Lassila & Tikanoja plc
Stock Exhange Release
2 August 2017 at 8.00 am
- Net sales for the second quarter were EUR 167.2 million (EUR 166.9 million), operating profit was EUR 10.1 million (EUR 14.1 million) and earnings per share EUR 0.19 (EUR 0.38) - Net sales for January-June increased by 0.5% to EUR 329.2 million (EUR 327.5 million), operating profit was EUR 15.2 million (EUR 20.9 million) and earnings per share EUR 0.30 (EUR 0.52) - 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
CEO PEKKA OJANPÄÄ:
"Lassila & Tikanoja's result for the first half of the year was weaker than expected. The Industrial Services business grew and improved its profitability year-on-year thanks to strong demand. The net sales of Environmental Services increased slightly year-on-year, but profitability declined. The result of Facility Services fell short of expectations, mainly due to the weaker-than-anticipated result in renovation business and the maintenance of technical systems as well as the expenses related to the deployment of the new ERP system. We will continue to implement our current measures to improve profitability. In line with our strategy, we will expand our service offering in the growing Swedish market by acquiring Veolia FM AB, which provides maintenance of technical systems. The acquisition will also provide opportunities for transferring special expertise from Sweden to Finland, especially in operations involving hospitals and the public sector. The acquisition is expected to be finalised during the third quarter of 2017."
GROUP NET SALES AND FINANCIAL PERFORMANCE
April-June
Lassila & Tikanoja's net sales for the second quarter increased by 0.2% to EUR 167.2 million (EUR 166.9 million). Operating profit totalled EUR 10.1 million (EUR 14.1 million), representing 6.0% (8.4%) of net sales. Earnings per share were EUR 0.19 (EUR 0.38).
Net sales increased in Industrial Services and Renewable Energy Sources, but decreased year-on-year in Facility Services and Environmental Services.
Operating profit increased in Industrial Services and Renewable Energy Sources, but the profitability of Environmental Services and Facility Services was lower than in the previous year. In addition to the lower profitability of business operations compared to the previous year, the operating profit was weighed down by expenses of EUR 0.7 million recognised in the second quarter in relation to the Veolia FM AB acquisition announced in June. The Group also increased its cost provisions related to the closure of landfills by EUR 0.6 million in the second quarter.
January-June
Net sales for January-June increased by 0.5% to EUR 329.2 million (EUR 327.5 million). Operating profit totalled EUR 15.2 million (EUR 20.9 million), representing 4.6% (6.4%) of net sales. Earnings per share were EUR 0.30 (EUR 0.52).
During the first half of the year, net sales increased in Industrial Services and Environmental Services, but decreased year-on-year in Facility Services and Renewable Energy Sources.
Operating profit increased in Industrial Services, while the profitability of Environmental Services, Renewable Energy Sources and Facility Services was lower than in the comparison period.
Financial summary
4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/ 2017 2016 2017 2016 2016 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net sales, EUR million 167.2 166.9 0.2% 329.2 327.5 0.5% 661.8 Operating profit, EUR million 10.1 14.1 -28.4% 15.2 20.9 -27.1% 50.5 Operating margin, % 6.0 8.4 4.6 6.4 7.6 Profit before tax, EUR 9.4 13.9 -32.6% 14.6 20.8 -29.8% 50.1 million Earnings per share, EUR 0.19 0.38 -49.0% 0.30 0.52 -42.2% 1.13 Cash flow from operating 0.40 0.61 -34.0% 0.58 0.12 395.4% 1.99 activities/share, EUR EVA, EUR million 5.0 9.1 -45.1% 5.1 10.9 -53.4% 30.7
NET SALES AND OPERATING PROFIT BY DIVISION
Environmental Services
Second quarter The division's net sales for the second quarter amounted to EUR 67.4 million (EUR 68.2 million). Operating profit totalled EUR 7.7 million (EUR 9.2 million).
The operating profit of Environmental Services was particularly weighed down in the second quarter by an increase of EUR 0.6 million in cost provisions related to the closure of landfills.
January-June Net sales for the first half of the year totalled EUR 130.3 million (EUR 130.0 million). Operating profit was EUR 13.7 million (EUR 14.6 million).
The division's operating profit for the first half of the year was reduced by fuel costs being higher than in the previous year, the impact of municipalisation on the availability and prices of secondary raw materials and an increase in cost provisions related to the closure of landfills.
Industrial Services
Second quarter The division's net sales for the second quarter increased by 13.2% to EUR 23.6 million (EUR 20.9 million). Operating profit increased by 19.7% to EUR 2.6 million (EUR 2.1 million).
Net sales grew across all of the division's service lines, particularly in environmental construction and sewer maintenance.
Operating profit increased in hazardous waste management and process cleaning but declined in environmental construction.
January-June The net sales of the Industrial Services division grew by 12.7% in January-June and amounted to EUR 41.5 million (EUR 36.8 million). Operating profit was EUR 2.4 million (EUR 1.8 million).
Net sales grew across all of the division's service lines during the first half of the year. Operating profit increased in hazardous waste management and process cleaning.
Facility Services
Second quarter The division's net sales for the second quarter were down by 1.9% to EUR 71.4 million (EUR 72.8 million). Operating profit totalled EUR 1.1 million (EUR 3.7 million).
Net sales decreased in the renovation business and the maintenance of technical systems. The net sales of the cleaning business and the property maintenance business remained on a par with the comparison period.
The operating profit of the cleaning business grew year-on-year due to previously implemented efficiency improvement measures. The operating profit of the division's other service lines declined. The decrease in profitability was attributable to the operational efficiency of the maintenance of technical systems business being weaker than in the comparison period and, in particular, the expenses arising from efficiency improvement measures in the renovation business, which reduced the service line's operating profit in the second quarter. The result of the property maintenance business was weighed down by the deployment of a new ERP system in the Facility Services division.
January-June The Facility Services division's operating profit in January-June was EUR 142.9 million (EUR 145.0 million). Operating profit totalled EUR 0.9 million (EUR 4.9 million).
The division's net sales increased during the first half of the year in the renovation business and the cleaning business. Profitability improved in the cleaning business but declined in the division's other service lines. In the renovation business, the decline in profitability was due to the weak result in the first quarter and the costs arising from the efficiency improvement measures implemented in the second quarter. In the maintenance of technical systems business, the result showed a decline due to profitability being lower than in the previous year. In the property maintenance business, the weaker profitability was due to the impact on profit and loss from the deployment of the new ERP system.
Renewable Energy Sources
Second quarter The second quarter net sales of Renewable Energy Sources (L&T Biowatti) amounted to EUR 7.3 million (EUR 7.0 million). Operating profit totalled EUR 0.2 million (EUR 0.0 million). The increase was mainly due to the improved energy content of fuel deliveries.
The division's net sales and operating profit increased compared to the previous year.
January-June The net sales of the Renewable Energy Sources division totalled EUR 19.4 million (EUR 19.8 million) in January-June. Operating profit was EUR 0.5 million (EUR 0.7 million).
The division's net sales and operating profit decreased year-on-year due to weaker demand in the first quarter.
FINANCING
Cash flow from operating activities amounted to EUR 22.3 million (EUR 4.5 million) in the first half of the year. A total of EUR 6.4 million in working capital was committed (EUR 27.2 million committed). The amount of working capital in the comparison period was increased by a different payment practice for employment pension contributions in 2016.
At the end of the period, interest-bearing liabilities amounted to EUR 111.0 million (EUR 103.8 million).
Net interest-bearing liabilities amounted to EUR 70.8 million (EUR 87.5 million), showing an increase of EUR 32.2 million from the beginning of the year and a decrease of EUR 16.6 million from the comparison period.
Net financial expenses in January-June amounted to EUR 0.6 million (EUR 0.1 million), including EUR 0.7 million in positive change in the fair value of currency hedges. Net financial expenses were 0.2% (0.0%) of net sales. The net financial expenses in the comparison period included EUR 0.7 million in exchange rate gains arising from the appreciation of the Russian rouble.
The average interest rate on long-term loans (with interest rate hedging) was 1.1% (1.5%). Loans totalling EUR 41.3 million will mature in 2017, including the short-term commercial papers currently in use.
The equity ratio was 43.5% (44.1%) and the gearing rate was 35.6 (43.9). Liquid assets at the end of the period amounted to EUR 40.2 million (EUR 16.3 million).
Of the EUR 100 million commercial paper programme, EUR 40 million (EUR 10.0 million) 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 the first half of the year totalled EUR 20.6 million (EUR 18.7 million), consisting primarily of machine and equipment purchases, investments in information systems and acquisitions. Of the significant ongoing information system projects, the new ERP system for Facility Services was deployed in the property maintenance business in the first half of 2017. The deployments in other service lines continue.
PERSONNEL
In the second quarter, the average number of employees converted into full-time equivalents was 6,942 (6,961). At the end of the period, Lassila & Tikanoja had 8,512 (8,631) full-time and part-time employees. Of these, 7,549 (7,758) worked in Finland and 963 (873) in other countries.
SHARES AND SHARE CAPITAL
Traded volume and price
The volume of trading on Nasdaq Helsinki in January-June 2017, excluding the shares held by the company in Lassila & Tikanoja plc, was 3,455,513 shares, which is 9.0% (9.6%) of the average number of outstanding shares. The value of trading was EUR 64.2 million (EUR 59.4 million). The highest share price was EUR 19.36 and the lowest EUR 17.22. The closing price was EUR 18.41. At the end of the review period, the market capitalisation excluding the shares held by the company was EUR 706.9 million (EUR 639.0 million).
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 38,391,847.
Shareholders
At the end of the period, the company had 12,064 (10,515) shareholders. Nominee-registered holdings accounted for 18.6% (17.3%) 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.
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 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. The acquisition is expected to be finalised during the third quarter of 2017.
EVENTS AFTER THE REVIEW PERIOD
On 4 July 2017, the company announced that it has received a notification from Kabouter Management, LLC according to which its holding in Lassila & Tikanoja had incresed above 5% to 7.53%.
