LAROX CORPORATION STOCK EXCHANGE RELEASE ON 16 FEBRUARY 2007, FREE
FOR PUBLICATION AT 8.30 a.m.
LAROX CORPORATION FINANCIAL STATEMENTS 1 JANUARY 31 DECEMBER
2006
OVERVIEW
Highlights of 2006:
- New quantity of orders received increased by 13.6 % compared to
previous year. New orders received during the fiscal year totalled
EUR 138 million (EUR 121.5 million). The amount of new orders
received during the fourth quarter of the year totalled EUR 43.5
million (EUR 39.4 million).
- Group order backlog at the end of the year was 50.5 % higher than
at the turn of the previous year, i.e. EUR 44.9 million (EUR 29.8 million).
- Net sales was EUR 122.8 million (EUR 104.3 million), an increase of
17.7 %.
- Operating profit improved by 33.9 %, i.e. EUR 8.9 million (EUR 6.7
million).
- Result before taxes totalled EUR 7.0 million (EUR 5.8 million).
- Net cash from operating activities totalled EUR 15.0 million (EUR 1.6 million).
- Earnings per share totalled EUR 0.53 (EUR 0.49).
- The Board of Directors proposes a dividend of EUR 0.30 (0.24) per share.
Larox Corporation President, Mr Toivo Matti Karppanen
We have reason to be extremely satisfied with 2006, as our position in
the fragmented filter segment was strengthened. Net sales increased by
nearly 18 % over the previous year to EUR 122.8 million, thus achieving the
target for net sales that we set in 2004. Furthermore, this growth was
entirely organic, as no acquisitions were made in 2006. Our sales have
also increased profitably: Laroxs operating profit for the 2006 fiscal
year increased by 33.9% to EUR 8.9 million.
We entered 2006 with a healthy order backlog. Sales of products and
services for the mining and metallurgy industry and the chemical process
industry, as well as sales of aftermarket products and services, all
exceeded their targets. The year progressed steadily, and we improved
cumulatively our previous years performance in each quarter in terms of
both sales and profitability. Our cash flow remained very strong throughout
the entire year.
Larox is a global player that has a strong presence in each of its
target markets. Our focus on a narrow area of expertise combined with a
broad product portfolio and excellent client relationships have created
positive results. Laroxs brand, service and quality high-tech products
are also strengths compared with our competitors. Based on our results
this strategy has proven to be good, and our business activities will
continue to guarantee services to customers throughout
the entire lifespan of their Larox solutions.
We entered 2007 with a bigger order backlog than ever before in Laroxs
history. This provides an excellent basis for our future operations. We
have good reason to believe that the healthy and profitable growth of
our net sales will continue.
BOARD REPORT
BUSINESS OPERATIONS
Demand for Laroxs products was positive in essential
markets. Order accumulation developed well throughout the
whole year and the order backlog at the end of the year was
clearly bigger than in the previous year. Orders received in the
Group grew by 13.6 % from the year of comparison and totalled EUR
138 million. Group order backlog grew by 50.5 % from the end of
the year 2005 and was EUR 44.9 million at the end of 2006.
The economic trend, which favoured industrial investments, had a
positive effect on the Group result. Demand in the mining and
metallurgical industry remained healthy and it was driven by high
prices of metals resulting from growing consumption of metals
mostly in China and other Asian countries. In chemical process
industry demand is recovering in all market areas, especially in
Europe.
Approximately 95 % of Larox net sales were generated outside Finland. The
geographical division of net sales was as follows:
1-12/2006 1-12/2005 1-12/2004
North, Central and South America 36.3 % 34.3 % 36.9 %
Asia and Australasia 23.6 % 26.4 % 26.4 %
Europe, CIS, Middle East, Africa 40.1 % 39.3 % 36.7 %
GROUP STRUCTURE
There were no changes in Group structure during the fiscal year.
PROFITS AND PROFITABILITY
The Larox Group result before taxes for the fiscal year totalled EUR
7.0 million (EUR 5.8 million), i.e. 5.7 % (5.6 %) of net sales.
Operating profit totalled EUR 8.9 million (EUR 6.7 million). Net
sales totalled EUR 122.8 million (EUR 104.3 million). Depreciation
totalled EUR 3.4 million (EUR 3.9 million) and the share taken by
net sales was 2.8 % (3.8 %). Result for the fiscal year totalled
EUR 5.0 million (EUR 4.5 million).
Order backlog at the end of the fiscal year totalled EUR 44.9
million (EUR 29.8 million). New orders received during the fiscal
year totalled EUR 138 million (EUR 121.5 million). The return of
shareholders equity was 19.4 % (19.7 %). Return on invested
capital was 16.7 % (12.6 %). Earnings per share totalled EUR 0.53
(EUR 0.49).
