ANNUAL ACCOUNTS INFORMATION Jan.1 - Dec
LÄNNEN TEHTAAT PLC STOCK EXCHANGE RELEASE March 4, 2003 9.00 a.m.
ANNUAL ACCOUNTS INFORMATION Jan.1 - Dec.31, 2002
Net turnover by Lännen Tehtaat totalled EUR 283.4 (254.1) million. The
12% growth was entirely due to the business purchased during the year.
The consolidated operating profit was EUR 3.3 (5.7) million and profit
before extraordinary items EUR 0.1 (4.8) million. Earnings per share
came to EUR 0.40 (EUR 0.84). The Board proposes a dividend of EUR 0.30
(EUR 0.60) per share to the Annual General Meeting.
Corporate expansion
The most significant event in 2002 was a share deal between Lännen
Tehtaat plc and the Finnish government. The ownership of a new company
called Avena Oy, formed through a demerger, was transferred in full to
Lännen Tehtaat on November 4, 2002. As a result, Lännen Tehtaat is now
Finlands leading producer of industrial feeds and a major actor in
the grain trade. Suomen Rehu Ltd, which concentrates on animal
nutrition (Lännen Tehtaat holding 82%), with its subsidiaries, and
Avena Nordic Grain Oy, which engages in the grain trade, were
transferred to Lännen Tehtaat from the former Avena Group.
Corporate structure
The corporate structure was altered as a result of the Avena deal. The
Lännen Tehtaat Group now consists of three operating divisions. In
this report on operations and these financial statements, division-
specific data are presented in accordance with the new organization,
and comparison data for previous years have been adjusted to
correspond to the new organization structure.
The Food Division comprises the Lännen Tehtaat plc units Apetit and
Lännen Sugar, and the subsidiary Tresko Fish Ltd. Lännen Cultivation,
which includes the former Agricultural Department and the Räpi
experimental farm, and was formerly part of Other business units, was
integrated with the Apetit unit. Lannen Polska Sp. z o.o. in Poland
was a Group company until the beginning of November, when Lännen
Tehtaats holding was reduced to 19%.
Following the Avena deal, a new Agricultural Division was formed,
comprising Suomen Rehu Ltd with its subsidiaries Hiven Oy in Finland,
SIA Baltic Feed in Latvia and Rehu Eesti Oü in Estonia, and Avena
Nordic Grain Oy with its subsidiary ZAO Avena St. Petersburg in
Russia. Lännen Feed, Lännen Plant Systems and Harviala Oy were
transferred to the new Division from Other business units.
The Machinium Division consists of Machinium Ltd as the parent company
of the sub-group and its subsidiaries Lännen Engineering Oy and Suomen
Rakennuskone Oy; SMA Construction AB and SMA Maskin AB with its
subsidiary SMA Maskinuthyrning AB in Sweden; AS Balti Ehitusmasin-
Baltem in Estonia; SIA BCM Baltijas Celtniecibas Masina in Latvia; and
UAB Baltijos Statybines Masinos in Lithuania.
The Other business units division was discontinued and divided between
the Food Division and the Agricultural Division.
Of the associated companies, Sucros Ltd belongs to the Food Division,
while Agribalt Oy, Movere Oy and Farmit Website Oy are part of the
Agricultural Division. Oy Potma Ltd was given up at the end of
December.
Net turnover
Consolidated net turnover totalled EUR 283.4 (254.1) million. The 12%
growth was entirely due to the business purchased during the year. The
Food Division accounted for 43% (48%) of net turnover, the
Agricultural Division for 25% (11%) and the Machinium Division for 32%
(41%).
Net turnover for the Food Division was EUR 120.8 (121.6) million.
Apetits domestic net turnover was EUR 55.4 (55.5) million, with
frozen foods accounting for EUR 42.0 (42.3) million. The fall in sales
of frozen vegetables and meals was compensated by higher sales of
frozen fish products. Sales of other fish products and jams also grew.
Lannen Polska net turnover is included for part of the year only and
was distinctly below the 2001 figure. Sales by Lännen Sugar grew
somewhat in spite of the delivery problems caused in early autumn by a
fire at the Sucros Ltd sugar packaging unit.
Net turnover for the new Agricultural Division came to EUR 70.8 (27.2)
million. The increase was due to integration of the Suomen Rehu and
Avena Nordic Grain groups into the Agricultural Division.
