Lassila & Tikanoja Plc: Financial Statements 1 January–31 December 2017

Helsinki, Finland, 2018-01-31 07:00 CET (GLOBE NEWSWIRE) --  

Lassila & Tikanoja plc
Financial statements
31 January 2018 at 8:00 a.m.

Lassila & Tikanoja Plc: Financial Statements 1 January–31 December 2017

- Net sales for the final quarter grew to EUR 207.0 million (168.3), operating profit was EUR 11.4 million (10.5) and earnings per share EUR 0.22 (0.22)
- Full-year net sales increased by 7.6% to EUR 712.1 million (661.8), operating profit was EUR 44.2 million (50.5) and earnings per share EUR 0.88 (1.13)
- Full-year net sales and operating profit in 2018 are expected to increase compared to 2017
- The Board of Directors proposes a dividend of EUR 0.92 per share

CEO PEKKA OJANPÄÄ:

“Lassila & Tikanoja’s net sales for 2017 increased from the previous year. The growth was both organic and, in particular, attributable to the L&T FM AB acquisition. Operating profit declined compared to the previous year.The net sales and operating profit of the Industrial Services division increased year-on-year due to strong demand and improved operational efficiency. The net sales of Environmental Services remained on a par with the previous year, but the division’s market position improved particularly in the retail and industrial segments. In Facility Services, the operating profit of the cleaning business developed favourably, while the weak profitability of the renovation business and costs related to the deployment of the new ERP system weighed down on operating profit in 2017. The integration of L&T FM AB is underway and progressing as planned. Non-recurring costs related to the acquisition weighed down on the Group’s operating profit. In line with our strategy, our focus in 2018 remains on strengthening our market position and improving profitability, particularly by revamping the operating model of Facility Services. The benefits of this renewal will, for the most part, be seen at the division level in 2019.”

GROUP NET SALES AND FINANCIAL PERFORMANCE

October–December
Lassila & Tikanoja’s net sales for the final quarter increased to EUR 207.0 million (168.3), up 23.0% (1.9) year-on-year. Operating profit totalled EUR 11.4 million (10.5), representing 5.5% (6.2) of net sales. Earnings per share were EUR 0.22 (0.22).

Net sales increased organically and due to the acquisition of L&T FM AB. The Facility Services division’s net sales increased by 50.8% year-on-year. Excluding L&T FM AB, the net sales of Facility Services increased by 11.3%.The net sales of Industrial Services grew by 11.6% due to strong demand. The net sales of the Environmental Services division increased by 0.6%. The net sales of the Renewable Energy Sources division declined by 7.5%.

Year 2017
Net sales for 2017 increased by 7.6% to EUR 712.1 million (661.8). Excluding L&T FM AB, the Group’s net sales increased by 2.1%. Operating profit totalled EUR 44.2 million (50.5), representing 6.2% (7.6) of net sales. Earnings per share were EUR 0.88 (1.13).

Net sales increased by 10.5% in Industrial Services and by 14.8% in Facility Services, primarily due to the acquisition of L&T FM AB. The net sales of Environmental Services were on a par with the previous year. The net sales of the Renewable Energy Sources division declined by 5.1%. The decrease was attributable to low demand due to the short heating season as well the low energy content of fuels.

Operating profit improved in Industrial Services but declined in the other divisions. Environmental Services’ operating profit was reduced by fuel costs being higher than in the previous year and a cost provision related to the closure of landfills. In Facility Services, the operating profit of the cleaning business developed favourably, while the weak profitability of the renovation business and costs related to the deployment of the new ERP system in the property maintenance business had a negative impact on the result. The Group’s result was also weighed down by costs related to the acquisition and integration of L&T FM AB.

Financial summary
 

* Proposal by the Board of Directors

 

NET SALES AND OPERATING PROFIT BY DIVISION

Environmental Services

October–December
The Environmental Services division’s net sales for the fourth quarter increased by 0.6% to EUR 67.0 million (66.5). Operating profit was on a par with the previous year at EUR 6.5 million (6.5).

Demand was at a good level and the division’s market position improved in recycled raw materials as well as the retail and industrial segments.

Year 2017
The Environmental Services division’s full-year net sales increased by 0.2% to EUR 265.3 million (264.8). Operating profit was EUR 29.8 million (31.3).