NEAR-TERM RISKS AND UNCERTAINTIES
Changes in the economy may result in significant changes in the secondary raw material markets for Environmental Services and the demand for Facility Services and Industrial Services.
Changes in the prices of fossil fuels may affect the demand of the recovered and renewable fuels produced by the company.
The deployment of the company's new ERP system, which began last year, will continue in 2017 and 2018. The deployment of the new system may lead to temporary 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 2016 Annual Report, and in the Report of the Board of Directors and the consolidated financial statements.
OUTLOOK FOR THE YEAR 2017
Lassila & Tikanoja's 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.
CONDENSED FINANCIAL STATEMENTS 1 JANUARY - 30 JUNE 2017
CONSOLIDATED INCOME STATEMENT
EUR million 4-6/2017 4-6/2016 1-6/2017 1-6/201 1-12/2016 6 -------------------------------------------------------------------------------- Net sales 167.2 166.9 329.2 327.5 661.8 Other operating income 2.6 1.7 3.6 2.6 4.8 Change of inventory -0.2 1.4 0.6 1.3 1.1 Materials and services -50.9 -50.4 -104.9 -100.7 -206.3 Employee benefit expenses -74.4 -73.3 -145.0 -144.8 -280.8 Other operating expenses -24.5 -22.6 -48.5 -45.6 -91.4 Depreciation and impairment -9.8 -9.5 -19.7 -19.4 -38.8 Operating profit 10.1 14.1 15.2 20.9 50.5 Financial income and expenses -0.7 -0.2 -0.6 -0.1 -0.4 Profit before tax 9.4 13.9 14.6 20.8 50.1 Income taxes -2.0 0.6 -3.0 -0.8 -6.7 -------------------------------------------------------------------------------- Profit for the period 7.4 14.5 11.6 20.0 43.4 Attributable to: Equity holders of the company 7.4 14.5 11.6 20.0 43.4 Non-controlling interest 0.0 0.0 0.0 0.0 0.0 Earnings per share attributable to equity holders of the parent company: Earnings per share, EUR 0.19 0.38 0.30 0.52 1.13 Diluted earnings per share, EUR 0.19 0.38 0.30 0.52 1.13
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million 4-6/20 4-6/20 1-6/20 1-6/201 1-12/2 17 16 17 6 016 -------------------------------------------------------------------------------- Profit for the period 7.4 14.5 11.6 20.0 43.4 Items not to be recognised through profit or loss Items arising from re-measurement of 0.0 0.0 0.0 0.0 0.0 defined benefit plans -------------------------------------------------------------------------------- Items not to be recognised through 0.0 0.0 0.0 0.0 0.0 profit or loss, total Items potentially to be recognised through profit or loss Hedging reserve, change in fair value 0.0 0.2 0.0 0.2 0.4 Currency translation differences -0.3 -0.1 -0.2 -0.1 -0.1 Currency translation differences, 0.0 0.0 0.0 0.0 0.0 non-controlling interest -------------------------------------------------------------------------------- Items potentially to be recognised -0.3 0.1 -0.2 0.2 0.3 through profit or loss, total -------------------------------------------------------------------------------- Total comprehensive income, after tax 7.1 14.7 11.3 20.2 43.7 Attributable to: Equity holders of the company 7.1 14.6 11.3 20.1 43.7 Non-controlling interest 0.0 0.0 0.0 0.0 0.0
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- ASSETS Non-current assets Intangible assets Goodwill 117.9 116.5 116.5 Customer contracts arising from acquisitions 5.5 5.6 5.2 Agreements on prohibition of competition 0.1 0.1 0.1 Other intangible assets arising from business 0.5 0.6 0.6 acquisitions Other intangible assets 21.9 18.6 20.8 -------------------------------------------------------------------------------- 145.9 141.5 143.2 Property, plant and equipment Land 5.3 5.0 5.3 Buildings and constructions 40.6 39.1 40.7 Machinery and equipment 103.3 104.0 104.8 Other 0.1 0.1 0.1 Prepayments and construction in progress 3.2 6.0 5.3 -------------------------------------------------------------------------------- 152.5 154.2 156.1 Other non-current assets Available-for-sale investments 0.6 0.6 0.6 Finance lease receivables 0.6 1.6 1.2 Deferred tax assets 5.5 5.8 5.5 Other receivables 2.3 1.8 1.7 -------------------------------------------------------------------------------- 9.1 9.8 9.0 Total non-current assets 307.5 305.5 308.3 Current assets Inventories 25.4 25.0 24.9 Trade and other receivables 93.9 91.3 90.5 Derivative receivables 0.7 0.2 0.3 Prepayments 1.8 25.4 0.6 Current available-for-sale financial assets 0.0 0.0 0.0 Cash and cash equivalents 40.2 16.3 28.2 -------------------------------------------------------------------------------- Total current assets 162.0 158.1 144.5 Total assets 469.5 463.6 452.8 --------------------------------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Equity Equity attributable to equity holders of the parent company Share capital 19.4 19.4 19.4 Other reserves -3.3 -3.2 -3.1 Invested unrestricted equity reserve 0.6 0.4 0.4 Retained earnings 170.7 162.4 162.7 Profit for the period 11.6 20.0 43.4 -------------------------------------------------------------------------------- 198.9 199.0 222.8 Non-controlling interest 0.2 0.2 0.2 -------------------------------------------------------------------------------- Total equity 199.1 199.1 223.0 Liabilities Non-current liabilities Deferred tax liabilities 24.0 24.3 24.8 Retirement benefit obligations 1.0 0.9 1.0 Provisions 4.4 4.0 4.8 Borrowings 66.9 60.9 63.5 Other liabilities 0.4 0.3 0.3 -------------------------------------------------------------------------------- 96.6 90.4 94.3 Current liabilities Borrowings 44.1 42.8 3.4 Trade and other payables 128.1 127.8 129.9 Derivative liabilities 0.3 0.4 0.1 Tax liabilities 0.0 0.3 0.1 Provisions 1.3 2.6 2.0 -------------------------------------------------------------------------------- 173.7 174.0 135.5 Total liabilities 270.4 264.5 229.8 Total equity and liabilities 469.5 463.6 452.8 --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOW
EUR million 1-6/20 1-6/20 1-12/20 17 16 16 -------------------------------------------------------------------------------- Cash flow from operating activities Profit for the period 11.6 20.0 43.4 Adjustments Income taxes 3.0 0.8 6.7 Depreciation and impairment 19.7 19.4 38.8 Financial income and expenses 0.6 0.1 0.4 Gain on sale of shares - - 0.0 Other -1.1 -1.9 -2.1 -------------------------------------------------------------------------------- Net cash generated from operating activities before 33.8 38.4 87.2 change in working capital Change in working capital Change in trade and other receivables -3.3 -29.2 -2.5 Change in inventories -0.5 -1.4 -1.4 Change in trade and other payables -2.6 3.4 6.6 -------------------------------------------------------------------------------- Change in working capital -6.4 -27.2 2.7 Interest paid -1.1 -0.9 -2.0 Interest received 0.9 0.1 0.3 Income taxes -5.0 -5.9 -11.7 -------------------------------------------------------------------------------- Net cash from operating activities 22.3 4.5 76.4 Cash flow from investing activities Acquisition of subsidiaries and businesses, net of cash -2.8 -1.8 -1.8 acquired Purchases of property, plant and equipment and -10.1 -15.1 -33.9 intangible assets Proceeds from sale of property, plant and equipment and 0.0 0.8 0.8 intangible assets Purchases of available-for-sale investments -0.8 - - Change in other non-current receivables 0.2 0.1 0.2 Dividends received - 0.0 0.0 -------------------------------------------------------------------------------- Net cash used in investing activities -13.5 -15.8 -34.6 Cash flow from financing activities Change in short-term borrowings 39.9 9.8 -0.2 Repayments of long-term borrowings -1.3 -3.6 -34.8 Dividends paid -35.3 -32.6 -32.6 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net cash generated from financing activities 3.3 -26.4 -67.6 Net change in liquid assets 12.1 -37.7 -25.9 Liquid assets at beginning of period 28.2 54.0 54.0 Effect of changes in foreign exchange rates -0.1 0.0 0.0 -------------------------------------------------------------------------------- Liquid assets at end of period 40.2 16.3 28.2
Liquid assets EUR million 6/2017 6/2016 12/2016 ------------------------------------------------------------ Cash and cash equivalents 40.2 16.3 28.2 Available-for-sale financial assets 0.0 0.0 0.0 ------------------------------------------------------------ Total 40.2 16.3 28.2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
EUR Share Curren Hedgin Investe Retain Equity Non-co Total million capita cy g d ed attributabl ntroll equity l transl reserv unrestr earnin e to equity ing ation e icted gs holders of intere differ equity the parent st ences reserve company -------------------------------------------------------------------------------- Equity on 19.4 -3.0 -0.1 0.4 206.1 222.8 0.2 223.0 1 Jan. 2017 Total comprehen sive income Profit for 11.6 11.6 0.0 11.6 the period Items 0.0 0.0 0.0 arising from remeasure ment of defined benefit plans Hedging 0.0 0.0 0.0 reserve, change in fair value Currency -0.2 0.0 -0.2 0.0 -0.2 translati on differenc es -------------------------------------------------------------------------------- Total -0.2 0.0 11.6 11.3 0.0 11.3 comprehen sive income Transactio ns with sharehold ers Share-base 0.1 -0.1 0.0 0.0 d benefits Dividends -35.3 -35.3 -35.3 paid Dividends 0.0 0.0 0.0 returned -------------------------------------------------------------------------------- Transactio 0.1 -35.5 -35.3 -35.3 ns with sharehold ers, total Other 0.1 0.1 0.1 changes -------------------------------------------------------------------------------- Equity on 19.4 -3.2 -0.1 0.6 182.3 198.9 0.2 199.1 30 June 2017
EUR Share Curren Hedgin Investe Retain Equity Non-co Total million capita cy g d ed attributabl ntroll equity l transl reserv unrestr earnin e to equity ing ation e icted gs holders of intere differ equity the parent st ences reserve company -------------------------------------------------------------------------------- Equity on 19.4 -2.9 -0.4 0.5 194.7 211.2 0.1 211.4 1 Jan. 2016 Total comprehen sive income Profit for 20.0 20.0 0.0 20.0 the period Items 0.0 0.0 arising from re-measur ement of defined benefit plans Hedging 0.2 0.2 0.2 reserve, change in fair value Currency -0.1 -0.1 0.0 0.0 translati on differenc es -------------------------------------------------------------------------------- Total 0.0 -0.1 0.2 0.0 20.0 20.1 0.0 20.2 comprehen sive income Transactio ns with sharehold ers Share-base 0.0 0.3 0.3 0.3 d benefits Dividends -32.6 -32.6 -32.6 paid Dividends 0.0 0.0 0.0 returned Transactio 0.0 0.0 0.0 0.0 -32.3 -32.3 -32.3 ns with sharehold ers, total Other -0.1 -0.1 -0.1 changes -------------------------------------------------------------------------------- Equity on 19.4 -3.0 -0.2 0.4 182.3 199.0 0.2 199.1 30 June 2016
KEY FIGURES
4-6/20 4-6/20 1-6/20 1-6/20 1-12/2 17 16 17 16 016 -------------------------------------------------------------------------------- Earnings per share, EUR 0.19 0.38 0.30 0.52 1.13 Diluted earnings per share, EUR 0.19 0.38 0.30 0.52 1.13 Cash flow from operating 0.40 0.61 0.58 0.12 1.99 activities/share, EUR EVA, EUR million* 5.0 9.1 5.1 10.9 30.7 Gross capital expenditure, EUR million 10.3 10.8 20.6 18.7 41.6 Depreciation, amortisation and 9.8 9.5 19.7 19.4 38.8 impairment, EUR million Equity per share, EUR 5.19 5.19 5.81 Return on equity, % (ROE) 11.0 19.5 20.0 Return on invested capital, % (ROI) 10.7 14.2 17.4 Equity ratio, % 43.5 44.1 50.4 Gearing, % 35.6 43.9 17.3 Net interest-bearing liabilities, EUR 70.8 87.5 38.7 million Average number of employees in full-time 6,942 6,961 7,199 equivalents Total number of full-time and part-time 8,512 8,631 7,931 employees at end of period Number of outstanding shares adjusted for issues, 1,000 shares average during the period 38,392 38,372 38,375 at end of period 38,398 38,378 38,378 average during the period, diluted 38,407 38,387 38,390
* EVA = operating profit - cost calculated on invested capital (average of four quarters) WACC: 2017 6.69%, 2016 6.56%
ACCOUNTING POLICIES
This half-year report is in compliance with the IAS 34 (Interim Financial Reporting) standard.
