Larox Corporation Annual Financial Statement on 13.2.2009 at 08.30 am
LAROX GROUP FINANCIAL STATEMENT 2008
Highlights of 2008:
- Net sales were EUR 208.0 million (EUR 158.3 million) with increase of 31.4 %.
Net sales of the fourth quarter were EUR 64.1 million (EUR 49.3 million).
- Operating profit was 27.1 % better, totaling EUR 16.6 million
(EUR 13.1 million).
- Total of new orders received decreased by 11.3 % in comparison to the previous
year. The total of new orders for the year 2008 was EUR 184.8 million
(EUR 208.4 million). New orders received during the fourth quarter totaled
EUR 25.8 million (EUR 64.9 million)
- The order backlog at the end of the year was 26.0 % lower than one year
earlier totaling EUR 72.0 million (EUR 97.3 million).
- Profit before tax was 14.0 million in 2008 (EUR 11.8 million). Profit before
tax for the fourth quarter totaled EUR 3.7 million (EUR 4.9 million).
- Net cash flow from operating activities was EUR 10.8 million
(EUR -2.4 million).
- Earnings per share were EUR 1.07 (EUR 1.01).
The board of directors proposes a dividend per share EUR 0.50 (EUR 0.60).
Mr. Toivo Matti Karppanen, President & CEO of Larox Corporation:
" The 2008 fiscal year was both good and bad for Larox: we achieved our
targeted growth in net sales, but not in relative profitability. Our order
backlog decreased in the second half of the year. Larox's net sales increased
by 31.4% over the previous year to EUR 208.0 million. Our operating profit was
8.0 percent of net sales. Return on shareholders' equity was 29.2 percent, and
earnings per share amounted to EUR 1.07.
The growth in net sales was achieved by aftermarket sales and equipment sales
to the mining and metallurgy industry. The investment climate in the mining
and metallurgy industry has been extremely strong for the past three years.
The existing plants have also been utilized to their full capacity, which has
increased demand for our aftermarket products and services. Sales volumes for
the chemical process industry have remained stable for several years, and 2008
was no exception. Sales to the chemical process industry increased only
slightly over the previous year.
At the start of 2008 our order backlog was at an excellent level due to the
strong prevailing economic trend. We continued to receive a healthy number
of orders in the first half of the year, but after August demand weakened
considerably. On 31 December 2008 our order backlog was EUR 25 million lower
than at the corresponding time in 2007.
Larox enlarged its business according to the growth strategy by established two
new subsidiaries, in China and Russia. With new subsidiaries Larox strengthens
its position in important developing market areas. Larox also made a
strategically important acquisition by purchasing Turku Ceramics Oy, which
manufacturers the ceramic discs. Through this acquisition we obtained more
decisive expertise for Larox.
Our strength is a very extensive service and product range. We can offer to our
customers all filters and aftermarket services for their processes.”
BUSINESS OPERATIONS
Net sales of the review period were EUR 208.0 million (EUR 158.3 million), which
is 31.4 % higher than for the year 2007. Operating profit was EUR 16.6 million
(EUR 13.1 million). Profit before taxes was EUR 14.0 million (EUR 11.8 million).
Earnings per share were EUR 1.07 (EUR 1.01).
Group order backlog at the end of December 2008 totaled EUR 72.0 million
(EUR 97.3 million), which is 26.0% less than at the same moment in the previous
year. The amount of new orders received during the review period was EUR 184.8
million (EUR 208.4 million).
Approximately 93 % of Group net sales were generated by exports and foreign
operations. Net sales by geographical division were as follows:
--------------------------------------------------------------------------------
| | 1-12/2008 | 1-12/2007 |
--------------------------------------------------------------------------------
| North, Central and South | 33.1% | 29.0% |
| America | | |
--------------------------------------------------------------------------------
| Asia and Australasia | 22.0% | 25.6% |
| | | |
--------------------------------------------------------------------------------
| Europe, Middle East and | 44.9% | 45.5% |
| Africa | | |
--------------------------------------------------------------------------------
CHANGES IN GROUP STRUCTURE DURING THE YEAR OF 2008
The transaction of Turku Ceramics Oy to the ownership of Larox Corporation was
realized on 1 October 2008 based on the letter of intent. Turku Ceramics,
which concentrates on subcontracting, is the only manufacturer of technical
ceramics in Finland. Larox uses the ceramic plates supplied
by Turku Ceramics as filter elements in disc filters.
Larox established a holding company, Larox AB, to Sweden for the subsidiary in
China. On 8 December Larox's subsidiary in China received its Business License.
Larox Filtration Technology (Suzhou) Co. Ltd is located in the Suzhou Industrial
Park (SIP) near Shanghai and it is responsible for filter sales, local assembly
and after market services in China. The subsidiary should be fully operational
during the spring in 2009.
Larox's subsidiary in Russia, OOO Larox, will start its operations early 2009
and it received a business license from Russian authorities on 22 December 2008.
The unit, located south of Moscow, will be in charge of after-market services
in Russia. With the help of its local spare-parts stock and customer service
Larox's ability to serve its present and future customers will be improved,
which is expected to have a positive effect on delivery times and development
of sales volume in Russia.
Larox's new subsidiaries are supporting the growth strategy of the company as
well as contributing to the global competitiveness in the growing markets of
Russia and Asia.
