928

3 582

769

1 902

633

3 263

1 075

Renewable Energy Sources

787

-18 189

-1 085

-1 325

-651

-361

-1 432

-3 900

Group admin. and other

-465

-887

-344

-767

-437

-104

-574

-762

L&T total

4 933

-7 906

18 179

8 860

6 464

8 553

16 275

8 755

Operating margin

 

 

 

 

 

 

 

 

Environmental Services

3.9

9.9

14.3

11.0

5.8

11.1

14.4

13.4

Cleaning and Office Support Services

2.1

2.3

9.0

2.5

4.2

0.5

11.5

6.2

Property Maintenance

1.9

5.8

11.4

2.5

4.9

2.0

12.1

3.8

Renewable Energy Sources

4.5

-144.6

-15.0

-13.8

-4.1

-2.4

-18.8

-32.2

L&T total

2.9

-4.7

11.1

5.5

4.1

5.6

11.3

5.9

Finance costs, net

-960

-1 099

-1 277

-1 163

-1 064

-987

-1 272

-917

Profit before tax

3 973

-9 005

16 902

7 697

5 400

7 566

15 003

7 838


BUSINESS ACQUISITIONS

Business combinations in aggregate

Consideration

EUR 1000

Fair values used in consolidation

Cash

933

Equity instruments

 

Contingent consideration

201

Total consideration transferred

1 134

Indemnification asset

 

Fair value of equity interest held before the acquisition

 

Total consideration

1 134

Acquisition-related costs (included in the administrative expenses in the consolidated financial statements)

4


Recognised amounts of identifiable assets acquired and liabilities assumed

Property, plant and equipment

515

Customer contracts

146

Agreements on prohibition of competition

151

Other intangible assets arising from business acquisitions

 

Other intangible assets

 

Non-current available-for-sale financial assets

 

Inventories

2

Trade and other receivables

87

Cash and cash equivalents

154

Total assets

1 056

Deferred tax liabilities

 

Non-current interest-bearing liabilities

44

Trade and other payables

146

Retirement benefit obligations

 

Contingent liability

 

Total liabilities

190

Total identifiable net assets

865

Non-controlling interest

 

Goodwill

268

Total

1 134


Acquisitions by Property Maintenance
- 1 January 2012, the property maintenance operations of IK Kiinteistöpalvelu Oy.

- 1 February 2012, the business of Jyvässeudun Talonmiehet Oy and Kiinteistöhuolto Markku Hyttinen Oy.

The figures for these acquired businesses are stated in aggregate, because none of them is of material importance when considered separately. Fair values have been determined as of the time the acquisition was realised. No business operations have been divested as a consequence of any acquisition. All acquisitions have been paid for in cash. With share acquisitions, L&T was able to gain 100% of the voting rights. The conditional consideration is tied to the transfer of the customer contracts to Lassila & Tikanoja plc, and the estimates of the fair values of considerations were determined on the basis of probability-weighted final acquisition price. The estimates for the conditional consideration have not changed between the time of acquisition and the balance sheet date. Trade and other receivables have been recorded at fair value at the time of acquisition. Individual acquisition prices have not been itemised because none of them is of material importance when considered separately. Profit for the period includes changes allocated to acquisition prices amounting to EUR 140 thousand.

By net sales, the largest acquisition was the business of Jyvässeudun Talonmiehet Oy (EUR 858 thousand).
It is not possible to itemise the effects of the acquired businesses on the consolidated net sales and profit for the period, because L&T integrates its acquisitions into the current business operations as quickly as possible to gain synergy benefits.

The accounting policy concerning business combinations is presented in Annual Report under Note 2 of the consolidated financial statements and under Summary on significant accounting policies.

CHANGES IN INTANGIBLE ASSETS


EUR 1000

1-3/2012

1-3/2011

1-12/2011

Carrying amount at beginning of period

144 489

142 681

142 681

Business acquisitions

566

3 894

22 859

Other capital expenditure

621

884

2 646

Disposals

-10

-1

-18

Amortisation and impairment

-2 121

-2 408

-23 865

Transfers between items

 

 

 

Exchange differences

85

98

186

Carrying amount at end of period

143 630

145 148

144 489



CHANGES IN PROPERTY, PLANT AND EQUIPMENT


EUR 1000

1-3/2012

1-3/2011

1-12/2011

Carrying amount at beginning of period

207 522

200 700

200 700

Business acquisitions

515

1 693

4 441

Other capital expenditure

9 772

6 397

40 616

Disposals

-199

-58

-477

Depreciation and impairment

-8 705

-8 160

-37 683

Transfers between items

 

 

 

Exchange differences

400

50

-75

Carrying amount at end of period

209 305

200 622

207 522



CAPITAL COMMITMENTS

EUR 1000

1-3/2012

1-3/2011

1-12/2011

Intangible assets

0

60

0

Property, plant and equipment

4 669

5 489

4 593

Total

4 669

5 549

4 593

 

