LEMMINKÄINEN CORPORATION STOCK EXCHANGE BULLETIN 15.2.2007 9:00
LEMMINKÄINENS FINANCIAL STATEMENT BULLETIN 2006: Significant
growth in earnings
- Net sales were EUR 1 795.9 million (1 601.7), growth 12.1 %
- Operations abroad generated net sales EUR 530.3 million (499.6), growth 6.2 %
- The operating profit was EUR 108.1 million (72.5), growth 49.1 %
- The profit before taxes was EUR 94.2 million (65.9), growth 42.9 %
- The operating margin was 6.0 % (4.5)
- The return on investment was 20.6 % (16.5) and the return on equity 30.2 % (24.5)
- The equity ratio was 31.2 % (31.0) and gearing 105.7 % (102.9)
- The Companys order book at the end of the accounting
period was EUR 1 326.7 million (1 011.3), growth 31.2 %
- Earnings per share were EUR 3.87 (2.57), growth 50.6 %
- The Board of Directors proposes a dividend of EUR 1.50 (1.00)
A SUCCESSFUL YEAR 2006
Lemminkäinens result in 2006 was one of the best in the Groups
history. Both the profit for the accounting period and earnings
per share were up more than 50 % on the previous year.
The biggest improvements in profits were made by Lemminkäinens
building contractor, the Palmberg Group, and the Paving and
Mineral Aggregates Division. This favourable trend was influenced
by the healthy state of the construction market, growth of the
Groups housing production, and the unusually long asphalt paving
season. The Building Materials Division continued with measures
aimed at boosting profitability, and there was a marked
improvements in the Divisions result. Lemcon reinforced its
position as a major rock engineering project contractor.
Operations abroad accounted for almost one third of Lemminkäinen
Groups total net sales.
FAVOURABLE OUTLOOK FOR 2007
Lemminkäinens strong order book and the positive outlook for the
construction market create good prerequisites for the favourable
development of the Companys business in 2007.
Lemminkäinen derives about a half of its net sales from building
construction, which is expected to remain brisk. In civil
engineering, the state of the rock engineering market in
particular is likely to remain good, which will boost demand for
Lemcons services. The Baltic states and Russia are potential
growth areas for asphalt paving. In Finland, however, competition
for asphalt paving contracts is likely to remain intense. Strong
demand for refurbishment contracting and the outsourcing of
property-related functions by companies will fuel demand for
Tekmannis technical building and facility services.
ANNUAL GENERAL MEETING, DIVIDEND AND FINANCIAL INFORMATION 2007
Lemminkäinen Corporations Annual General Meeting will be held at
3.00 p.m. on Friday, 16 March 2007 at the Hotel Palace, 10th
floor, Eteläranta 10, 00130 Helsinki.
The Board of Directors will propose to the Annual General Meeting
that the Company pay a dividend of EUR 1.50 (1,00) per share for
the 2006 accounting period, i.e. a total of EUR 25,531,875.00
(17,021,250.00). The dividend will be paid to all those included
on the list of shareholders kept by the Finnish Central Securities
Depository on the record date, 21 March 2007. The dividend will be
paid on 28 March 2007.
The Annual Report 2006 will be published in Finnish and English in
week 10/2007. The interim financial reviews will be published on
10 May, 9 August and 8 November 2007.
The stock exchange bulletins by Lemminkäinen Corporation in 2006
can be reviewed on the companys website at www.lemminkainen.fi.
LEMMINKÄINEN CORPORATION
Juhani Sormaala
Managing Director
Additional information:
Juhani Sormaala, Managing Director, tel. +358 2071 53302
Jukka Ovaska, Finance Director, tel. +358 2071 53334
Katri Sundström, Investor Relations Manager, tel. +358 2071 54813
PRESENTATION OF LEMMINKÄINEN GROUPS FULL-YEAR FINANCIAL STATEMENTS
Lemminkäinen will present its full-year financial statements to
investors, analysts and members of the press at 1:30 p.m. on 15
February 2007. The venue will be Ravintola Sipuli, Kanavaranta 7,
Helsinki, Finland. Those wishing to attend are cordially invited
to register in advance by phone +358 2071 54813 or e-mail
katri.sundstrom@lemminkainen.fi. The presentation material
concerning the financial statements will be available after the
event on the companys website at www.lemminkainen.fi.
APPENDICES:
Board of Directors Report 1.1.31.12.2006
Tabulated section of the financial statements
Distribution: Helsinki Stock Exchange, key media
BOARD OF DIRECTORS REPORT 1.1. 31.12.2006
CONSTRUCTION MARKET
The Finnish construction market continued to develop favourably in
2006, and the total volume of construction rose by about 4.5 %.
The outlook for the construction sector is still good, although
growth is expected to slow down slightly in 2007. The housing
market remained brisk despite the rise in interest rates, and
about 34 500 new housing starts were made.
Commercial construction remained brisk and there was a marked
recovery in office construction, especially in the Helsinki
metropolitan area. A number of logistics centres were built. The
outlook for civil engineering will continue to be good for some
years thanks to road construction investments. The timing of
paving works in some major road contracts is such that they will
not be carried out until after 2007.
The international markets relevant to Lemminkäinen developed
favourably. Finnish industrys increased investments in China,
India, Russia and Eastern European countries boosted demand for
Lemminkäinens services. The road construction market in the
Baltic states grew with the aid of EU funding. The market area
exhibiting the fastest growth in telecommunications network
construction was South America.