PROFITS AND PROFITABILITY
Larox Group's result before tax for the review period totaled EUR 14.0 million
(EUR 11.8 million), i.e. 6.7% (7.4%) of net sales. The total net sales were
EUR 208.0 million (EUR 158.3 million). The Group showed an operating profit
of EUR 16.6 million (EUR 13.1 million), i.e. 8.0% (8.3%) of net sales. Earnings
per share were EUR 1.07 (EUR 1.01).
NET SALES AND RESULT DEVELOPMENT DURING THE FOURTH QUARTER
For the fourth quarter of the year the consolidated net sales totaled EUR 64.1
million (EUR 49.3 million), operating profit of EUR 4.9 million (EUR 5.2
million) and profit before taxes was EUR 3.7 million (EUR 4.9 million).
The amount of new orders received during the forth quarter of the year totaled
EUR 25.8 million (EUR 64.9 million). The earnings per share per quarter were EUR
0.30 (EUR 0.56).
BALANCE SHEET AND FINANCING
At the turn of the year 2008 the Group balance sheet totaled EUR 118.1 million
(102.9 million). Net financing costs totaled EUR 2.7 million (EUR 1.3 million),
i.e. 1.3% (0.8%) of net sales. Net cash flow from operating activities was
EUR 10.8 million (EUR -2.4 million). The equity ration was 32.3% (34.2%) and
debt-equity ratio 1.07 (1.12). Reserve of financing limits of the Group has
been increased at the end of the preview period. Furthermore pension loan has
been taken as a long term financing method.
INVESTMENTS
Larox Group's investments totaled EUR 7.4 million (EUR 3.2 million). The
investments include the acquisition of Turku Ceramics Oy, IT applications
and replacement investments.
PERSONNEL
The average number of personnel employed by the Group during the review period
was 562 (458). At the end of the review period it was 593 (469) of whom 279
(220) worked for the parent company. The growth can mainly be seen in service in
Finland, Australia, South Africa, Chile and Peru and due to the acquisition of
Turku Ceramics Oy (26 persons).
At the end of the year the number of Group personnel by area was as follows:
--------------------------------------------------------------------------------
| AREA | 2008 | 2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finland | 303 | 220 |
--------------------------------------------------------------------------------
| Other Europe | 130 | 127 |
--------------------------------------------------------------------------------
| North America | 35 | 32 |
--------------------------------------------------------------------------------
| South and Central America | 49 | 36 |
--------------------------------------------------------------------------------
| Asia and Australasia | 39 | 28 |
--------------------------------------------------------------------------------
| Middle East and Africa | 37 | 26 |
--------------------------------------------------------------------------------
| Personnel total | 593 | 469 |
--------------------------------------------------------------------------------
The development of management and leadership was emphasized at every
organizational level as well as the implementation of newcomers to
the global organization. Under the conditions of rapid growth also methods
of performance management and R&P discussion practices were developed in
order to support newcomers in getting at their tasks quickly and to implement
the strategy throughout the organization.
Furthermore, new competence management tools were piloted.
Employee benefits expenses are divided as follows:
--------------------------------------------------------------------------------
| 1000 EUR | 1.1.-31.12.2008 | 1.1.-31.12.2007 |
--------------------------------------------------------------------------------
| Employee benefits expenses, total | -36 360 | -31 526 |
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND AUDITORS
In Larox Corporation annual general meeting of shareholders on 26 March 2008
Mr. Timo Vartiainen, Ms. 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 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:
auditing society PricewaterhouseCoopers Oy with primary responsibility APA Kim
Karhu.
ADMINISTRATION
In 2008 the main principles of corporate governance, recommended by the
NASDAQ OMX Helsinki Ltd, the Central Chamber of Commerce and the Confederation
of Finnish Industries (EK) were adopted in the Larox Corporation. The company's
Board of Directors has confirmed the principles, and these can be found on the
Larox Corporation website: www.larox.com.
RISKS AND UNCERTAINTY FACTORS
Risk management is part of Larox Group's management and control system. It aims
to prevent negative phenomena, support the Group strategy and ensure continuity
of its operations and the wellbeing of its personnel. According to Larox risks
management system risks are divided into the following four risk categories:
commercial, operational, financial risks and risk of damage.
Larox operates on a global market where global economic trends affect its
business development, even though it is not at the mercy of changes in some
particular market area. The recent political unrest in sub-equatorial Africa
has caused the most uncertainty in Larox's business. Larox established
subsidiaries in both China and Russia, the global economic crisis adds
challenges the new subsidiaries are facing.
The demand risk of Larox products has increased essentially because of the
global economic challenges. The uncertainty in demand, which appeared at the
end of 2008, is expected to continue during the year of 2009. The international
crisis has decreased Larox's customers' interest in investments and their
operational volumes when at the same time some customers are starting economic
measurements, this all causing the increase in competition to continue. There
are certain branches of industry in Larox's clientele where no effects of the
economic crisis have been noticed, such as the food and pharmaceutical
industries.
Larox manages risks related to purchasing and manufacturing already at contract
level by tying raw material costs to materials cost index. Furthermore Larox
will inspect and control its subcontractors even more than before in accordance
with quality systems and by developing logistics. In addition, Larox aims to
expand its cooperation networks. Along with the economic crisis the availability
of supplier resources has increased.