The Machinium Divisions net turnover, at EUR 91.8 (105.3) million,
was below the 2001 level. Reorganization of operations and
concentration on Komatsu and Lännen earthmoving machinery reduced net
turnover in Sweden. Market shares fell, too. Some of the market shares
in Finland were also lost because of the tough competition. In the
Baltic States, the Divisions net turnover increased and the companies
also increased their market shares. Thanks to exports to the Baltic
States, net turnover for the Finnish companies remained close to the
2001 level.
The net turnover of the parent company Lännen Tehtaat plc was EUR
140.1 (138.8) million.
Profits
The consolidated operating profit was EUR 3.3 (5.7) million and profit
before extraordinary items EUR 0.1 (4.8) million. Performance was
hampered by one-off costs arising from the discontinuation of
operations in Poland and poor profitability in the Machinium Division.
Direct taxes recorded in the profit and loss account came to EUR 0.5
million receivable, against EUR 1.5 million in 2001. Profit for the
financial year after tax and minority interest was EUR 2.4 (5.1)
million.
After taxes and minority interests, 2002 profits stood at EUR 2.4
million. The 41.4% share of Machinium Group losses carried by
Machiniums minority shareholders improved the figure by EUR 2.0
million. The other minority interests' effect was negligible.
The Food Divisions operating profit stood at EUR 3.3 (7.0) million.
Giving up Lannen Polska reduced the total by EUR 3.3 million.
Reductions in operating profit were also caused by a decline in other
operating income and a lower share of associated companies profits.
Lännen Sugars operating profit was at the 2001 level.
The Agricultural Division made EUR 5.2 (1.4) million in operating
profit. The figure for the Lännen Tehtaat units in the division was at
the 2001 level. The increase was due to Suomen Rehu and Avena Nordic
Grain, which were integrated with the Agricultural Division at the
beginning of November, and to EUR 3.3 million sales profit from the
sale of a real estate company previously owned by Avena Oy.
The Machinium Divisions financial performance was poor. The operating
result was EUR 5.2 (-2.7) million. Profitability was below target and
the previous years level. The losses were incurred solely by the
Swedish companies, and the EUR 1.3 million one-off costs of the
rationalization project also lowered profits in 2002, as did writing
off in a single sum the remaining consolidated goodwill of EUR 1.2
million on acquisition of the companies in Sweden, equivalent to 6,5
years of depreciation. Earthmoving machinery operations in Finland and the
Baltic States showed a profit, with financial performance in excess of
target and the 2001 figures.
Lännen Tehtaat owns 58.6% of the Machinium Division. The balance sheet
value of this holding is EUR 5.4 million. Other liabilities for
Machinium Division come to EUR 7.5 million.
Financing
The Groups financial structure changed with the acquisition of Avena.
The deal was mainly financed with external capital, which is why the
net interest-bearing liabilities of the Group were EUR 83.9 (24.9)
million at the end of the year. Financial assets stood at EUR 17.0
(20.8) million. Current liabilities include EUR 7.0 million worth of
outstanding commercial papers. The availability of short-term
financing has been safeguarded with sufficient committed credit
facilities. Net financial expenses came to EUR 3.2 (0.9) million.
Financial expenses include EUR 1.2 million in losses made in Poland.
The equity ratio was 37% (57%) at the end of the year.
Annual General Meeting, share capital and shareholders
Lännen Tehtaat plcs Annual General Meeting on April 4, 2002 decided
to distribute a dividend of EUR 0.60 (0.84) per share.
The AGM authorized the Board of Directors to decide to raise share
capital by issuing new shares and/or a convertible bond in one or more
tranches. Share capital can be raised by a maximum of EUR 2,449,030 or
1,224,515 shares through a rights and/or a convertible bond issue. The
authorization is valid for one year as of the AGM. If a weighty
financial reason exists, share capital can be raised and/or a
convertible bond issued in derogation from the shareholders prior
subscription rights.
The Board was further authorized to decide on surrender of the
companys own shares. In accordance with this authorization, the Board
may surrender the 65,000 company shares acquired. Shares can be
surrendered in connection with corporate acquisitions or for some
similar purpose, or sold in public trading on Helsinki Exchanges. This
authorization is also valid for one year as of the AGM.
So far the Board has not exercised its right to raise share capital by
issuing new shares or a convertible bond.
The authorization to surrender the companys own shares has not been
exercised, either. The 65,000 company shares owned by the company
represent 1.1% of share capital and votes.
Investment
Gross investment in non-current assets came to EUR 47.3 (3.9) million.
The most important investment in 2002 was the purchase of Avena Oy
shares. The purchase price was EUR 40 million, minus EUR 1.6 million
in additional costs related to Suomen Rehu Ltd financial arrangements
for the period preceding execution of the deal.