Net sales from municipal contracts decreased, but the division’s market position improved in recycled raw materials as well as the retail and industrial segments.

Net sales and profitability were on a par with the previous year. The division’s operating profit was reduced by fuel costs being higher than in the previous year as well as an increase of EUR 0.6 million in cost provisions related to the closure of landfills, recognised in the second quarter.

Industrial Services

October–December
The Industrial Services division’s net sales for the final quarter increased by 11.6% to EUR 23.9 million (21.4). Operating profit was unchanged from the previous year at EUR 2.6 million (2.6).

Net sales increased year-on-year in all of the division’s service lines. Strong demand supported the growth of net sales particularly in environmental construction.

Year 2017
The Industrial Services division’s full-year net sales grew by 10.5% to EUR 90.7 million (82.1). Operating profit was EUR 8.6 million (7.8).

The division’s net sales increased year-on-year particularly in process cleaning, sewer maintenance and hazardous waste management. The net sales of environmental construction were on a par with the previous year.

Strong demand and the improved efficiency of operations improved the division’s result compared to the previous year. Operating profit showed a year-on-year increase particularly in hazardous waste management.

Facility Services

October–December
The Facility Services division’s net sales for the final quarter increased by 50.8% to EUR 108.2 million (71.8). Operating profit was EUR 3.2 million (2.6).

Improved demand supported the growth of net sales in renovation services, maintenance of technical systems and cleaning. All of the division’s service lines saw an increase in operating profit, with the exception of the property maintenance business.

Year 2017
The Facility Services division’s full-year net sales grew by 14.8% to EUR 331.0 million (288.3). Operating profit was EUR 9.2 million (13.5).

The division’s net sales increased primarily due to the acquisition of L&T FM AB, but amortisation related to its purchase price allocation and integration costs weighed down on operating profit. The operating profit of the cleaning business grew year-on-year due to strong demand and operational efficiency. In maintenance of technical systems and renovation, operating profit declined compared to the previous year. The operating profit of the property maintenance business was weighed down by costs related to the deployment of a new ERP system in the Facility Services division.

Renewable Energy Sources

October–December
The final quarter net sales of Renewable Energy Sources (L&T Biowatti) decreased by 7.5% to EUR 10.7 million (11.6). Operating profit was EUR 0.2 million (0.7).

Operating profit decreased year-on-year due to the low energy content of fuels and low volume.

Year 2017
The full-year net sales of the Renewable Energy Sources division decreased by 5.1% to EUR 34.9 million (36.8). Operating profit was EUR 0.7 million (1.5).

The year-on-year decline in the division’s net sales and operating profit was mainly attributable to the low demand for forest energy due to the short heating season, the weak energy content of fuels and increasing delivery costs.

FINANCING

Cash flow from operating activities amounted to EUR 61.8 million (76.4). A total of EUR 10.8 million in working capital was committed (2.7 released).

At the end of the period, interest-bearing liabilities amounted to EUR 165.9 million (66.9).

Net interest-bearing liabilities amounted to EUR 117.9 million (38.7), showing a decrease of EUR 15.3 million from the previous quarter and an increase of EUR 79.2 million from the comparison period.

Net financial expenses in 2017 amounted to EUR 1.4 million (0.4). Net financial expenses were 0.2% (0.1) of net sales.

The average interest rate on long-term loans (with interest rate hedging) was 1.1% (1.6). Loans totalling EUR 22.6 million will mature in 2018, including the short-term commercial paper currently in use.

The equity ratio was 39.3% (50.4) and the gearing rate was 53.9 (17.3). Liquid assets at the end of the period amounted to EUR 48.1 million (28.2).

Of the EUR 100 million commercial paper programme, EUR 20 million (0.0) was in use at the end of the period. A committed limit totalling EUR 30.0 million was not in use, as was the case in the comparison period.

DISTRIBUTION OF ASSETS

The Annual General Meeting held on 16 March 2017 resolved that a dividend of EUR 0.92 per share be paid on the basis of the balance sheet that was adopted for the financial year 2016. The dividend, totalling EUR 35.3 million, was paid to shareholders on 27 March 2017.

CAPITAL EXPENDITURE

Gross capital expenditure in 2017 totalled EUR 110.3 million (41.6), consisting primarily of acquisitions, machine and equipment purchases and investments in information systems. The most significant investment was the acquisition of L&T FM AB. Of the significant ongoing information system projects, the new ERP system for Facility Services was deployed in the property maintenance business in early 2017. System deployment processes for the other service lines will continue in 2018.