GROUP NET SALES, EARNINGS AND BALANCE SHEET
Lemminkäinen Groups net sales rose 12.1 % to EUR 1 795.9 million
(1 601.7). The Group generated 70 % of its net sales in Finland,
14 % in other Nordic countries, 6 % in Russia and Eastern Europe,
6 % in the Baltic states, and 4 % in other countries.
The Groups operating profit rose 49.1 % to EUR 108.1 million
(72.5). The operating margin improved and was 6.0 % (4.5).
Earnings per share were up over 50 % at EUR 3.87 (2.57).
The return on investment was 20.6 % (16.5) and the return on
equity 30.2 % (24.5). The equity ratio was 31.2 % (31.0).
The companys liquid funds at the end of the accounting period
were EUR 60.6 million (42.4) and interest-bearing liabilities
totalled EUR 343.6 million (264.0). Gearing was 105.7 % (102.9).
Groups key figures, 2006 2005 2004
EUR million
Net sales, of which 1 795.9 1 601.7 1 431.3
operations abroad 530.3 499.6 358.6
Operating profit 108.1 72.5 63.9
Operating margin, % 6.0 4.5 4.5
Profit before taxes 94.2 65.9 55.1
Profit for accounting period 72.9 48.5 40.4
Profit share of parent
companys shareholders 65.8 43.7 37.4
Earnings per share, EUR 3.87 2.57 2.20
Dividend per share, EUR 1.50(1 1.00 0.60
Return on investment, % 20.6 16.5 14.8
Return on equity, % 30.2 24.5 21.9
Equity ratio, % 31.2 31.0 27.5
Gearing, % 105.7 102.9 132.4
Liquid funds 60.6 42.4 39.9
Interest-bearing liabilities 343.6 264.0 279.5
1) Board of Directors proposal to the AGM
BUSINESS SECTORS
Paving and Mineral Aggregates Division
The net sales of the Paving and Mineral Aggregates Division rose
8.6 % to EUR 559.0 million (514.7). The Division generated 50 % of
its net sales in Finland, 30 % in other Nordic countries, and 20 %
in the Baltic states and Russia.
The Divisions operating profit rose 47.8 % to EUR 30.3 million
(20.5). The order book grew 42.2 % and at the end of the
accounting period it was EUR 185.1 million (130.2), of which
operations abroad accounted for EUR 129.8 million (71.1).
Paving and Mineral 2006 2005 2004
Aggregates Division,
EUR million
Net sales, of which 559.0 514.7 430.4
operations abroad 276.6 239.9 190.6
Operating profit 30.3 20.5 18.4
Operating margin, % 5.4 4.0 4.3
Order book at end of period 185.1 130.2 124.7
Personnel (average) 2 839 2 673 2 553
In Finland the paving season continued until the end of the year
due to the mild winter. The total volume of paving work declined
by about 10 % and it is not expected to rise in 2007. Competition
in Finland will remain intense and profitability in the industry
generally will be quite weak.
In other Nordic countries the volume of paving work will remain
roughly at the 2005 level. Demand remained strong in the Baltic
states, which is one of Lemminkäinens most important asphalt
paving markets.
A total of 5.3 (5.5) million tonnes of asphalt was produced, 2.5
(2.8) million tonnes in Finland and 2.8 (2.7) million tonnes
abroad.
In Finland the rise in costs of asphalt paving work was much
slower than in the previous year, which was influenced by the
lower prices of raw materials, especially bitumen. The price level
of asphalt paving contracts in Finland and Sweden is quite low,
but higher in Norway and Denmark.
Brisk building construction and major on-going infrastructure
projects sustained demand for mineral aggregate as a good level.
The net sales of Forssan Betoni, Lemminkäinens ready-mix concrete
producer, were also clearly higher than in the previous year.
In spring 2006 the quality of the ready-mix concrete delivered by
Forssan Betoni to the construction site at Olkiluoto nuclear power
plant became a topic of public debate. Subsequent investigations
revealed that the concrete satisfied all the set quality
requirements.
Building Materials Division
The net sales of the Building Materials Division were EUR 104.4
million (100.3). The Division generated 7 % of its net sales
abroad, mainly in Sweden and Eastern Europe. The Divisions
operating profit was much improved at EUR 4.0 million (0.6). The
order book grew 76 %.
Building Materials Division, 2006 2005 2004
EUR million
Net sales, of which 104.4 100.3 95.7
operations abroad 7.7 6.4 6.7
Operating profit 4.0 0.6 3.1
Operating margin, % 3.9 0.6 3.3
Order book at end of period 23.4 13.3 12.5
Personnel (average) 609 617 603
There was a marked improvement in the Building Materials
Divisions profitability in 2006 as a result of earlier
interventions. These included product range renewals and the
development of business systems. The pick-up in office
construction increased the Divisions production of precast
concrete staircase units. In roofing contracting the set targets
were achieved even though the price level of roofing materials
remained low. Demand for urban environment contracting remained
good and investments in the new construction and refurbishment of
sports and exercise facilities continued.
On 31 May 2006 Lemminkäinen Betonituote Oy acquired RK-
Betoniporras Oy and the precast concrete staircase operations of
Suonenjoen Sementtituote Oy. The combined net sales of these
acquisitions is about EUR 3.5 million.
Lemcon Ltd
Lemcons net sales rose to EUR 344.0 million (328.8). The company
generated 44 % of its net sales in Finland, 27 % in Russia and
Eastern Europe, 10 % in other Nordic countries, 13 % in North and
South America and 6 % in other countries.
The companys operating profit was EUR 12.5 million (15.3) and the
profit before taxes EUR 11.1 million (16.7). The order book was
EUR 361.9 million (439.5), of which operations abroad accounted
for 48.1 %.
