Balance sheet, cash flow and financing

Measures to strengthen the balance sheet

On 14 May 2014, Lemminkäinen announced the divestment of its technical building services business. The price was EUR 55.4 million, of which Lemminkäinen recorded capital gain of EUR 23.6 million.

In 2014, Lemminkäinen committed to strengthening its balance sheet with EUR 100 million by the end of September 2015. As part of the programme, the company conducted a rights offering in the third quarter. With the offering, the company raised gross proceeds of EUR 29.3 million (net proceeds of EUR 27.3 million). In addition, the company will divest non-core assets and operations by EUR 70 million. At the end of the year, the company had carried out divestments amounting to EUR 21.5 million.

The Board of Directors proposes that Lemminkäinen will not pay any dividends for the financial year 2014.

Balance sheet, financing and cash flow, IFRS 31 Dec 2014 31 Dec 2013 Change
Key figures, balance sheet

Equity ratio, %* 37.1 27.3
Gearing, %** 51.8 100.8
Return on investment, %*** 13.5 -9.4
Capital invested, EUR million 760.3 731.7 28.6
Net working capital, EUR million 362.6 325.1 37.5
Financial position and liquidity

Interest-bearing debt, EUR million 347.8 407.6 -59.8

- of which long-term liabilities, EUR million 139.5 61.3 78.2

- of which short-term liabilities, EUR million 208.3 346.3 -138.0
Liquid funds, EUR million 134.2 81.1 53.1
Interest-bearing net debt, EUR million 213.6 326.5 -112.9
Committed, unused credit limits, EUR million 185.0 175.0 10.0
Unused overdraft limits, EUR million 33.2 44.0 -10.8
Net financial costs, EUR million**** 37.9 26.8 11.1
Cash flow

Cash flow from operations, EUR million***** -54.8 8.3 -63.1

* If hybrid bonds were recognised as debt, the equity ratio would be: 12/2014 24.6%, 9/2014 22.5% and 12/2013 21.5%.

** If hybrid bonds were recognised as debt, gearing would be: 12/2014 128.4%, 9/2014 125.5% and 12/2013 155.2%.

*** Rolling 12 months

**** Cumulative, from the beginning of the year.

***** The 2014 cash flow was impaired by the payment of EUR 60 million in damages related to the asphalt cartel.

Balance sheet, financing and cash flow for the financial year

On 31 December 2014, the balance sheet total was EUR 1,257.8 million (1,342.7), of which shareholders’ equity accounted for EUR 412.5 million (324.0). In 2014, shareholders’ equity was increased by the EUR 70 million hybrid bond and the approximately EUR 30 million rights offering. The slowdown of housing sales in Finland increased net working capital. At the same time, the company has released capital through more efficient invoicing, for example. Solvency was improved by measures related to the strengthening of the capital structure, the divestment of business operations and the improved result.

Interest-bearing debt at the end of the year amounted to EUR 347.8 million (407.6) and interest-bearing net debt totalled EUR 213.6 million (326.5). Liquid funds increased due to the divestment of the technical building services and measures related to the strengthening of the capital structure. Of the company’s interest-bearing debt, EUR 127.1 million (73.1) comprises project loans, EUR 99.6 million (59.9) bonds, EUR 63.4 million (150.2) commercial papers, EUR 50.2 million (57.8) finance lease liabilities, EUR 5.6 million (45.1) loans from financial institutions and other liabilities, and EUR 2.0 million (21.5) pension loans. Of all interest-bearing debt, 41% (32) was at a fixed interest rate.

Net financial costs increased in January–December and amounted to EUR 37.9 million (26.8), representing 1.9% (1.3) of net sales. The increase was due to a EUR 7 million write-down of loan receivables related to the divestment of Lemcon Networks’ businesses, the renegotiated credit limits, increasing currency hedging costs for the rouble and valuation of interest rate derivatives. The interest expenses of the hybrid bonds are not recorded under the finance costs in the income statement; instead, their impact can be seen in the earnings per share as well as in equity.

Cash flow from operations in January–December totalled EUR -54.8 million (8.3). The cash flow includes the payment of EUR 60 million in damages related to the asphalt cartel.