 

 

 

The Group’s share of capital commitments
of joint ventures

50

75

0


 
RELATED-PARTY TRANSACTIONS
(Joint ventures)


EUR 1000

1-3/2012

1-3/2011

1-12/2011

Sales

488

309

2 489

Other operating income

12

18

63

Interest income

203

219

707

Non-current receivables

 

 

 

Capital loan receivable

25 146

21 646

24 396

Current receivables

 

 

 

Trade receivables

2 466

2 083

2 710

Loan receivables

1 801

1 232

1 633


CONTINGENT LIABILITIES

Securities for own commitments

EUR 1000

3/2012

3/2011

12/2011

Mortgages on rights of tenancy

42 186

42 179

42 186

Company mortgages

21 460

21 460

21 460

Other securities

191

218

174

 

 

 

 

Bank guarantees required for environmental permits

5 140

4 399

5 702


Other securities are security deposits.
The Group has given no pledges, mortgages or guarantees on behalf of outsiders.

Operating lease liabilities

EUR 1000

3/2012

3/2011

12/2011

Maturity not later than one year

7 231

8 175

7 708

Maturity later than one year and not later than five years

13 968

20 089

15 504

Maturity later than five years

 4 103

4 252

4 185

Total

25 302

32 516

27 397


Liabilities associated with derivative agreements


Interest rate and currency swaps

EUR 1000

3/2012

3/2011

12/2011

Nominal values of interest rate and currency swaps*

 

 

 

Maturity not later than one year

13 429

11 716

13 429

Maturity later than one year and not later than five years

36 272

47 668

38 033

Maturity later than five years

 

 

 

Total

49 701

59 384

51 462

Fair value

-1 095

-665

-1 504

 

 

 

 

Nominal value of interest rate swaps**

 

 

 

Maturity not later than one year

4 000

0

4 000

Maturity later than one year and not later than five years

19 455

0

19 455

Maturity later than five years

4 545

0

4 545

Total

28 000

0

28 000

Fair value

-174

0

-144


* The interest rate and currency swaps are used to hedge cash flow related to a floating rate loan, and hedge accounting under IAS 39 has been applied to it. The hedges have been effective, and the changes in the fair values are shown in the consolidated statement of comprehensive income for the period. On the balance sheet date, the value of foreign currency loans was EUR 0.3 million positive. The fair values of the swap contracts are based on the market data at the balance sheet date.

** Hedge accounting under IAS 39 has not been applied to these interest rate swaps. Changes in fair values
have been recognised in finance income and costs.


Commodity derivatives

metric tons

3/2012

3/2011

12/2011

Nominal values of diesel swaps

 

 

 

Maturity not later than one year

2 544

6 333

2 544

Maturity later than one year and not later than five years

636

1 908

636

Total

3 180

8 241

3 180

Fair value, EUR 1000

405

1 322

419


Commodity derivative contracts were concluded, for hedging of future diesel oil purchases. IAS 39 -compliant hedge accounting will be applied to these contracts, and the effective change in fair value will be recognised in the hedging reserve within equity. The fair values of commodity derivatives are based on market prices at the balance sheet date.

Currency derivatives

EUR 1000

3/2012

3/2011

12/2011

Volume of forward contracts

 

 

 

Maturity not later than one year

253

0

1 079

Fair value

-6

0

-19


Hedge accounting under IAS 39 has not been applied to forward contracts. Changes in fair values have been recognised in finance income and costs.


CALCULATION OF KEY FIGURES  

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

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

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

EVA:
operating profit - cost calculated on invested capital (average of four quarters)
WACC 2011: 7.7% and WACC 2012: 7.1%

Equity per share:
equity attributable to equity holders of the parent company / adjusted basic number of shares at end of period

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

Return on investment, % (ROI):
(profit before tax + finance costs) / (total equity and liabilities - non-interest-bearing liabilities (average)) x 100

Equity ratio, %:
equity / (total equity and liabilities - advances received) x 100

Gearing, %:
net interest-bearing liabilities / equity x 100

Net interest-bearing liabilities:
interest-bearing liabilities - liquid assets

Operating profit excluding non-recurring items:
operating profit +/- non-recurring items


Helsinki, 25 April 2012

LASSILA & TIKANOJA PLC

Board of Directors


Pekka Ojanpää
President and CEO

For additional information please contact:
Pekka Ojanpää, President and CEO, tel. +358 10 636 2810,
Ville Rantala, CFO, tel. +358 50 385 1442 or
Keijo Keränen, Head of Treasury & IR, tel. +358 50 385 6957.


Lassila & Tikanoja specialises in environmental management and property and plant support services. L&T is a significant supplier of wood-based biofuels, recovered fuels and recycled raw materials. With operations in Finland, Sweden, Latvia and Russia, L&T employs 9,500 persons. Net sales in 2011 amounted to EUR 652 million. L&T is listed on NASDAQ OMX Helsinki.

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


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