Lemcon Ltd, 2006 2005 2004
EUR million
Net sales, of which 344.0 328.8 264.5
operations abroad 191.6 210.6 139.4
Operating profit 12.5 15.3 11.1
Operating margin, % 3.6 4.6 4.2
Profit before taxes 11.1 16.7 11.3
Order book at end of period 361.9 439.5 239.1
Personnel (average) 993 893 556
There was significant growth in Lemcons infrastructure building
operations in 2006 and the market situation is expected to remain
favourable also in the future. In Sweden the company has firmly
established itself as a major rock engineering project contractor.
Lemcons project management operations in Finland remained stable
in commercial and office construction building. Abroad, the main
focus was on industrial construction. In China and Russia Lemcon
strives to participate actively in plant building projects of
Finnish industry. In Tallinn, Estonia, the company acquired
building plots for its own housing production. India, Romania,
Bulgaria and Ukraine are expected to generate new business growth
in the future.
Lemcon Networks net sales grew and the company expanded its
operations, especially in South America. The company is further
developing its ability to operate in countries where the number of
mobile phone users is expected to grow.
In spring 2006 IKEA announced that it was terminating the contract
made with Lemcon concerning the construction of the MEGA shopping
centre in St. Petersburg. The contract was worth EUR 92 million.
There are no legal grounds for the contract termination and
proceedings have started at the court of arbitration in Stockholm.
Oy Alfred A. Palmberg Ab
Palmberg had a good year in 2006. The companys net sales rose by
almost a quarter to EUR 637.5 million (517.3), of which 7 % was
generated in Sweden. Both operating profit and profit before taxes
were up over 80 % on the previous year. Palmbergs order book at
the end of the accounting period had almost doubled in size
compared with the previous year.
Oy Alfred A. Palmberg Ab, 2006 2005 2004
EUR million
Net sales, of which 637.5 517.3 486.4
operations abroad 45.4 30.8 18.6
Operating profit 52.4 28.3 29.2
Operating margin, % 8.2 5.5 6.0
Profit before taxes 46.0 25.2 26.0
Order book at end of period 681.5 366.9 334.3
Personnel (average) 2 165 1 984 1 890
Building construction continued to grow in 2006 and the trend is
expected to remain unchanged in the future too. The growth is
being sustained by brisk commercial construction and a marked
recovery in office construction. The production of logistics
facilities has also increased. About 34 500 new housing starts
were made in Finland.
Palmbergs regional subsidiaries increased their housing
production significantly. At the end of the accounting period the
company had 1 698 (1 313) private-sector housing units under
construction. Palmbergs own housing and commercial developments
account for about a half of the companys business.
Palmbergs strong order book and the positive outlook for building
construction create good prerequisites for the companys
favourable development in 2007. The biggest obstacle to new
building production is the shortage of skilled labour, foremen in
particular. Building plots, especially in larger towns and cities,
are in short supply.
Palmbergs private-sector 2006 2005 2004
housing production
Housing starts 1 558 1 249 1 010
Housing units sold 1 156 1 258 997
Unsold completed units 83 74 89
Completed 1 173 1 068 948
Under construction at 31.12.2006 1 698 1 313 1 132
At the end of the review period Palmberg owned a total of 749 000
m2 of unused building rights, of which about 483 000 m2 were
residential building rights. The company also has conditional co-
operation and zoning agreements for about 550,000 m2, of which
about 326,000 m2 are residential building rights. Market
conditions permitting, the company has the possibility to increase
its housing production thanks to its good stock of building plots.
At the present rate of production the company owns enough unused
building rights to meet its needs for about four years.
Tekmanni Oy
Tekmannis net sales were EUR 191.7 million (191.1), of which 5 %
was generated abroad, mainly in Sweden and Russia. The operating
profit was EUR 6.9 million (6.8) and the profit before taxes EUR
7.8 million (7.4). The companys order book grew by over a fifth.
Tekmanni Oy, 2006 2005 2004
EUR million
Net sales, of which 191.7 191.1 198.3
operations abroad 9.6 11.8 3.3
Operating profit 6.9 6.8 2.2
Operating margin, % 3.6 3.5 1.1
Profit before taxes 7.8 7.4 2.6
Order book at end of period 74.9 61.5 72.7
Personnel (average) 1 812 1 745 1 877
Tekmannis performance in the first half of the year was adversely
impacted by reduced business volume and increased material costs.
However, the establishment of renewed management and business
systems started to show up positively in the companys result in
the second half of the year.
In technical building services demand for maintenance, servicing
and repair work remained strong in 2006. The continued outsourcing
of property-related functions by companies fuelled demand for the
services of Tekmanni Service, and growth is expected to continue
in the coming years too.
With growing demand for plumbing modernisation work in apartment
buildings, Tekmanni strengthened its expertise in this area by
acquiring a majority interest in the Oulu-based HVAC firm Oulun
LVI-Ykkönen Oy in September 2006. The operations of Tekmannis
technical building service units in Seinäjoki, Vaasa and Kokkola
were transferred to a new subsidiary, Tekmanni Pohjanmaa Oy, in
October 2006.
GROUPS ORDER BOOK
The Groups order book grew by almost a third to EUR 1 326.7
million (1 011.3). The market breakdown of the order book was
Finland 75 %, other Nordic countries 12 %, the Baltic states 5 %,
Russia and Eastern Europe 5 %, and other countries 3 %.
