MACHINIUM LTD AND ITS SWEDISH SUBSIDIARI
LÄNNEN TEHTAAT PLC STOCK EXCHANGE RELEASE July 28, 2004 at 10;10 a.m.
MACHINIUM LTD AND ITS SWEDISH SUBSIDIARIES FILING FOR BANKRUPTCY, SECOND QUARTER PROFITS OF LÄNNEN TEHTAAT DOWN BY EUR 4 MILLION Machinium Ltd, the parent company of the earthmoving and materials handling division, and its Swedish subsidiaries SMA Construction AB and SM Maskin AB, and SMA Maskinuthyrning AB, a subsidiary of SMA Maskin AB, have today filed for bankruptcy. Suomen Rakennuskone Oy, which is owned by Machinium Ltd, and its Baltic subsidiaries will continue their operations and every effort will be made to find a new owner for the companies as soon as possible. The ownership of Machinium Ltd is divided between Lännen Tehtaat plc (about 60%), Forenvia Venture I Ky and SFK 99-Fund Ky (between them, 30%), and other minority shareholders(10%). Net turnover of the companies filing for bankruptcy came to EUR 48 million in the year ending at December 31, 2003. On June 30, 2004, the companies had debts amounting to EUR 39 million, of which EUR 6 million were intra-company subordinated loans. At the same time, the companies employed a staff numbering 197, 195 in Sweden and 2 in Finland. During the past two years, Lännen Tehtaat has been actively in its search for an ownership basis for Machinium that would have enabled the group to continue operations. However, despite considerable efforts, it has proved impossible to find a solution. The Finnish and Baltic companies of the Machinium Division have been constantly in the black. The sale of the business operation of the profitable Suomen Rakennuskone and its three Baltic subsidiaries had already been launched before the bankruptcy and the aim is to have the sales process concluded as quickly as possible despite the bankruptcy of the parent company. The business operations of Lännen Engineering Oy, a Loimaa-based company of the Machinium group were sold to Lännen Tractors Oy in May 2004. The Machinium Division was set up in 1999 by incorporating the earthmoving machinery division of Lännen Tehtaat and SMA Maskin, a Swedish company acquired by Machinium, into one group. The profitability of the Swedish companies has been weak and despite a number of restructuring and cost-cutting rounds, the companies have remained in the red. SMA Construction AB, in particular, has seen its losses grow during 2004. The combined loss of the Swedish companies in the period January 1 June 30, 2004 totalled EUR 2.5 million (1.8). The liabilities resulting from the bankruptcy of Machinium will cause Lännen Tehtaat an estimated loss of EUR 4.0 million, which has been entered into the results of the second quarter. As a consequence of the bankruptcy, the Lännen Tehtaat Group will see its consolidated balance sheet shrink by EUR 30 million. The exit from Machinium is estimated to increase the equity ratio by 4 per cent, while at the same time the annual consolidated net turnover of Lännen Tehtaat will be cut by EUR 90 million. The Machinium group has accumulated losses of about EUR 13 million between 1999 and 2004. After the minority share has been deducted from the total, the share of Lännen Tehtaat is about EUR 7 million. The principal operating sector of Lännen Tehtaat is the food industry. In 2003, consolidated net turnover amounted to EUR 492 million, and the Group made a profit of EUR 6.7 million. At the end of the year, Lännen Tehtaat had capital and reserves totalling EUR 95 million. LÄNNEN TEHTAAT PLC Erkki Lepistö President & CEO More details: Erkki Lepistö, tel. +358 2 8397 4001 Distribution: Helsinki Exchanges Main media www.lannen.fi