The constant uncertainty about the financial situation of companies has
increased Larox's credit loss risk, too. Larox attempts to control these risks
by applying more suitable payment terms, by monitoring operations actively and
by reacting to payment delays more efficiently. The euro, U.S. dollar,
Australian dollar and South African rand are Larox's main invoicing currencies.
Larox's principal buying currency is the euro. Larox fights off currency risks
by means of various protective measures. The fluctuation of exchange rates of
Larox's main currencies makes the management of currency risks more difficult.
Larox fights off the risk of damage by following various occupational health
and safety schemes and by preparing other strategies and plans for business
premises, and by supervising the implementation of these strategies and plans.
According to Larox, traffic and other accidents and illnesses during business
trips pose the greatest risk of damage. Larox attempts to prevent these risks
by detailed codes of practice as well as vaccinations and other health care
measures. During the review period there have not been savage personnel damages
or other accidents, which could seriously risk Larox ability to do business.
Further information about risks and risk management is presented in the Group's
Internet pages (www.larox.com) in the section of Corporate Governance.
ENVIRONMENTAL MATTERS
Direct environmental influence of Larox's business is minor. The Group takes
care of the proper sorting and further handling of its wastes, including
hazardous wastes. The environmental influence of the lifetime of the Larox
filters is positive: due to efficient separation techniques the customers can
decrease the environmental influence of their production processes. In the
applications of mining and metallurgical as well as chemical processing
industries Larox filters decrease the energy and water consumption of production
processes as well as emissions.
AUTHORIZATION GIVEN TO THE BOARD OF DIRECTORS
The annual general meeting of shareholders had authorized the Board of
Directors to decide on the repurchase of shares by using the company's
unrestricted shareholders' equity but this authorization was not used during
the fiscal year. The authorization regarded 500 000 Larox Corporation B-series
shares at the maximum and expired on 30 September 2008 from the resolution
of the annual general meeting of shareholders.
The annual general meeting of shareholders authorized the Board of Directors
to decide on shares, stock option rights or special rights referred to in the
Finnish Companies Act chapter 10, paragraph 1 in one or more lots in such a
way that based on the authorization the total maximum number of Larox
Corporation B-series shares is 500 000 but this authorization was not used
during the fiscal year. The authorization is valid until 30 March 2012
from the resolution by the annual general meeting of shareholders.
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 43 320 of the subscribed B-series shares, the restriction period of which
ended on 1 December 2008, were released for trading together with other Larox
Corporation B-series shares. Shares released in 2008 were the last to be
released according to the share issue of 2004.
SHARE-BASED INCENTIVE PLAN FOR KEY PERSONNEL
Larox Corporation Board of Directors decided on 29 May 2007 on a share-based
incentive plan for Larox Group key personnel. The maximum number of shares to
be granted under the share-based award program is in total 150 000 and in cash
such an amount that is needed to cover the taxes and tax-related payments at
the grant date, however the amount can not exceed the value of shares at the
grant date. The vesting period started on 1 January 2007 and ends on 31 December
2010. This was informed in a company announcement on 30 May 2007 and on
10 August 2007.
SHARES AND SHAREHOLDERS
The trading with Larox shares 1 January - 31 December 2008 totaled 2 228 321,
which is 23.8 % of the total number of shares. The value of the trading totaled
EUR 20.7 million. The lowest price of the period was EUR 4.60 and the highest
EUR 12.40 per share. The closing trading price of the share was EUR 4.60 per
share and the market value of the total capital stock EUR 43.2 million. At the
end of 20088 the number of shareholders was 1 913.
FUTURE PROSPECT
During the last quarter the accumulation of new orders decreased essentially.
The order backlog at the end of the year was EUR 72.0 million (EUR 97.3 million)
and expected deliveries during 2009 are EUR 58.5 million.
Unstable global economic situation increases uncertainty in demand. Due to this
future prospects are difficult to predict and estimations include more
uncertainty than usually. Net sales of the Group for 2009 are expected to
clearly decrease in comparison to the previous year. It is Larox's objective to
reconcile the cost structure so that profitability will remain on a satisfactory
level at the minimum.
DISTRIBUTION OF PROFIT
Parent company's dividends available for the distribution totaled EUR 15.6
million, of which the profit for the fiscal year is EUR 2.5 million. The Board
proposes to the annual general meeting of shareholders a dividend of EUR 0.50
per share be distributed, i.e. a total of EUR 4.7 million. Proposed dividend to
be distributed does not endanger the solvency of the company.
Lappeenranta on 13 February 2009
For further information please contact
Mr Toivo Matti Karppanen
President & CEO
Tel +358 (0) 20 7687 210
Fax +358 (0) 20 7687 277
E-mail topi.karppanen@larox.com
Internet www.larox.com
Financial publications on 2009
The Larox Corporation annual report will be published in week 11
Altogether three interim reports will be published during the year 2009:
The interim report for 1.1.-31.3.2009 on 23 April 2009
The interim report for 1.1.-30.6.2009 on 6 August 2009
The interim report for 1.1.-30.9.2009 on 23 October 2009.
Distribution: NASDAQ OMX Helsinki Ltd, central media
www.larox.com
NOTES TO THE ANNUAL REPORT
Larox has applied the same accounting principles in this Annual Report as
in Annual Report 2007. The contents of the changes in standards and
interpretations are presented more detailed in Annual Report 2008.