Order book by business sector, 2006 2005 2004
EUR million
Paving and Mineral Aggregates
Division 185.1 130.2 124.7
Building Materials Division 23.4 13.3 12.5
Lemcon Ltd 361.9 439.5 239.1
Oy Alfred A. Palmberg Ab 681.5 366.9 334.3
Tekmanni Oy 74.9 61.5 72.7
Group total, of which 1 326.7 1 011.3 783.4
international orders 331.8 343.4 244.6
Significant orders received in 2006
Palmberg is building a new office building complex in the
Salmisaari district of Helsinki. Lemminkäinens own head office
will be relocated to the site in 2009. The premises will be leased
from the developer, Varma Mutual Pension Insurance Company. The
contract is worth approx. EUR 100 million. (Bulletin 28.4.2006)
Palmberg and Fennia Mutual Insurance Company signed a contract for
the construction of two office buildings in West Pasila. The
contract is worth about EUR 50 million. (Bulletin 11.4.2006)
Oka Oy, a subsidiary of Palmberg, is building a shopping centre in
downtown Lappeenranta. The project also includes office space, a
parking facility and apartments. The total value of the contract
is approx. EUR 41 million.
Oka Oy is also building a logistics centre for Tokmanni Oy in
Mäntsälä. The contract is worth approx. EUR 40 million. (Bulletin
29.11.2006).
Palmberg-Rakennus Oy signed an agreement to build two new Sokos
hotels, one at Levi in the municipality of Kittilä and the other
at Vuokatti in the municipality of Sotkamo. The combined value of
the projects is approx. EUR 27 million. (Bulletin 5.10.2006)
Lemcon Ltd signed a project management contract concerning the
construction of a maritime museum centre in Kotka. The contract is
worth EUR 26.3 million. (Bulletin 9.6.2006)
The Finnish Road Administrations VUOLI Project and Lemcon Ltd
signed a contract concerning the fitting out of a railway tunnel
at Vuosaari Harbour. The contract is worth approx. EUR 23 million.
Bulletin 26.10.2006)
Lemcon Ltd has signed an agreement with the City of Helsinki
concerning excavation and reinforcement works on the eastern part
of the city centres underground service tunnel. The contract is
worth EUR 21.7 million. (Bulletin 13.6.2006)
Lemcon Ltd signed a contract with the Russian subsidiary of Stora
Enso Packaging Oy concerning the construction of corrugated board
mill in Russia. The contract is worth EUR 20.1 million. (Bulletin
14.9.2006)
Significant orders received after the 2006 accounting period
Lemcon Ltd has been awarded a tunnel construction contract worth
EUR 43 million in Sweden. The new railway tunnel will be built for
Banverket Central Region on the Ådalsbana line. (Bulletin
10.1.2007)
Lemcon Oy has signed a project management agreement with Nokia
concerning the construction of a logistics centre in India. The
contract is worth EUR 17 million. (Bulletin 8.1.2007)
FINANCING
According to the source and application of funds statement, the
cash flow from operating activities was EUR 7.2 million (59.5),
the cash flow from investing activities EUR 14.4 million
(-18.3) and the cash flow from financing activities EUR 40.4
million (-39.3). The cash flow for the accounting period includes
dividends totalling EUR 18.5 million (11.1) for 2005.
Interest-bearing liabilities at the end of the accounting period
were EUR 343.6 million (264.0) and liquid funds were EUR 60.6
million (42.4). Interest-bearing net debt was EUR 283.0 million
(221.6). The change in interest-bearing net debt was EUR 61.3
million.
Net financing expenses were EUR 14.9 million (7.7), representing
0.8 % (0.5) of net sales. The equity ratio was 31.2 % (31.0) and
gearing 105.7 % (102.9).
The changes in cash flows and net debt stem from the larger
dividend pay-out, the increase in business volume, as well as
changes in project financing and an increase in the trade
receivables pertaining to them. Receivables from IKEA are a
significant item included in the change in project financing.
SHARES AND SHARE CAPITAL
The listed price of Lemminkäinen Corporations share was EUR 36.10
(30.50)at the end of the accounting period. The shares highest
listed price during 2006 was EUR 39.34 (30.61) and its lowest EUR
28.38 (15.75). The mean share price was EUR 34.00 (21.74). The
market capitalisation at the end of the accounting period was EUR
614.5 million (519.1). Altogether 4 113 868 shares (4 610 443)
worth EUR 139.9 million (100.2) were traded in 2006. At the end of
the year the Company had 3 535 (3 116) shareholders.
Lemminkäinens share capital is EUR 34 042 500 and the shares
nominal value is EUR 2. The company has one share series and the
total number of issued shares is 17 021 250.
INVESTMENTS
Investments in the accounting period amounted to EUR 48.7 million
(37.4). The investments were mainly purchases of paving, crushing
and excavation equipment, production plant for building materials,
and building construction equipment. The investments also include
some fairly small acquisitions of businesses and enterprises.
PERSONNEL
The average number of employees in the Group over the accounting
period was 8 418 (7 912), of whom 73 % worked in Finland, 11 % in
other Nordic countries, 10 % in the Baltic states and 6 % in other
countries.
Personnel(average) 2006 2005 2004
Hourly paid workers 5 480 5 162 5 112
Salaried staff 2 938 2 750 2 367
Total personnel, of whom 8 418 7 912 7 479
working abroad 2 235 1 965 1 623
Personnel at end of period 8 087 7 112 6 783
Total wages, salaries and other
rewards for the accounting
period, EUR million 288.0 268.5 250.9
GROUP STRUCTURE
At the beginning of 2006 the roofing and concrete products
businesses of the Building Materials Division were transferred to
two new subsidiaries: Lemminkäinen Katto Oy and Lemminkäinen
Betonituote Oy. The new companies together with Omni-Sica Oy still
constitute the Building Materials Division.