EUR 4.2 million of the EUR 5.8 (1.9) million in Food Division
investments went into Lannen Polska shares, which were given up at the
beginning of November. The investment was a precondition for allowing
the Group to disassociate itself from Lannen Polskas financial and
other liabilities. Other investments went mainly into developing and
maintaining production technology.
Investments by the Agricultural Division, including acquisition of the
Avena Oy shares, stood at EUR 40.8 (1.5) million, and those by the
Machinium Division at EUR 0.7 (0.5) million.
R&D
The Groups R&D expenses totalled 0.6% (0.6%) of net turnover, largely
focusing on Apetit products. Retail sales of frozen fish products
under the Apetit label began at the beginning of 2002, and the targets
set for sales were exceeded. The animal feeds business acquired
brought significant new expertise and innovation into the Group. The
new products introduced by Suomen Rehu relate to improvements in
livestock production productivity, and ways of supporting the health
and well-being of livestock and reducing the environmental impacts of
livestock production.
Events after the end of the financial year
Lännen Rehu Oy started operations at the beginning of 2003. The
company was formed by transferring the assets and liabilities of
Lännen Tehtaat plcs animal feeds business to the new company under
the Corporate Taxation Act.
At the beginning of 2003, the parent company bought back the head
office and canteen buildings in Säkylä, which the company had been
renting since 1988. The deal will have no major impact on financial
performance.
On January 31, the Lännen Tehtaat plc and Avena Oy Boards signed a
merger plan to integrate Avena Oy into Lännen Tehtaat plc by the end
of 2003.
Outlook for 2003
Growth in the retail market for frozen foods and relatively successful
crop season production provide a good foundation for favourable
developments at Apetit in 2003. Domestic sales are expected to grow.
The total market for sugar is expected to remain at the 2002 level,
while the consumer product market will decline, which means falling
sales for Lännen Sugar. As a whole, the Food Divisions net turnover
will decline slightly as a result of giving up the loss-making Polish
subsidiary, but profits will improve.
The trend in the new Agricultural Divisions net turnover and
profitability will depend mainly on the animal feeds sector and grain
trade. Animal feeds net turnover will remain at the previous years
level. Rising raw material prices will keep the first-quarter
performance of the animal feeds business clearly below target and the
2002 figure. Profitability for the entire year is expected to be at
the 2002 level. Grain trade net turnover will depend on the quantity
and quality of the next seasons crops in the main market areas.
Profits are expected to remain at the previous years level.
Earthmoving is expected to maintain the 2002 level in its main market
area in 2003. Investment decisions continue to be hampered by
uncertainty concerning cyclical trends. Demand for machinery is
expected to remain at the 2002 level in Finland and Sweden, and growth
should continue in the Baltic States. The decline on the materials
handling equipment market is expected to come to a halt in Sweden. The
Machinium Divisions net turnover is expected to be higher than in
2002.
The rationalization project carried out in Sweden has greatly reduced
operating costs in the Machinium Division. A strategy development
project has begun, and is expected to produce synergy benefits in
marketing, after-sales marketing, logistics and support functions. New
Komatsu and Lännen products will sharpen Machiniums competitive edge.
Because of the poor start to the year in materials handling machinery
business and the slow summer season in earthmoving, the Divisions
first three quarters are expected to remain in the red. However, with
the exception of materials handling machinery business, Machinium
Division profitability should improve on 2002.
Lännen Tehtaat Group net turnover will reach a new level of EUR 500
million in 2003 as a result of the new animal feeds business and grain
trade. Despite a poor profit for the first quarter of the year 2003,
profits for the whole year are expected to rise to a satisfactory
level from the poor 2002 figure.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
EUR million
10-12/ 10-12/ 1-12/ 1-12/
2002 2001 2002 2001
Net turnover 107.5 74.4 283.4 254.1
Other operating income 3.7 0.3 4.2 1.2
Costs and expenses -104.3 -71.3 -278.3 -245.2
Depreciation -3.6 -2.0 -8.5 -7.2
Share of profits of
associated undertakings 1.1 0.8 2.5 2.8
Operating profit 4.4 2.2 3.3 5.7
Share of loss of
associated undertakings -0.2 -0.2
Financial income and
expenses -0.1 0.2 -3.2 -0.9
Profit/loss before
extraordinary items 4.1 2.4 -0.1 4.8
Extraordinary income
Extraordinary expenses
Profit/loss before taxes
and minority interests 4.1 2.4 -0.1 4.8
Income taxes -0.3 -1.1 0.5 -1.5
Minority interests 1.0 0.7 2.0 1.8
Profit for the period 4.8 2.0 2.4 5.1
PROPOSAL OF THE BOARD FOR THE DISTRIBUTION OF PROFIT
The Board of Directors proposes that Lännen Tehtaat plc pay a dividend
of EUR 0.30 per share.