The half-year report has been prepared with application of the current IFRS standards and interpretations presented in the financial statements dated 31 December 2016. Amendments to IFRS standards that have entered into force thereafter have also been applied. Such amendments to IFRS standards have not had a material effect on the half-year report.
More detailed information on accounting policies is presented in the consolidated financial statements of Lassila & Tikanoja plc dated 31 December 2016.
The Alternative Performance Measures reported by the company are EVA and cash flow from operating activities per share. The calculation formulas for the performance measures are presented at the end of the half-year report.
The information presented in the half-year report has not been audited.
Application of IFRS 15 Revenue from Contracts with Customers
Lassila & Tikanoja will apply the standard as of 1 January 2018.
IFRS 15 lays down a comprehensive framework for determining when revenue can be recognised and to what extent. IFRS 15 replaces the existing guidance on revenue recognition. In accordance with IFRS 15, an entity shall recognise revenue as a monetary amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services in question.
The new standard includes a five-step model for recognising revenue from contracts with customers. According to IFRS 15, revenue must be allocated to performance obligations based on relative transaction prices. A performance obligation is defined as a promise to transfer goods and/or services to a customer. The recognition takes place over time or at a specific point in time, with the passing of control as the key criterion.
Lassila & Tikanoja began preparing for the introduction of the standard in 2016 by carrying out a high-level analysis of the company's customer contracts by division/income flow. The provision of services accounts for a significant share of the company's income flows. Currently, revenue from services is recognised as the services are provided. The company has preliminarily estimated that control concerning a service is passed over time, as the customer simultaneously receives and consumes the benefit from the company's performance as the entity performs. Thus, the company satisfies the performance obligation and recognises revenue over time in accordance with IFRS 15. Therefore, according to current estimates, there will not be any substantial changes to the existing revenue recognition practices.
Customer accounts and contracts in which the timing of revenue recognition and, for example, the calculation method of variable consideration can change have also been identified in connection with the review of contracts. The changes are mainly related to the timing and amount of recognition of revenue from projects and environmental construction. The income flows that may be subject to potential changes represent approximately 13% of the Group's current net sales. Furthermore, IFRS 15 requires more detailed notes. The company will prepare the processes for collecting such notes during the 2017 financial year. The company has not yet decided on the transition method to be applied.
SEGMENT INFORMATION
Net sales
4-6/2017 4-6/2016 -------------------------------------------------------------------------------- EUR million Extern Interdiv Total Extern Interdiv Total Total net al ision al ision sales, change % -------------------------------------------------------------------------------- Environmental 66.4 0.9 67.4 67.3 0.8 68.2 -1.2 Services Industrial 22.7 0.9 23.6 20.4 0.5 20.9 13.2 Services Facility 70.9 0.6 71.4 72.1 0.7 72.8 -1.9 Services Renewable 7.2 0.1 7.3 7.0 0.0 7.0 3.6 Energy Sources Eliminations -2.5 -2.5 -2.1 -2.1 -------------------------------------------------------------------------------- Total 167.2 0.0 167.2 166.9 0.0 166.9 0.2 1-6/2017 1-6/2016 EUR million Extern Interdiv Total Extern Interdiv Total Total net al ision al ision sales, change % -------------------------------------------------------------------------------- Environmental 128.6 1.7 130.3 128.2 1.7 130.0 0.2 Services Industrial 39.8 1.7 41.5 36.0 0.8 36.8 12.7 Services Facility 141.5 1.3 142.9 143.6 1.5 145.0 -1.5 Services Renewable 19.3 0.1 19.4 19.8 0.1 19.8 -2.1 Energy Sources Eliminations -4.8 -4.8 -4.1 -4.1 -------------------------------------------------------------------------------- Total 329.2 0.0 329.2 327.5 0.0 327.5 0.5 12/2016 EUR million Extern Interdiv Total al ision ---------------------------------------- Environmental 261.2 3.6 264.8 Services Industrial 78.7 3.4 82.1 Services Facility 285.3 2.9 288.3 Services Renewable 36.6 0.2 36.8 Energy Sources Eliminations -10.1 -10.1 ---------------------------------------- Total 661.8 0.0 661.8
Operating profit
EUR million 4-6/ % 4-6/ % 1-6/ % 1-6/ % 1-12/ % 2017 2016 2017 2016 2016 -------------------------------------------------------------------------------- Environmental 7.7 11.5 9.2 13.5 13.7 10.5 14.6 11.3 31.3 11.8 Services Industrial Services 2.6 10.9 2.1 10.3 2.4 5.7 1.8 5.0 7.8 9.5 Facility Services 1.1 1.6 3.7 5.1 0.9 0.6 4.9 3.3 13.5 4.7 Renewable Energy 0.2 2.9 0.0 0.3 0.5 2.6 0.7 3.4 1.5 4.1 Sources Group -1.5 -1.0 -2.2 -1.1 -3.7 administration and other -------------------------------------------------------------------------------- Total 10.1 6.0 14.1 8.4 15.2 4.6 20.9 6.4 50.5 7.6
OTHER SEGMENT INFORMATION
EUR million 6/2017 6/2016 12/2016 ---------------------------------------------------------------------- Assets Environmental Services 215.2 222.3 215.4 Industrial Services 72.5 71.8 69.5 Facility Services 109.7 123.4 97.2 Renewable Energy Sources 21.3 21.3 23.5 Group administration and other 1.3 0.9 11.1 Unallocated assets 49.6 23.9 36.0 ---------------------------------------------------------------------- L&T total 469.5 463.6 452.8 Liabilities Environmental Services 48.8 54.6 54.7 Industrial Services 24.6 23.2 22.4 Facility Services 53.1 50.0 46.9 Renewable Energy Sources 5.9 5.9 7.0 Group administration and other 2.1 1.6 6.6 Unallocated liabilities 135.7 129.2 92.2 ---------------------------------------------------------------------- L&T total 270.4 264.5 229.8 EUR million 4-6/2017 4-6/2016 1-6/2017 1-6/201 1-12/2016 6 -------------------------------------------------------------------------------- Capital expenditure Environmental Services 6.0 5.3 11.5 9.4 18.5 Industrial Services 1.6 2.4 3.5 3.3 8.2 Facility Services 2.8 3.1 4.9 5.9 14.5 Renewable Energy Sources 0.1 0.0 0.1 0.1 0.3 Group administration and other 0.0 0.0 0.5 0.0 0.0 -------------------------------------------------------------------------------- L&T total 10.3 10.8 20.6 18.7 41.6 Depreciation and amortisation Environmental Services 4.8 4.9 9.6 9.9 19.6 Industrial Services 1.8 1.7 3.5 3.3 6.7 Facility Services 3.2 2.9 6.5 6.2 12.2 Renewable Energy Sources 0.1 0.1 0.2 0.1 0.3 Group administration and other 0.0 0.0 0.0 0.0 0.0 -------------------------------------------------------------------------------- L&T total 9.8 9.5 19.7 19.4 38.8
INCOME STATEMENT BY QUARTER
EUR million 4-6/2017 1-3/2017 10-12/201 7-9/2016 4-6/2016 6 -------------------------------------------------------------------------------- Net sales Environmental Services 67.4 62.9 66.5 68.2 68.2 Industrial Services 23.6 17.9 21.4 23.9 20.9 Facility Services 71.4 71.4 71.8 71.5 72.8 Renewable Energy Sources 7.3 12.1 11.6 5.3 7.0 Interdivision net sales -2.5 -2.3 -3.0 -2.9 -2.1 -------------------------------------------------------------------------------- L&T total 167.2 161.9 168.3 166.0 166.9 Operating profit Environmental Services 7.7 5.9 6.5 10.2 9.2 Industrial Services 2.6 -0.2 2.6 3.4 2.1 Facility Services 1.1 -0.3 2.6 6.1 3.7 Renewable Energy Sources 0.2 0.3 0.7 0.1 0.0 Group administration and -1.5 -0.6 -1.8 -0.7 -1.0 other -------------------------------------------------------------------------------- L&T total 10.1 5.1 10.5 19.1 14.1 Operating margin Environmental Services 11.5 9.4 9.7 14.9 13.5 Industrial Services 10.9 -1.1 11.9 14.2 10.3 Facility Services 1.6 -0.4 3.6 8.5 5.1 Renewable Energy Sources 2.9 2.4 6.2 2.0 0.3 -------------------------------------------------------------------------------- L&T total 6.0 3.2 6.2 11.5 8.4 Financial income and -0.7 0.1 0.1 -0.4 -0.2 expenses, net -------------------------------------------------------------------------------- Profit before tax 9.4 5.2 10.6 18.7 13.9
MATCHING THE EVA RESULT TO OPERATING PROFIT
EUR million 1-6/2017 1-6/2016 1-12/2016 -------------------------------------------------------------------------------- Operating profit 15.2 20.9 50.5 Invested capital (rolling 12-month quarterly 302.9 304.6 300.6 average) Cost calculated on invested capital -10.1 -10.0 -19.7 -------------------------------------------------------------------------------- EVA 5.1 10.9 30.7
BUSINESS ACQUISITIONS, COMBINED