The review is prepared in accordance with all the requirements of IAS 34
Interim Financial Reporting -standard and in accordance with IFRS recognition
and measurement principles.
The preparation of the financial statements in accordance with IFRS requires
the use of estimates and assumptions that affect the reported amounts of assets
and liabilities and the reported amounts of income and expenses during the
reporting period. The estimates are based on management's best knowledge of
current events and actions but actual results may differ from these estimates.
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.
Annual reporting information included in this release is audited.
--------------------------------------------------------------------------------
| INCOME STATEMENTS, | | | | |
| IFRS | | | | |
--------------------------------------------------------------------------------
| 1000 EUR | 10-12/2008 | 10-12/2007 | 1-12/2008 | 1-12/2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales | 64 079 | 49 298 | 207 995 | 158 270 |
--------------------------------------------------------------------------------
| Other operating | 2 325 | 1 038 | 4 230 | 2 240 |
| income | | | | |
--------------------------------------------------------------------------------
| Materials | -33 261 | -24 890 | -107 971 | -76 672 |
--------------------------------------------------------------------------------
| External services | -4 737 | -4 380 | -11 146 | -10 186 |
--------------------------------------------------------------------------------
| Employee benefits | -10 870 | -8 536 | -36 360 | -31 526 |
| expense | | | | |
--------------------------------------------------------------------------------
| Depreciation, | -958 | -942 | -3 808 | -3 504 |
| amortization & | | | | |
| impairment losses | | | | |
--------------------------------------------------------------------------------
| Other operating | -11 668 | -6 423 | -36 322 | -25 551 |
| expenses | | | | |
--------------------------------------------------------------------------------
| OPERATING PROFIT | 4 908 | 5 164 | 16 618 | 13 070 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial income | 185 | 407 | 655 | 946 |
--------------------------------------------------------------------------------
| Financial expenses | -1 328 | -706 | -3 778 | -2 622 |
--------------------------------------------------------------------------------
| Share of profit/loss | -39 | 43 | 462 | 361 |
| in associates | | | | |
--------------------------------------------------------------------------------
| PROFIT/LOSS BEFORE | 3 726 | 4 908 | 13 957 | 11 755 |
| TAX | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income tas expense | -898 | 342 | -3 935 | -2 259 |
--------------------------------------------------------------------------------
| PROFIT/LOSS FOR THE | 2 828 | 5 250 | 10 022 | 9 496 |
| PERIOD | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EPS basic (EUR) | 0.30 | 0.56 | 1.07 | 1.01 |
--------------------------------------------------------------------------------
| EPS diluted (EUR) | 0.30 | 0.56 | 1.07 | 1.01 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| BALANCE SHEET, IFRS | | |
--------------------------------------------------------------------------------
| 1000 EUR | 31.12.2008 | 31.12.2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-CURRENT ASSETS | | |
--------------------------------------------------------------------------------
| Intangible asssets | 18 998 | 18 795 |
--------------------------------------------------------------------------------
| Goodwill | 2 843 | 2 926 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 11 382 | 9 257 |
--------------------------------------------------------------------------------
| Investments in associates | 1 723 | 1 393 |
--------------------------------------------------------------------------------
| Available-for-sale investments | 23 | 23 |
--------------------------------------------------------------------------------
| Deferred tax asset | 5 063 | 5 238 |
--------------------------------------------------------------------------------
| TOTAL NON-CURRENT ASSETS | 40 031 | 37 633 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CURRENT ASSET | | |
--------------------------------------------------------------------------------
| Inventories | 28 191 | 26 592 |
--------------------------------------------------------------------------------
| Trade receivables and other receivables | 46 555 | 36 651 |
--------------------------------------------------------------------------------
| Current tax assets | 1 701 | 165 |
--------------------------------------------------------------------------------
| Cash and bank | 1 661 | 1 812 |
--------------------------------------------------------------------------------
| TOTAL CURRENT ASSET | 78 108 | 65 220 |
--------------------------------------------------------------------------------
| TOTAL ASSET | 118 139 | 102 853 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | |
--------------------------------------------------------------------------------
| Share capital | 5 629 | 5 629 |
--------------------------------------------------------------------------------
| Share premium account | 5 777 | 5 777 |
--------------------------------------------------------------------------------
| Other reserves | -208 | 0 |
--------------------------------------------------------------------------------
| Translation differences | -205 | -127 |
--------------------------------------------------------------------------------
| Retained earnings | 24 777 | 21 566 |
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY | 35 770 | 32 845 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-CURRENT LIABILITIES | | |
--------------------------------------------------------------------------------
| Deferred tax liability | 4 111 | 1 804 |
--------------------------------------------------------------------------------
| Long term financial liabilities | 13 124 | 12 751 |
--------------------------------------------------------------------------------
| Employee benefit obligations | 594 | 554 |
--------------------------------------------------------------------------------
| Non-current provisions | 1 843 | 826 |
--------------------------------------------------------------------------------
