Lassila & Tikanoja plc: Financial Statements Release 1
January–31 December 2023
Lassila & Tikanoja plc
Stock exchange release
9 February 2024 at 8:00 a.m.
Lassila & Tikanoja plc: Financial Statements Release
1 January–31 December 2023
EFFICIENCY MEASURES IMPROVED PROFITABILITY IN
FACILITY SERVICES FINLAND, PROFITABILITY DECREASED IN
ENVIRONMENTAL SERVICES
Unless otherwise mentioned, the figures in brackets refer to the
corresponding period in the previous year.
- Net sales for the final quarter were EUR 200.9 million (210.1).
Net sales decreased by 4.4%.
- Adjusted operating profit for the final quarter was EUR 7.2
million (9.6) and operating profit was EUR 6.7 million (12.9). The
operating profit for the comparison period was improved by a gain
of EUR 4.3 million from the sale of the renewable energy sources
business. Earnings per share were EUR 0.14 (0.29).
- Net sales for 2023 amounted to EUR 802.1 million (844.1). The
comparison period included EUR 35.4 million of net sales from the
renewable energy sources business. Adjusted operating profit was
EUR 39.0 million (40.9) and operating profit was EUR 38.4 million
(42.9). The operating profit for the comparison year was improved
by a gain of EUR 4.3 million from the sale of the renewable energy
sources business. Earnings per share were EUR 0.79 (0.83).
- Net cash flow from operating activities after investments was
strong at EUR 50.9 million (41.1) and net cash flow from operating
activities after investments per share was EUR 1.33 (1.08).
- The Board of Directors proposes a dividend of EUR 0.49 per
share.
Outlook for the year 2024
Net sales in 2024 are estimated to be at the same level as in
the previous year, and operating profit is estimated to be at the
same level or better compared to the previous year.
PRESIDENT AND CEO EERO HAUTANIEMI:
“Net sales for 2023 amounted to EUR 802.1 million (844.1). The
comparison period included EUR 35.4 million of net sales from the
renewable energy sources business. Adjusted operating profit was
EUR 39.0 million (40.9). Net cash flow from operating activities
was strong at EUR 93.6 million (71.8), as was the Group’s financial
position. In 2023, the increase in production costs affected all of
L&T’s divisions, as did the labour market decisions reached in
the late spring, which included one-off items.
In the Environmental Services division, the decline in general
economic activity was reflected in lower waste volumes and the
prices of recycled raw materials throughout the year. The decrease
in the prices and volumes of recycled raw materials burdened the
net sales of the division and had a negative effect of EUR 4.5
million on the operating profit.
The Finnish Waste Act was amended in July 2021. Under the
reform, municipalities take on a larger role in organising the
collection of packaging material waste and biowaste from housing
properties. As a consequence of the reform, L&T’s direct
customer agreements with residential properties on the separate
collection of packaging waste and biowaste are transferred to
municipalities for competitive bidding gradually between 1 July
2022 and 1 July 2025.
As a result of municipalisation, EUR 40 million of the value of the
Finnish waste management market was moved out of the scope of free
competition to municipal waste companies during 2022-2023. The
effects of this change were fully visible on the division starting
from the latter half of 2023. L&T estimates that based on
decisions made by the end of year 2023, a further EUR 30 million
will be moved out of the scope of free competition to municipal
waste companies between 2024 and 2026.
In the latter half of the year, the collection of packaging
waste from residential properties was transferred to municipal
waste companies in several geographical areas that are significant
to L&T. L&T participates in the competitive tendering of
municipal contracts. During 2023 competitive tendering of municipal
contracts is estimated to have amounted to EUR 15-20 million and
the Group won municipal contracts amounting to EUR 8 million.
Nevertheless, the change transferred the ownership of the waste
material collected from these residential properties, decreased
additional sales and reduced the efficiency of L&T’s waste
collection logistics increasing production costs. The change had a
total negative impact of approximately EUR 2.5 million on operating
profit in 2023.
L&T aims to compensate for the impacts of municipalisation
by growing the corporate customer business and continuing to
improve the efficiency of operations during the next three years.
In the division, measures to improve operational efficiency and
profitability were initiated during the latter half of the year.
The employment relationship of approximately 50 salaried employees
are terminated as a result of change negotiations and other jointly
agreed measures latest by the end of the first quarter of 2024.
The Industrial Services division achieved a good result. Net
sales increased in all of the division’s business lines. We carried
out several large projects in the market for demanding industrial
soil remediation projects in particular. Business operations in
Sweden developed favorably despite the challenging market
environment.
The operating profit of Facility Services Finland improved
significantly in 2023. Measures to streamline the cost structure
and improve operational efficiency continued. Progress was achieved
in digitalisation with the number of sites within the scope of
data-driven cleaning increasing in 2023. In building technology
services, the demand for energy efficiency services increased
during the period under review.
The customer agreements in Facility Services Sweden are mostly
fixed-price contracts, and the division has not been able to pass
the increased production costs on to customer prices. The division
has a programme under way to simplify operating models and adapt
them to the changed business environment. The results are expected
to become visible by the end of 2024.