At the end of 2006 Lemminkäinen Corporation sold Tielinja Oy, the
Paving and Mineral Aggregates Divisions specialist road-marking
subsidiary, to Elfving Opasteet Oy. The net sales of Tielinja Oy
were EUR 7.5 million in 2005.
RESEARCH AND DEVELOPMENT
Lemminkäinens research and development work focuses on the
company´s development of operational prerequisites and the quality
assurance of products and services. Taking account of safety
issues and environmental effects are important principles of
Lemminkäinens development work. Products and services are
developed in long-term collaboration with customers.
The Groups business units and subsidiaries are responsible for
their own research and development activities. Lemminkäinens
Central Laboratory carries out R&D at Group level. In 2006 the
Groups research and development expenditure represented for 0.4 %
of net sales.
RISK MANAGEMENT
The purpose of Lemminkäinens risk management is to identify and
draw attention to business-related risks, and to ensure that risks
are managed and monitored systematically. Effective risk
management helps to ensure business continuity and the achievement
of set goals. Lemminkäinens business risks are divided into six
categories: market risks, project risks, financing risks, credit
loss risks, environmental risks, and accidents and damage.
Lemminkäinen has specified the measures necessary to control its
most significant known risks.
The differing cyclical behaviour of Lemminkäinens business
sectors represents the strategic cornerstone its group structure.
For example, cyclical sensitivity to domestic new construction a
typical risk in the construction sector is counterbalanced by
international operations and refurbishment contracting.
Lemminkäinens operations abroad generate one third of net sales,
and refurbishment contracting accounts for about 40 % of the
Groups business.
Quite small contract sizes are typical of Lemminkainens business.
The net sales generated annually from even the biggest of
Lemminkäinens contracts will generally not exceed 5 % of the
Group total in any given year. This means that the failure of an
individual contract cannot have a major impact on the Groups
result.
Lemminkäinen employs derivative contracts to hedge against price
rises of raw materials such as bitumen. Moreover, in the asphalt
paving business, fluctuations in raw material prices are passed on
directly and quite quickly in the final prices of asphalt
pavements.
All significant corporate or business acquisitions are evaluated
critically from the perspectives of their cash flow and impact on
the balance sheet. The maturities of seasonal credit stemming from
the nature of Lemminkäinens business are short, while those of
other borrowings are mostly long. Lemminkäinen hedges against
interest rate and foreign exchange risks in the conventional ways.
More detailed information on Lemminkäinens risk management can be
found in the Annual Report and on the companys website.
FCAs ALLEGATIONS CONCERNING THE ASPHALT PAVING AND BITUMINOUS
ROOFING INDUSTRIES
In March 2004 the Finnish Competition Authority (FCA) proposed to
the Market Court that a sanction of EUR 68 million should be
imposed on Lemminkäinen in connection with the operation of an
alleged cartel in the asphalt paving industry. In its rejoinder
submitted to the Market Court, Lemminkäinen denied the FCAs
allegations as being unfounded in all respects and called for the
Market Court to dismiss the FCAs sanction proposal in its
entirety. The Market Court has expected to pronounce its judgement
during the spring of 2007. The parties will have an opportunity to
appeal the Market Courts decision to the Supreme Administrative
Court.
In March 2006 the FCA sent companies of the bituminous roofing
industry a copy of its draft proposal to the Market Court for
comment. The draft proposal alleges that prohibited exchanges of
information took place on the bituminous roofing market during the
years 1996-2002. The amount of the fine sought by the FCA is not
specified in the document. Having studied the draft proposal,
Lemminkäinen has made it clear in its response to the FCA that the
companys activities have been in compliance with the competition
regulations.
ENVIRONMENT
Lemminkäinen Group takes account of life cycle and environmental
perspectives when developing its operations, products and
services.
The Group performs risk assessments on the environmental effects
of its activities. The risks relate mainly to oil storage and
handling, waste management and production plant emissions. The
service lives and environmental effects of concrete and concrete-
based products are assessed in studies which clarify the
environmental effects of the products over their entire life
cycles.
More detailed information on Lemminkäinens environmental affairs
can be found in the Annual Report and on the companys website.
DECISIONS OF THE ANNUAL GENERAL MEETING AND CORPORATE GOVERNANCE
The Annual General Meeting of Lemminkäinen Corporation held on 17
March 2006 adopted the 2005 annual financial statements and
granted the Board of Directors and the Managing Director freedom
from responsibility. In accordance with the Board of Directors
proposal, the Annual General Meeting decided to pay a dividend of
EUR 1.00 per share, i.e. a total dividend of EUR 17 021 250.00.
The record date of the dividend payment was 22 March 2006 and the
date of dividend payment was 29 March 2006.
Messrs. Berndt Brunow, Erkki J. Pentti, Heikki Pentti, Teppo
Taberman and Sakari Tamminen were elected to serve as members of
the Company's Board of Directors. The Board of Directors elected
Heikki Pentti to serve as the Chairman and Teppo Taberman to serve
as the Vice Chairman. PricewaterhouseCoopers Oy, a firm of
authorised public accountants, was elected to serve as the
Companys auditors, with Mr. Jan Holmberg, A.P.A. acting as the
auditor in charge.