Fair value, total EUR million 1-6/2017 1-6/2016 1-12/2016 -------------------------------------------------------------------------------- Intangible assets 0.6 1.1 1.1 Property, plant and equipment 1.0 1.8 1.8 Investments 0.0 0.0 0.0 Receivables 0.3 1.7 1.7 Cash and cash equivalents 1.0 2.3 2.3 -------------------------------------------------------------------------------- Total assets 2.9 6.9 6.9 Other liabilities 0.3 1.0 1.0 Deferred tax liabilities 0.0 0.0 0.0 -------------------------------------------------------------------------------- Total liabilities 0.3 1.0 1.0 Net assets acquired 2.6 5.9 5.9 Total consideration 4.1 8.8 8.8 Goodwill 1.5 2.9 2.9 Effect on cash flow Consideration paid in cash -4.1 -8.8 -8.8 Cash and cash equivalents of the acquired company 1.0 2.3 2.3 Paid in the previous year - 3.6 3.6 Unpaid - 1.0 1.0 -------------------------------------------------------------------------------- Cash flow from investing activities -3.2 -1.8 -1.8
CHANGES IN INTANGIBLE ASSETS
EUR million 1-6/2017 1-6/2016 1-12/2016 --------------------------------------------------------------------- Carrying amount at beginning of period 143.2 134.9 134.9 Business acquisitions 2.2 1.4 1.4 Other capital expenditure 3.6 5.0 9.2 Disposals 0.0 0.1 0.2 Depreciation and impairment -2.9 -2.3 -4.8 Transfers between items 0.0 2.6 2.7 Exchange differences -0.1 -0.2 -0.4 --------------------------------------------------------------------- Carrying amount at end of period 145.9 141.5 143.2
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 1-6/2017 1-6/2016 1-12/2016 --------------------------------------------------------------------- Carrying amount at beginning of period 156.1 161.5 161.5 Business acquisitions 0.0 0.8 0.8 Other capital expenditure 14.3 11.4 30.2 Disposals -0.9 -0.3 -0.7 Depreciation and impairment -16.9 -17.1 -34.0 Transfers between items 0.0 -2.6 -2.7 Exchange differences -0.2 0.5 1.0 --------------------------------------------------------------------- Carrying amount at end of period 152.5 154.2 156.1
CAPITAL COMMITMENTS
EUR million 6/2017 6/2016 12/2016 ------------------------------------------------------ Intangible assets 0.2 0.1 0.1 Property, plant and equipment 7.4 8.0 7.2 ------------------------------------------------------ Total 7.6 8.0 7.3
FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
EUR Loans Available Financial Derivativ Carrying Fair million and -for-sale liabilities es under amounts value 30 June other financial measured using hedge by hierarc 2017 receivab assets the effective accountin balance hy les interest method g sheet level item ------------------------------------------------------------------------ -------- Non-curre nt financia l assets Available 0.6 0.6 -for-sale investme nts Finance 0.6 0.6 3 lease receivab les Other 1.4 1.4 2 receivab les Current financia l assets Trade and 87.0 87.0 other receivab les Finance 0.8 0.8 lease receivab les Derivativ 0.7 0.7 e receivab les Cash and 40.2 40.2 cash equivale nts ------------------------------------------------------------------------ Total 130.0 0.6 0.7 131.2 financia l assets Non-curre nt financia l liabilit ies Borrowing 57.0 57.0 2 s Finance 9.9 9.9 lease payables Other 0.1 0.1 liabilit ies Current financia l liabilit ies Borrowing 42.6 42.6 s Finance 1.5 1.5 lease payables Trade and 66.5 66.5 other payables Derivativ 0.3 0.3 2 e liabilit ies ------------------------------------------------------------------------ Total 177.6 0.3 177.9 financia l liabilit ies
The fair values of balance sheet items do not differ significantly from the carrying values of balance sheet items.
EUR Loans Available Financial Derivativ Carrying Fair million and -for-sale liabilities es under amounts value 30 June other financial measured using hedge by hierarc 2016 receivab assets the effective accountin balance hy les interest method g sheet level item ------------------------------------------------------------------------ -------- Non-curre nt financia l assets Available 0.6 0.6 3 -for-sale investme nts Finance 1.6 1.6 2 lease receivab les Other 1.7 1.7 receivab les Current financia l assets Trade and 84.2 84.2 other receivab les Finance 1.0 1.0 lease receivab les Derivativ 0.2 0.2 e receivab les Cash and 16.3 16.3 cash equivale nts ------------------------------------------------------------------------ Total 104.8 0.6 0.2 105.5 financia l assets Non-curre nt financia l liabilit ies Borrowing 59.6 59.6 2 s Finance 1.4 1.4 lease receivab les Other 0.0 0.0 liabilit ies Current financia l liabilit ies Borrowing 42.6 42.6 s Finance 0.2 0.2 lease payables Trade and 67.0 67.0 other payables Derivativ 0.4 0.4 2 e liabilit ies ------------------------------------------------------------------------ Total 170.8 0.4 171.1 financia l liabilit ies
The fair values of balance sheet items do not differ significantly from the carrying values of balance sheet items.
CONTINGENT LIABILITIES
EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Securities for own commitments Mortgages on rights of tenancy 0.2 0.2 0.2 Company mortgages - 0.8 - Other securities 0.1 0.1 0.1 Bank guarantees required for environmental permits 10.4 10.2 10.9 Other securities are security deposits. Operating lease liabilities EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Maturity not later than one year 5.7 7.6 7.4 Maturity later than one year and not later than five 7.3 11.7 11.4 years Maturity later than five years 3.5 4.0 4.0 -------------------------------------------------------------------------------- Total 16.5 23.3 22.7 Liabilities associated with derivative agreements Interest rate swaps EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Nominal values of interest rate swaps Maturity not later than one year 61.6 - - Maturity later than one year and not later than five - - - years Maturity later than five years - - - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total 61.6 - - Fair value 0.7 - - Interest rate swaps EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Nominal values of interest rate swaps Maturity not later than one year 1.8 30.8 1.8 Maturity later than one year and not later than five 1.8 3.6 2.7 years Maturity later than five years 0.0 0.0 0.0 -------------------------------------------------------------------------------- Total 3.6 34.4 4.5 Fair value -0.1 -0.3 -0.1
The interest rate swaps are used for the hedging of cash flow related to floating rate loans, and hedge accounting under IAS 39 has been applied to them. The hedges have been effective, and the changes in their fair values are shown on the consolidated statement of comprehensive income for the period. The fair values of the swap contracts are based on the market data at the end of the review period.
Commodity derivatives
EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Nominal values of diesel swaps Maturity not later than one year 1.3 1.2 1.3 Maturity later than one year and not later than five 0.0 0.0 0.0 years -------------------------------------------------------------------------------- Total 1.3 1.2 1.3 Fair value -0.1 0.1 0.3
Commodity derivative contracts were signed for the hedging of future diesel oil purchases. IAS 39-compliant hedge accounting is applied to these contracts, and the effective change in fair value is recognised in the hedging reserve within equity. The fair values of commodity derivatives are based on market prices on the balance sheet date.
CALCULATION OF KEY FIGURES
Earnings per share: profit attributable to equity holders of the parent company / adjusted average basic number of shares
Diluted earnings per share: profit attributable to equity holders of the parent company / adjusted average diluted number of shares
Cash flow from operating activities/share: cash flow from operating activities as in the statement of cash flow / adjusted average basic number of shares
EVA: operating profit - cost calculated on invested capital (average of four quarters) WACC 2017: 6.69% and 2016: 6.56%
Equity per share: profit 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 invested capital, % (ROI): (profit before tax + financial expenses) / (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
Helsinki, 2 August 2017
LASSILA & TIKANOJA PLC Board of Directors
Pekka Ojanpää President and CEO
Additional information: Pekka Ojanpää, President and CEO, tel. +358 10 636 2810 Timo Leinonen, CFO, tel. +358 400 793 073
Lassila & Tikanoja is a service company that is transforming consumer society into an efficient recycling society. In co-operation with our customers, we are reducing waste volumes, extending the useful lives of properties, recovering materials and decreasing the use of raw materials and energy. We help our customers to focus on their core business and protect the environment. Together, we create well-being and jobs. With operations in Finland, Sweden and Russia, L&T employs 8,000 persons. Net sales in 2016 amounted to EUR 661.8 million. L&T is listed on Nasdaq Helsinki.