In October 2023, Lassila & Tikanoja plc’s Board of Directors
approved the company’s renewed strategy. Under the renewed
strategy, the Environmental Services and Industrial Services
divisions will seek new growth especially by focusing on business
opportunities related to the circular economy of materials. Growth
will be sought through organic development and potential selective
acquisitions. In connection with the strategy review, the Board of
Directors decided to evaluate the strategic alternatives for
Facility Services Finland and Facility Services Sweden as part of
the company’s business portfolio development. The sale of
operations is one possible option. This strategic evaluation
progressed according to plan in the fourth quarter.”
GROUP NET SALES AND FINANCIAL PERFORMANCE
October–December
Net sales for the fourth quarter amounted to EUR 200.9 million
(210.1), representing a year-on-year decrease of 4.4%. Adjusted
operating profit was EUR 7.2 million (9.6), representing 3.6%
(4.6%) of net sales. Operating profit was EUR 6.7 million (12.9),
or 3.3% (6.2%) of net sales. Earnings per share were EUR 0.14
(0.29).
Net sales increased in Industrial Services and decreased in the
other divisions. Operating profit improved in Industrial Services
and Facility Services Finland, and declined in Environmental
Services and Facility Services Sweden.
The result for the fourth quarter was affected positively by
L&T’s EUR 1.1 million (0.9) share of the profit of the joint
venture Laania Oy. The operating profit for the comparison period
was improved by a gain of EUR 4.3 million from the sale of the
renewable energy sources business.
Year 2023
Net sales for 2023 amounted to EUR 802.1 million (844.1), a
decrease of 5.0% year-on-year. Excluding the effect of the
renewable energy sources business, net sales were on a par with the
comparison period and the rate of organic growth was -0.9%.
Adjusted operating profit was EUR 39.0 million (40.9), representing
4.9% (4.8%) of net sales. Operating profit was EUR 38.4 million
(42.9), or 4.8% (5.1%) of net sales. Earnings per share were EUR
0.79 (0.83).
Net sales increased in Industrial Services and decreased in the
other divisions. Operating profit improved in Industrial Services
and Facility Services Finland, and declined in Environmental
Services and Facility Services Sweden.
The result for the financial year was affected positively by the
fair value of EUR 1.3 million of an interest rate swap being
recognised in financial items due to the termination of the
interest rate swap. The result for the period was also affected
positively by L&T’s EUR 3.6 million (0.7) share of the profit
of the joint venture Laania Oy. The operating profit for the
comparison year was improved by a gain of EUR 4.3 million from the
sale of the renewable energy sources business.
Financial summary
|
10–12/2023 |
10–12/2022 |
Change % |
1–12/2023 |
1–12/2022 |
Change % |
|
|
|
|
|
|
|
Net sales, EUR
million |
200.9 |
210.1 |
-4.4 |
802.1 |
844.1 |
-5.0 |
Adjusted
operating profit, EUR million |
7.2 |
9.6 |
-25.4 |
39.0 |
40.9 |
-4.7 |
Adjusted
operating margin, % |
3.6 |
4.6 |
|
4.9 |
4.8 |
|
Operating
profit, EUR million |
6.7 |
12.9 |
-48.6 |
38.4 |
42.9 |
-10.6 |
Operating
margin, % |
3.3 |
6.2 |
|
4.8 |
5.1 |
|
EBITDA, EUR
million |
20.5 |
26.5 |
-22.7 |
95.8 |
98.3 |
-2.6 |
EBITDA, % |
10.2 |
12.6 |
|
11.9 |
11.6 |
|
Earnings per
share, EUR |
0.14 |
0.29 |
-54.0 |
0.79 |
0.83 |
-4.6 |
Net cash flow
from operating activities
after investments per share, EUR |
0.60 |
1.05 |
-43.3 |
1.33 |
1.08 |
23.7 |
Return on
equity (ROE), % |
|
|
|
13.3 |
14.6 |
|
Capital
employed, EUR million |
|
|
|
425.9 |
437.2 |
-2.6 |
Return on
capital employed (ROCE), % |
|
|
|
10.3 |
10.4 |
|
Equity ratio,
% |
|
|
|
36.8 |
34.3 |
|
Gearing,
% |
|
|
|
69.3 |
75.9 |
|
NET SALES AND OPERATING PROFIT BY DIVISION
Environmental Services
October–December
The division’s net sales for the fourth quarter decreased to EUR
68.9 million (71.1). Operating profit was EUR 3.6 million
(6.2).
Year 2023
The full-year net sales of the Environmental Services division
decreased to EUR 283.7 million (321.2) in 2023. Operating profit
was EUR 27.1 million (30.3). Excluding the effect of the renewable
energy sources business, net sales decreased by 1.2%. The renewable
energy sources business was reported as a part of the Environmental
Services division until the end of the second quarter of 2022.