PERSONNEL

In 2017, the average number of employees converted into full-time equivalents was 7,875 (7,199). At the end of the period, Lassila & Tikanoja had 8,663 (7,931) full-time and part-time employees. Of these, 7,041 (7,023) worked in Finland and 1,622 (908) in other countries.

PROPOSAL FOR THE DISTRIBUTION OF ASSETS

According to the financial statements, Lassila & Tikanoja plc's unrestricted equity amounts to EUR 102,864,459.89, with the operating profit for the period representing EUR 34,195,639.76 of this total. There were no substantial changes in the financial standing of the company after the end of the period, and the solvency test referred to in Chapter 13, Section 2 of the Companies Act does not affect the amount of distributable assets.

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.92 per share be paid for the financial year 2017. The dividend is paid to shareholders included in the company shareholder register maintained by Euroclear Finland Oy on the record date, 19 March 2018. The Board proposes to the Annual General Meeting that the dividend be paid on 26 March 2018.

No dividend shall be paid on shares held by the company on the record date of 19 March 2018.

On the day the proposal for the distribution of assets was made, the number of shares entitling to dividend was 38,398,012, which means the total amount of the dividend would be EUR 35,326,171.04. Earnings per share amounted to EUR 0.88. The proposed dividend, EUR 0.92 per share, is 104.8% of the earnings per share.

L&T’s Annual Report, which includes the report by the Board of Directors and the financial statements for 2017, will be published in week 8 at www.lt.fi/annualreport2017.


SHARES AND SHARE CAPITAL

Traded volume and price
The volume of trading on Nasdaq Helsinki in 2017, excluding the shares held by the company in Lassila & Tikanoja plc, was 5,480,149 shares, which is 14.3% (16.9) of the average number of outstanding shares. The value of trading was EUR 101.6 million (110.1). The highest share price was EUR 20.89 and the lowest EUR 17.22. The closing price was EUR 18.06. At the end of the review period, the market capitalisation excluding the shares held by the company was EUR 693.5 million (736.9).

Own shares
At the end of the period, the company held 400,862 of its own shares, representing 1.0% 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 is 38,398,012. The average number of shares excluding the shares held by the company was 38,394,955.

Shareholders
At the end of the period, the company had 12,208 (10,812) shareholders. Nominee-registered holdings accounted for 19.5% (17.6%) of the total number of shares.

Authorisation for the Board of Directors
The Annual General Meeting held on 16 March 2017 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. In addition, the Annual General Meeting authorised the Board of Directors to decide on a share issue and the issuance of special rights entitling their holders to shares.

The Board of Directors is authorised to purchase a maximum of 2,000,000 company shares (5.2% of the total number of shares). The repurchase authorisation is effective for 18 months.

The Board of Directors is authorised to decide on the issuance of new shares or shares which may be held by the company through a share issue and/or issuance of option rights or other special rights conferring entitlement to shares, referred to in Chapter 10, Section 1 of the Finnish Companies Act, so that under the authorisation, a maximum of 2,000,000 shares (5.2% of the total number of shares) may be issued and/or conveyed. The share issue authorisation is effective for 18 months.

RESOLUTIONS BY THE ANNUAL GENERAL MEETING

The Annual General Meeting, which was held on 16 March 2017, adopted the financial statements and consolidated financial statements for 2016 and released the members of the Board of Directors and the President and CEO from liability.

The Annual General Meeting resolved that a dividend of EUR 0.92 per share, totalling EUR 35.3 million, be paid on the basis of the balance sheet adopted for the financial year 2016. It was decided that the dividend be paid on 27 March 2017.

The Annual General Meeting confirmed the number of members of the Board of Directors as six. Heikki Bergholm, Laura Lares, Sakari Lassila, Miikka Maijala and Teemu Kangas-Kärki were re-elected and Laura Tarkka was elected as a new member to the Board until the end of the following Annual General Meeting.

KPMG Oy Ab, Authorised Public Accountants, was elected auditor. KPMG Oy Ab named 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 16 March 2017.

BOARD OF DIRECTORS

The members of Lassila & Tikanoja plc’s Board of Directors are Heikki Bergholm, Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Miikka Maijala and Laura Tarkka. At its constitutive meeting after the Annual General Meeting, the Board of Directors elected Heikki Bergholm as Chairman of the Board and Sakari Lassila as Vice Chairman.