Operating profit includes EUR 0.9 million extraordinary costs,
recorded in the last quarter, which were caused by the termination
of the component manufacturing functions in the Netherlands product
factory in Utrecht. In future Netherlands product factory will buy these
components from sub-suppliers. This was informed in a stock exchange
release on 6 November 2006.
FINANCING
The interest-bearing debts totalled EUR 29.0 million (EUR
40.0 million). Groups net financing costs totalled EUR 1.9 million
(EUR 0.9 million) and the share taken by net sales was 1.5 % (0.8 %).
Net financing costs include losses resulted from unrealized exchange
rate revaluations. The equity ratio was 33.9 % (29.9 %) and the debt-
equity ratio was 1.1 (1.6).
INVESTMENTS
Larox Group investments totalled EUR 2.3 million (EUR 1.8
million). The investments were mainly directed to development, IT
applications and replacement investments.
RESEARCH AND PRODUCT DEVELOPMENT
Expenditure by the Larox Group on research, equipment and process
development, automation products and test filtration in the fiscal
year was
2006 2005 2004
EUR million 6.8 6.9 6.6
% of net 5,5 % 6,6 % 6,8 %
sales
At the beginning of the year Larox started a project in
cooperation with Lappeenranta University of Technology and TEKES
(Finnish Funding Agency for Technology and Innovation), aimed at
improving the efficiency of test filtration by statistic methods.
In the project a computer programme will be developed, which
guides the test filtration engineer and makes an optimal test plan
that gives a maximum amount of information using a minimum-size
test sample. The project will be completed by the end of 2007 and
applied in test filtration.
The main focus in product development was related to launching new
products and continuously improving the existing products. New
product launches during the fiscal year were high volume Hoesch
Fast Opening Filter Press and Pannevis Side Vacuum Belt Filter
ranges. The first orders for new design belt filters were received
during the fiscal year.
Larox has been further investing in and working on with the
redesign, standardization and modularization of the Hoesch Filter
Press and the Pannevis Vacuum Belt Filter families. As a result
and to meet tightening customer specifications as well as new
requirements of European Atex-directives Larox will have a more
cost efficient design and the filters will meet the latest
industry standards.
Larox now has Atex-proven solutions for customers who have solid
/liquid separation applications with explosion proof atmospheres.
As a result of product continuous improvement Larox has succeeded
to improve with several customers their process results and the
reliability of the Larox solution.
PERSONNEL
The average number of personnel employed by the Group in the
review period was 450 (438).
At the end of the year the number of personnel by area was
as follows:
Area 2006 2005 2004
Finland 210 215 212
Other European countries 139 147 151
North America 27 26 24
South and Central America 33 25 22
Asia and Australasia 17 17 13
Middle East and Africa 20 15 13
Personnel total 446 445 435
Employee benefits expenses are divided as follows:
1000 EUR 1.1.- 1.1.- 1.1.-
31.12.2006 31.12.2005 31.12.2004
Salaries and fees -23 219 -21 407 -20 575
Pension expenses, defined -2 228 -2 273 -2 102
contribution plans
Pension expenses, defined -33 -4 258
benefit plans
Share-based payments -57 -100 0
Other employee benefits -2 555 -2 584 -2 483
Employee benefits expenses,
total -28 092 -26 369 -24 902
THE BOARD OF DIRECTORS AND AUDITORS
In Larox Corporation annual general meeting of shareholders on 30 March
2006 Mr Timo Vartiainen, Mrs Katariina Aaltonen, Mr Teppo Taberman, Mr
Thomas Franck and Mr Matti Ruotsala were re-elected to the Board. Mr
Timo Vartiainen was elected Chairman of the Board and Mr Teppo Taberman
was elected Vice Chairman in the organizational meeting of the Board of
Directors held immediately after the annual general meeting of shareholders.
The Annual General Meeting of shareholders elected the following main
auditors: APA Kim Karhu and auditing society PricewaterhouseCoopers Oy
with primary responsibility APA Kaija Leppinen. APA Henrik Sormunen and
APA Jarmo Alén were elected deputy auditors.
ADMINISTRATION
In 2006 the main principles of corporate governance, recommended
by the Helsinki Stock Exchange (OMX), the Central Chamber of
Commerce and the Confederation of Finnish Industries (EK) were
adopted in the Larox Corporation. The companys Board of Directors
has confirmed the principles, and these can be found on the Larox
Corporation website: www.larox.com.