The focus of the Environmental Services division is heavily on
corporate customers and producer responsibility organisation
customers, and their number grew in the beginning of the year and
stabilised in the fourth quarter. In the Environmental Services
division, the decline in general economic activity was reflected in
lower waste volumes and the prices of recycled raw materials
throughout the year. The decrease in the prices and volumes of
recycled raw materials burdened the net sales of the division and
had a negative effect of EUR 4.5 million on the operating
profit.
The Finnish Waste Act was amended in July 2021. Under the
reform, municipalities take on a larger role in organising the
collection of packaging material waste and biowaste from housing
properties. As a consequence of the reform, L&T’s direct
customer agreements with residential properties on the separate
collection of packaging waste and biowaste are transferred to
municipalities for competitive bidding gradually between 1 July
2022 and 1 July 2025.
As a result of municipalisation, EUR 40 million of the value of
the Finnish waste management market was moved out of the scope of
free competition to municipal waste companies during 2022-2023. The
effects of this change were fully visible on the division starting
from the latter half of 2023. L&T estimates that based on
decisions made by the end of year 2023, a further EUR 30 million
will be moved out of the scope of free competition to municipal
waste companies between 2024 and 2026.
In the latter half of the year, the collection of packaging
waste from residential properties was transferred to municipal
waste companies in several geographical areas that are significant
to L&T. L&T participates in the competitive tendering of
municipal contracts. During 2023 competitive tendering of municipal
contracts is estimated to have amounted to EUR 15-20 million and
the Group won municipal contracts amounting to EUR 8 million.
Nevertheless, the change transferred the ownership of the waste
material collected from these residential properties, decreased
additional sales and reduced the efficiency of L&T’s waste
collection logistics increasing production costs. The change had a
total negative impact of approximately EUR 2.5 million on operating
profit in 2023.
L&T aims to compensate for the impacts of municipalisation
by growing the corporate customer business and continuing to
improve the efficiency of operations during the next three years.
In the division, measures to improve operational efficiency and
profitability were initiated during the latter half of the year.
The employment relationship of approximately 50 salaried employees
are terminated as a result of change negotiations and other jointly
agreed measures latest by the end of the first quarter of 2024.
The division aims to shift its focus increasingly to the
materials business in the circular economy value chain. Related
assessments were initiated in the latter part of the year.
There is a significant systems renewal project under way in
Environmental Services, which will also include the deployment of a
new ERP system. The systems renewal project increased the
division’s fixed costs in 2023. The supplier of the ERP system was
changed in 2022 and, during the period under review, the previous
supplier paid a one-off compensation relating to the termination of
the co-operation. Expenses capitalised during the co-operation with
the previous supplier were written down on the balance sheet during
the review period. The one-off compensation and the related costs
and write-down did not have a significant effect on the division’s
operating profit. The system is scheduled to enter the deployment
stage in the second half of 2024. The total investment in the
system projects is estimated at approximately EUR 16.9 million, of
which approximately EUR 14,2 million was realised by the end of
2023.
Industrial Services
October–December
The division’s net sales for the final quarter were EUR 37.9
million (36.3). Adjusted operating profit was EUR 3.8 million (3.1)
and operating profit was EUR 3.6 million (2.3). Operating profit
was reduced by a change of EUR 0.2 million in the fair value of the
deferred consideration related to the acquisition of Sand &
Vattenbläst i Tyringe AB (“SVB”) recognised in the fourth quarter
of 2023. The change in the fair value is due to SVB’s improved
result which increases the final acquisition price recognised as
liability. In the comparison period, the fair value change
recognised in the deferred consideration related to the acquisition
reduced operating profit by EUR 0.8 million.
Year 2023
The Industrial Services division’s full-year net sales in 2023 grew
to EUR 141.0 million (132.0). Adjusted operating profit was EUR
14.0 million (13.6). Operating profit was EUR 13.8 million (12.7).
Operating profit was reduced by a change of EUR 0.2 million in the
fair value of the deferred consideration related to the acquisition
of Sand & Vattenbläst i Tyringe AB (“SVB”) recognised in the
fourth quarter of 2023. The change in the fair value is due to
SVB’s improved result which increases the final acquisition price
recognised as liability. In the comparison period, the fair value
change recognised in the deferred consideration related to the
acquisition reduced operating profit by EUR 0.8 million.
Demand was strong in all of the Industrial Services division’s
business lines. The environmental construction business line was
highlighted as a focus area in L&T’s renewed strategy in the
autumn, and several large customer projects, especially in
demanding soil remediation, were carried out in the business line
during the period under review. The customer volume increased in
hazardous waste services. In process cleaning in Finland, the
demand related to annual maintenance breaks was strong, and the
resource allocation was successful. Business operations in Sweden
developed favorably despite the challenging market environment.
Facility Services Finland
October–December
The division’s net sales for the final quarter were EUR 61.4
million (64.6). Operating profit was EUR 1.1 million (0.8).
Year 2023
The full-year net sales of the Environmental Services division
decreased to EUR 250.0 million (256.3) in 2023. Operating profit
improved to EUR 4.4 million (-0.5).