Mr. Erkki J. Pentti, long-serving member of the Board of Directors
and significant shareholder of Lemminkäinen, passed away on 26
December 2006 after a serious illness. Erkki J. Pentti had served
as a member of the Board of Directors since 1975. Lemminkäinens
Board of Directors will consist of four members until the next
Annual General Meeting is convened on 16 March 2007.
The Board of Directors has chosen from among its members a
Nominating Committee, an Audit Committee, and a Remuneration and
Appointments Committee. The committees assist the Board of
Directors by preparing pertinent matters for the Boards
consideration.
The role of the Nominating Committee is to prepare for the Annual
General Meeting a proposal on the number of members of the Board
of Directors as well as the names of the members and the
remuneration that should be paid to them. The Chairman of the
Nominating Committee will be Mr. Berndt Brunow, with Messrs. Teppo
Taberman and Sakari Tamminen serving as committee members.
The role of the Board of Directors Audit Committee is to
scrutinise the contents of the full-year financial statements and
interim financial reviews as well as the companys internal audit
and control systems. The meetings of the Audit Committee shall be
attended by the Companys Auditor and Internal Auditor as well as
management representatives as and when necessary. The Chairman of
the Audit Committee is Mr. Sakari Tamminen, with Messrs. Berndt
Brunow Teppo Taberman and Heikki Pentti serving as committee
members.
The Remuneration and Appointments Committee deals with matters
relating to the appointment of senior executives as well as their
pay, rewards and benefits. Final decisions are made by the Board
of Directors on the basis of the Committees proposals. The
Chairman of the Remuneration and Appointments Committee is Mr.
Heikki Pentti, with Messrs. Berndt Brunow and Teppo Taberman
serving as committee members.
All members of the Board of Directors may take part in the
meetings of the Remuneration and Appointments Committee and the
Audit Committee.
The Managing Director of Lemminkäinen Corporation is Mr. Juhani
Sormaala.
STRATEGY REVISED AFTER THE ACCOUNTING PERIOD
The Groups business strategy and strategic target levels have
been revised. The strategic objectives are still profitable growth
and the maintenance of good solvency. Good profitability is
regarded as a long-term average return on investment exceeding 18
%, and good solvency as an equity ratio exceeding 35 %.
Additional information on the strategy will be provided in a
separate stock exchange bulletin and on the companys website.
FAVOURABLE OUTLOOK FOR 2007
Lemminkäinens strong order book and the positive outlook for the
construction market create good prerequisites for the favourable
development of the Companys business in 2007.
Lemminkäinen derives about a half of its net sales from building
construction, which is expected to remain brisk. In civil
engineering, the state of the rock engineering market in
particular is likely to remain good, which will boost demand for
Lemcons services. The Baltic states and Russia are potential
growth areas for asphalt paving. In Finland, however, competition
for asphalt paving contracts is likely to remain intense. Strong
demand for refurbishment contracting and the outsourcing of
property-related functions by companies will fuel demand for
Tekmannis technical building and facility services.
BOARD OF DIRECTORS PROPOSAL FOR THE APPROPRIATION OF RETAINED
EARNINGS
The distributable shareholders equity shown on the consolidated
balance sheet amounts to EUR 190 534 248.21. The distributable
shareholders equity shown on the balance sheet of the parent
company, Lemminkäinen Corporation, at 31 December 2006 amounts to
EUR 70 959 134.51, consisting of EUR 61 358 513.76 in retained
earnings from previous years and EUR 9 600 620.75 in profit for
the accounting period.
The Board of Directors will propose to the Annual General Meeting
that the Company pay a dividend of EUR 1.50 per share for the 2006
accounting period, i.e. a total of EUR 25,531,875.00, after which
retained earnings would stand at EUR 45,427,259.51.
Helsinki, 14 February 2007
LEMMINKÄINEN CORPORATION
Board of Directors
TABULATED SECTION OF THE FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