RISKS AND UNCERTAINTY FACTORS
Investments in customers fields of business affect Laroxs
business. The most remarkable risks that may affect the Group's
business and financial result are caused by overall development of
economic trends, which is reflected in the financial situation and demand
in the customers fields of operation. The development of demand is
followed based on general economic situation, e.g by utilizing
test filtrations, order backlog and three (3) and six (6) months
sales forecasts.
There are a lot of competitors in the business. In addition to
international companies a great number of smaller local companies
compete with Larox.
The Group's dependency of one single customer is limited but loosing more
customers may have financial consequences.
The Group has paid special attention to risks related to the increase of material
and sub-contracting costs.
The risks related to stability and availability of the Group personnel have
been acknowledged and the Group has taken measures to keep the
management and other personnel in the Group and to facilitate recruiting
of new personnel.
Different financial instruments are used to manage financial
risks. The purpose is to protect the Group against changes that
are unfavorable to the Groups financial situation. The objective
of the Group is to minimize the impacts of fluctuations in
financial markets on the Groups cash reserves, profits and
shareholders equity. The main risks are currency risks and
interest rate risks. The Group treasury function manages financial
risks centrally according to the currency policy approved by the
Board of Directors.
Larox has insurance coverage on material damages and legal
liability for damages. Insurance coverage on unexpected risks is
however limited.
ENVIRONMENTAL MATTERS
Direct environmental influence of Laroxs business is minor. The
Group takes care of the proper sorting and further handling of its
wastes, including hazardous wastes. The portion of energy expenses
was 1.9 % (1.5 %) of other operating expenses.
AUTHORIZATION GIVEN TO THE BOARD OF DIRECTORS TO DECIDE ON THE
INCREASE OF SHARE CAPITAL THROUGH A NEW SHARE ISSUE
The Annual General Meeting of shareholders on 30 March 2006
authorized the Board of Directors to decide on the increase of
share capital by a maximum of EUR 330 000 by offering a maximum of
550 000 new B-series shares to be subscribed but this
authorization was not used during the review period.
ISSUE OF EQUITY INSTRUMENTS, SUBSCRIPTION OF B-SERIES SHARES BASED
ON THE MANAGEMENT INCENTIVE SYSTEM
Based on Larox Corporation share issue to the top management in 2004,
a total of 27 075 of the subscribed B-series shares, the restriction
period of which ended on 1 December 2006, are released for trading
together with other Larox Corporation B-series shares.
In the share issue to the top management a total of 108 300 B-
series shares were subscribed. The restriction periods of other
shares subscribed in this share issue will end on 1 December 2007
regarding 37 095 shares and on 1 December 2008 regarding 43 430
shares.
Larox Corporation published the terms of the share issue of 2004
to the top management in stock exchange releases of 16 February
2004 and 17 March 2004.
SHARE AND SHAREHOLDERS
The trading with Larox shares 1 January 31 December 2006
totalled 2 570 733, which is 27.4 % of the total number of shares.
The value of the trading totalled EUR 19.9 million. The lowest
price of the Larox share was EUR 6.10 and the highest EUR 9.35 per
share. The closing trading price of the share was EUR 9.00 per
share and the market value of the capital stock EUR 84.4 million.
At the end of 2006 the number of shareholders was 743.
EVENTS AFTER THE BALANCE SHEET DATE
In Finland the engineering design cooperation with Etteplan Oyj
was widened. As a part of the agreement, 10 employees transferred
to Etteplan on 1 January 2007.
Good development of order backlog has continued in January.
FUTURE PROSPECTS
The market situation is expected to continue favourable and the Group net
sales and profitability are expected to improve from the previous year.
The good order backlog at the turn of the year, EUR 44.9 million
(EUR 29.8 million) and the already started procedures support this.
The orders of approximately EUR 9 million, received at the beginning of 2007
(stock exchange release of 5 February 2007) are a proof of strong investment
activity in filters. Positive demand of metals, which is expected to continue
strong and the recovering demand in the chemical process industry influence
specially investment decisions.
DISTRIBUTION OF PROFITS
Parent companys dividends available for the distribution totalled
EUR 12.3 million, of which the profit for the fiscal year is EUR
5.2 million. The Board proposes to the annual general meeting of
shareholders dividend to be distributed EUR 0.30 per share, i.e. a
total of EUR 2.8 million. No essential changes have taken place in financial
situation of the company after the balance sheet date. Proposed
dividend to be distributed does not endanger the solvency of the
company.
All below figures in the financial statements have been adjusted
and therefore the added sum of individual figures may differ from
the presented added figure.