| TOTAL NON-CURRENT LIABILITIES | 19 672 | 15 936 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CURRENT LIABILITIES | | |
--------------------------------------------------------------------------------
| Short term financial liabilities | 25 144 | 24 133 |
--------------------------------------------------------------------------------
| Trade payables and other payables | 35 893 | 26 684 |
--------------------------------------------------------------------------------
| Current tax liabilities | 550 | 1 935 |
--------------------------------------------------------------------------------
| Current provisions | 1 110 | 1 321 |
--------------------------------------------------------------------------------
| TOTAL CURRENT LIABILITIES | 62 697 | 54 072 |
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES | 118 139 | 102 853 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CASH FLOW STATEMENTS, IFRS | | |
--------------------------------------------------------------------------------
| 1000 EUR | 1-12/2008 | 1-12/2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net profit/loss | 10 022 | 9 496 |
--------------------------------------------------------------------------------
| Adjustments to the net profit/loss of the | 10 400 | 6 986 |
| period | | |
--------------------------------------------------------------------------------
| Change in working capital | -2 999 | -13 817 |
--------------------------------------------------------------------------------
| Interest paid | -1 848 | -1 819 |
--------------------------------------------------------------------------------
| Interest income received | 78 | 53 |
--------------------------------------------------------------------------------
| Other financing items | 253 | -50 |
--------------------------------------------------------------------------------
| Income taxes paid | -5 058 | -3 217 |
--------------------------------------------------------------------------------
| Net cash from operating activities | 10 848 | -2 368 |
--------------------------------------------------------------------------------
| Net cash used in investment activities | -6 228 | -3 038 |
--------------------------------------------------------------------------------
| Increase in loans | 27 356 | 23 197 |
--------------------------------------------------------------------------------
| Decrease in loans | -26 129 | -15 024 |
--------------------------------------------------------------------------------
| Repayment of finance lease liabilities | -88 | -93 |
--------------------------------------------------------------------------------
| Dividends paid | -5 629 | -2 814 |
--------------------------------------------------------------------------------
| Net cash used in financing activities | -4 490 | 5 265 |
--------------------------------------------------------------------------------
| Change in cash and cash equivalents | 131 | -141 |
--------------------------------------------------------------------------------
| Operating balance of cash and cash | 1 812 | 1 952 |
| equivalents | | |
--------------------------------------------------------------------------------
| Effect of the foreign exchange rates | -282 | 1 |
--------------------------------------------------------------------------------
| Closing balance of cash and cash | 1 661 | 1 812 |
| equivalents | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CHANGE IN | | | | | | | |
| SHAREHOLDERS' | | | | | | | |
| EQUITY | | | | | | | |
--------------------------------------------------------------------------------
| 1-12/2007 | Equity belonging to parent company's | | |
| | shareholders | | |
--------------------------------------------------------------------------------
| 1000 EUR | Share | Share | Fair | Hed- | Trans | Retaine | Total |
| | capit | issue | va- | ging | latio | d | |
| | al | premi | lue | res. | n | earning | |
| | | um | res. | | diff. | s | |
--------------------------------------------------------------------------------
| SHAREHOLDERS' | 5 629 | 5 777 | 105 | -44 | -69 | 15 271 | 26 668 |
| EQUITY | | | | | | | |
| 1.JAN 2007 | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | | 44 | | | 44 |
| hedging | | | | | | | |
| recognized in | | | | | | | |
| equity, net of | | | | | | | |
| tax | | | | | | | |
--------------------------------------------------------------------------------
| Investment | | | -105 | | | | -105 |
| available to | | | | | | | |
| sale, at fair | | | | | | | |
| value, net of | | | | | | | |
| tax | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | | -58 | -487 | -545 |
| translation | | | | | | | |
--------------------------------------------------------------------------------
| Net profits | | | -105 | 44 | -58 | -487 | -606 |
| and losses | | | | | | | |
| recognized | | | | | | | |
| directly in | | | | | | | |
| shareholders | | | | | | | |
| equity | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | | | |
| period | | | | | | | |
--------------------------------------------------------------------------------
| Total profits | | | | | | 9 496 | 9 496 |
| and losses | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | -105 | 44 | -58 | 9 009 | 8 890 |
| distribution | | | | | | | |
--------------------------------------------------------------------------------
| Share-based | | | | | | -2 814 | -2 814 |
| payments | | | | | | | |
--------------------------------------------------------------------------------
| Osakeperusteis | | | | | | 101 | 101 |
| et maksut | | | | | | | |
--------------------------------------------------------------------------------
| SHAREHOLDERS' | 5 629 | 5 777 | 0 | 0 | -127 | 21 566 | 32 845 |
| EQUITY | | | | | | | |
| 31 DEC 2008 | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| CHANGE IN | | | | | | | |
| SHAREHOLDERS' | | | | | | | |
| EQUITY | | | | | | | |
--------------------------------------------------------------------------------
| 1-12/2008 | Equity belonging to parent company's shareholders | |
--------------------------------------------------------------------------------
| 1000 EUR | Share | Share | Fair | Hed- | Trans | Retaine | Total |
| | capit | issue | va- | ging | latio | d | |
| | al | premi | lue | res. | n | earning | |
| | | um | res. | | diff. | s | |
--------------------------------------------------------------------------------
| SHAREHOLDERS' | 5 629 | 5 777 | 0 | 0 | -127 | 21 566 | 32 845 |