CONSOLIDATED BALANCE SHEET
EUR million 2002 2001
Assets
Intangible assets 20.3 6.9
Tangible assets 69.4 39.4
Investments 21.5 19.7
Own shares 0.8 0.8
Stocks 81.9 41.2
Receivables 52.0 39.4
Marketable securities 5.7 6.5
Cash and cash equivalents 11.3 14.3
Total 262.9 168.2
Liabilities
Share capital 12.2 12.2
Other capital and reserves 78.9 80.3
Minority interests 6.1 5.5
Provisions 0.2 0.1
Long-term liabilities 69.0 23.2
Current liabilities 96.5 46.9
Total 262.9 168.2
CONSOLIDATED CASH FLOW STATEMENT
EUR million 2002 2001
Net cash flow from operations -6.0 20.2
Net cash flow from investments -53.1 -1.7
Net cash flow from financings 55.3 -28.5
Changes in liquid assets -3.8 -10.0
Liquid assets on Jan.1 20.8 30.8
Liquid assets on Dec.1 17.0 20.8
KEY INDICATORS
2002 2001
Earnings per share, EUR 0.40 0.84
Equity per share, EUR 14.66 14.86
Dividend per share, EUR 0.30 0.60
Return on investment, % (ROI) 2.7 6.4
Return on equity, % (ROE) 0.5 3.4
Equity ratio, % 36.5 57.3
Current ratio 1.6 2.2
Gross investments, EURm 47.3 3.9
% of net turnover 16.7 1.5
Average number of personnel 993 1010
Average number of shares in thousands 6058 6062
BUSINESS SEGMENT INFORMATION
NET TURNOVER
EUR million
10-12/ 10-12/ 1-12/ 1-12/
2002 2001 2002 2001
Food Division 29.3 29.9 120.8 121.6
Agricultural Division 53.0 9.9 70.8 27.2
Machinium Division 25.2 34.6 91.8 105.3
Total 107.5 74.4 283.4 254.1
OPERATING PROFIT/LOSS
EUR million
Food Division 3.0 2.5 3.3 7.0
Agricultural Division 4.8 1.0 5.2 1.4
Machinium Division -3.4 -1.3 -5.2 -2.7
Total 4.4 2.2 3.3 5.7
AVERAGE PERSONNEL
Food Division 438 467
Agricultural Division 175 120
Machinium Division 380 423
Total 993 1010
SIGNIFICANT SUBGROUP FIGURES FOR THE WHOLE YEAR.
SUBGROUPS WERE INCORPORATED IN LÄNNEN TEHTAAT
AGRICULTURAL DIVISION IN NOVEMBER.
EUR million
Suomen Rehu Group
Net turnover 188.1 175.0
Operating profit 6.5 5.9
Investments 8.5 2.5
Average personnel 289 254
Avena Nordic Grain Group
Net turnover 92.1 90.3
Operating profit 2.1 1.9
Investments 0.3 0.4
Average personnel 25 24
CONTINGENT LIABILITIES
EUR million 2002 2001
Debts against which mortgages
have been given
Pension loans 8.1 8.4
Loans from credit institutions 57.3 10.7
Mortgages given for debts
Real estate mortgages 37.6 0.1
Corporate mortgages 54.7 13.2
Shares pledged 39.8
Other securities given
Real estate mortgages 1.7
Corporate Mortgages 8.2 1.7
Pledges 0.0 0.0
Leasing liabilities
Falling due during the following year 0.8 0.3
Falling due at later date 0.8 0.2
Contingent liabilities
for own commitments
Guarantees 0.0
Repurchasing commitments 22.5 22.6
Other commitments 1.4 0.9
Contingent liabilities on behalf of
Group undertakings 14.7
Contingent liabilities on behalf of
associated undertakings 0.4
Other contingent liabilities
Redemption liability
of leased buildings 6.0 6.2
Outstanding derivative instruments
Forward currency contracts
Market value -0.2
Value of underlying instruments 11.8 5.1
Raw material futures
Market value -0.5
Value of underlying instruments 15.5
The data have not been audited.
LÄNNEN TEHTAAT PLC
Board of Directors
Erkki Lepistö
President & CEO
More details: Erkki Lepistö, President & CEO, tel. +358 2 8397 4001
Distribution:
Helsinki Exchanges
Main media
www.lannen.fi