KEY RATIOS OF LAROX GROUP
EUR 1000 1- 1- 1-
12/2006 12/2005 12/2004
New orders 137 971 121 470 93 204
Group order backlog at end of 44 911 29 845 12 425
period
Net sales 122 809 104 324 96 470
Operating profit 8 931 6 670 3 894
% of net sales 7,3 6,4 4,0
Net financing costs 1 887 879 2 069
% of net sales 1,5 0,8 2,1
Result before taxes 7 044 5 790 1 825
Result for the period 5 004 4 502 1 508
Investments 2 285 1 832 32 580
Shareholders' equity per share 2,84 2,68 2,25
at end of period, EUR
Equity Ratio % 33,9 29,9 28,9
Return on equity, % 19,4 19,7 8,6
Return on investments, % 16,7 12,6 8,0
Liabilities and shareholders' 83 295 84 269 72 523
equity
% of net sales 67,8 80,8 75,2
Contingent liabilities 26,8 26,7 30,0
Earnings per share, EUR 0,53 0,49 0,17
Dividend per share, EUR *)0.30 0,24 0,17
Trading price at end of period, 9,00 6,10 4,66
EUR
Market capitalization at end of 84,4 56,6 43,2
period, EUR million **)
Average number of personnel 450 438 436
Number of personnel at the end 446 445 435
ot period
Net sales per person 273 238 221
*) Board of directors proposal to the annual general meeting of
Larox Corporation shareholders.
**) A-share data is based on the B shares last trading date of
the financial year.
KEY FIGURES BY
QUARTERS
2006 2006 2006 2006 2005
EUR 1000 10-12 7-9 4-6 1-3 10-12
New orders 43 482 31 525 38 041 24 923 39 444
Group order backlog 44 911 41 780 37 706 29 526 29 845
Net sales 40 431 28 281 29 001 25 097 39 518
Operating profit 4 568 2 457 1 853 52 6 794
% of net sales 11,3 8,7 6,4 0,2 17,2
Net financing costs 218 259 724 686 338
% of net sales 0,5 0,9 2,5 2,7 0,9
Result before taxes 4 350 2 198 1 129 -634 6 455
Result for the 3 358 1 293 899 -546 4 846
quarter
INCOME STATEMENTS, 10- 10- 1- 1-
IFRS 12/2006 12/2005 12/2006 12/2005
EUR 1000
Sales 40 431 39 518 122 809 104 324
Other operating income 557 481 1 680 1 019
Change in inventories
of finished
goods and work in -811 -2 012 -1 287 -329
progress
Materials and services -20 170 -15 530 -59 743 -46 157
Employee benefits -8 214 -7 824 -28 092 -26 369
expenses
Depreciation, -777 -1 012 -3 412 -3 931
amortisation &
impairment losses
Other operating -6 447 -6 827 -23 023 -21 888
expenses
OPERATING PROFIT 4 568 6 794 8 931 6 670
Financial income 138 448 890 897
Financial expenses -510 -867 -3 032 -1 987
Share of profit/loss 155 80 255 212
in associates
PROFIT BEFORE TAX 4 350 6 455 7 044 5 791
Income tax expense -992 -1 609 -2 040 -1 288
PROFIT FOR THE PERIOD 3 358 4 846 5 004 4 503
EPS basic & diluted 0,36 0,52 0,53 0,49
(EUR)
BALANCE SHEETS, IFRS
EUR 1000 31.12.2006 31.12.2005
ASSETS
Intangible assets 18 871 19 336
Goodwill 2 948 3 179
Property, plant and 9 566 10 622
equipment
Investments in 1 153 1 006
associates
Other long-term 208 273
investments
Deferred tax asset 3 561 2 097
NON-CURRENT ASSETS 36 307 36 512
Inventories 19 842 15 964
Trade and other 25 194 30 056
receivables
Cash and cash 1 952 1 737
equivalents
CURRENT ASSETS 46 988 47 756
TOTAL ASSETS 83 295 84 269
EQUITY AND LIABILITIES
Share capital 5 629 5 565
Share issue 0 64
Share premium account 5 777 5 777
Other reserves 61 124
Translation -69 -145
differences
Retained earnings 15 271 13 516
SHAREHOLDERS' EQUITY 26 668 24 901
Deferred tax liability 2 511 1 333
Long-term liabilities, 19 405 24 829
interest-bearing
Employee benefit 479 500
obligations
Non-current provisions 1 341 1 254
NON-CURRENT 23 735 27 916
LIABILITIES
Short-term 9 619 15 187
liabilities, interest-
bearing
Short-term 23 273 16 265
liabilities, non
interest-bearing
CURRENT LIABILITIES 32 892 31 452
TOTAL EQUITY AND 83 295 84 269
LIABILITIES
CASH FLOW STATEMENTS, IFRS
1000 EUR 1- 1-
12/2006 12/2005
Net profit/loss 5 004 4 502
Adjustments to the net 7 132 6 476
profit/loss of the period
Change in working capital 6 020 -5 624
Interest paid -1 814 -1 794