In Facility Services Finland the measures initiated in the
second half of 2022 to streamline the cost structure and improve
operational efficiency continued in the division throughout the
period under review.
In 2023, the efficiency of production improved and personnel
turnover decreased in cleaning services. Good progress was achieved
in digitalisation with the number of sites within the scope of
data-driven cleaning increasing in 2023. In building technology
services, the demand for energy efficiency services increased
during the period under review. The rising costs caused by high
inflation were, for the most part, passed on to customer
prices.
Facility Services Sweden
October–December
The division’s net sales for the final quarter decreased to EUR
34.5 million (39.8). Operating profit was EUR -0.9 million (0.5).
Operating profit before the amortisation of purchase price
allocations of acquisitions was EUR -0.6 million (0.8).
Year 2023
The net sales of Facility Services Sweden amounted to EUR 133.2
million (140.4) in 2023. The decrease in net sales was due to the
depreciation of the Swedish krona. Net sales denominated in the
Swedish krona increased. Operating profit declined to EUR -3.7
million (0.4). Operating profit before the amortisation of purchase
price allocations of acquisitions was EUR -2.5 million (2.2).
Customer agreements in the Swedish business are mostly
fixed-price contracts, and the division has not been able to pass
the increased production costs on to customer prices. In the fourth
quarter, the uncertainty in the business environment was reflected
in customer demand, and fewer new projects were started than in the
comparison period. The division has a programme under way to
simplify operating models and adapt them to the changed business
environment. The results are expected to become visible by the end
of 2024.
FINANCING
In 2023, net cash flow from operating activities amounted to EUR
93.6 million (71.8). Net cash flow after investments totalled EUR
50.9 million (41.1). In the comparison period, net cash flow after
investments was reduced by acquisitions, which had a total impact
of approximately EUR 13 million. A total of EUR 5.1 million in
working capital was released (EUR 6.2 million committed).
At the end of the financial year, interest-bearing liabilities
amounted to EUR 193.7 million (216.8). Net interest-bearing
liabilities totalled EUR 160.9 million (167.3). The average
interest rate on long-term loans, excluding lease liabilities, with
interest rate hedging, was 4.0% (2.5%). In the second quarter, the
company refinanced a EUR 50 million bank loan that would have
matured in the third quarter of 2024. The new bank loan is in the
amount of EUR 40 million and will mature in the third quarter of
2026. In addition to the usual financial covenants, the new bank
loan is linked to sustainability targets, namely L&T’s carbon
footprint and accident frequency. The interest rate swap used by
the company to convert part of the EUR 50 million bank loan into a
fixed interest loan was terminated in connection with the
refinancing of the bank loan. The fair value of the interest rate
swap, EUR 1.3 million, was recognised in financial income in the
second quarter. The company had no interest rate swaps at the end
of the financial year. In the third quarter, the company repaid the
remaining amount of EUR 17.7 million of the bond issued in
2018.
The EUR 100.0 million commercial paper programme was unused at
the end of the financial year, as was the case in the comparison
period. The account limit totalling EUR 10.0 million and the
committed credit limit totalling EUR 40.0 million were not in use,
as was the case in the comparison period.
Net financial expenses amounted to EUR -6.3 million (-5.8). Net
financial expenses were increased by the rise in the general
interest rate level, which was compensated by the fair value of EUR
1.3 million of an interest rate swap being recognised due to the
termination of the interest rate swap. The effect of exchange rate
changes on net financial expenses was EUR -0.0 million (-0.2). Net
financial expenses were 0.8% (0.7%) of net sales.
The equity ratio was 36.8% (34.3%) and the gearing ratio was
69.3% (75.9%). The Group’s total equity was EUR 232.2 million
(220.4). Cash and cash equivalents amounted to EUR 32.9 million
(49.5) at the end of the financial year.
DIVIDEND DISTRIBUTION
The Annual General Meeting held on 23 March 2023 resolved that a
dividend of EUR 0.47 per share, totalling EUR 17.9 million, be paid
on the basis of the balance sheet that was adopted for the
financial year 2022. The dividend was paid to shareholders on 3
April 2023.
CAPITAL EXPENDITURE
Gross capital expenditure for 2023 came to EUR 61.1 million
(58.2). The capital expenditure consisted primarily of machine and
equipment purchases, as well as investments in information systems.
Acquisitions accounted for approximately EUR 21 million of the
gross capital expenditure in the comparison period.
SUSTAINABILITY
Environmental responsibility
Climate benefits for customers created by L&T
|
2023 |
2022 |
Target |
|
|
|
|
Carbon handprint (tCO2e) |
-453,000 |
-534,500 |
growth
faster than net sales |
The carbon handprint illustrates the climate benefits of a
product, process or service, i.e. the emission reduction potential
for the user. L&T’s carbon handprint reduces the customer’s
carbon footprint. Our services generated emission reductions for
customers through, for example, customers replacing virgin raw
materials with secondary raw materials, and fossil fuels with solid
recovered fuels. The decline in L&T’s carbon handprint was due
to the decline in waste material volumes, particularly in the
construction segment, that reduces the amount material directed to
recycling.