The financial statements for the 2006 accounting period have been
prepared in accordance with IFRS measurement and recognition
principles.
FINANCIAL STATEMENTS AND OTHER TABULATED INFORMATION
1) Consolidated income statement
2) Consolidated income statement, quarterly
3) Net sales by business sector
4) Net sales by business sector, quarterly
5) Operating profit by business sector
6) Operating profit/loss by business sector, quarterly
7) Consolidated balance sheet
8) Statement of changes in equity
9) Statement of source and application of funds
10) Economic trends and financial indicators
11) Share-specific indicators
12) Guarantees and contingent liabilities
CONSOLIDATED INCOME STATEMENT
EUR million 2006 2005 Change Change,
%
Net sales 1 795.9 1 601.7 194.2 12.1
Operating income
and expenses -1 652.9 -1 495.3 -157.6 -10.5
Depreciation -35.0 -34.0 -1.0 -2.9
Operating profit 108.1 72.5 35.6 49.1
Financial expenses -18.2 -11.5 -6.7 -58.3
Financial income 3.3 3.8 -0.5 -13.2
Share of the
profits/losses
of affiliated companies 1.1 1.1 0.0 0.0
Profit before taxes 94.2 65.9 28.3 42.9
Income taxes -21.3 -17.4 -3.9 -22.4
Profit for the
accounting period 72.9 48.5 24.4 50.3
Distribution of the profit
for the accounting period
To shareholders of
the parent company 65.8 43.7 22.1 50.6
To minority
interests 7.1 4.7 2.4 51.1
EPS calculated from profit/loss attributable
to parent company shareholders, EUR
Earnings per share, EUR 3.87 2.57
Earnings per share, EUR,
diluted 3.87 2.57
CONSOLIDATED INCOME STATEMENT, QUARTERLY
4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
EUR million 2005 2005 2005 2006 2006 2006 2006
Net sales 424.3 516.7 429.5 303.5 427.8 573.9 490.8
Operating income
and expenses -396.9 -454.4 -406.8 -305.3 -392.8 -505.4 -449.4
Depreciation -8.9 -12.7 -7.4 -5.0 -9.2 -12.8 -8.0
Operating
profit/loss 18.5 49.6 15.3 -6.8 25.8 55.7 33.4
Financial
expenses -3.5 -2.7 -2.7 -2.7 -5.2 -4.6 -5.7
Financial
income 1.2 0.9 0.9 0.8 0.0 0.4 2.1
Share of the
profits/losses
of affiliated
companies 0.3 0.8 0.0 -0.3 0.2 0.8 0.5
Profit/loss
before taxes 16.4 48.7 13.5 -9.1 20.7 52.3 30.3
Income taxes -4.2 -13.0 -3.4 1.7 -4.8 -12.1 -6.1
Profit/loss for the
accounting
period 12.2 35.7 10.1 -7.3 15.9 40.1 24.2
Distribution of the profit/loss for the
accounting period
To the
shareholders
of the parent
company 11.3 34.1 9.2 -8.3 13.6 38.4 22.1
To minority
interests 0.9 1.6 0.9 1.0 2.4 1.7 2.1
EPS calculated from profit/loss attributable
to parent company shareholders, EUR
Earnings per
share, EUR 0.66 2.00 0.54 -0.49 0.80 2.26 1.30
Earnings per
share, EUR,
diluted 0.66 2.00 0.54 -0.49 0.80 2.26 1.30
NET SALES BY BUSINESS SECTOR
EUR million 2006 2005 Change Change,
%
Lemminkäinen Corporation
Paving and Mineral
Aggregates Division 559.0 514.7 44.3 8.6
Building Materials Division 104.4 100.3 4.1 4.1
Lemcon Ltd 344.0 328.8 15.2 4.6
Oy Alfred A. Palmberg Ab 637.5 517.3 120.2 23.2
Tekmanni Oy 191.7 191.1 0.6 0.3
Others -40.7 -50.4 9.7 19.2
Group total 1 795.9 1 601.7 194.2 12.1
NET SALES BY BUSINESS SECTOR, QUARTERLY
4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
EUR million 2005 2005 2005 2006 2006 2006 2006
Lemminkäinen Corporation
Paving
and Mineral
Aggregates
Division 140.6 223.8 128.8 23.9 147.8 249.6 137.7
Building
Materials
Division 28.9 38.7 19.4 11.6 29.8 37.2 25.8
Lemcon Ltd 83.3 82.6 96.9 100.9 71.8 98.8 72.5
Oy Alfred A.
Palmberg Ab 135.8 140.0 142.2 129.7 141.7 155.2 211.0
Tekmanni Oy 52.5 46.8 51.4 42.9 44.8 47.6 56.3
Others -16.9 -15.0 -9.2 -5.6 -8.2 -14.5 -12.4
Group total 424.3 516.7 429.5 303.5 427.8 573.9 490.8
OPERATING PROFIT BY BUSINESS SECTOR
EUR million 2006 2005 Change Change,
%
Lemminkäinen Corporation
Paving and Mineral
Aggregates Division 30.3 20.5 9.8 47.8
Building Materials Division 4.0 0.6 3.4 566.7
Lemcon Ltd 12.5 15.3 -2.8 -18.3
Oy Alfred A. Palmberg Ab 52.4 28.3 24.1 85.2
Tekmanni Oy 6.9 6.8 0.1 1.5
Others 1.8 1.0 0.8 80.0
Group total 108.1 72.5 35.6 49.1
OPERATING PROFIT/LOSS BY BUSINESS SECTOR, QUARTERLY
4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-9/ 10-12/
EUR million 2005 2005 2005 2006 2006 2006 2006
Lemminkäinen
Corporation
Paving
and Mineral
Aggregates
Division 4.4 28.7 3.7 -20.6 6.1 33.0 11.9
Building
Materials
Division 1.8 3.8 -1.6 -2.6 1.9 4.6 0.1
Lemcon Ltd 2.1 5.4 5.2 4.1 3.1 4.3 1.0
Oy Alfred A.