Distribution: Nasdaq Helsinki Major media www.lassila-tikanoja.com
Attachment:
https://cns.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=640101
- Net sales for the second quarter were EUR 167.2 million (EUR 166.9 million), operating profit was EUR 10.1 million (EUR 14.1 million) and earnings per share EUR 0.19 (EUR 0.38) - Net sales for January-June increased by 0.5% to EUR 329.2 million (EUR 327.5 million), operating profit was EUR 15.2 million (EUR 20.9 million) and earnings per share EUR 0.30 (EUR 0.52) - 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
CEO PEKKA OJANPÄÄ:
"Lassila & Tikanoja's result for the first half of the year was weaker than expected. The Industrial Services business grew and improved its profitability year-on-year thanks to strong demand. The net sales of Environmental Services increased slightly year-on-year, but profitability declined. The result of Facility Services fell short of expectations, mainly due to the weaker-than-anticipated result in renovation business and the maintenance of technical systems as well as the expenses related to the deployment of the new ERP system. We will continue to implement our current measures to improve profitability. In line with our strategy, we will expand our service offering in the growing Swedish market by acquiring Veolia FM AB, which provides maintenance of technical systems. The acquisition will also provide opportunities for transferring special expertise from Sweden to Finland, especially in operations involving hospitals and the public sector. The acquisition is expected to be finalised during the third quarter of 2017."
GROUP NET SALES AND FINANCIAL PERFORMANCE
April-June
Lassila & Tikanoja's net sales for the second quarter increased by 0.2% to EUR 167.2 million (EUR 166.9 million). Operating profit totalled EUR 10.1 million (EUR 14.1 million), representing 6.0% (8.4%) of net sales. Earnings per share were EUR 0.19 (EUR 0.38).
Net sales increased in Industrial Services and Renewable Energy Sources, but decreased year-on-year in Facility Services and Environmental Services.
Operating profit increased in Industrial Services and Renewable Energy Sources, but the profitability of Environmental Services and Facility Services was lower than in the previous year. In addition to the lower profitability of business operations compared to the previous year, the operating profit was weighed down by expenses of EUR 0.7 million recognised in the second quarter in relation to the Veolia FM AB acquisition announced in June. The Group also increased its cost provisions related to the closure of landfills by EUR 0.6 million in the second quarter.
January-June
Net sales for January-June increased by 0.5% to EUR 329.2 million (EUR 327.5 million). Operating profit totalled EUR 15.2 million (EUR 20.9 million), representing 4.6% (6.4%) of net sales. Earnings per share were EUR 0.30 (EUR 0.52).
During the first half of the year, net sales increased in Industrial Services and Environmental Services, but decreased year-on-year in Facility Services and Renewable Energy Sources.
Operating profit increased in Industrial Services, while the profitability of Environmental Services, Renewable Energy Sources and Facility Services was lower than in the comparison period.
Financial summary
4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/ 2017 2016 2017 2016 2016 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net sales, EUR million 167.2 166.9 0.2% 329.2 327.5 0.5% 661.8 Operating profit, EUR million 10.1 14.1 -28.4% 15.2 20.9 -27.1% 50.5 Operating margin, % 6.0 8.4 4.6 6.4 7.6 Profit before tax, EUR 9.4 13.9 -32.6% 14.6 20.8 -29.8% 50.1 million Earnings per share, EUR 0.19 0.38 -49.0% 0.30 0.52 -42.2% 1.13 Cash flow from operating 0.40 0.61 -34.0% 0.58 0.12 395.4% 1.99 activities/share, EUR EVA, EUR million 5.0 9.1 -45.1% 5.1 10.9 -53.4% 30.7
NET SALES AND OPERATING PROFIT BY DIVISION
Environmental Services
Second quarter The division's net sales for the second quarter amounted to EUR 67.4 million (EUR 68.2 million). Operating profit totalled EUR 7.7 million (EUR 9.2 million).
The operating profit of Environmental Services was particularly weighed down in the second quarter by an increase of EUR 0.6 million in cost provisions related to the closure of landfills.
January-June Net sales for the first half of the year totalled EUR 130.3 million (EUR 130.0 million). Operating profit was EUR 13.7 million (EUR 14.6 million).
The division's operating profit for the first half of the year was reduced by fuel costs being higher than in the previous year, the impact of municipalisation on the availability and prices of secondary raw materials and an increase in cost provisions related to the closure of landfills.
Industrial Services
Second quarter The division's net sales for the second quarter increased by 13.2% to EUR 23.6 million (EUR 20.9 million). Operating profit increased by 19.7% to EUR 2.6 million (EUR 2.1 million).
Net sales grew across all of the division's service lines, particularly in environmental construction and sewer maintenance.
Operating profit increased in hazardous waste management and process cleaning but declined in environmental construction.
January-June The net sales of the Industrial Services division grew by 12.7% in January-June and amounted to EUR 41.5 million (EUR 36.8 million). Operating profit was EUR 2.4 million (EUR 1.8 million).
Net sales grew across all of the division's service lines during the first half of the year. Operating profit increased in hazardous waste management and process cleaning.
Facility Services
Second quarter The division's net sales for the second quarter were down by 1.9% to EUR 71.4 million (EUR 72.8 million). Operating profit totalled EUR 1.1 million (EUR 3.7 million).
Net sales decreased in the renovation business and the maintenance of technical systems. The net sales of the cleaning business and the property maintenance business remained on a par with the comparison period.
The operating profit of the cleaning business grew year-on-year due to previously implemented efficiency improvement measures. The operating profit of the division's other service lines declined. The decrease in profitability was attributable to the operational efficiency of the maintenance of technical systems business being weaker than in the comparison period and, in particular, the expenses arising from efficiency improvement measures in the renovation business, which reduced the service line's operating profit in the second quarter. The result of the property maintenance business was weighed down by the deployment of a new ERP system in the Facility Services division.
January-June The Facility Services division's operating profit in January-June was EUR 142.9 million (EUR 145.0 million). Operating profit totalled EUR 0.9 million (EUR 4.9 million).
The division's net sales increased during the first half of the year in the renovation business and the cleaning business. Profitability improved in the cleaning business but declined in the division's other service lines. In the renovation business, the decline in profitability was due to the weak result in the first quarter and the costs arising from the efficiency improvement measures implemented in the second quarter. In the maintenance of technical systems business, the result showed a decline due to profitability being lower than in the previous year. In the property maintenance business, the weaker profitability was due to the impact on profit and loss from the deployment of the new ERP system.
Renewable Energy Sources
Second quarter The second quarter net sales of Renewable Energy Sources (L&T Biowatti) amounted to EUR 7.3 million (EUR 7.0 million). Operating profit totalled EUR 0.2 million (EUR 0.0 million). The increase was mainly due to the improved energy content of fuel deliveries.
The division's net sales and operating profit increased compared to the previous year.
January-June The net sales of the Renewable Energy Sources division totalled EUR 19.4 million (EUR 19.8 million) in January-June. Operating profit was EUR 0.5 million (EUR 0.7 million).
The division's net sales and operating profit decreased year-on-year due to weaker demand in the first quarter.
FINANCING
Cash flow from operating activities amounted to EUR 22.3 million (EUR 4.5 million) in the first half of the year. A total of EUR 6.4 million in working capital was committed (EUR 27.2 million committed). The amount of working capital in the comparison period was increased by a different payment practice for employment pension contributions in 2016.
At the end of the period, interest-bearing liabilities amounted to EUR 111.0 million (EUR 103.8 million).
Net interest-bearing liabilities amounted to EUR 70.8 million (EUR 87.5 million), showing an increase of EUR 32.2 million from the beginning of the year and a decrease of EUR 16.6 million from the comparison period.
Net financial expenses in January-June amounted to EUR 0.6 million (EUR 0.1 million), including EUR 0.7 million in positive change in the fair value of currency hedges. Net financial expenses were 0.2% (0.0%) of net sales. The net financial expenses in the comparison period included EUR 0.7 million in exchange rate gains arising from the appreciation of the Russian rouble.
The average interest rate on long-term loans (with interest rate hedging) was 1.1% (1.5%). Loans totalling EUR 41.3 million will mature in 2017, including the short-term commercial papers currently in use.
The equity ratio was 43.5% (44.1%) and the gearing rate was 35.6 (43.9). Liquid assets at the end of the period amounted to EUR 40.2 million (EUR 16.3 million).
Of the EUR 100 million commercial paper programme, EUR 40 million (EUR 10.0 million) 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 the first half of the year totalled EUR 20.6 million (EUR 18.7 million), consisting primarily of machine and equipment purchases, investments in information systems and acquisitions. Of the significant ongoing information system projects, the new ERP system for Facility Services was deployed in the property maintenance business in the first half of 2017. The deployments in other service lines continue.
PERSONNEL
In the second quarter, the average number of employees converted into full-time equivalents was 6,942 (6,961). At the end of the period, Lassila & Tikanoja had 8,512 (8,631) full-time and part-time employees. Of these, 7,549 (7,758) worked in Finland and 963 (873) in other countries.
SHARES AND SHARE CAPITAL
Traded volume and price
The volume of trading on Nasdaq Helsinki in January-June 2017, excluding the shares held by the company in Lassila & Tikanoja plc, was 3,455,513 shares, which is 9.0% (9.6%) of the average number of outstanding shares. The value of trading was EUR 64.2 million (EUR 59.4 million). The highest share price was EUR 19.36 and the lowest EUR 17.22. The closing price was EUR 18.41. At the end of the review period, the market capitalisation excluding the shares held by the company was EUR 706.9 million (EUR 639.0 million).
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 38,391,847.
Shareholders
At the end of the period, the company had 12,064 (10,515) shareholders. Nominee-registered holdings accounted for 18.6% (17.3%) 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.
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 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. The acquisition is expected to be finalised during the third quarter of 2017.
EVENTS AFTER THE REVIEW PERIOD
On 4 July 2017, the company announced that it has received a notification from Kabouter Management, LLC according to which its holding in Lassila & Tikanoja had incresed above 5% to 7.53%.
NEAR-TERM RISKS AND UNCERTAINTIES
Changes in the economy may result in significant changes in the secondary raw material markets for Environmental Services and the demand for Facility Services and Industrial Services.