The carbon handprint of the renewable energy sources business
and the joint venture Laania is not reported as part of L&T’s
carbon handprint for 2022. The renewable energy sources business
was transferred to Laania joint venture in July 2022.
Progress towards science-based emission reduction targets, using
2018 as the baseline
|
2023 |
2022 |
Target |
Target to be achieved by |
|
|
|
|
|
Carbon footprint (tCO2e) |
31,200 |
34,200 |
24,400 |
2030 |
L&T’s strategic objective is to halve the carbon footprint
of its operations by 2030, using 2018 as the baseline, and to
reduce the indirect emissions generated by its supply chain. The
emission reduction target set by L&T has been validated by the
Science Based Targets initiative. The achievement of this objective
will be promoted by switching to zero-emission transport
technologies and fuels and by opting for renewable energy at
L&T’s properties. Transport operations account for 95 per cent
of the emissions generated by L&T’s own operations. The use of
renewable fuels increased significantly year-on-year, particularly
in the Industrial Services division’s fleet of heavy vehicles.
The fuel distribution obligation was adjusted in 2022 by
reducing the biofuel component by 7.5 percentage points. The change
was not taken into account in the emissions calculations reported
in L&T’s annual report published in March 2023, as Statistics
Finland had not yet updated its fuel classification data in
accordance with the change. Statistics Finland published the
updated fuel classification data later in spring 2023, and they
have been taken into account in the emission calculations in this
report.
Recycling rate and material recovery
|
2023 |
2022 |
Target |
Target to be achieved by |
|
|
|
|
|
Recycling rate of material flows
managed by L&T, % |
57.8 |
59.4 |
65 |
2026 |
The recycling rate is the weighted average of our customers’
recycling rates. It also includes materials that cannot yet be
recycled. To increase our reuse and recycling rate, we actively
look for new material streams whose refining rate we can increase.
Reporting covers municipal waste collected from corporate
customers, hazardous waste, industrial waste and construction waste
in Finland. Slurry, contaminated soil and ash are excluded from
reporting.
Social responsibility
Total recordable incident frequency (TRIF)
|
2023 |
2022 |
Target |
Target to be achieved by |
|
|
|
|
|
|
Total recordable incident
frequency |
23 |
23 |
15 |
2030 |
|
|
|
|
|
|
|
|
|
|
L&T eliminates hazards and improves its own safety as well
as the safety of customers and other stakeholders through effective
proactive measures, such as risk assessments, safety observations,
Safety Walks and occupational safety sessions. L&T has provided
training on building workplace safety culture to over 80% of the
company’s supervisors in Finland as part of the Safety under
the helmet training initiative.
Well-being at work
|
2023 |
2022 |
Target |
Target to be achieved by |
|
|
|
|
|
Occupational health rate (proportion of
employees with no sickness-related absences) |
41 |
40 |
57 |
2026 |
Sickness-related absences (%) |
5.1 |
5.6 |
4 |
2030 |
The objective of L&T’s personnel policies and plans is to
ensure that the number, competence and retention of personnel are
at the level required for effective performance. For a
labour-intensive company, employees’ ability to work and function
and maintain it throughout their careers until retirement on
old-age pension is important.
CURRENT ISSUES RELATED TO SUSTAINABILITY
L&T updated its environmental sustainability target in
October 2023. The goal is to halve the emissions of L&T’s own
operations by 2030 from the level in 2018 and to reduce indirect
(Scope 3) emissions by 18% by 2030 from the level in 2022. The
company has set a target of net-zero emissions by 2045.
L&T was awarded Gold, which is the second-best rating, in
the international EcoVadis sustainability assessment. Each year,
EcoVadis assesses approximately 90,000 globally operating
companies, of which only 5% reach the Gold level.
The sustainability results presented in this report have not yet
been verified. L&T’s verified sustainability figures will be
published in the Annual Report in week 9.
PERSONNEL
The average number of employees converted into full-time
equivalents was 6,743 (6,820). At the end of the review period,
L&T had 8,159 (8,371) full-time and part-time employees. Of
these, 6,891 (7,020) worked in Finland and 1,268 (1,351) in
Sweden.
SHARES AND SHARE CAPITAL
Traded volume and price
The volume of trading in 2023 was 5.6 million shares, which is
14.8% (24.7%) of the average number of outstanding shares. The
value of trading was EUR 57.1 million (104.9). The highest share
price was EUR 11.84 and the lowest EUR 9.00. The closing price was
EUR 9.80. At the end of the financial year, the market
capitalisation excluding the shares held by the company was EUR
373.9 million (405.9).
Own shares
At the end of the period, the company held 644,772 of its own
shares, representing 1.7% of all shares and votes.
Share capital and number of shares
The company’s registered share capital amounts to EUR 19,399,437
and the number of outstanding shares was 38,154,102 at the end of
the period. The average number of shares excluding the shares held
by the company was 38,126,791.
