ANNUAL ACCOUNTS INFORMATION January 1 ?
LÄNNEN TEHTAAT PLC Stock exchange release Feb. 24, 2004 at 9;00 am
ANNUAL ACCOUNTS INFORMATION January 1 December 31, 2003
Net turnover by Lännen Tehtaat totalled EUR 492.0 million (2002: EUR
283.4 million). The increase on the previous years figure was from
the business operations of Suomen Rehu and Avena Nordic Grain, which
were acquired in November 2002. The consolidated operating profit was
EUR 11.7 (3.3) million and profit before extraordinary items EUR 8.4 (-
0.1) million. Earnings per share came to EUR 1.11 (EUR 0.40). The
Board proposes a dividend of EUR 0.65 (EUR 0.30) per share to the
Annual General Meeting.
Group structure
No significant changes occurred in the Group structure. The Groups
division into three business areas remained unchanged.
The Food Division consists of Apetit and Lännen Sugar, both units of
Lännen Tehtaat plc, and the subsidiary company Tresko Fish Ltd.
The Agricultural Division consists of the following companies: Suomen
Rehu Ltd and its subsidiary companies Hiven Oy in Finland, SIA Baltic
Feed in Latvia and Rehu Eesti Oü in Estonia; Lännen Rehu Oy, which was
set up at the start of the year in a business transfer; Avena Nordic
Grain Oy and its Russian subsidiary ZAO Avena St. Petersburg; and
Lännen Plant Systems and Harviala Oy. Avena Oy, which was previously
part of the Agricultural Division, was merged with Lännen Tehtaat plc
at the end of the year.
The Machinium Division comprises Machinium Ltd as the parent company
and the following subsidiaries: Lännen Engineering Oy and Suomen
Rakennuskone Oy in Finland; SMA Construction AB and SMA Maskin AB,
plus 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.
Of the associated companies, Sucros Ltd belongs to the Food Division,
while Movere Oy and Farmit Website Oy are part of the Agricultural
Division. The shares in Agribalt Oy, which was previously part of the
Agricultural Division, were sold at the start of July.
Net turnover
Consolidated net turnover totalled EUR 492.0 million (2002: EUR 283.4
million). The increase on the previous years figure was from the
business operations of Suomen Rehu and Avena Nordic Grain, which were
acquired in November 2002. The Food Division accounted for 23% (43%)
of net turnover, the Agricultural Division for 58% (25%) and the
Machinium Division for 19% (32%).
Net turnover for the Food Division was EUR 114.9 (120.8) million, of
which frozen products accounted for EUR 41.6 (41.9) million. Sales of
frozen pizzas and frozen potato products were up, as were sales of
fish products. Sales of frozen vegetables, frozen meals and jams were
down on the previous years level. The drop in net turnover in
comparison with 2002 was in part due to the sale of Lannen Polska in
late 2002.
Sugar sales were down on the previous years level due to the fairly
poor berry and apple crops. Sales in 2002 were boosted by the fact
that consumers stocked up on sugar following the fire at the Sucros
sugar packaging unit.
Net turnover for the Agricultural Division was EUR 282.6 (70.8)
million. The figure cannot be compared directly with the previous
years level because Suomen Rehu and Avena Nordic Grain were
incorporated into the Division at the end of 2002. Sales volumes in
the animal feeds business were at the previous years level. Adjusting
the figures to allow a direct comparison with 2002 reveals that net
turnover was down on the previous year, due to the lower sales prices,
and fell short of the expected level. Grain trade net turnover reached
the same level as in 2002. Other operations in the Agricultural
Division accounted for only a minor proportion of the Divisions net
turnover.
Net turnover for the Machinium Division was EUR 94.5 (91.8) million.
The increase on the previous years figure was due to the higher sales
of earthmoving machinery. Sales were up in Finland and also increased
markedly in Sweden and the Baltic States. Sales in the materials
handling business were significantly below the targeted level and fell
short of the previous years figure as well, on account of both the
market downturn and loss of market share in Sweden.
Net turnover for the parent company Lännen Tehtaat plc was EUR 115.0
(140.1) million. The decrease on the previous years figure was mainly
due to transfer of the net turnover for the animal feeds business to
Lännen Tehtaat plcs subsidiary Lännen Rehu Oy at the start of 2003.
Profits
The consolidated operating profit was EUR 11.7 (3.3) million and
profit before extraordinary items EUR 8.4 (-0.1) million.