Changes in the prices of fossil fuels may affect the demand of the recovered and renewable fuels produced by the company.
The deployment of the company's new ERP system, which began last year, will continue in 2017 and 2018. The deployment of the new system may lead to temporary 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 2016 Annual Report, and in the Report of the Board of Directors and the consolidated financial statements.
OUTLOOK FOR THE YEAR 2017
Lassila & Tikanoja's 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.
CONDENSED FINANCIAL STATEMENTS 1 JANUARY - 30 JUNE 2017
CONSOLIDATED INCOME STATEMENT
EUR million 4-6/2017 4-6/2016 1-6/2017 1-6/201 1-12/2016 6 -------------------------------------------------------------------------------- Net sales 167.2 166.9 329.2 327.5 661.8 Other operating income 2.6 1.7 3.6 2.6 4.8 Change of inventory -0.2 1.4 0.6 1.3 1.1 Materials and services -50.9 -50.4 -104.9 -100.7 -206.3 Employee benefit expenses -74.4 -73.3 -145.0 -144.8 -280.8 Other operating expenses -24.5 -22.6 -48.5 -45.6 -91.4 Depreciation and impairment -9.8 -9.5 -19.7 -19.4 -38.8 Operating profit 10.1 14.1 15.2 20.9 50.5 Financial income and expenses -0.7 -0.2 -0.6 -0.1 -0.4 Profit before tax 9.4 13.9 14.6 20.8 50.1 Income taxes -2.0 0.6 -3.0 -0.8 -6.7 -------------------------------------------------------------------------------- Profit for the period 7.4 14.5 11.6 20.0 43.4 Attributable to: Equity holders of the company 7.4 14.5 11.6 20.0 43.4 Non-controlling interest 0.0 0.0 0.0 0.0 0.0 Earnings per share attributable to equity holders of the parent company: Earnings per share, EUR 0.19 0.38 0.30 0.52 1.13 Diluted earnings per share, EUR 0.19 0.38 0.30 0.52 1.13
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million 4-6/20 4-6/20 1-6/20 1-6/201 1-12/2 17 16 17 6 016 -------------------------------------------------------------------------------- Profit for the period 7.4 14.5 11.6 20.0 43.4 Items not to be recognised through profit or loss Items arising from re-measurement of 0.0 0.0 0.0 0.0 0.0 defined benefit plans -------------------------------------------------------------------------------- Items not to be recognised through 0.0 0.0 0.0 0.0 0.0 profit or loss, total Items potentially to be recognised through profit or loss Hedging reserve, change in fair value 0.0 0.2 0.0 0.2 0.4 Currency translation differences -0.3 -0.1 -0.2 -0.1 -0.1 Currency translation differences, 0.0 0.0 0.0 0.0 0.0 non-controlling interest -------------------------------------------------------------------------------- Items potentially to be recognised -0.3 0.1 -0.2 0.2 0.3 through profit or loss, total -------------------------------------------------------------------------------- Total comprehensive income, after tax 7.1 14.7 11.3 20.2 43.7 Attributable to: Equity holders of the company 7.1 14.6 11.3 20.1 43.7 Non-controlling interest 0.0 0.0 0.0 0.0 0.0
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- ASSETS Non-current assets Intangible assets Goodwill 117.9 116.5 116.5 Customer contracts arising from acquisitions 5.5 5.6 5.2 Agreements on prohibition of competition 0.1 0.1 0.1 Other intangible assets arising from business 0.5 0.6 0.6 acquisitions Other intangible assets 21.9 18.6 20.8 -------------------------------------------------------------------------------- 145.9 141.5 143.2 Property, plant and equipment Land 5.3 5.0 5.3 Buildings and constructions 40.6 39.1 40.7 Machinery and equipment 103.3 104.0 104.8 Other 0.1 0.1 0.1 Prepayments and construction in progress 3.2 6.0 5.3 -------------------------------------------------------------------------------- 152.5 154.2 156.1 Other non-current assets Available-for-sale investments 0.6 0.6 0.6 Finance lease receivables 0.6 1.6 1.2 Deferred tax assets 5.5 5.8 5.5 Other receivables 2.3 1.8 1.7 -------------------------------------------------------------------------------- 9.1 9.8 9.0 Total non-current assets 307.5 305.5 308.3 Current assets Inventories 25.4 25.0 24.9 Trade and other receivables 93.9 91.3 90.5 Derivative receivables 0.7 0.2 0.3 Prepayments 1.8 25.4 0.6 Current available-for-sale financial assets 0.0 0.0 0.0 Cash and cash equivalents 40.2 16.3 28.2 -------------------------------------------------------------------------------- Total current assets 162.0 158.1 144.5 Total assets 469.5 463.6 452.8 --------------------------------------------------------------------------------
EQUITY AND LIABILITIES
EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Equity Equity attributable to equity holders of the parent company Share capital 19.4 19.4 19.4 Other reserves -3.3 -3.2 -3.1 Invested unrestricted equity reserve 0.6 0.4 0.4 Retained earnings 170.7 162.4 162.7 Profit for the period 11.6 20.0 43.4 -------------------------------------------------------------------------------- 198.9 199.0 222.8 Non-controlling interest 0.2 0.2 0.2 -------------------------------------------------------------------------------- Total equity 199.1 199.1 223.0 Liabilities Non-current liabilities Deferred tax liabilities 24.0 24.3 24.8 Retirement benefit obligations 1.0 0.9 1.0 Provisions 4.4 4.0 4.8 Borrowings 66.9 60.9 63.5 Other liabilities 0.4 0.3 0.3 -------------------------------------------------------------------------------- 96.6 90.4 94.3 Current liabilities Borrowings 44.1 42.8 3.4 Trade and other payables 128.1 127.8 129.9 Derivative liabilities 0.3 0.4 0.1 Tax liabilities 0.0 0.3 0.1 Provisions 1.3 2.6 2.0 -------------------------------------------------------------------------------- 173.7 174.0 135.5 Total liabilities 270.4 264.5 229.8 Total equity and liabilities 469.5 463.6 452.8 --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOW
EUR million 1-6/20 1-6/20 1-12/20 17 16 16 -------------------------------------------------------------------------------- Cash flow from operating activities Profit for the period 11.6 20.0 43.4 Adjustments Income taxes 3.0 0.8 6.7 Depreciation and impairment 19.7 19.4 38.8 Financial income and expenses 0.6 0.1 0.4 Gain on sale of shares - - 0.0 Other -1.1 -1.9 -2.1 -------------------------------------------------------------------------------- Net cash generated from operating activities before 33.8 38.4 87.2 change in working capital Change in working capital Change in trade and other receivables -3.3 -29.2 -2.5 Change in inventories -0.5 -1.4 -1.4 Change in trade and other payables -2.6 3.4 6.6 -------------------------------------------------------------------------------- Change in working capital -6.4 -27.2 2.7 Interest paid -1.1 -0.9 -2.0 Interest received 0.9 0.1 0.3 Income taxes -5.0 -5.9 -11.7 -------------------------------------------------------------------------------- Net cash from operating activities 22.3 4.5 76.4 Cash flow from investing activities Acquisition of subsidiaries and businesses, net of cash -2.8 -1.8 -1.8 acquired Purchases of property, plant and equipment and -10.1 -15.1 -33.9 intangible assets Proceeds from sale of property, plant and equipment and 0.0 0.8 0.8 intangible assets Purchases of available-for-sale investments -0.8 - - Change in other non-current receivables 0.2 0.1 0.2 Dividends received - 0.0 0.0 -------------------------------------------------------------------------------- Net cash used in investing activities -13.5 -15.8 -34.6 Cash flow from financing activities Change in short-term borrowings 39.9 9.8 -0.2 Repayments of long-term borrowings -1.3 -3.6 -34.8 Dividends paid -35.3 -32.6 -32.6 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net cash generated from financing activities 3.3 -26.4 -67.6 Net change in liquid assets 12.1 -37.7 -25.9 Liquid assets at beginning of period 28.2 54.0 54.0 Effect of changes in foreign exchange rates -0.1 0.0 0.0 -------------------------------------------------------------------------------- Liquid assets at end of period 40.2 16.3 28.2
Liquid assets EUR million 6/2017 6/2016 12/2016 ------------------------------------------------------------ Cash and cash equivalents 40.2 16.3 28.2 Available-for-sale financial assets 0.0 0.0 0.0 ------------------------------------------------------------ Total 40.2 16.3 28.2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
EUR Share Curren Hedgin Investe Retain Equity Non-co Total million capita cy g d ed attributabl ntroll equity l transl reserv unrestr earnin e to equity ing ation e icted gs holders of intere differ equity the parent st ences reserve company -------------------------------------------------------------------------------- Equity on 19.4 -3.0 -0.1 0.4 206.1 222.8 0.2 223.0 1 Jan. 2017 Total comprehen sive income Profit for 11.6 11.6 0.0 11.6 the period Items 0.0 0.0 0.0 arising from remeasure ment of defined benefit plans Hedging 0.0 0.0 0.0 reserve, change in fair value Currency -0.2 0.0 -0.2 0.0 -0.2 translati on differenc es -------------------------------------------------------------------------------- Total -0.2 0.0 11.6 11.3 0.0 11.3 comprehen sive income Transactio ns with sharehold ers Share-base 0.1 -0.1 0.0 0.0 d benefits Dividends -35.3 -35.3 -35.3 paid Dividends 0.0 0.0 0.0 returned -------------------------------------------------------------------------------- Transactio 0.1 -35.5 -35.3 -35.3 ns with sharehold ers, total Other 0.1 0.1 0.1 changes -------------------------------------------------------------------------------- Equity on 19.4 -3.2 -0.1 0.6 182.3 198.9 0.2 199.1 30 June 2017
EUR Share Curren Hedgin Investe Retain Equity Non-co Total million capita cy g d ed attributabl ntroll equity l transl reserv unrestr earnin e to equity ing ation e icted gs holders of intere differ equity the parent st ences reserve company -------------------------------------------------------------------------------- Equity on 19.4 -2.9 -0.4 0.5 194.7 211.2 0.1 211.4 1 Jan. 2016 Total comprehen sive income Profit for 20.0 20.0 0.0 20.0 the period Items 0.0 0.0 arising from re-measur ement of defined benefit plans Hedging 0.2 0.2 0.2 reserve, change in fair value Currency -0.1 -0.1 0.0 0.0 translati on differenc es -------------------------------------------------------------------------------- Total 0.0 -0.1 0.2 0.0 20.0 20.1 0.0 20.2 comprehen sive income Transactio ns with sharehold ers Share-base 0.0 0.3 0.3 0.3 d benefits Dividends -32.6 -32.6 -32.6 paid Dividends 0.0 0.0 0.0 returned Transactio 0.0 0.0 0.0 0.0 -32.3 -32.3 -32.3 ns with sharehold ers, total Other -0.1 -0.1 -0.1 changes -------------------------------------------------------------------------------- Equity on 19.4 -3.0 -0.2 0.4 182.3 199.0 0.2 199.1 30 June 2016
KEY FIGURES
4-6/20 4-6/20 1-6/20 1-6/20 1-12/2 17 16 17 16 016 -------------------------------------------------------------------------------- Earnings per share, EUR 0.19 0.38 0.30 0.52 1.13 Diluted earnings per share, EUR 0.19 0.38 0.30 0.52 1.13 Cash flow from operating 0.40 0.61 0.58 0.12 1.99 activities/share, EUR EVA, EUR million* 5.0 9.1 5.1 10.9 30.7 Gross capital expenditure, EUR million 10.3 10.8 20.6 18.7 41.6 Depreciation, amortisation and 9.8 9.5 19.7 19.4 38.8 impairment, EUR million Equity per share, EUR 5.19 5.19 5.81 Return on equity, % (ROE) 11.0 19.5 20.0 Return on invested capital, % (ROI) 10.7 14.2 17.4 Equity ratio, % 43.5 44.1 50.4 Gearing, % 35.6 43.9 17.3 Net interest-bearing liabilities, EUR 70.8 87.5 38.7 million Average number of employees in full-time 6,942 6,961 7,199 equivalents Total number of full-time and part-time 8,512 8,631 7,931 employees at end of period Number of outstanding shares adjusted for issues, 1,000 shares average during the period 38,392 38,372 38,375 at end of period 38,398 38,378 38,378 average during the period, diluted 38,407 38,387 38,390
* EVA = operating profit - cost calculated on invested capital (average of four quarters) WACC: 2017 6.69%, 2016 6.56%
ACCOUNTING POLICIES
This half-year report is in compliance with the IAS 34 (Interim Financial Reporting) standard.