Share-based incentive plans
In December 2022, the Board of Directors of Lassila &
Tikanoja plc decided to establish two new long-term share-based
incentive plans for the Group’s key employees. The aim of the new
plans is to align the objectives of the company, shareholders and
key employees in order to increase the value of the company in the
long term, to retain the key employees at the company and to offer
them competitive reward plans that are based on earning and
accumulating the company’s shares as well as on appreciation of the
share price. The Performance Share Plan 2023–2027 comprises three
(3) three-year (3) performance periods covering the calendar years
2023–2025, 2024–2026 and 2025–2027.
During the performance period 2023–2025, the earning of rewards
is based on the following performance criteria: return on capital
employed (ROCE), total shareholder return (TSR) and reduction of
the carbon footprint (ESG). The target group of the Performance
Share Plan during the performance period 2023–2025 consists of
approximately 38 key employees, including the Group’s President and
CEO and the Group Executive Board.
During the performance period 2024–2026, the earning of rewards
is based on the following performance criteria: return on capital
employed (ROCE), total shareholder return (TSR) and reduction of
the carbon footprint (ESG). The target group of the Performance
Share Plan during the performance period 2024–2026 consists of
approximately 50 key employees, including the Group’s President and
CEO and the Group Executive Board.
The transitional share-based incentive scheme 2023–2026 consists
of two (2) earnings periods of one (1) year each, corresponding to
the calendar years 2023 and 2024. The earnings period is followed
by a two-year retention period. The aim of the scheme is to support
the transition from the old share-based incentive scheme to the new
share-based incentive scheme. The earning of rewards for the 2023
and 2024 earnings periods is based the return on capital employed
(ROCE) and the reduction of the carbon footprint (ESG). The target
group of the transitional share-based incentive scheme for the
earnings periods 2023 and 2024 consists of approximately 10 key
employees, including the Group’s President and CEO and the Group
Executive Board.
Shareholders
At the end of the review period, the company had 24,959 (24,556)
shareholders. Nominee-registered holdings accounted for 10.2%
(7.0%) of the total number of shares.
Flagging notifications
On 26 June 2023, Lassila & Tikanoja plc received a
notification indicating that Mandatum Life Insurance Company
Limited’s shareholding in Lassila & Tikanoja fell below the 5%
threshold on 26 June 2023.
Authorisations for the Board of Directors
The Annual General Meeting held on 23 March 2023 authorised Lassila
& Tikanoja plc’s Board of Directors to decide on the repurchase
of the company’s own shares using the company’s unrestricted
equity. In addition, the Annual General Meeting authorised the
Board of Directors to decide on a share issue and the issuance of
special rights entitling their holders to shares.
The Board of Directors is authorised to purchase a maximum of
2,000,000 company shares (5.2% of the total number of shares). The
repurchase authorisation is effective for 18 months.
The Board of Directors is authorised to decide on the issuance of
new shares or shares that may be held by the company through a
share issue and/or issuance of option rights or other special
rights conferring entitlement to shares, referred to in Chapter 10,
Section 1 of the Finnish Companies Act, so that under the
authorisation, a maximum of 2,000,000 shares (5.2% of the total
number of shares) may be issued and/or conveyed. The authorisation
is effective for 18 months.
RESOLUTIONS BY THE ANNUAL GENERAL MEETING
The Annual General Meeting of Lassila & Tikanoja plc, which
was held on 23 March 2023, adopted the financial statements and
consolidated financial statements for the financial year 2022,
discharged the members of the Board of Directors and the President
and CEO from liability and adopted the remuneration report for the
company’s governing bodies. The Annual General Meeting resolved on
the use of the profit shown on the balance sheet and the payment of
dividend, the composition and remuneration of the Board of
Directors, the election and remuneration of the auditor, amendment
of Articles of Association, and authorising the Board of Directors
to decide on the repurchase of the company’s own shares and on a
share issue and the issuance of special rights entitling to
shares.
The Annual General Meeting resolved that a dividend of EUR 0.47
per share be paid on the basis of the balance sheet to be adopted
for the financial year 2022. It was decided that the dividend be
paid on 3 April 2023.
The Annual General Meeting confirmed the number of members of
the Board of Directors as six in accordance with the proposal of
the Shareholders’ Nomination Board. Teemu Kangas-Kärki, Laura
Lares, Sakari Lassila, Jukka Leinonen and Pasi Tolppanen were
re-elected, and Anni Ronkainen was elected as a new member, to the
Board for a term ending at the conclusion of the next Annual
General Meeting. Jukka Leinonen was elected as the Chairman of the
Board and Sakari Lassila was elected as the Vice Chairman.
The Annual General Meeting elected PricewaterhouseCoopers Oy,
Authorised Public Accountants, as the company’s auditor.
PricewaterhouseCoopers Oy has announced that it will name Samuli
Perälä, Authorised Public Accountant, as the principal
auditor.
The Annual General Meeting resolved to amend Article 10 of the
Articles of Association to enable the holding of a general meeting
without a meeting venue, as a remote meeting.
The resolutions of the Annual General Meeting were announced in
more detail in a stock exchange release on 23 March 2023.