Direct taxes recorded in the profit and loss account came to EUR 2.6
million (2002: receivables 0.5 million).
After taxes and minority interests, 2003 profits came to EUR 6.7 (2.4)
million. This result was boosted by EUR 1.7 million as a consequence
of the fact that 40.2% of the Machinium Groups loss was carried by
its minority shareholders; by contrast, the result was weakened by a
figure of EUR 0.7 million because 17.9% of Suomen Rehus profits were
allocated to its minority shareholders.
The Food Divisions operating profit stood at EUR 6.5 (3.3) million.
The Divisions profitability as a whole was much improved on the
previous year, but fell short of the targeted level. The profitability
of Apetits domestic business was below the previous years level due
to the higher proportionate sales of products with special pricing
campaigns or with a lower margin, and because of the rise in prices of
energy and imported raw materials. Profitability was improved by the
increased profit contribution of the associated company Sucros and the
profits came to the level preceding the 2002 fire. The Divisions 2002
operating profit had been affected by the loss-making operations of
the Polish subsidiary and the costs of withdrawing from Poland,
together amounting to approximately EUR 4.1 million.
The Agricultural Divisions operating profit was EUR 8.3 (5.2)
million. The figure is not directly comparable with the previous year
due to the changes in the Groups structure. The Divisions
profitability was at the planned level. Profitability in the animal
feeds business was maintained at the 2002 level, thanks to efficiency
improvements in production and logistics and the savings in fixed
costs, despite the higher raw material prices at the end of the year.
Grain trade profitability was at the 2002 level.
The Machinium Divisions operating result was EUR 3.1 (-5.2) million.
This continued operating loss occurred in spite of the Divisions
improved profitability. The loss was principally due to the poor
performance of the materials handling machines business, especially
the reduced sales and maintenance volumes. The earthmoving machinery
business made a profit, and its performance in Finland and the Baltic
States was in line with targets. The financial performance of the
Swedish earthmoving machinery business was also improved on the 2002
level, although it fell short of the target and recorded a loss.
Lännen Tehtaat plc has a 59.8% holding in the Machinium Group. The
balance sheet value of this holding was reduced from EUR 5.5 million
to EUR 2.5 million. The value adjustment does not affect the pre-tax
consolidated profits. In addition, the parent companys financial
expenses include a provision of EUR 1.0 million for restructuring
within the Machinium Group. The parent companys other liabilities in
the Machinium Group amount to EUR 7.3 million.
Financing
The Groups financial structure strengthened in 2003 on account of the
good cash flow from operations. Interest-bearing liabilities totalled
EUR 73.7 (83.9) million at the end of the year, and financial assets
amounted to EUR 13.1 (17.0) million. Commercial papers were used for
short-term financing. Liquidity was secured by long-term committed
credit facilities; no credit facilities were used during the year. Net
financial expenses came to EUR 3.3 (3.2) million. Net financial
expenses were reduced by one-off income and expenses with a net total
of EUR 0.3 million. The equity ratio was 40% (37%) at the end of the
year.
The Machinium Divisions liquidity has remained satisfactory despite
the losses made. The 2003 loss was financed by reducing the amount of
working capital.
Decisions of the Annual General Meeting
Lännen Tehtaat plcs Annual General Meeting on April 3, 2003 decided
to distribute a dividend of EUR 0.30 (0.60) per share.
The Annual General Meeting authorized the Board of Directors to take
decisions regarding release of Lännen shares in the companys
possession. Under the authorization, the Board of Directors may
release the 65,000 company shares in its possession. The shares may be
released in connection with corporate acquisitions or for a similar
purpose, or sold in public trading on Helsinki Exchanges. The
authorization remains valid for one year from the date of the AGM.
The Board has not yet made use of the authorization. The 65,000
company shares in its possession represent 1.1% of the companys total
share capital and total votes.
Investment
Gross investment in non-current assets came to EUR 9.5 (47.3) million.
The investment was mainly in developing and maintaining production
technology.
Investment by the Food Division totalled EUR 1.7 (5.8) million, and by
the Agricultural Division EUR 7.1 (40.8) million. The Agricultural
Divisions investment included EUR 3.4 million on the purchase in
early 2003 of the headquarters and staff restaurant buildings that
were previously rented under a leasing agreement. The buildings are
located in Säkylä and have been in the companys constant use. In
2002, the Divisions investment included purchase of the Avena Oy
shares. Investment by the Machinium Division totalled EUR 0.7 (0.7)
million.