Palmberg Ab 8.5 9.5 5.7 7.5 14.3 10.8 19.8
Tekmanni Oy 1.6 2.5 1.1 2.2 0.1 3.4 1.1
Others 0.1 -0.2 1.1 2.5 0.2 -0.4 -0.5
Group total 18.5 49.6 15.3 -6.8 25.8 55.7 33.4
CONSOLIDATED BALANCE SHEET
EUR million 2006 2005
Non-current assets
Tangible assets 169.4 164.4
Goodwill on consolidation 68.2 63.5
Other intangible assets 2.5 2.5
Investments 9.4 10.9
Deferred tax asset 4.3 4.0
Other non-current receivables 2.2 0.7
Total 255.9 245.9
Current assets
Inventories 281.9 223.7
Trade and other receivables 340.7 263.4
Cash funds 60.6 42.4
Total 683.2 529.5
Assets, total 939.2 775.4
Shareholders equity and
liabilities
Equity attributable to shareholders
of the parent company
Share capital 34.0 34.0
Share premium account 5.8 5.8
Revaluation reserve 0.1 1.5
Translation difference 0.1 0.4
Retained earnings 142.2 115.5
Profit for the
accounting period 65.8 43.7
Shareholders equity
before minority interest 248.0 200.9
Minority interest 19.7 14.6
Shareholders equity, total 267.7 215.5
Non-current liabilities
Deferred tax liabilities 14.6 19.4
Pension liabilities 1.1 1.2
Provisions 1.7 4.9
Interest-bearing liabilities 91.2 103.5
Other liabilities 1.7 2.5
Total 110.3 131.5
Current liabilities
Accounts payable and
other liabilities 303.0 266.5
Provisions 5.7 1.5
Interest-bearing liabilities 252.5 160.5
Total 561.1 428.5
Shareholders equity and
liabilities, total 939.2 775.4
STATEMENT OF CHANGES IN EQUITY
Share Transla Re- Share-
tion
Share premium differe valuati Retaine Minori holders
nce on d ty
EUR million capita account reserve reserve earning intere equity
l s st
Shareholders
Equity
1.1.2005 34.0 5.8 -0.2 1.4 125.7 15.2 181.9
Translation
difference 0.8 0.8
Hedging of
net investment
in foreign
subsidiary -0.2 -0.2
Transfer from
revaluation reserve -0.2 -0.2
Change in
fair value 0.2 0.2
Reversal of
dividend liability 0.0 0.0
Dividend
distribution -10.2 -10.2
Profit for the
accounting period 43.7 4.7 48.5
Change in minority
interest -5.3 -5.3
Shareholders
equity
31.12.2005 34.0 5.8 0.4 1.5 159.2 14.6 215.5
Translation
difference -0.5 -0.5
Hedging of
net investment
in foreign
subsidiary 0.3 0.3
Change in
fair value 0.1 0.1
Effect of
sold shares -1.5 -1.5
Reversal of
dividend liability 0.0 0.0
Dividend
distribution -17.0 -17.0
Profit for the
accounting period 65.8 7.1 72.9
Change in
minority interest -2.0 -2.0
Shareholders
equity
31.12.2006 34.0 5.8 0.1 0.1 208.0 19.7 267.7
STATEMENT OF SOURCE AND APPLICATION
OF FUNDS
EUR million 2006 2005
Profit before extraordinary items 94.2 65.9
Depreciation according to plan 35.0 34.0
Other adjustments 4.1 4.3
Cash flow before change in
working capital 133.3 104.2
Change in working capital -109.3 -17.6
Financial items -11.9 -7.0
Direct taxes paid -19.2 -20.1
Cash flow from operating activities -7.2 59.5
Cash flow from investing activities -14.4 -18.3
Change in loans 58.9 -28.1
Dividends paid -18.5 -11.1
Cash flow from financing activities 40.4 -39.3
Change in cash funds 18.8 1.9
Cash funds at beginning of period 42.4 39.9
Translation difference
of cash funds -0.6 0.6
Cash funds at end of period 60.6 42.4
ECONOMIC TRENDS AND 2006 2005
FINANCIAL INDICATORS
Return on equity, % 30.2 24.5
Return on investment, % 20.6 16.5
Operating margin, % 6.0 4.5
Equity ratio, % 31.2 31.0
Gearing, % 105.7 102.9
Interest-bearing
net debt, EUR million 283.0 221.6
Gross investments, EUR million
(incl. leasing purchases) 48.7 37.4
Order book, EUR million 1 326.7 1 011.3
- of which foreign
orders, EUR million 331.8 343.4
Personnel, average 8 418 7 912
Personnel at end of period 8 087 7 112
Net sales, EUR million 1 795.9 1 601.7
- of which operations
abroad, EUR million 530.3 499.6
% of net sales 29.5 31.2
SHARE-SPECIFIC INDICATORS 2006 2005
Earnings per share, EUR 3.87 2.57
Equity per share, EUR 14.57 11.80
Dividend per share, EUR 1) 1.50 1.00
Dividend to earnings ratio, % 38.8 38.9
Market capitalisation, EUR mill. 614.5 519.1
Share price at end of period, EUR 36.10 30.50
Trading volume during
period, 1 000 shares 4 114 4 610
Number of issued shares,
1,000 shares 17 021 17 021
1) Board of Directors proposal to the AGM
GUARANTEES AND CONTINGENT
LIABILITIES
EUR million 2006 2005
Securities for own commitments
Property mortgages 2.4 3.3
Business mortgages 100.1 99.2
Bonds pledged as security 0.8 0.7
Total 103.3 103.3
Guarantees
On behalf of affiliated companies 0.8 0.4
On behalf of others 5.3 5.3
Minimum rental payments of irrevocable leasing
agreements
One year or less 6.0 7.8
Longer than one year but
less than five years 17.9 16.7
Longer than five years 20.8 3.2
Total 44.7 27.7
Purchase commitments of investments 2.9
Derivative contracts
Forward foreign exchange contracts
Nominal value 11.2 18.1
Fair value 0.1 -0.2
Currency options, calls purchased
Nominal value 0.0 1.7
Fair value 0.0 0.0
Currency options, puts written
Nominal value 0.0 1.7
Fair value 0.0 -0.2
Interest rate options, calls
purchased
Nominal value 34.5 36.4
Fair value 0.0 0.0
Interest rate options, puts written
Nominal value 5.0 6.9
Fair value -0.1 -0.4
Interest rate swap contracts
Nominal value 30.2 12.1
Fair value -2.0 -0.1
The fair value of contracts is the gain or loss
arising from closure of the contract based on the
market price on the accounting date.
The Auditors have not yet submitted their report on
the financial statements.
LEMMINKÄINENS FINANCIAL STATEMENT BULLETIN 2006: Significant growth in earnings
| Source: Lemminkäinen