BOARD OF DIRECTORS
The members of Lassila & Tikanoja plc’s Board of Directors are
Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Jukka Leinonen,
Anni Ronkainen and Pasi Tolppanen. Lassila & Tikanoja plc’s
Annual General Meeting held on 23 March 2023 elected Jukka Leinonen
as the Chairman of the Board and Sakari Lassila as the Vice
Chairman.
In its constitutive meeting held after the Annual General Meeting,
the Board of Directors elected the members of the Audit Committee
and the Personnel and Sustainability Committee from amongst its
members. Sakari Lassila (Chairman), Teemu Kangas-Kärki and Anni
Ronkainen were elected to the Audit Committee. Jukka Leinonen
(Chairman), Laura Lares and Pasi Tolppanen were elected to the
Personnel and Sustainability Committee.
The company announced the composition of Lassila & Tikanoja
plc’s Nomination Board on 19 September 2023. Lassila & Tikanoja
plc’s three largest shareholders, who are entitled to appoint a
representative to Lassila & Tikanoja plc’s Shareholders’
Nomination Board are the Evald and Hilda Nissin Säätiö foundation,
a group of shareholders (Chemec Oy, CH-Polymers Oy, Maijala Eeva,
Maijala Hannele, Maijala Heikki, Maijala Juhani, Maijala Juuso,
Maijala Miikka, Maijala Mikko, Maijala Roope and Maijala Tuula),
and Nordea Funds Ltd (through 11 funds managed by it). These
shareholders have appointed Juhani Lassila, Miikka Maijala and
Tanja Eronen as their representatives in Lassila & Tikanoja’s
Nomination Board. The Chairman of Lassila & Tikanoja plc’s
Board of Directors, Jukka Leinonen, acts as the fourth member of
the Nomination Board. The Chairman of the Nomination Board is
Juhani Lassila.
Long-term targets
Financial targets
Indicator |
Target |
|
|
Annual growth in net sales, % |
5% |
Return on capital employed, %
(ROCE) |
15% |
Gearing, % |
Less
than 125% |
Lassila & Tikanoja does not consider the long-term financial
targets as guidance for any fiscal year.
Sustainability and stakeholder targets
Measure |
Target |
|
|
Net Promoter Score, NPS |
>50 by 2026 |
Employee Net Promoter Score, eNPS |
>50 by 2026 |
Carbon footprint |
-50%
by 2030, using 2018 as the baseline |
L&T updated its environmental sustainability target in
October 2023. The goal is to halve the emissions of L&T’s own
operations by 2030 from the level in 2018 and to reduce indirect
(Scope 3) emissions by 18% by 2030 from the level in 2022. The
company has set a target of net-zero emissions by 2045.
Sustainability and stakeholder measures are reported as part of
the Group’s quarterly and annual reporting.
Strategy
In October, Lassila & Tikanoja plc’s Board of Directors
approved the company’s updated strategy. Under the updated
strategy, the Environmental Services and Industrial Services
divisions will seek new growth especially by focusing on business
opportunities related to the circular economy of materials. Growth
will be sought through business development and potential
complementary acquisitions.
The Environmental Services division’s strong market position,
broad customer base and significant material volumes provide a good
basis for growing the materials business. As for material streams,
the division will continue to focus on plastic, wood waste and
metals, but opportunities related to other streams are also being
explored.
In the Industrial Services division, new business opportunities
are emerging around the processing and value increase of industrial
flows, as well as the restoration of the built environment. Growth
is also sought in the Swedish market in industrial services and
material value chains.
Facility Services Finland and Facility Services Sweden will
focus on improving profitability. In October 2023, Lassila &
Tikanoja announced that the company’s Board of Directors had
decided to evaluate the strategic options for Facility Services
Finland and Facility Services Sweden as part of the company’s
business portfolio development. The sale of operations is one
possible option. The review is expected to be completed by the end
of 2024. The review will not necessarily lead to any measures, and
Lassila & Tikanoja will disclose more information on the matter
as necessary.
The company discussed its updated strategy in more detail at a
Capital Markets Day organised on 23 November 2023. The recording
and presentation materials are available on the Group website.
CHANGES IN THE GROUP EXECUTIVE BOARD
On 31 March 2023, the company announced that Tina Hellstadius,
the Senior Vice President for Facility Services Sweden, will leave
Lassila & Tikanoja on 31 March 2023.
On 18 April 2023, the company announced that Mikko Taipale
(Master of Laws) has been appointed Senior Vice President, Facility
Services Sweden and a member of the Group Executive Board effective
from 19 April 2023.
EVENTS AFTER THE FINANCIAL YEAR
On 11 January 2024, the company announced that Lassila &
Tikanoja’s Shareholders’ Nomination Board proposes to the Annual
General Meeting to be held on 21 March 2024 that the Board of
Directors have seven (7) members. The Nomination Board proposes
that Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Jukka
Leinonen, Anni Ronkainen and Pasi Tolppanen be re-elected to the
Board of Directors and that Juuso Maijala be elected as a new
member. A presentation of Juuso Maijala is available on L&T’s
website. In addition, the Nomination Board proposes that Jukka
Leinonen be elected as Chairman of the Board of Directors and
Sakari Lassila as Vice Chairman.