Interest income received 179 30
Other financing items -310 21
Income taxes paid -1 229 -2 020
Net cash from operating 14 981 1 592
activities
Net cash used in investment -1 772 -1 805
activities
Share issue 0 310
Increase in loans 5 896 12 647
Decrease in loans -16 494 -9 820
Repayment of finance lease -56 -634
liabilities
Dividends paid -2 226 -1 576
Net cash used in financing -12 880 925
activities
Change in cash and cash 329 712
equivalents
Operating balance of cash and 1 737 962
cash equivalents
Effect of the foreign exchange -114 62
rates
Closing balance of cash and 1 952 1 737
cash equivalents
CHANGE IN SHAREHOLDERS' EQUITY 1-12/2005
Share Fair Hed Other Trans
1000 EUR Share issue valu ging reser lat Retai
diff ned
capital prem res. res ves earn Total
SHAREHOLDERS' EQUITY 5 564 5 532 0 0 134 -100 9 760 20 890
1 JANUARY
Impact of implementation of new 175 175
standards*)
ADJUSTED 5 564 5 532 0 0 134 -100 9 935 21 065
SHAREHOLDERS' EQUITY
1 JANUARY
Cash flow hedging
Increase in hedging reserve -15 -15
Gain of the fair value 138 138
revaluation
Change in 11 -44 771 738
translation
difference
Recognised directly in retained -216 -216
earnings**)
Other changes -145 -145
Profit for the 4 502 4 502
period
Dividend -1 576 -1 576
distribution
Rights issue 1 1
Unregistered share 64 245 308
capital
Share-based payments 100 100
SHAREHOLDERS' EQUITY 5 629 5 777 138 -15 0 -145 13 516 24 901
31 DECEMBER 2005
*) Impact of IAS 32 and IAS 39 adoption.
**) Adjustment to deferred taxes from previous periods.
CHANGE IN SHAREHOLDERS' EQUITY 1-12/2006
Share Fair Hed Trans Retain
ed
EUR 1000 Share issue val ging lat ear
capital prem res res diff nings Total
SHAREHOLDERS' 5 629 5 777 138 -15 -145 13 516 24 902
EQUITY 1
JANUARY
Cash flow hedging
Increase in hedging reserve -30 -30
Gain of the fair value -33 -33
revaluation
Other changes 75 -1 081 -1 006
Profit for the 5 004 5 004
period
Dividend -2 226 -2 226
distribution
Share-based payments 57 57
SHAREHOLDERS' 5 629 5 777 105 -44 -70 15 270 26 668
EQUITY 31
DECEMBER 2006
Larox has applied the same accounting principles in this
Annual Report as in Annual Report 2005. Additionally the
Group has applied the following standard changes and
interpretations, effective on 1 January 2006, which may
influence the accounting principles of the Groups
financial statements.
- IAS 19 (change), Employee Benefits
- Amendment to IAS 39 Cash flow hedge accounting of forecast
intra-group transactions
- IAS 39 (change) Financial Instruments: recognition and
measurement
- IFRS 4 (change) Insurance Contracts
- IFRIC 4, Determining whether an Arrangement Contains a Lease
- IAS 21 The Effects of Changes in Foreign Exchange Rates Net
Investment in a Foreign Operation
The contents of changes in standards and interpretations
were presented in more detail in 2005 Annual Report. The
adaptation did not cause such changes in accounting principles
which would have had an effect on the information presented in
this release.
The Larox Corporation annual report will be published in week
12/2007. The interim report for January - March 2007 will be
published on 27 April 2007, and the interim report for JanuaryJune 2007
will be published on 10 August 2007 and the interim report for
January September 2007 will be published on 26 October 2007.
The Larox Corporation Annual General Meeting of shareholders
will be held on 30 March 2007 at 11 a.m. at the Larox Corporation
head office in Lappeenranta.
Lappeenranta on 16 February 2007
LAROX CORPORATION
BOARD OF DIRECTORS
For further information, please contact
Mr Toivo Matti Karppanen,
President & CEO
Phone +358 5 668 8210
E-mail topi.karppanen@larox.com
www.larox.com
DISTRIBUTION The Helsinki Stock Exchange, Central Media
LAROX CORPORATION FINANCIAL STATEMENTS 1 JANUARY 31 DECEMBER 2006
| Source: Larox Oyj