The half-year report has been prepared with application of the current IFRS standards and interpretations presented in the financial statements dated 31 December 2016. Amendments to IFRS standards that have entered into force thereafter have also been applied. Such amendments to IFRS standards have not had a material effect on the half-year report.
More detailed information on accounting policies is presented in the consolidated financial statements of Lassila & Tikanoja plc dated 31 December 2016.
The Alternative Performance Measures reported by the company are EVA and cash flow from operating activities per share. The calculation formulas for the performance measures are presented at the end of the half-year report.
The information presented in the half-year report has not been audited.
Application of IFRS 15 Revenue from Contracts with Customers
Lassila & Tikanoja will apply the standard as of 1 January 2018.
IFRS 15 lays down a comprehensive framework for determining when revenue can be recognised and to what extent. IFRS 15 replaces the existing guidance on revenue recognition. In accordance with IFRS 15, an entity shall recognise revenue as a monetary amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services in question.
The new standard includes a five-step model for recognising revenue from contracts with customers. According to IFRS 15, revenue must be allocated to performance obligations based on relative transaction prices. A performance obligation is defined as a promise to transfer goods and/or services to a customer. The recognition takes place over time or at a specific point in time, with the passing of control as the key criterion.
Lassila & Tikanoja began preparing for the introduction of the standard in 2016 by carrying out a high-level analysis of the company's customer contracts by division/income flow. The provision of services accounts for a significant share of the company's income flows. Currently, revenue from services is recognised as the services are provided. The company has preliminarily estimated that control concerning a service is passed over time, as the customer simultaneously receives and consumes the benefit from the company's performance as the entity performs. Thus, the company satisfies the performance obligation and recognises revenue over time in accordance with IFRS 15. Therefore, according to current estimates, there will not be any substantial changes to the existing revenue recognition practices.
Customer accounts and contracts in which the timing of revenue recognition and, for example, the calculation method of variable consideration can change have also been identified in connection with the review of contracts. The changes are mainly related to the timing and amount of recognition of revenue from projects and environmental construction. The income flows that may be subject to potential changes represent approximately 13% of the Group's current net sales. Furthermore, IFRS 15 requires more detailed notes. The company will prepare the processes for collecting such notes during the 2017 financial year. The company has not yet decided on the transition method to be applied.
SEGMENT INFORMATION
Net sales
4-6/2017 4-6/2016 -------------------------------------------------------------------------------- EUR million Extern Interdiv Total Extern Interdiv Total Total net al ision al ision sales, change % -------------------------------------------------------------------------------- Environmental 66.4 0.9 67.4 67.3 0.8 68.2 -1.2 Services Industrial 22.7 0.9 23.6 20.4 0.5 20.9 13.2 Services Facility 70.9 0.6 71.4 72.1 0.7 72.8 -1.9 Services Renewable 7.2 0.1 7.3 7.0 0.0 7.0 3.6 Energy Sources Eliminations -2.5 -2.5 -2.1 -2.1 -------------------------------------------------------------------------------- Total 167.2 0.0 167.2 166.9 0.0 166.9 0.2 1-6/2017 1-6/2016 EUR million Extern Interdiv Total Extern Interdiv Total Total net al ision al ision sales, change % -------------------------------------------------------------------------------- Environmental 128.6 1.7 130.3 128.2 1.7 130.0 0.2 Services Industrial 39.8 1.7 41.5 36.0 0.8 36.8 12.7 Services Facility 141.5 1.3 142.9 143.6 1.5 145.0 -1.5 Services Renewable 19.3 0.1 19.4 19.8 0.1 19.8 -2.1 Energy Sources Eliminations -4.8 -4.8 -4.1 -4.1 -------------------------------------------------------------------------------- Total 329.2 0.0 329.2 327.5 0.0 327.5 0.5 12/2016 EUR million Extern Interdiv Total al ision ---------------------------------------- Environmental 261.2 3.6 264.8 Services Industrial 78.7 3.4 82.1 Services Facility 285.3 2.9 288.3 Services Renewable 36.6 0.2 36.8 Energy Sources Eliminations -10.1 -10.1 ---------------------------------------- Total 661.8 0.0 661.8
Operating profit
EUR million 4-6/ % 4-6/ % 1-6/ % 1-6/ % 1-12/ % 2017 2016 2017 2016 2016 -------------------------------------------------------------------------------- Environmental 7.7 11.5 9.2 13.5 13.7 10.5 14.6 11.3 31.3 11.8 Services Industrial Services 2.6 10.9 2.1 10.3 2.4 5.7 1.8 5.0 7.8 9.5 Facility Services 1.1 1.6 3.7 5.1 0.9 0.6 4.9 3.3 13.5 4.7 Renewable Energy 0.2 2.9 0.0 0.3 0.5 2.6 0.7 3.4 1.5 4.1 Sources Group -1.5 -1.0 -2.2 -1.1 -3.7 administration and other -------------------------------------------------------------------------------- Total 10.1 6.0 14.1 8.4 15.2 4.6 20.9 6.4 50.5 7.6
OTHER SEGMENT INFORMATION
EUR million 6/2017 6/2016 12/2016 ---------------------------------------------------------------------- Assets Environmental Services 215.2 222.3 215.4 Industrial Services 72.5 71.8 69.5 Facility Services 109.7 123.4 97.2 Renewable Energy Sources 21.3 21.3 23.5 Group administration and other 1.3 0.9 11.1 Unallocated assets 49.6 23.9 36.0 ---------------------------------------------------------------------- L&T total 469.5 463.6 452.8 Liabilities Environmental Services 48.8 54.6 54.7 Industrial Services 24.6 23.2 22.4 Facility Services 53.1 50.0 46.9 Renewable Energy Sources 5.9 5.9 7.0 Group administration and other 2.1 1.6 6.6 Unallocated liabilities 135.7 129.2 92.2 ---------------------------------------------------------------------- L&T total 270.4 264.5 229.8 EUR million 4-6/2017 4-6/2016 1-6/2017 1-6/201 1-12/2016 6 -------------------------------------------------------------------------------- Capital expenditure Environmental Services 6.0 5.3 11.5 9.4 18.5 Industrial Services 1.6 2.4 3.5 3.3 8.2 Facility Services 2.8 3.1 4.9 5.9 14.5 Renewable Energy Sources 0.1 0.0 0.1 0.1 0.3 Group administration and other 0.0 0.0 0.5 0.0 0.0 -------------------------------------------------------------------------------- L&T total 10.3 10.8 20.6 18.7 41.6 Depreciation and amortisation Environmental Services 4.8 4.9 9.6 9.9 19.6 Industrial Services 1.8 1.7 3.5 3.3 6.7 Facility Services 3.2 2.9 6.5 6.2 12.2 Renewable Energy Sources 0.1 0.1 0.2 0.1 0.3 Group administration and other 0.0 0.0 0.0 0.0 0.0 -------------------------------------------------------------------------------- L&T total 9.8 9.5 19.7 19.4 38.8
INCOME STATEMENT BY QUARTER
EUR million 4-6/2017 1-3/2017 10-12/201 7-9/2016 4-6/2016 6 -------------------------------------------------------------------------------- Net sales Environmental Services 67.4 62.9 66.5 68.2 68.2 Industrial Services 23.6 17.9 21.4 23.9 20.9 Facility Services 71.4 71.4 71.8 71.5 72.8 Renewable Energy Sources 7.3 12.1 11.6 5.3 7.0 Interdivision net sales -2.5 -2.3 -3.0 -2.9 -2.1 -------------------------------------------------------------------------------- L&T total 167.2 161.9 168.3 166.0 166.9 Operating profit Environmental Services 7.7 5.9 6.5 10.2 9.2 Industrial Services 2.6 -0.2 2.6 3.4 2.1 Facility Services 1.1 -0.3 2.6 6.1 3.7 Renewable Energy Sources 0.2 0.3 0.7 0.1 0.0 Group administration and -1.5 -0.6 -1.8 -0.7 -1.0 other -------------------------------------------------------------------------------- L&T total 10.1 5.1 10.5 19.1 14.1 Operating margin Environmental Services 11.5 9.4 9.7 14.9 13.5 Industrial Services 10.9 -1.1 11.9 14.2 10.3 Facility Services 1.6 -0.4 3.6 8.5 5.1 Renewable Energy Sources 2.9 2.4 6.2 2.0 0.3 -------------------------------------------------------------------------------- L&T total 6.0 3.2 6.2 11.5 8.4 Financial income and -0.7 0.1 0.1 -0.4 -0.2 expenses, net -------------------------------------------------------------------------------- Profit before tax 9.4 5.2 10.6 18.7 13.9
MATCHING THE EVA RESULT TO OPERATING PROFIT
EUR million 1-6/2017 1-6/2016 1-12/2016 -------------------------------------------------------------------------------- Operating profit 15.2 20.9 50.5 Invested capital (rolling 12-month quarterly 302.9 304.6 300.6 average) Cost calculated on invested capital -10.1 -10.0 -19.7 -------------------------------------------------------------------------------- EVA 5.1 10.9 30.7
BUSINESS ACQUISITIONS, COMBINED