NEAR-TERM RISKS AND UNCERTAINTIES
General economic uncertainty may affect the level of economic
activity among customers, which may reduce the demand for L&T’s
services.
Higher costs, such as the rising prices of fuel and energy, and
potential changes in interest rates may have an impact on the
company’s financial performance.
The Finnish Waste Act was amended in July 2021. Under the
reforms to the Waste Act, municipalities take on a larger role in
organising the collection of packaging waste materials and biowaste
from residential properties. As a consequence of the reform,
L&T’s direct customer agreements with residential properties on
the separate collection of packaging waste and biowaste will be
transferred to municipalities for competitive bidding gradually
between 1 July 2022 and 1 July 2025. As a result of
municipalisation, approximately EUR 30 million of the Finnish waste
management market will be moved out of the scope of free
competition and to municipally owned companies between the years
2024-2026. The Environmental Services division participates in
competitive tendering for municipal contracts and is a significant
player in municipal contracts, but the Group estimates that the
overall impact of the change will be negative.
The company has several ERP system renewal projects under way.
Temporary additional costs arising from system deployments and
establishing the operating model may weigh down the company’s
result.
Production costs may be increased by challenges related to
employee turnover and labour availability.
The geopolitical situation involves continued uncertainty due to
Russia’s war of aggression. The indirect impacts on overall
economic activity in Finland and Sweden may have a negative impact
on net sales and profit.
The Group company Lassila & Tikanoja FM AB is a claimant and
a defendant in legal proceedings in Sweden concerning unpaid
receivables invoiced from a former customer of the Group. In June
2022, Lassila & Tikanoja FM AB took legal action in the
District Court of Solna against the former customer company of
L&T, demanding payment for unpaid receivables. At the balance
sheet date, the carrying amount of the receivables in the Company’s
balance sheet was approximately EUR 1.5 million. L&T’s former
customer company in question has rejected Lassila & Tikanoja FM
AB’s claims and the payment obligation, and brought a counterclaim
demanding compensation totalling approximately SEK 116 million from
Lassila & Tikanoja FM AB. The dispute is still pending. Lassila
& Tikanoja considers the counterclaim to be without merit and
has not recognised any provisions in relation to
it.
More detailed information on Lassila & Tikanoja’s risks and
risk management is provided in the 2022 Annual Review and in the
Report by the Board of Directors and the consolidated financial
statements.
PROPOSAL FOR THE DISTRIBUTION OF PROFIT
According to the financial statements, Lassila & Tikanoja
plc’s unrestricted equity amounts to EUR 51,335,173.21, with the
profit for the period representing EUR 7,420,038.45 of this total.
There were no substantial changes in the financial standing of the
company after the end of the period, and the solvency test referred
to in Chapter 13, Section 2 of the Companies Act does not affect
the amount of distributable profits.
The Board of Directors proposes to the Annual General Meeting
that a dividend of EUR 0.49 per share be paid for the financial
year 2023. The dividend will be paid to shareholders entered in the
company’s shareholder register maintained by Euroclear Finland Oy
on the record date, 25 March 2024. The Board proposes to the Annual
General Meeting that the dividend be paid on 3 April 2024.
No dividend shall be paid on shares held by the company on the
record date of the dividend payment, 25 March 2024.
On the day the proposal for the distribution of profit was made,
the number of shares entitling to dividend was 38,154,102, which
means the total amount of the dividend would be EUR 18,695,509.98.
The Group’s earnings per share amounted to EUR 0.79. The proposed
dividend, EUR 0.49 per share, is 62.1% of the Group’s earnings per
share.
Lassila & Tikanoja’s Annual Report, which includes the
Report by the Board of Directors and the financial statements for
2023, will be published in week 9 at vuosikertomus.lt.fi/en.
Helsinki, 8 February 2024
LASSILA & TIKANOJA PLC
Board of Directors
Eero Hautaniemi
President and CEO
For additional information, please contact:
Eero Hautaniemi, President and CEO, tel. +358 10 636 2810
Valtteri Palin, CFO, tel. +358 40 734 7749
Lassila & Tikanoja is a service company that is putting the
circular economy into practice. Together with our customers, we
keep materials, manufacturing sites and properties in productive
use for as long as possible and we enhance the use of raw materials
and energy. This is to create more value with the circular economy
for our customers, personnel and society in a broader sense.
Achieving this also means growth in value for our shareholders. Our
objective is to continuously grow our actions’ carbon handprint,
our positive effect on the climate. We assume our social
responsibility by looking after the work ability of our personnel
as well as offering jobs to those who are struggling to find
employment, for example. With operations in Finland and Sweden,
L&T employs approximately 8,160 people. Net sales in 2023
amounted to EUR 802.1 million. L&T is listed on Nasdaq
Helsinki.
Distribution:
Nasdaq Helsinki
Major media
www.lt.fi/en
- LT-Financial statements release 2023
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