| EQUITY | | | | | | | |
| 1.JAN 2008 | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | | -208 | | | -208 |
| hedging | | | | | | | |
| recognized in | | | | | | | |
| equity, net of | | | | | | | |
| tax | | | | | | | |
--------------------------------------------------------------------------------
| Investment | | | | | | | 0 |
| available to | | | | | | | |
| sale, at fair | | | | | | | |
| value, net of | | | | | | | |
| tax | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | | | | 0 |
| translation | | | | | | | |
--------------------------------------------------------------------------------
| Net profits | | | | -208 | -78 | -1 191 | -1 269 |
| and losses | | | | | | | |
| recognized | | | | | | | |
| directly in | | | | | | | |
| shareholders | | | | | | | |
| equity | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | | 10 022 | 10 022 |
| period | | | | | | | |
--------------------------------------------------------------------------------
| Total profits | | | | -208 | -78 | 8 831 | 8 545 |
| and losses | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | | -5 629 | -5 629 |
| distribution | | | | | | | |
--------------------------------------------------------------------------------
| Share-based | | | | | | 9 | 9 |
| payments | | | | | | | |
--------------------------------------------------------------------------------
| SHAREHOLDERS' | 5 629 | 5 777 | 0 | -208 | -205 | 24 777 | 35 770 |
| EQUITY | | | | | | | |
| 31 DEC 2008 | | | | | | | |
--------------------------------------------------------------------------------
KEY RATIOS OF LAROX GROUP
--------------------------------------------------------------------------------
| 1000 EUR | 1-12/2008 | 1-12/2007 | 1-12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| New orders | 184 799 | 208 421 | 137 971 |
--------------------------------------------------------------------------------
| Group order backlog, end of the | 72 006 | 97 330 | 44 911 |
| period | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 207 995 | 158 270 | 122 809 |
--------------------------------------------------------------------------------
| Operating profit | 16 618 | 13 070 | 8 931 |
--------------------------------------------------------------------------------
| % of net sales | 8.0 | 8.3 | 7.3 |
--------------------------------------------------------------------------------
| Net financing costs | 2 661 | 1 315 | 1 887 |
--------------------------------------------------------------------------------
| % of net sales | 1.3 | 0.8 | 1.5 |
--------------------------------------------------------------------------------
| Result before taxes | 13 957 | 11 755 | 7 044 |
--------------------------------------------------------------------------------
| Result for the period | 10 022 | 9 496 | 5 004 |
--------------------------------------------------------------------------------
| EPS basic and diluted (EUR) | 1.07 | 1.01 | 0.53 |
--------------------------------------------------------------------------------
| Investments | 7 402 | 3 284 | 2 285 |
--------------------------------------------------------------------------------
| Shareholders' equity per share at the | 3.81 | 3.50 | 2.84 |
| end of the period (EUR) | | | |
--------------------------------------------------------------------------------
| Equity ration % | 32.3 | 34.2 | 33.9 |
--------------------------------------------------------------------------------
| Contingent liabilities (EUR million) | 44.2 | 30.3 | 27.8 |
--------------------------------------------------------------------------------
| Trading price at the end of period, | 4.60 | 12.00 | 9.00 |
| (EUR) | | | |
--------------------------------------------------------------------------------
| Market capitalization at the end of period, | | |
--------------------------------------------------------------------------------
| EUR million *) | 43.2 | 112.6 | 84.4 |
--------------------------------------------------------------------------------
| Personnel, average | 562 | 458 | 450 |
--------------------------------------------------------------------------------
| Personnel at the end of the period | 593 | 469 | 446 |
--------------------------------------------------------------------------------
| Net sales/employer | 370 | 346 | 273 |
--------------------------------------------------------------------------------
*) The price of the A share is based on the B share's last trading rate of the
reporting period (weighted average).
KEY FIGURES BY QUARTERS
--------------------------------------------------------------------------------
| | 2008 | 2008 | 2008 | 2008 | 2007 |
--------------------------------------------------------------------------------
| 1000 EUR | 10-12 | 7-9 | 4-6 | 1-3 | 10-12 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| New orders | 25 817 | 53 759 | 51 906 | 53 317 | 64 912 |
--------------------------------------------------------------------------------
| Group order backlog | 72 006 | 110 087 | 115 675 | 109 183 | 97 330 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 64 079 | 58 804 | 47 548 | 37 563 | 49 298 |
--------------------------------------------------------------------------------
| Operating profit | 4 908 | 5 254 | 3 460 | 2 726 | 5 164 |
--------------------------------------------------------------------------------
| % of net sales | 7.7 | 9.4 | 7.3 | 7.3 | 10.5 |
--------------------------------------------------------------------------------
| Net financing costs | 1 182 | 732 | 233 | 514 | 256 |
--------------------------------------------------------------------------------
| % of net sales | 1.8 | 1.2 | 0.5 | 1.4 | 0.5 |
--------------------------------------------------------------------------------
| Result before taxes | 3 726 | 4 792 | 3 227 | 2 212 | 4 908 |
--------------------------------------------------------------------------------
| Result for the | 2 828 | 3 317 | 2 548 | 1 329 | 5 250 |
| quarter | | | | | |
--------------------------------------------------------------------------------
| EPS basic and diluted | 0.35 | 0.27 | 0.14 | 0.56 |
| 0.30 | | | | |
--------------------------------------------------------------------------------
DIVIDEND PAID
Based on the resolution of the annual general meeting of shareholders held
on 26 March 2008 a dividend of EUR 0.60 per share was paid; a total of
EUR 5.628.960. The dividends were paid on 7 April 2008.