R&D
The Groups product development expenses accounted for 0.7% (0.6%) of
net turnover. The focus was especially on the development of animal
feeds and food products. In animal feeds, the emphasis in 2003 was on
the development of feeding that advances animal health and wellbeing,
feeding technologies that improve the profitability of livestock
production, and the special feeds business.
In food products, the focus of development was on the Apetit units
products. The start of the year saw the launch of a modified range of
pizzas specially tailored to Finnish tastes, and in September the new
Quick & Tasty fast-food range was introduced, containing plenty of
vegetables but little fat.
Environmental matters
Environmental protection and investment expenses have been charged to
the profit and loss account with the exception of EUR 0.2 million
capitalized for wastewater treatment equipment and waste disposal at
the Säkylä industrial estate.
Changeover to IAS financial statements
Lännen Tehtaat will publish its first financial statements under the
IAS-IFRS standards in 2005. Interim reports will also be prepared in
accordance with the IAS standards as of 2005. IAS comparison data will
be compiled in 2004 in preparation for the 2005 financial statements
and interim reports.
Events after the end of the financial year
At the start of 2004, Lännen Rehu Oy shares were transferred in a
share exchange from the parent company to the ownership of Suomen Rehu
Ltd. Lännen Tehtaats holding in Suomen Rehu rose to 87.9% (82.1%).
Outlook for 2004
The Food Divisions net turnover is expected to grow in line with the
general trend in the market. The Apetit units sales are expected to
increase slightly. Although the total consumption of sugar will not
rise, it is expected that sales of Lännen Sugars consumer products
will be up slightly in comparison with the exceptionally low level of
2003.
Net turnover in the animal feeds business is expected to be unchanged
from the 2003 level. The rise in raw material prices will weaken
profitability, especially in the early part of the year. Grain trade
net turnover will depend on the amount and quality of this years
crops in the main market areas.
The earthmoving and utility machinery market is expected to remain
good in Finland. In Sweden, the decline that began in 2000 is expected
to come to a halt. The stable growth in the Baltic States is forecast
to continue in the next few years. There are nevertheless
uncertainties in the market, concerning for instance the future course
of the economy, which will affect decision-making on investment in
construction and engineering projects. The market for materials
handling machines in Sweden is expected to remain unchanged.
Lännen Tehtaat Groups net turnover is expected to rise to over EUR
500 million in 2004. The profit trend in the first part of the year
will be very modest, as was the case the previous year. Full-year
profits are expected to be at the same level as in 2003.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
EUR million
10-12/ 10-12/ 1-12/ 1-12/
2003 2002 2003 2002
Net turnover 129.2 107.5 492.0 283.4
Other operating income 0.8 3.7 2.1 4.2
Costs and expenses -123.8 -104.3 -473.8 -278.3
Depreciation -3.5 -3.6 -11.8 -8.5
Share of profits of
associated undertakings 0.6 1.1 3.2 2.5
Operating profit 3.3 4.4 11.7 3.3
Share of loss of
associated undertakings -0.2 -0.2
Financial income and
expenses -0.9 -0.1 -3.3 -3.2
Profit/loss before
extraordinary items 2.4 4.1 8.4 -0.1
Extraordinary income
Extraordinary expenses
Profit/loss before taxes
and minority interests 2.4 4.1 8.4 -0.1
Income taxes -0.7 -0.3 -2.6 0.5
Minority interests 0.3 1.0 0.9 2.0
Profit for the period 2.0 4.8 6.7 2.4
PROPOSAL OF THE BOARD FOR THE DISTRIBUTION OF PROFIT
The Board of Directors proposes that Lännen Tehtaat plc pay a dividend
of EUR 0.65 per share.
