Lemminkäinen Annual Report 2000
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ANNUAL REPORT 2000 CONTENTS Information for shareholders 1 Lemminkäinen in brief 2 Review by the Managing Director 3 Parent company Board of Directors 4 Board of Directors’ report for the accounting period 1st Jan. 2000 – 31st Dec. 2000 5 Economic trends and financial indicators 10 Consolidated income statement 12 Consolidated balance sheet 13 Consolidated statement of source and application of funds 14 Parent company income statement 15 Parent company balance sheet 16 Parent company statement of source and application of funds 17 Accounting principles 18 Notes to the financial statements 19 Board of Directors’ proposal for appropriations of retained earnings 31 Auditors’ Report 31 Business sector reviews 32 Contact information 42 INFORMATION FOR SHAREHOLDERS Financial reporting will be mailed to the Company’s regis- year 2000 figures in the table of eco- During the course of the year 2001 Lem- tered shareholders. The publications nomic trends and financial indicators, minkäinen Corporation will publish a may also be ordered from the the income statements, the balance bulletin on the year 2000 financial state- Company’s information services by sheets and the statements of source and ments, an annual report and three inter- phone: + 358 9 159 9511, or by e-mail: application of funds are additionally im financial reviews. The latter will [email protected] stated in Finnish marks. appear on the 16th May, 15th August and 14th November. Currencies used in the EUR 1 = FIM 5.94573 The annual report and interim annual report financial reviews will be published in The monetary amounts in this Annual Finnish and English. The publications Report are stated in euro. However, the ■ The company’s Highway 3 contracts were completed in the autumn. THE YEAR 2000 IN BRIEF ■ The Finnish construction mar- ket continued to grow at an annual rate of 6 %. ■ Lemminkäinen’s net sales rose 17 % to EUR 965 million. ■ The profit before extraordinary items was 16 % up at EUR 46 million. ■ Moderate growth of the con- struction market is forecast for 2001. Further growth in Lem- minkäinen’s net sales and steady development of its profits are expected. ■ The company’s Board of Direc- tors proposes that a dividend of EUR 0.84 per share be paid for the 2000 financial year. LEMMINKÄINEN CORPORATION 1 ANNUAL REPORT 2000 LEMMINKÄINEN IN BRIEF The Lemminkäinen Group operates in all contracting related to these materials. The Helsinki metropolitan area and Southwest sectors of the construction industry: civil main product groups are bituminous roof- Finland. In addition to the parent company, engineering, building contracting, technical ing materials, pre-cast concrete and natural the Group has eight subsidiaries, each oper- building services and the manufacture of stone products, and materials used in the ating regionally under its own name. building materials and related contracting. construction of sporting facilities. The Group’s business areas include compet- itive tender contracting of both new and Business sectors LEMMINKÄINEN CONSTRUCTION LTD refurbishment work as well as private-sec- Lemminkäinen Construction Ltd is an tor housing, commercial and industrial PAVING AND MINERAL AGGREGATES international building project contractor. developments. DIVISION The company operates internationally from The Division produces asphalt, recycled the Far East to South America, with a strong TEKMANNI OY asphalt macadam and specialist paving. It focus currently in Europe. In Finland the Tekmanni Oy is one of Finland’s leading carries out contracting in the fields of road company is a leading contractor in the fields contractors in the fields of technical build- paving, milling and road marking as well as of project management, sports-related con- ing and facility services, industrial installa- quarrying and crushing. The Division also struction and civil engineering. In recent tions and maintenance, and telecommuni- produces ready-mixed concrete and mineral years telecommunications network con- cations network construction. Commercial, aggregates for resale, as well as environmen- struction has grown to become an impor- industrial, public and residential apartment tal geotechnology products and services. tant part of the company’s business. buildings are typical construction and maintenance sites. The company’s telecom- BUILDING MATERIALS DIVISION OY ALFRED A. PALMBERG AB munications network contracting services The Division manufactures and imports a Oy Alfred A. Palmberg Ab, the parent com- include the construction of base stations range of building products, and carries out pany of the Palmberg Group, operates in the and city networks. THE LEMMINKÄINEN GROUP LEMMINKÄINEN LEMMINKÄINEN OY ALFRED TEKMANNI OY