INVESTMENTS
--------------------------------------------------------------------------------
| Property, plant and equipment | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | 31.12.2008 | 31.12.2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Aquisition cost | 29 520 | 28 589 |
--------------------------------------------------------------------------------
| Translation differences | | -349 | -120 |
--------------------------------------------------------------------------------
| Additions | | 1 226 | 1 144 |
--------------------------------------------------------------------------------
| Acquisition of subsidiary | | 2 938 | 0 |
--------------------------------------------------------------------------------
| Disposals | | -33 | -93 |
--------------------------------------------------------------------------------
| Acquisition cost | 32 762 | 29 520 |
--------------------------------------------------------------------------------
| Cumulative depreciations | -20 263 | -19 023 |
--------------------------------------------------------------------------------
| Translation differences | | 279 | 163 |
--------------------------------------------------------------------------------
| Depreciation for the period | | -1 394 | -1 403 |
--------------------------------------------------------------------------------
| Cumul depr, end of period | -21 380 | -20 263 |
--------------------------------------------------------------------------------
| Carrying value, end of period | 11 382 | 9 257 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Intangible assets (exluding goodwill) | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | 31.12.2008 | 31.12.2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition cost | 29 858 | 27 772 |
--------------------------------------------------------------------------------
| Translation differences | | 18 | -55 |
--------------------------------------------------------------------------------
| Additions | | 1 763 | 2 151 |
--------------------------------------------------------------------------------
| Acquisition of subsidiary | | 850 | 0 |
--------------------------------------------------------------------------------
| Disposals | | 0 | 0 |
--------------------------------------------------------------------------------
| Acquisit. cost, end of period | 32 488 | 29 858 |
--------------------------------------------------------------------------------
| Cumulative depreciations | -11 062 | -8 901 |
--------------------------------------------------------------------------------
| Translation differences | | -14 | -61 |
--------------------------------------------------------------------------------
| Depreciation for the period | | -2 414 | -2 101 |
--------------------------------------------------------------------------------
| Cumul depr, end of period | -13 490 | -11 063 |
--------------------------------------------------------------------------------
| Carrying value, end of period | 18 998 | 18 795 |
--------------------------------------------------------------------------------
BUSINESS COMBINATIONS
On 1 October 2008 Larox Group acquired the total share capital of
Turku Ceramics Oy and obtained the control in the company. Turku Ceramics
concentrates mainly on subcontract manufacturing of highly tailored parts
and components designed by the customers. Durable high tech ceramics are
used more and more to replace conventional materials in challenging conditions
of machine and chemical process industries. The acquired business
contributed revenues of EUR 0.3 million and net profit of EUR 0.03 million
for the last quarter of 2008.
--------------------------------------------------------------------------------
| Details of net assets acquired and | | |
| goodwill are as follows: | | |
--------------------------------------------------------------------------------
| Purchase consideration: | | |
--------------------------------------------------------------------------------
| Cash paid | 4 333 | |
--------------------------------------------------------------------------------
| Direct costs relating to the acquisition | 81 | |
--------------------------------------------------------------------------------
| Total purchase consideration | 4 414 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The assets and liabilities as of 1 October | | |
| 2008 are as follows: | | |
--------------------------------------------------------------------------------
| | Fair value | Acquiree's |
| | | carrying |
| | | ammount |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents | 949 | 949 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 2 397 | 1 359 |
--------------------------------------------------------------------------------
| Contractual supplier relationship | 850 | 2 |
| (included in intangible assets) | | |
--------------------------------------------------------------------------------
| Inventories | 553 | 333 |
--------------------------------------------------------------------------------
| Trade and other receivables | 337 | 337 |
--------------------------------------------------------------------------------
| Trade and other payables | -278 | -278 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | -653 | -106 |
--------------------------------------------------------------------------------
| Fair value of net assets | 4 155 | 2 596 |
--------------------------------------------------------------------------------
| Goodwill | 259 | |
--------------------------------------------------------------------------------
| Total purchase consideration | 4 414 | |
--------------------------------------------------------------------------------
| Purchase consideration settled in cash | | 4 333 |
--------------------------------------------------------------------------------
| Cash and equivalents in subsidiary | | -949 |
| acquired | | |
--------------------------------------------------------------------------------
| Cash outflow on acquisition | | 3 384 |
--------------------------------------------------------------------------------
In business combination mentioned above acquired tangible assets were
valued with fair values based on the market prices of similar tangible assets.
In evaluating the market values wholesale price index and remaining economical
operating life were used. In business combination the Group has acquired
contractual supplier relations. These relations were valued using cost based
method, because market price method and methods based on cash flows would not
have given as reliable results. Subcontractor and suppliers have a great
consequence in acquired business, because components need to fulfill high
quality requirements. A new supplier can be accepted only after test series
have been produced. The fair value of contractual supplier relations has
been evaluated based on costs of required test series. Goodwill is formed of
capable personnel, technological know-how and going concern - principle.