CONSOLIDATED PROFIT AND LOSS ACCOUNT, PRO FORMA
AVENA FIGURES INCLUDED IN COMPARISON DATA 2002
EUR million Pro forma Pro forma
10-12/ 10-12/ 1-12/ 1-12/
2003 2002 2003 2002
Net turnover 129.2 137.9 492.0 506.5
Other operating income 0.8 3.9 2.1 5.2
Costs and expenses -123.8 -133.4 -473.8 -491.5
Depreciation -3.5 -4.2 -11.8 -13.9
Share of profits of
associated undertakings 0.6 1.1 3.2 2.6
Operating profit 3.3 5.3 11.7 8.9
Share of loss of
associated undertakings -0.1 -0.4
Financial income and
expenses -0.9 -0.7 -3.3 -6.2
Profit before
extraordinary items 2.4 4.5 8.4 2.3
Extraordinary income
Extraordinary expenses
Profit before taxes
and minority interests 2.4 4.5 8.4 2 3
Income taxes -0.7 -0.4 -2.6 0.0
Minority interests 0.3 1.0 0.9 1.5
Profit for the period 2.0 5.1 6.7 3.8
CONSOLIDATED BALANCE SHEET
EUR million 2003 2002
Assets
Intangible assets 21.6 20.3
Tangible assets 65.6 69.4
Investments 21.9 21.5
Own shares 0.8 0.8
Stocks 80.2 81.9
Receivables 46.5 52.0
Marketable securities 1.5 5.7
Cash and cash equivalents 11.6 11.3
Total 249.7 262.9
Liabilities
Share capital 12.2 12.2
Other capital and reserves 82.8 78.9
Minority interests 4.9 6.1
Provisions 2.1 0.2
Long-term liabilities 48.3 69.0
Current liabilities 99.4 96.5
Total 249.7 262.9
CONSOLIDATED CASH FLOW STATEMENT
EUR million 2003 2002
Operations
Cash flow from operations 18.8 10.5
Change in working capital 7.4 -16.5
Net cash flow from
operations (A) 26.2 -6.0
Investments
Investments in non-current
assets -9.5 -63.3
Proceeds from sales of
non-current assets 1.5 10.1
Net cash flow from
investments (B) -8.0 -53.2
Financing
Change in loans -18.0 58.5
Dividends paid -1.8 -3.6
Other changes in capital and
reserves and in minority
interests -2.3 0.5
Net cash flow from
financing (C) -22.1 55.4
Changes in liquid assets
(A+B+C) -3.9 -3.8
Liquid assets on Jan. 1 17.0 20.8
Liquid assets on Dec. 31 13.1 17.0
KEY INDICATORS
2003 2002
Earnings per share, EUR 1.11 0.40
Equity per share, EUR 15.29 14.66
Dividend per share, EUR 0.65 0.30
Return on investment, % (ROI) 7.7 2.7
Return on equity, % (ROE) 6.0 0.5
Equity ratio, % 39.5 36.5
Current ratio 1.4 1.6
Gross investments, EUR million 9.5 47.3
% of net turnover 1.9 16.7
Average number of personnel 1161 993
Average number of shares in thousands 6058 6058
BUSINESS SEGMENT INFORMATION
NET TURNOVER
EUR million
10-12/ 10-12/ 1-12/ 1-12/
2003 2002 2003 2002
Food Division 27.3 29.3 114.9 120.8
Agricultural Division 73.4 53.0 282.6 70.8
Machinium Division 28.5 25.2 94.5 91.8
Total 129.2 107.5 492.0 283.4
OPERATING PROFIT
EUR million
Food Division 1.8 3.0 6.5 3.3
Agricultural Division 2.7 4.8 8.3 5.2
Machinium Division -1.2 -3.4 -3.1 -5.2
Total 3.3 4.4 11.7 3.3
AVERAGE PERSONNEL
Food Division 331 438
Agricultural Division 442 175
Machinium Division 388 380
Total 1161 993
CONTINGENT LIABILITIES
EUR million 2003 2002
Debts against which mortgages
have been given
Pension loans 7.9 8.1
Loans from credit institutions 46.6 57.3
Mortgages given for debts
Real estate mortgages 32.6 37.6
Corporate mortgages 76.0 54.7
Shares pledged 3.6 39.8
Other securities given
Corporate Mortgages 6.9 8.2
Pledges 0.0 0.0
Leasing liabilities
Falling due during the following year 1.0 0.8
Falling due at later date 1.1 0.8
Contingent liabilities
for own commitments
Repurchasing commitments 19.0 22.5
Other commitments 2.4 1.4
Contingent liabilities on behalf of
associated undertakings 0.4
Other contingent liabilities
Redemption liability
of leased buildings 2.6 6.0
Outstanding derivative instruments
Forward currency contracts
Market value -0.3 -0.2
Value of underlying instruments 9.5 11.8
Raw material futures
Market value -0.5 -0.5
Value of underlying instruments 10.6 15.5
Interest rate swaps
Value of underlying instruments 25.0
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