Fair value, total EUR million 1-6/2017 1-6/2016 1-12/2016 -------------------------------------------------------------------------------- Intangible assets 0.6 1.1 1.1 Property, plant and equipment 1.0 1.8 1.8 Investments 0.0 0.0 0.0 Receivables 0.3 1.7 1.7 Cash and cash equivalents 1.0 2.3 2.3 -------------------------------------------------------------------------------- Total assets 2.9 6.9 6.9 Other liabilities 0.3 1.0 1.0 Deferred tax liabilities 0.0 0.0 0.0 -------------------------------------------------------------------------------- Total liabilities 0.3 1.0 1.0 Net assets acquired 2.6 5.9 5.9 Total consideration 4.1 8.8 8.8 Goodwill 1.5 2.9 2.9 Effect on cash flow Consideration paid in cash -4.1 -8.8 -8.8 Cash and cash equivalents of the acquired company 1.0 2.3 2.3 Paid in the previous year - 3.6 3.6 Unpaid - 1.0 1.0 -------------------------------------------------------------------------------- Cash flow from investing activities -3.2 -1.8 -1.8
CHANGES IN INTANGIBLE ASSETS
EUR million 1-6/2017 1-6/2016 1-12/2016 --------------------------------------------------------------------- Carrying amount at beginning of period 143.2 134.9 134.9 Business acquisitions 2.2 1.4 1.4 Other capital expenditure 3.6 5.0 9.2 Disposals 0.0 0.1 0.2 Depreciation and impairment -2.9 -2.3 -4.8 Transfers between items 0.0 2.6 2.7 Exchange differences -0.1 -0.2 -0.4 --------------------------------------------------------------------- Carrying amount at end of period 145.9 141.5 143.2
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 1-6/2017 1-6/2016 1-12/2016 --------------------------------------------------------------------- Carrying amount at beginning of period 156.1 161.5 161.5 Business acquisitions 0.0 0.8 0.8 Other capital expenditure 14.3 11.4 30.2 Disposals -0.9 -0.3 -0.7 Depreciation and impairment -16.9 -17.1 -34.0 Transfers between items 0.0 -2.6 -2.7 Exchange differences -0.2 0.5 1.0 --------------------------------------------------------------------- Carrying amount at end of period 152.5 154.2 156.1
CAPITAL COMMITMENTS
EUR million 6/2017 6/2016 12/2016 ------------------------------------------------------ Intangible assets 0.2 0.1 0.1 Property, plant and equipment 7.4 8.0 7.2 ------------------------------------------------------ Total 7.6 8.0 7.3
FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
EUR Loans Available Financial Derivativ Carrying Fair million and -for-sale liabilities es under amounts value 30 June other financial measured using hedge by hierarc 2017 receivab assets the effective accountin balance hy les interest method g sheet level item ------------------------------------------------------------------------ -------- Non-curre nt financia l assets Available 0.6 0.6 -for-sale investme nts Finance 0.6 0.6 3 lease receivab les Other 1.4 1.4 2 receivab les Current financia l assets Trade and 87.0 87.0 other receivab les Finance 0.8 0.8 lease receivab les Derivativ 0.7 0.7 e receivab les Cash and 40.2 40.2 cash equivale nts ------------------------------------------------------------------------ Total 130.0 0.6 0.7 131.2 financia l assets Non-curre nt financia l liabilit ies Borrowing 57.0 57.0 2 s Finance 9.9 9.9 lease payables Other 0.1 0.1 liabilit ies Current financia l liabilit ies Borrowing 42.6 42.6 s Finance 1.5 1.5 lease payables Trade and 66.5 66.5 other payables Derivativ 0.3 0.3 2 e liabilit ies ------------------------------------------------------------------------ Total 177.6 0.3 177.9 financia l liabilit ies
The fair values of balance sheet items do not differ significantly from the carrying values of balance sheet items.
EUR Loans Available Financial Derivativ Carrying Fair million and -for-sale liabilities es under amounts value 30 June other financial measured using hedge by hierarc 2016 receivab assets the effective accountin balance hy les interest method g sheet level item ------------------------------------------------------------------------ -------- Non-curre nt financia l assets Available 0.6 0.6 3 -for-sale investme nts Finance 1.6 1.6 2 lease receivab les Other 1.7 1.7 receivab les Current financia l assets Trade and 84.2 84.2 other receivab les Finance 1.0 1.0 lease receivab les Derivativ 0.2 0.2 e receivab les Cash and 16.3 16.3 cash equivale nts ------------------------------------------------------------------------ Total 104.8 0.6 0.2 105.5 financia l assets Non-curre nt financia l liabilit ies Borrowing 59.6 59.6 2 s Finance 1.4 1.4 lease receivab les Other 0.0 0.0 liabilit ies Current financia l liabilit ies Borrowing 42.6 42.6 s Finance 0.2 0.2 lease payables Trade and 67.0 67.0 other payables Derivativ 0.4 0.4 2 e liabilit ies ------------------------------------------------------------------------ Total 170.8 0.4 171.1 financia l liabilit ies
The fair values of balance sheet items do not differ significantly from the carrying values of balance sheet items.
CONTINGENT LIABILITIES
EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Securities for own commitments Mortgages on rights of tenancy 0.2 0.2 0.2 Company mortgages - 0.8 - Other securities 0.1 0.1 0.1 Bank guarantees required for environmental permits 10.4 10.2 10.9 Other securities are security deposits. Operating lease liabilities EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Maturity not later than one year 5.7 7.6 7.4 Maturity later than one year and not later than five 7.3 11.7 11.4 years Maturity later than five years 3.5 4.0 4.0 -------------------------------------------------------------------------------- Total 16.5 23.3 22.7 Liabilities associated with derivative agreements Interest rate swaps EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Nominal values of interest rate swaps Maturity not later than one year 61.6 - - Maturity later than one year and not later than five - - - years Maturity later than five years - - - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total 61.6 - - Fair value 0.7 - - Interest rate swaps EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Nominal values of interest rate swaps Maturity not later than one year 1.8 30.8 1.8 Maturity later than one year and not later than five 1.8 3.6 2.7 years Maturity later than five years 0.0 0.0 0.0 -------------------------------------------------------------------------------- Total 3.6 34.4 4.5 Fair value -0.1 -0.3 -0.1
The interest rate swaps are used for the hedging of cash flow related to floating rate loans, and hedge accounting under IAS 39 has been applied to them. The hedges have been effective, and the changes in their fair values are shown on the consolidated statement of comprehensive income for the period. The fair values of the swap contracts are based on the market data at the end of the review period.
Commodity derivatives
EUR million 6/2017 6/2016 12/2016 -------------------------------------------------------------------------------- Nominal values of diesel swaps Maturity not later than one year 1.3 1.2 1.3 Maturity later than one year and not later than five 0.0 0.0 0.0 years -------------------------------------------------------------------------------- Total 1.3 1.2 1.3 Fair value -0.1 0.1 0.3
Commodity derivative contracts were signed for the hedging of future diesel oil purchases. IAS 39-compliant hedge accounting is applied to these contracts, and the effective change in fair value is recognised in the hedging reserve within equity. The fair values of commodity derivatives are based on market prices on the balance sheet date.
CALCULATION OF KEY FIGURES
Earnings per share: profit attributable to equity holders of the parent company / adjusted average basic number of shares
Diluted earnings per share: profit attributable to equity holders of the parent company / adjusted average diluted number of shares
Cash flow from operating activities/share: cash flow from operating activities as in the statement of cash flow / adjusted average basic number of shares
EVA: operating profit - cost calculated on invested capital (average of four quarters) WACC 2017: 6.69% and 2016: 6.56%
Equity per share: profit 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 invested capital, % (ROI): (profit before tax + financial expenses) / (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
Helsinki, 2 August 2017
LASSILA & TIKANOJA PLC Board of Directors
Pekka Ojanpää President and CEO
Additional information: Pekka Ojanpää, President and CEO, tel. +358 10 636 2810 Timo Leinonen, CFO, tel. +358 400 793 073
Lassila & Tikanoja is a service company that is transforming consumer society into an efficient recycling society. In co-operation with our customers, we are reducing waste volumes, extending the useful lives of properties, recovering materials and decreasing the use of raw materials and energy. We help our customers to focus on their core business and protect the environment. Together, we create well-being and jobs. With operations in Finland, Sweden and Russia, L&T employs 8,000 persons. Net sales in 2016 amounted to EUR 661.8 million. L&T is listed on Nasdaq Helsinki.
Distribution: Nasdaq Helsinki Major media www.lassila-tikanoja.com
Attachment:
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