Geographical segments
--------------------------------------------------------------------------------
| Net sales 1000 EUR | 1-12/2008 | 1-12/2007 |
--------------------------------------------------------------------------------
| North, Central and South America | 68 846 | 45 881 |
--------------------------------------------------------------------------------
| Asia and Australasia | 45 759 | 40 479 |
--------------------------------------------------------------------------------
| Europe, Middle East and Africa | 93 390 | 71 910 |
--------------------------------------------------------------------------------
| Total net sales | 207 995 | 158 270 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets 1000 EUR | 1-12/2008 | 1-12/2007 |
--------------------------------------------------------------------------------
| North, Central and South America | 13 636 | 11 647 |
--------------------------------------------------------------------------------
| Asia and Australasia | 9 434 | 8 133 |
--------------------------------------------------------------------------------
| Europe, Middle East and Africa | 123 297 | 114 904 |
--------------------------------------------------------------------------------
| Internal items | -28 228 | -31 831 |
--------------------------------------------------------------------------------
| Total assets | 118 139 | 102 853 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investments 1000 EUR | 1-12/2008 | 1-12/2007 |
--------------------------------------------------------------------------------
| North, Central and South America | 144 | 148 |
--------------------------------------------------------------------------------
| Asia and Australasia | 80 | 332 |
--------------------------------------------------------------------------------
| Europe, Middle East and Africa | 7 178 | 2 804 |
--------------------------------------------------------------------------------
| Total investments | 7 402 | 3 284 |
--------------------------------------------------------------------------------
Commitments and contingencies
--------------------------------------------------------------------------------
| Loans secured by real estate and corporate mortgages | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1000 EUR | 31.12.2008 | 31.12.2007 |
--------------------------------------------------------------------------------
| Pension loans | | |
--------------------------------------------------------------------------------
| Loans from financial institutions | 38 049 | 36 577 |
--------------------------------------------------------------------------------
| Other loans | | |
--------------------------------------------------------------------------------
| Total | 38 049 | 36 577 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Real estate mortgages | 6 560 | 6 560 |
| | | |
--------------------------------------------------------------------------------
| Corporate mortgages, general pledging | 3 936 | 3 936 |
| | | |
--------------------------------------------------------------------------------
| Corporate mortgages, specific pledging | 9 062 | 9 062 |
--------------------------------------------------------------------------------
| Total | 19 558 | 19 558 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Guarantees for others | | |
--------------------------------------------------------------------------------
| Pledged securities *) | 13 511 | 9 097 |
--------------------------------------------------------------------------------
| Others | 161 | 124 |
--------------------------------------------------------------------------------
| Total | 13 672 | 9 221 |
--------------------------------------------------------------------------------
| *) Book value of secured shares | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other liabilities | | |
--------------------------------------------------------------------------------
| Operating lease liabilities 1000 EUR | 1 094 | 857 |
--------------------------------------------------------------------------------
| Lease liabilities 1000 EUR | 9 889 | 639 |
--------------------------------------------------------------------------------
Fair and nominal values of derivative instruments
--------------------------------------------------------------------------------
| 1000 EUR | 31.12.2008 | 31.12.2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Currency derivatives: | 0 | 3 155 |
--------------------------------------------------------------------------------
| Currency options | 7 033 | 18 313 |
--------------------------------------------------------------------------------
| Forward contracts | | |
--------------------------------------------------------------------------------
| Fair value | -402 | 225 |
--------------------------------------------------------------------------------
| Nominal value | 7 033 | 21 468 |
--------------------------------------------------------------------------------
Related party transactions
--------------------------------------------------------------------------------
| 1000 EUR | | 1.1.-31.12.2008 | 1.1.-31.12.2007 |
--------------------------------------------------------------------------------
| Transactions with associated | | |
--------------------------------------------------------------------------------
| Companies | | | |
--------------------------------------------------------------------------------
| Sales of goods and services | | 15 | 3 |
--------------------------------------------------------------------------------
| Purchases of goods and services | | 2 736 | 2 829 |
--------------------------------------------------------------------------------
| Other transactions with related | | | |
--------------------------------------------------------------------------------
| Parties | | | |
--------------------------------------------------------------------------------
| Purchases of services | | 20 | 22 |
--------------------------------------------------------------------------------
| Balances with associated | | | |
| companies | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Trade receivables | | 16 | 1 |
--------------------------------------------------------------------------------
| Trade payables | | 236 | 783 |
--------------------------------------------------------------------------------
CALCULATION OF KEY FIGURES
Equity ratio, % =
Shareholders' equity
--------------------------------- x 100
Total assets - advances received
Earnings per share =
Net profit
---------------------------------
Adjusted average number of shares
during the period
Market capitalization at the end of the period =
Number of shares at the end of the period x trading price at the end of the
period weighted by the number of shares traded
Larox develops, designs and manufactures industrial filters and is a
leading technology company in its field. Larox is a full service solution
provider in filtration for separating solids from liquids. It supplies
comprehensive aftermarket services throughout the lifespan of the Larox
solution. Companies world-wide in mining and metallurgy, chemical processing
and related industries benefit from the Larox technologies. Larox operates
in over 40 countries and has over 590 employees. Larox Group is headquartered
in Lappeenranta, Finland where the Group also has production facilities. Net
sales in 2008 totaled 208.0 million euros, of which more than 93 % were
generated by exports and the company's foreign operations.