CORPORATION CONSTRUCTION LTD A. PALMBERG AB PAVING AND MINERAL Civil Engineering Helsinki Technical building services AGGREGATES DIVISION ■ metropolitan area ■ ■ Project Management ■ Technical facility services Paving ■ Southwest Finland ■ ■ Telecommunications ■ Industrial installations Mineral aggregates Construction Palmberg-Urakoitsijat Oy and maintenance ■ ■ ■ Ready-mixed concrete Oka Oy Telecommunications ■ ■ networks Road marking Rakennustoimisto ■ Palmberg Oy Research and ■ development Rakennus-Otava Oy ■ ■ Oy Konte Ab BUILDING MATERIALS ■ DIVISION Byggnads Ab Forsström ■ Rakennus Oy Roofing materials and ■ contarcting Palmberg-Rakennus Oy ■ ■ Concrete and natural Savocon Oy stone products ■ Sports-related surfacing systems LEMMINKÄINEN CORPORATION 2 ANNUAL REPORT 2000 REVIEW BY THE MANAGING DIRECTOR The domestic construction market con- earlier years of very rapid growth. Even tinued to grow steadily and without any though most of Palmberg’s regionally major surprises. Structural change operating subsidiaries did achieve stemming from Finland’s transition to rather good results, the performance of an information society has also sus- the subsidiary group as a whole did not tained the growth in demand for con- live up to expectation. There were two struction. The integration process in the reasons for this: the losses of the Tam- Nordic countries and more generally in pere-based subsidiary, Rakennustoimis- the Baltic Rim region has continued as to Palmberg Oy, and a slow-down in the expected. housing market towards the end of the The year 2000 was the fifth consecu- year. The management of Rakennus- tive year of rapid growth for Lem- toimisto Palmberg Oy has been minkäinen. Indeed, the Group’s net changed. The housing market slow- sales have more than doubled since down led to the postponement of a 1996. number of planned new starts, which The paving and mineral aggregates also slowed down the income recogni- market is mature. Despite this, Lem- tion of margins on private-sector con- minkäinen succeeded in growing its struction in progress. business in this sector by almost a third, For Lemminkäinen, the acquisition while at the same time preserving its channel for some of these products. The of a majority interest in Tekmanni Oy good level of profitability. In Finland, growth in net sales of this division clear- meant expansion into an entirely new the company’s position in the mineral ly exceeded the growth in the domestic area of business. There were a number aggregates market was strengthened by construction market. Moreover, the rel- of good reasons for this move. It enabled means of acquisitions. Moreover, the atively good profitability of the previous the company to secure a strong position company expanded into the production year was successfully maintained despite in a growing market. The share of tech- of ready-mix concrete, which has obvi- the fact that the margins of roofing nical building systems in new construc- ous synergy with mineral aggregate material production were eroded by a tion is growing all the time. The acquisi- operations. In Sweden, Lemminkäinen sharp rise in the price of bitumen. The tion also puts Lemminkäinen a key again used acquisitions to secure a firm Building Materials Division is now position in the field of building mainte- foothold in the asphalt paving market of operating at the upper limits of its pro- nance services. As a business, building that country. In the Baltic states and duction capacity. services contracting is very similar to Poland the company continued to The operations of Lemminkäinen the roofing and urban environment pursue its policy of moving forward Construction Ltd are more clearly contracting that Lemminkäinen has one small step at a time. When the defined than previously into three sepa- been carrying out for many years. The financial statements had already been rate business areas: civil engineering acquisition of Tekmanni also increases prepared, Lemminkäinen acquired the contracting demanding special expertise Lemminkäinen’s capabilities in telecom asphalt paving and mineral aggregates and equipment in Finland and based on network construction. operations of the Danish company project work abroad, project manage- Lemminkäinen enjoys a strong posi- Icopal a/s. The acquisition will signifi- ment contracting for building construc- tion in all of the business areas and mar- cantly strengthen Lemminkäinen’s tion in Finland and abroad, and interna- kets in which it operates. The diversity position in Denmark and Norway. Due tional projects in the field of telecom of these operations reduces the compa- to all these actions, Lemminkäinen has network construction. In the latter two ny’s cyclic sensitivity and risks. I am consolidated its position as one of the business areas Nokia Corporation