Sakari Lassila was elected as the Chairman of the Audit Committee and Teemu Kangas-Kärki and Laura Tarkka as members. Heikki Bergholm was elected as the Chairman of the Personnel Committee and Laura Lares and Miikka Maijala as members.

SUMMARY OF STOCK EXCHANGE RELEASES PURSUANT TO ARTICLE 4, CHAPTER 6 OF THE SECURITIES MARKET ACT

On 31 March 2017, the company announced that, based on the decision of the Annual General Meeting of Lassila & Tikanoja plc on 16 March 2017, it had transferred 3,896 shares to the members of the Board of Directors as part of the remuneration of the Board.

On 21 April 2017, the company announced that, starting from the interim report for January–March 2017, it will report its results through an income statement categorised by expense type. The stock exchange release presented cumulative quarterly comparison data by expense type for 2016 in accordance with the new income statement scheme. Previously, the company has used an income statement categorised by operation type in its reporting. The change has no impact on the Group’s segment reporting. The presentation method was changed to correspond to the income statement scheme used in the management’s reporting.

On 13 June 2017, the company announced a change to its outlook for 2017. Full-year net sales in 2017 are expected to remain at the 2016 level and operating profit is expected to be below the 2016 level. Previously, the company had estimated that the 2017 net sales and operating profit were expected to remain at the 2016 level. The company lowered its outlook for the operating profit due to weak profitability in Facility Services and particularly in the renovation business.

On 20 June 2017, the company announced that it has signed an agreement to acquire Veolia’s facility management business in Sweden through the acquisition of 100 per cent of the shares of Veolia FM AB from Veolia Nordic AB. The company indicated that the acquisition is aimed at strengthening its presence in the Swedish facility services market by broadening its service offering in Sweden to include the maintenance of technical systems.

On 4 July 2017, the company announced that it had received a notification from Kabouter Management LCC, indicating that its holding of the shares and votes in Lassila & Tikanoja plc has risen above the threshold of 5%, to 7.53%.

On 31 August 2017, the company announced that it had completed the acquisition of Veolia’s facility management business in Sweden.

On 16 November 2017, the company announced a change to its outlook for 2017. According to the new guidance, full-year net sales in 2017 were expected to be above the 2016 level and operating profit was expected to be below the 2016 level.

On 22 November 2017, the company announced changes in its management. Lassila & Tikanoja merged the positions of CFO, Supply Chain Director and Development Director as of 1 January 2018. M.Sc. (Econ.) Tuomas Mäkipeska was named CFO in charge of finances, ICT, development and procurement and Member of the Group Executive Board beginning 1 January 2018. The company announced that CFO and Member of the Group Executive Board Timo Leinonen and Supply Chain Director and Member of the Group Executive Board Timo Kontinen would leave the company.

On 14 December 2017, the company announced it is changing its segment reporting to report the Maintenance of Technical Systems business as a separate segment as of 1 January 2018. Lassila & Tikanoja’s new structure consists of five reporting segments: Environmental Services, Industrial Services, Facility Services, Renewable Energy Sources and Maintenance of Technical Systems. The interim report for the first quarter of 2018 will be prepared in accordance with the new reporting structure.

EVENTS AFTER THE REVIEW PERIOD

The company’s management is not aware of any events of material importance after the review period that might have affected the preparation of the financial statements release.

NEAR-TERM RISKS AND UNCERTAINTIES

Fluctuations in the prices of fossil fuels may affect the demand of the recovered and renewable fuels produced by the company.

The company has begun the deployment of a new ERP system and will continue the deployment process in 2018. The deployment of the new system may lead to temporary overlapping costs arising from changes in the operating model, which can have a negative effect on the company’s result.

More detailed information on Lassila & Tikanoja’s risks and risk management is available in the 2017 Annual Report, which will be published in week 8, and in the Report of the Board of Directors and the consolidated financial statements.

OUTLOOK FOR THE YEAR 2018

Lassila & Tikanoja’s net sales and operating profit in 2018 are expected to be above the 2017 levels.


CONDENSED FINANCIAL STATEMENTS 1 JANUARY – 31 DECEMBER 2017

CONSOLIDATED INCOME STATEMENT
 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION