Ramirent has a
total number of outlets
more than 243
in 11 countries
Finland
100
Norway
38
Sweden
43
Denmark
15
Estonia
10
Latvia
9
Lithuania
3
Poland
13
Russia
4
Hungary
7
Ukraine
1
Total
243
Ramirent Outlet Network
in Europe
NORWAY SWEDEN RUSSIA LITHUANIA HUNGARY POLAND ST. PETERSBURG MOSCOW LATVIA UKRAINE ESTONIA FINLAND DENMARK
MAP
RAMIRENT IN BRIEF 3
CEO’S REVIEW 4
THE GROUP’S OPERATING STRUCTURE AND ORGANIZATION 6
RAMIRENT FINLAND 7
RAMIRENT SCANDINAVIA 11
RAMIRENT EUROPE 12
RAMIRENT ALTIMA 14
BOARD OF DIRECTORS’ REPORT 19
CONSOLIDATED INCOME STATEMENT 21
CONSOLIDATED BALANCE SHEET 22
CONSOLIDATED CASH FLOW STATEMENT 24
PARENT COMPANY INCOME STATEMENT 25
PARENT COMPANY BALANCE SHEET 26
PARENT COMPANY CASH FLOW STATEMENT 28
NOTES 29
KEY FIGURES 42
BOARD OF DIRECTORS’ PROPOSAL 44
AUDITORS’ REPORT 45
CORPORATE GOVERNANCE AND MANAGEMENT 47
SHARE TURNOVER AND PERFORMANCE (MONTHLY) 48
RAMIRENT IN BRIEF
Key figures
Net sales and other operating income, € million Profit before extraordinary items, € million Earnings per share, €
Return on investment, % Personnel 31.12. 68,5 11,5 1,89 25,3 629 54,0 11,4 1,96 32,4 524 37,7 7,7 1,44 29,2 317 2001 2000 1999 102,3 14,3 1,49 13,3 1327 2002 173,4 13,0 1,58 10,3 1452 2003
Ramirent is the leading company in Northern and Eastern Europe in
machin-ery and equipment rentals for construction and industry. Following the
acqui-sition of Altima, the Group has 240 permanent outlets in eleven European
countries (Finland, Norway, Sweden, Denmark, Russia, Estonia, Latvia,
Lithuania, Poland, Hungary and the Ukraine).
The Ramirent Group’s core product groups are construction machinery,
personnel hoists, scaffolding, formwork, portable spacial units, on-site
elec-trical and heating systems, and tower cranes. The Group also provides related
planning, erection, transportation and advisory services. The Group’s main
customer segments are construction companies, installation companies,
in-dustrial plants, shipyards, national and local authorities, and private persons.
The Group has about 40,000 customers.
With a network of over 90 rental outlets throughout Finland, Ramirent is
the largest machinery rental company in the country. In Norway Ramirent
has a wholly-owned subsidiary Bautas AS which, with 38 outlets, is the
larg-est machinery rental company operating in Norway. In Sweden, after the
ac-quisition of Altima, Ramirent is the second largest machinery rental company
and operates through Ramirent AB’s subsidiaries, Altima Sverige AB, Stavdal
Byggmaskiner AB and Stavdal Lift AB. Ramirent has a total of 43 outlets in
Sweden. In Denmark, Ramirent operates through its subsidiary Altima A/S,
which is Denmark’s largest machinery rental company and has 15 outlets.
Acting through its subsidiaries, Ramirent Europe rents out construction
machinery and equipment in Russia, Estonia, Latvia, Lithuania, Poland,
Hungary and the Ukraine. At present the Group has a network of 47 rental
outlets in these countries.
REVIEW BY THE PRESIDENT AND CEO
Review of 2003
Ramirent estimates that the overall Nordic market for the machine rental business was smaller in 2003 than it had been in the previous year. Parti-cularly in the Oslo area in Norway the market weakened significantly. On the other hand, the machine rental market developed positively in Eastern European countries. The rapid strengthe-ning of the euro, especially against the Norwegian krona (the NOK weakened 15.5% against the EUR in 2003) and the Russian rouble and Polish zloty, strained the Group’s net sales, profit, capital and reserves and key figures for 2003.
The net sales of the Ramirent Group increased by 70.3% compared to the previous year. A signifi-cant part of the growth in net sales came from the companies in Scandinavia (Norway and Sweden) which were included in the previous year’s figures only for three months. The net sales of Ramirent Scandinavia were EUR 94.7 million (26.8).
Ramirent Europe also continued to grow strongly, with net sales increasing by 29.9% to EUR 20.8 million (15.7). Finnish operations cont-racted by 4.6% compared with 2002, totalling EUR 57.2 million (60.0).
The Group’s gross margin increased by 53% to EUR 45.2 million (29.6). The Group’s operating profit increased by 17.7% to EUR 19.3 million (16.4). The operating profit derived from Finnish operations was EUR 10.3 million (11.6). The oper-ating profit from Ramirent Scandinavia was EUR 6.1 million (2.9), while the operating profit from Ramirent Europe was EUR 2.8 million (1.9). The Group’s profit before minority interest and taxes decreased by 9.0% to EUR 13.0 million (14.3). The Group’s net profit for the year increased by 10.8% to EUR 10.5 million (9.5), while earnings per share also improved to EUR 1.58 (1.49).
In accordance with its strategy, the Ramirent Group focused strongly on growth and internatio-nalisation in 2003.
Ramirent Plc’s wholly-owned subsidiary, Ramirent Hungary Berléti Kft, expanded its machinery rental business in Hungary by acquiring the total stock of Gepbazis Kft in May 2003. The company operates in the southern Hungarian town of Pécs, where it has four outlets. Ramirent will merge the rental businesses of Gepbazis Kft and Ramirent Hungary Berleti Kft and extend its net-work of outlets throughout the whole of Hungary in the coming years.
Ramirent Plc made a public tender offer to the shareholders of Altima AB (publ) on 10 December 2003. In accordance with the offer Ramirent offered Altima’s shareholders 0.6054 newly issued Ramirent shares for each Altima share. The offer period commenced on 22 December 2003 and expired on 19 January 2004. The more detailed terms and conditions of the offer and the condi-tions for implementation appear in Ramirent’s prospectus concerning the matter. According to Ramirent’s Board of Directors, the businesses of the companies (Ramirent and Altima) complement each other well and their combination will create one of the leading European machinery rental companies whose strong structure will support the continuation of international growth, particularly in Central and Eastern Europe.
Ramirent founded a Ukrainian subsidiary Rami-rent Ukraine Ltd at the end of 2003.
Outlook for 2004
The overall market in the Nordic countries is expected to remain the same or to grow a little compared with 2003. The overall market in Eastern European countries in expected to conti-nue to increase. Due to the Altima transaction in particular, it is expected that the Ramirent Group’s net sales will grow significantly in 2004. The Group’s result for 2004 will be strained particular-ly in the first half of the year by the costs of integ-rating Altima into Ramirent. The synergies obtainable from the combination will have their full effect only on the results of 2005.
Internationalization and growth strategy
The Ramirent Group will continue to seek growth in the coming years. At the same time, the Group intends to maintain profitability at a good level. While growth will occur mainly through interna-tionalisation, business in Finland is also expected to continue to grow. The Group’s main market areas, in addition to the Nordic countries, are the countries of Eastern and Central Europe.
However, internationalisation is not an end in itself. Rather, there are weighty reasons why it is
the preferred course for Ramirent. First, the attain-ment of sufficient growth and corporate size in the Finnish market alone is virtually impossible, due to the limited size of the machinery rental market. On the other hand, powerful growth is essential for the company to be able to compete on an equal footing with other European machinery rental companies in growing markets. Secondly, the machinery rental markets of different countries are at different stages of development and the cyclical rises and falls of these markets are out of sync. Hence, by operating in many countries the company is able to develop much more steadily than by operating in just one country. Thirdly, the machines and equipment used in the machine rental business are the same in different countries. In fact, the machines are often made by the same international manufacturers. Capacity can thus be easily relocated from one country to another, which makes it possible to achieve better capacity utilisation ratios than when operating in only one market.
March 2004 Erkki Norvio
President and CEO
12,1 8,4 15 10 5 99 00 01 20 12,9 0 50 100 172,9 99 00 01 02 03 11,4 7,7 15 10 5 99 00 01 20 11,5 150 101,5 03 13,0 19,3 03 200 36,9 53,8 68,2 02 14,3 16,4 02 OPERATING PROFIT 1999-2003 EUR million NET SALES 1999-2003 EUR million PROFIT BEFORE
MINORITY INTEREST AND TAXES 1999-2003
MANAGEMENT GROUP Erkki Norvio Thorolf Hannus Kurt Opseth Mikael Öberg Lars Henningsson Finance and Administration RAMIRENT FINLAND RAMIRENT EUROPE Thorolf Hannus Petri Söderholm Timo Korhonen PRESIDENT & CEO RAMIRENT OYJ BOARD OF DIRECTORS Erkki Norvio RAMIRENT NORWAY BAUTAS Kurt Opseth RAMIRENT DENMARK ALTIMA Erik Höi RAMIRENT SWEDEN ALTIMA Mikael Öberg STAVDAL Lars Erik Höi Timo Korhonen Petri Söderholm Reijo Fernelius Jorma Nyyssölä
THE GROUP’S OPERATING STRUCTURE AND ORGANISATION
The Ramirent Group operates in eleven countries. The operating structure is based on the idea of proximity to customers and operations are chan-nelled through subsidiaries located in different countries. Strategic planning, investments, financ-ing and matters concernfinanc-ing all markets are co-ordinated at Group level.
The Group’s Finnish operations are conducted under the Ramirent trademark, with Ramirent Plc as the parent company. Additionally, the Group has two Finnish subsidiaries for scaffolding oper-ations (Rami Oy and Uudenmaan Teline-ykköset Oy) and one Finnish subsidiary for tower crane rentals (Rami-Cranes Oy). Geographically, Finnish operations have been divided into eight areas. There are already over 90 permanent
Ramirent outlets in Finland.
Norwegian operations are handled through the Bautas AS subsidiary. The company has 38 perma-nent rental outlets in 4 areas throughout Norway. In Sweden, operations are conducted through Ramirent AB’s subsidiaries, Altima and Stavdal. Altogether Ramirent has 43 outlets in Sweden. Operations in Denmark are conducted through Ramirent’s subsidiary, Altima A/S which has 15 outlets.
Operations in Eastern and Central European countries (Russia, Estonia, Latvia, Lithuania, Poland, Hungary and the Ukraine) are carried out by the Ramirent Europe Group through subsidiar-ies in each of the aforementioned countrsubsidiar-ies. The Group has 47 permanent outlets in these countries.
M A R K E T I N G P U R C H A S E S P R O D U C T L I N E S
FINLAND NORWAY SWEDEN DENMARK EUROPE
O P E R A T I N G S T R U C T U R E
RAMIRENT IN FINLAND
History
The history of Ramirent dates back to 1955 and the establishment of a partnership called Rakennusmies. At that time there was a need for new construction projects and equipment in Finland with post-war reconstruction at its height. The import, manufacture and trading of construction machinery and equipment were de-fined as the company’s lines of business. In the 1960s and 1970s the product range expanded, and the company also took on the development and manufacture of various prefabricated units. At the time, the company was called A-Elementti Oy Rakennusmies.
In 1983, Oy Partek Ab acquired the whole stock of the company, and in the following 2–3 years prefabricated unit production was trans-ferred to Partek’s own corresponding group. After the company’s own production came to an end, its name was changed to A-Rakennusmies Oy. Through this change the company returned to its roots and focused on the import, sales and renting of construction machinery and equip-ment. In the late 1980s, business grew again and the product range expanded. Further growth was sought mainly through acquisitions. In 1989, A-Rakennusmies acquired Rakennuslaite Oy, which had been renting construction machinery for 15 years. A leading seller and renter of formwork and personnel hoists, Hytec Oy, was merged with the company in 1991. In 1992, the major part of Monivuokraus Ky’s business and network of rental outlets was acquired, which significantly increased
A-Rakennusmies’ construction machinery rental operations. In 1993, the construction machinery operations of Starckjohann-Telko Oy were joined to the company and in 1994 Tallberg Rakennustekniikka Oy’s business was acquired. In 1995, the Betox Oy business was acquired.
In December 1995, the business operations of A-Rakennusmies were transferred to a new company held by key persons in A-Rakennus-mies through the holding company Gaspar Oy Ab, together with the funds managed by Cap-Man Capital Cap-Management Oy and MB Finance Group Oy. Of the previous owners, Oy Julius Tallberg Ab, Oy Partek Ab and Starckjohann Oy retained their holdings in the company until
November 1997, when the latter two sold their shares to the company’s other shareholders. In 1998, A-Rakennusmies was listed on the main list of the Helsinki Exchanges and the public quotation of its shares began on 30 April, 1998. In conjunction with this, the capital investors CapMan Capital Management and MB Finance Group sold most of their holdings.
A-Rakennusmies continued its acquisitions. The machinery rental operations of Kehä-Vuokraus and Cranes-Sampo were acquired in 1998 and two scaffolding rental companies, Uudenmaan Telineykköset Oy and Etelä-Suomen Telinepiste Oy, were acquired in 2000. The tower crane operations were incorporated as a subsidiary company called Rami-Cranes Oy at the beginning of March 2000 and the scaffolding operations were combined into a subsidiary called Teline-Rami Oy at the begin-ning of 2001. The name A-Rakennusmies Oyj was changed to Ramirent Plc in March 2001. In 2002, Ramirent acquired the business opera-tions of the scaffolding rental company Tupla-Rakenne Oy and its sister companies.
Market development
According to the estimates of Ramirent, the Finnish construction machinery rental market weakened somewhat in 2003, compared with the previous year. The use of rental machinery is still relatively low in Finland by international standards. A slight increase in the use of rental services is expected in the future as construction companies and industry focus on improving profitability and productivity. The Finnish con-struction machinery rental market is expected to grow 0–5% annually in the future, depending on the development of business activities in construction and industry.
Operations and the market situation
The Construction Machinery and Personnel Hoists product lines cover the renting of machinery and personnel hoists needed in con-struction and industrial maintenance, and the sales of related equipment and accessories. The machinery and equipment in these product lines are used in concrete casting, soil compaction,
C O L U M N F O R M E Q U I P M E N T.
Net sales of Ramirent’s Finnish operations
57,2 M€
Operating profit of Ramirent’s Finnish operations
10,3 M€ hoisting, heating, sanding, grinding, welding,
drilling and nailing. The product range also in-cludes various cutting machines, pneumatic ma-chinery, electrical and lighting equipment, pumps, and testing and measuring equipment. The combined net sales of these product lines increased somewhat from the previous year. The net sales of rental operations are expected to still grow slightly in 2004.
The Formwork and Supporting Equipment product line rents and sells shuttering required for on-site concrete casting, and the related planning, erection and supervision services. Shuttering is used to cast vertical and horizontal structures such as walls and vaults. The net sales of Formwork and Supporting Equipment fell short of the previous year’s level. In 2004, net sales are expected to remain at the same level or to increase slightly compared with 2003.
The operations of the Scaffolding and Weather Covers product line are carried out through Ramirent Plc’s wholly-owned subsidiaries, Teline-Rami Oy and Uudenmaan Telineykköset Oy. These companies are responsible for the renting and selling of scaffolds and weather covers. The companies’ comprehensive service
also includes planning, erection, transfers, dis-assembly and transportation. The 2003 net sales of Scaffolding and Weather Covers remained approximately at the previous year’s level. In 2004, net sales are estimated to grow somewhat.
The Portable Spacial Units and Containers product line rents and sells portable spacial units and containers for use on new construction and renovation sites and for many other purposes. The product range includes office, changing room, canteen, storage and accommodation units. The net sales of Portable Spacial Units and Containers decreased to some extent from the previous year. A small increase is expected in 2004.
The operations of the Tower Cranes and Hoists product line are carried out through Ramirent Plc’s wholly-owned subsidiary, Rami-Cranes Oy. Rami-Cranes Oy is responsible for renting and selling tower cranes and construction site hoists and related maintenance and spare parts services. Rami-Cranes also repairs and provides spare parts services for other kinds of hoists and construction machinery. The net sales of Rami-Cranes decreased to some extent from the previous year. In 2004, net sales are estimated to grow somewhat compared with 2003.
S U P P O RT E Q U I P M E N T F O R H E AV Y C O N C R E T E S L A B S . K A M P P I C E N T E R , H E L S I N K I , D E C E M B E R 2 0 0 3
RAMIRENT SCANDINAVIA
Net sales of Ramirent Scandinavia
94,7 M€
Operating profit of Ramirent Scandinavia
6,1 M€
History
Veidekke ASA, Norway’s largest construction company, incorporated its internal machinery rental department into a subsidiary called Bau-tas in 1997. BauBau-tas AS was founded at a good time, as between 1997 and 1999 the company experienced organic growth that tripled its sales. During the same period, Veidekke’s share of net sales fell from 100% to less than 50%. In 2000, Bautas acquired its biggest competitor Stavdal, which at the time was listed on the Oslo Stock Exchange. The acquisition doubled Bautas’ net sales and gave the company a good position in the Swedish market. In Norway Stavdal was merged with Bautas, but in Sweden the company continued to operate under the Stavdal name. In 2001, AF-gruppen, the second largest construction company in Norway, out-sourced its construction machinery rental busi-ness to Bautas, making an agreement to transfer most of its “light” machinery to the company. This was a clear sign that Bautas had succeeded in establishing its position as an independent equipment rental company. In 2001, the company also acquired a rental business in southern Sweden, making Stavdal a nation-wide company with operations in all major Swedish regions. In September 2002, Ramirent Plc acquired Bautas and Stavdal. The companies were integrated into the Ramirent Group on 1 October 2002, and the Norwegian and Swedish operations were combined to form Ramirent Scandinavia.
Norway (Bautas AS)
In 2003 the Norwegian machinery and equip-ment rental market deteriorated significantly when compared with the year before. This was mainly due to a reduction in construction activity. The deterioration was particularly marked in the Oslo region, which accounts for a substantial share of Bautas’ net sales. The operations of Bautas have not developed according to plan, mainly due to the weakening market situation. However, Bautas maintained its position on the Norwegian market. The over-all markets are expected to remain the same or possibly improve slightly in 2004 when
compared with the previous year. In 2004, Bautas will primarily focus on improving its profitability.
Sweden (Stavdal i Sverige AB)
In Sweden, the equipment rental market weak-ened slightly due to a decrease in construction. Regional differences could still be seen, however. Stavdal’s net sales increased some-what from the previous year. Despite this, the company did not achieve its profitability tar-gets, mainly because the planned cost savings were not realized.
However, Stavdal maintained its market position in Sweden. In 2004 the Swedish equipment rental market is expected to remain approximately the same as in the previous year. Stavdal will primarily focus on improving its profitability in 2004.
RAMIRENT EUROPE
T E M P O R A RY D O C K I N G F O R M A I N T E N A N C E A N D PA I N T W O R K O N A N A I R P L A N E .
History
Ramirent Europe’s machinery rental business began in Moscow in 1989 with the foundation of a joint venture company in the former Soviet Union with two local partners. In 1993, the Moscow business was transferred to a wholly-owned subsidiary, ZAO Techrent. In 1994, Ramirent Europe’s operations were expanded by establishing subsidiaries in St. Petersburg and Tallinn.
A-Rakennusmies East Oy began operations in 1997, as a result of the eastern operations of A-Rakennusmies Oy being incorporated into a separate company. A fund managed by Capman Capital Management Oy, the Alliance ScanEast Fund L.P., put up 50% of the equity.
These operations are presently conducted through Ramirent Europe Oy and its subsidiar-ies. Ramirent Europe Oy has subsidiaries in seven countries: Russia (OOO Techrent in Moscow and ZAO Peterrent in St. Petersburg), Estonia (AS Ramirent), Latvia (A-Ramirent SIA and Rami teh SIA), Lithuania (A-Ramirent UAB) and Poland (Rema-Rental S.A. and Operator S.A.). In addition, Ramirent Plc has set up a Hungarian subsidiary called Ramirent Hungary Bérleti Kft that started operations in early 2002.
As a result of a share issue in 2000, Ramirent
Plc’s holding in Ramirent Europe Oy increased to 65%, with the Alliance ScanEast Fund L.P.’s holding correspondingly decreasing to 35%.
On 27 February 2004, Ramirent Plc signed an agreement to acquire Ramirent Europe Oy’s 35% minority share from Alliance ScanEast Fund L.P. The transaction was closed on 29 March 2004, and Ramirent Plc now owns 100% of Ramirent Europe Oy.
General overview
Ramirent Europe has developed according to its strategy. In 2003, the net sales of Ramirent Europe increased by 29.9% compared with the previous year. The operating profit also improved to EUR 2.8 million (EUR 1.9 million in 2002). Profit increased in all countries where Ramirent Europe operates. Operations are expected to continue to grow in 2004, although the main focus will be on improving profitability.
Estonia (AS Ramirent)
In 2003, construction in Estonia increased by about 11%. This, coupled with the expansion of the network of AS Ramirent outlets, led to a very solid year in the Estonian market. The company’s net sales increased by 38% from the previous year and the operating profit was
Development of the net sales of Ramirent Europe
Net sales of Ramirent Europe
20,8 Me
Operating profit of Ramirent Europe
2,8 Me good. This favourable development is also
ex-pected to continue in 2004.
Latvia (A-Ramirent SIA, Rami teh SIA)
Construction increased in Latvia by 14%. The net sales of Ramirent SIA increased by 33% and those of Ramiteh SIA by 25% from the previous year. The operating profit of both companieswas good. This positive development is also expected to continue in the 2004 financial year.
Lithuania (A-Ramirent UAB)
Construction in Lithuania increased by 25% in 2003. The Ramirent subsidiary also increased its net sales, achieving its target of 38% growth from the previous year.
The operating profit was good and met expec-tations. Operating profit is expected to continue to improve in the 2004 financial year.
Poland (Rema-Rental S.A.)
Rental operations in Poland were mainly con-ducted through the company’s subsidiary Rema-Rental S.A., which is wholly owned by Ramirent Europe. As expected, market conditions were tough in Poland. Construction decreased for the third consecutive year. This time the rate of decrease had slowed down to 5%. The situation is expected to improve during 2004. The aim is to further expand the company’s product range and network in Poland which currently consists of 13 outlets. The company’s net sales increased by 20% from the previous year. The Polish figures include those of Operator Sp Z o.o, a subsidiary of Ramirent S.A. . In 2004, the operations of the company will be combined to Ramirent S.A. The company’s operating profit is expected to increase in 2004. In January 2004, Ramirent S.A. acquired MVS AG’s Polish portable spacial units operations.
Russia, (OOO Techrent in Moscow and ZAO Peterrent in St. Petersburg)
Construction in Russia increased by 14% in 2003. The net sales of Techrent increased only by 2% from the previous year and its operating
profit was good. Techrent’s operations are expected to develop positively in 2004, and the company will continue to improve its product range and operating conditions.
Peterrent’s net sales increased by 45% from the previous year, and its operating profit was reasonably good. Development is expected to continue favourably in 2004.
Hungary (Ramirent Hungary Bérleti Kft)
Construction in Hungary increased by 8% in 2003. During the financial year, the company acquired Gepbasis Kft, a company in South Hungary. The acquisition substantially strength-ened our Hungarian outlet network which now features 7 outlets. Our operations increased according to plan, and strong growth is expected for 2004.
The Ukraine (Ramirent Ukraine Ltd)
The company was registered late in 2003, and its operations will commence in spring 2004.
Overview
Ramirent Plc made a public tender offer to the shareholders of Altima AB (publ) on 10 December 2003. In accordance with the offer Ramirent offered Altima’s shareholders 0.6054 newly issued Ramirent shares for each Altima share. The offer period commenced on 22 December 2003 and expired on 19
January 2004. Ramirent’s public tender offer was accepted to the extent that Ramirent controlled 94.62% of Altima’s shares and votes. Ramirent implemented the offer to Altima’s shareholders and extended the accept-ance period until 13 February 2004. On 19 February 2004, Ramirent controlled 98.39% of Altima’s total shares and votes. Ramirent Plc’s Board of Directors decided not to further extend the offer period. In addition, the Board decided to commence the redemption proce-dure for minority shareholders in order to re-deem the remaining Altima shares as soon as possible.
RAMIRENT – ALTIMA
Background and reasons for the offer
Ramirent’s Board of Directors considers that the merger of Ramirent and Altima is well-founded for strategic, industrial and financial reasons.
Through its strategy of international growth, Ramirent aims to become one of the leading machinery rental companies in Europe. Ramirent considers international growth important for several reasons.
The combination offers the potential to realise synergies through:
– a larger and more diversified service offering for customers and a more efficient rental out-let structure.
– a better bargaining position with respect to suppliers and thus more cost-efficient pur-chasing.
– the opportunity to relocate machinery be-tween geographical markets and thus achieve higher capacity utilisation.
– the opportunity to spread fixed administrative and IT costs over a larger number of units. T H E I N D U S T R I A L E V E N T O F T H E Y E A R , H E L D I N T A M P E R E I N O C T O B E R 2 0 0 3 .
The merger creates opportunities to serve large customers with operations in several coun-tries.
According to Ramirent’s Board of Directors, the businesses of the companies (Ramirent and Altima) complement each other well and their combination will create one of the leading European machinery rental companies whose strong structure will support the continuation of international growth, particularly in Central and Eastern Europe. The New Group will have a strong balance sheet and is expected to produce substantial synergies. The merger is estimated to create synergies of at least EUR 10 million annually, fully effective as of 2005. The costs of realising these synergies are estimated at EUR 5 million.
Based on the above, Ramirent’s Board of Directors decided on 9 December 2003 to make an offer to future shareholders in Altima to transfer all shares in Altima to Ramirent. As the offer, which was announced on 10 December 2003, will be conducted through a share exchange, the shareholders of both Ramirent and Altima can fully participate in the future development of the New Group.
Business Concept
The New Group’s business concept is to create shareholder value by offering efficient machin-ery and equipment rental services for the construction and industrial sector in the Nordic region and in other selected European coun-tries.
Objectives and Strategy
The New Group’s objective is to consolidate its position as one of the leading players in the European market for machinery and equipment rentals for the construction and industrial sector by means of strong, profitable growth. The strategy to attain this objective is to work ac-tively in market consolidation, especially in the Nordic region, as well as in Central and Eastern Europe.
Following the merger, the New Group will have a market-leading position in the Nordic countries and in certain Eastern European
coun-tries. It will also have a robust platform for growth in other European markets. The following main operational approaches will be employed to achieve profitable growth: – Focus on organic growth, while continually
appraising acquisition opportunities. – Continual investments in machinery and
equipment to maintain and develop the rental portfolio.
– Establishment of new rental outlets to meet the requirements of existing and new customers.
– Higher sales to customers outside the con-struction sector in a bid to reduce sensitivity to business fluctuations in this sector. – Utilisation of the growth potential that arises
when construction and industrial companies transfer their in-house machinery operations to machinery rental companies.
In the Nordic countries, acquisitions will be undertaken primarily to strengthen existing product lines. In markets outside the Nordic area, where the major growth opportunities are expected, acquisitions will be conducted to strengthen existing product lines and to consoli-date and establish a market presence. Interna-tional growth will be important for the New Group for a variety of reasons:
– Sufficient size must be attained to compete effectively for market share in growth markets.
– Being active in a number of markets offers more stable growth and earnings, since different geographical markets develop at varying rates and encounter differing business cycles.
– Geographical diversification creates higher capacity utilisation, since machinery and equipment may be relocated among countries.
The New Group is expected to work primarily in line with the following financial objectives: – Operating margin before depreciation will
exceed an average of 30% over a business cycle.
– The equity to assets ratio will exceed 50%. – The debt to equity ratio (gearing) will not
The New Group’s potential to meet these objectives depends on factors such as demand in the machinery rental industry and on the New Group’s ability to retain its market position, as well as effectively using its rental portfolio, effectively financing new investments and the ability to realise synergies. Concerning risk factors, please see section 5.14 of Ramirent Plc’s Prospectus.
Market
Worldwide, the market for the rental of machinery and equipment to the construction and industrial sector is showing higher growth than overall sales of machinery and equipment. This is largely attributable to customers seeking higher flexibility and reductions in tied-up capital, leading to higher demand for rental services.
Industry analysts estimate that the global market for machinery and equipment rentals amounts to about EUR 55 billion, of which the
U.S. market accounts for more than one third and the European market for a little more than 20%. Ramirent estimates that European market growth over the past two decades varied from 5% to 8% annually, and there are factors indi-cating that, in the longer term, growth has the potential to continue to exceed overall economic growth.
Ramirent estimates that the Nordic market for machinery and equipment rentals amounts to almost EUR 1.4 billion. The Swedish market is estimated to total approximately EUR 650 million, making it the largest in the Nordic region. The Norwegian and Danish markets are each believed to amount to some EUR 250 million, and are thus individually slightly larger than the Finnish market, which is estimated at some EUR 200 million.
Like the European market, the Nordic market has a good track record for growth over a protracted period and Ramirent estimates the average annual growth over the past two
decades was some 5%. In the Nordic market, the construction sector accounts for about 50% of value, with the industrial sector accounting for some 20%. The remainder is primarily attributable to sales to customers in the state and municipal sectors and to individuals.
Market Trends –
Outsourcing machinery fleets
One measure of the level of development of the machinery rental market in various countries is the share of total sales of machinery and equip-ment to machinery rental companies. This share is estimated to total some 40% in Sweden, with 30% in Denmark and Norway, and a little lower again in Finland. Eastern and Central European markets have a lower level of market maturity than the Nordic area and display sub-stantially lower shares. For example, Ramirent’s management estimates that the proportion of machinery and equipment sold to machinery rental companies is about 10% in the Baltic countries and Poland.
This share is expected to rise in Europe gener-ally, but especially in Eastern Europe as con-struction and industrial companies increasingly transfer their in-house machinery operations to machinery rental companies in an effort to reduce tied-up capital while offering higher availability and superior service. This trend is expected to have a long-term positive impact on the machinery rental industry.
Construction companies represent the key customer group for customers in the machinery rental sector. These companies represent a substantial share of market growth, because of the change in their approach to machinery and equipment operations in recent years. The demand for lower tied-up capital and higher efficiency has prompted greater interest in renting machinery and equipment, as well as transferring a company’s entire machinery operations to machinery rental companies. Parallel with the trend in the construction industry, higher demand has been noted from other customer groups – such as the manufac-turing and events industries, as well as munici-palities and state administrations – who have realised the benefits of renting.
Greater consolidation
The European machinery rental market was previously represented primarily by two types of suppliers, namely, small and frequently local machinery rental companies, and organisations in major construction companies with responsi-bility for equipment rentals. In pace with the emergence and growth of the market over the past 20 years, this structure has been consolidat-ed in the hunt for size and cost advantage. In particular, the largest national players are estab-lishing international market positions through acquisitions. French and British players have taken the lead in consolidation, but a similar trend is also noted in the Nordic market.
Growth factors
The primary driving force in the machinery rental market is customer demand for higher capital efficiency and cost effectiveness via, for example, reductions in labour costs, greater flexibility and superior service.
Market growth in the machinery rental industry is also affected by:
– The percentage of players choosing to rent instead of owning machinery and equipment. – Activity in the construction market, as well
as among individuals and public sector customers.
As a result of on-going consolidation, ma-chinery rental companies have generally be-come larger and thus offer a broader machinery range and superior availability. Moreover, the major rental companies can provide added value to customers as a result of the economies of scale attained in the form of larger purchasing volumes, higher capacity utilisation and better service, thanks to specialist expertise.
Combined, these factors have led to an increase in the percentage of players choosing to rent rather than investing in their own equipment.
Consequently, the reduced demand witnessed during recent years as a result of an underlying, weak construction market has been offset by customers choosing to satisfy an increasing pro-portion of their needs by renting machinery and equipment rather than investing in their own.
BOARD OF DIRECTORS’ REPORT
Business Development in the Financial Year
Ramirent estimates that the overall Nordic market for the machinery rental business was smaller in 2003 than it had been in the previous year. Partic-ularly in the Oslo region in Norway the market weakened significantly. On the other hand, the machinery rental market increased in Eastern European countries.
The rapid strengthening of the euro, especially against the Norwegian krona (the NOK weakened 15.5% against the EUR in 2003) and the Russian rouble and Polish zloty, strained the Group’s net sales, profit, capital and reserves and key figures for 2003.
The net sales of the Ramirent Group increased by 70.3% compared to the previous year. A signif-icant part of the growth in net sales came from the companies in Scandinavia (Norway and Sweden) which were included in the previous year’s figures only for three months. The net sales of Ramirent Scandinavia were EUR 94.7 million (26.8). Ramirent Europe also continued to grow strongly, with net sales increasing by 29.9% to EUR 20.8 million (15.7). Finnish operations contracted by 4.6% compared with 2002, totalling EUR 57.2 million (60.0). The operating profit derived from Finnish operations was EUR 10.3 million (11.6). The operating profit from Ramirent Scandinavia was EUR 6.1 million (2.9), while the operating profit from Ramirent Europe was EUR 2.8 million (1.9).
In accordance with its strategy, the Ramirent Group focused strongly on growth and interna-tionalisation in 2003.
Ramirent Plc made a public tender offer to the shareholders of Altima AB (publ) on 10 December 2003, according to which Ramirent offered Altima’s shareholders 0.6054 newly issued Ramirent shares for each Altima share. The offer period commenced on 22 December 2003 and expired on 19 January 2004. The more detailed terms and conditions of the offer and the condi-tions for implementation appear in Ramirent’s prospectus concerning this matter.
According to Ramirent’s Board of Directors, the businesses of the companies (Ramirent and Altima) complement each other well and their combina-tion will create one of the leading European machinery rental companies whose strong struc-ture will support the continuation of international growth, particularly in Central and Eastern Europe.
Changes in Group Structure
Ramirent Plc’s wholly owned subsidiary, Ramirent Hungary Berléti Kft, expanded its machinery rental business in Hungary by acquiring the total stock of Gepbazis Kft in May 2003. The company operates in the southern Hungarian town of Pécs, where it has four outlets. Ramirent intends to merge the rental businesses of Gepbazis Kft and Ramirent Hungary Berleti Kft and to extend its network of outlets throughout the whole of Hungary in the coming years.
Ramirent founded a Ukrainian subsidiary Ramirent Ukraine Ltd at the end of 2003.
Grou’s Net Sales, Profit and Balance Sheet
The Ramirent Group’s net sales for 2003 totalled EUR 172.9 million (101.5), an increase of 70.3% on the previous year. Other operating income was EUR 0.5 million (0.8). The Group’s operating profit was EUR 19.3 million (16.4). Depreciation grew as a result of major investments to EUR 25.9 million (13.3).
Operating profit before depreciation (operating margin) increased by 53.0%, totalling EUR 45.2 million (29.6). Operating profit increased by 17.7%, totalling EUR 19.3 million (16.4), while profit before appropriations and taxes totalled EUR 13.1 million (14.3). The profit after taxes and minority interests was EUR 10.5 million (9.5). The balance sheet total was EUR 215.9 million (223.1). Earnings per share was EUR 1.58 (1.49) and return on investment 10.3% (13.3%).
Capital Expenditure
The Group’s gross capital expenditure in non-cur-rent assets totalled EUR 32.2 million (112.8).
Financing and Liquidity
Net debt at the end of the year totalled EUR 106.4 million (113.4) and gearing was 156.2%
(160.0%). Interest-bearing debt totalled EUR 111.7 million (121.1). The Group made substan-tial investments in 2003, financed mainly by cash flow financing and loans from financial institu-tions, and also by investment finance. The equity ratio was 31.6% (31.8%). The Group’s liquidity was good during the year under review.
Increasing the share capital in deviation from the shareholders’ pre-emptive subscription rights
The share capital was increased, in deviation from the shareholders’ pre-emptive subscription rights, by EUR 236,215.46 on the basis of the 1998 B and 2000 C option programs.
Personnel
The Group employed an average of 1,464 people (884). 510 employees (477) worked in domestic operations, while 942 (850) were employed in international operations. The growth in personnel was influenced by the business acquisitions made in Finland in the spring of 2002, the substantial investments made in international operations, and above all the acquisition of the business opera-tions of Bautas.
Outlook for 2004
The overall market in the Nordic countries is expected to remain the same or to grow slightly compared with 2003.
In the Eastern European countries the overall market is expected to continue to grow.
Due to the Altima transaction in particular, it is expected that the Ramirent Group’s net sales will grow significantly in 2004. The Group’s result for 2004 will be strained particularly in the first half of the year by the costs of integrating Altima into Ramirent. The synergies obtainable from the combination will have their full effect only on the results of 2005.
Significant Events after the end of the Financial Year
Ramirent Plc’s Extraordinary General Meeting held on 13 January, 2004, approved the proposal of the Board of Directors to increase the company’s share capital through a rights offering to Altima AB (publ).
Ramirent’s public tender offer was accepted to the extent that Ramirent controlled 94.62% of Altima’s total shares and votes. Ramirent implemented the offer to Altima’s shareholders and extended the acceptance period until 13 February 2004.
On 19 February 2004, Ramirent controlled
Plc’s Board of Directors decided not to further extend the offer period. In addition, the Board decided to commence the redemption procedure for minority shareholders in order to redeem the remaining Altima shares as soon as possible.
As expected, by a decision dated 2 February 2004, the Russian competition authority gave unconditional clearance for implementation of Ramirent’s public tender offer to the shareholders of Altima AB (publ.).
The changes in Ramirent’s ownership shares were disclosed in stock exchange releases dated 23 January, 2004 and 26 January, 2004.
After the close of the 2003 financial year, in-creases in Ramirent Plc’s share capital were regis-tered on 28 January, 2004 and 23 February, 2004. Thus, the company’s fully paid share capital was EUR 10,749,542.45, divided into 12,782,903 shares.
On 16 February, 2004, Ramirent Plc received notice from Thomas Tallberg of his intention to resign from membership of the company’s Board of Directors with immediate effect.
Board of Directors, President & CEO, and the Auditor
The Annual General Meeting held on 24 April, 2003, elected the following Board members: Raimo Taivalkoski, Chairman, Thomas Tallberg, Vice Chairman (until 16 February, 2004), Erkki Norvio, Tuire Mannila and Eigil Flaathen. Erkki Norvio is the President and CEO. KPMG Wideri Oy Ab, a firm of authorised public accountants, was elected as the Auditor by the Annual General Meeting, with Solveig Törnroos-Huhtamäki, APA, as the principally responsible Auditor.
Proposal of the Board on the Use of Distributable funds
The Group’s distributable funds amount to
EUR 6,778,910. The parent company’s distributa-ble funds amount to EUR 15,792,298.16, of which the net profit for the year accounts for
EUR 1,703,685.38.
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.25 per share be distributed, making EUR 3,195,725.75 in total. The number of shares has been calculated as 12,782,903 shares, i.e. the number of shares with a right to dividend registered on February 23,
INCOME STATEMENT
CONSOLIDATED
Note 1.1.-31.12.2003 1.1.-31.12.2002
(EUR 1000) (EUR 1000)
NET SALES 2 172 931 101 490
Other operating income 3 511 841
Materials and services 4 29 929 21 672
Personnel services 5 51 778 27 417
Depreciation and writedown 6 25 894 13 284
Other operating expenses 46 526 23 606
154 127 85 979
OPERATING PROFIT 19 315 16 352
Financial income and expenses 7 -6 265 -2 018
PROFIT BEFORE MINORITY INTEREST
AND TAXES 13 050 14 334
Income taxes 10 -1 448 -4 108
Minority interests -1 059 -709
BALANCE SHEET
CONSOLIDATED Note 31.12.2003 31.12.2002 (EUR 1000) (EUR 1000) ASSETS NON-CURRENT ASSETS Intangible assets 11 30 750 36 852 Tangible assets 11 140 714 141 903 Investments Other investments 13, 14, 15 425 480TOTAL NON-CURRENT ASSETS 171 889 179 235 CURRENT ASSETS
Inventories 16 6 286 7 424
Current receivables
Trade receivables 26 541 25 342
Other receivables 3 085 226
Prepayments and accrued income 2 762 3 298
Cash in hand and at the banks 5 337 7 618
TOTAL CURRENT ASSETS 44 011 43 908
CONSOLIDATED
Note 31.12.2003 31.12.2002
(EUR 1000) (EUR 1000)
LIABILITIES
CAPITAL AND RESERVES
Share capital 18 5 620 5 384
Share premium account 18 35 411 33 078
Retained earnings 18 10 341 17 230
Net profit for the year 18 10 543 9 517
TOTAL CAPITAL AND RESERVES 61 915 65 209
MINORITY INTERESTS 6 210 5 643
CREDITORS
Deferred tax 21 9 916 6 879
Non-current liabilities
Loans from financial institutions 22, 25, 26 81 332 88 657
Pension loans 22, 26 4 453 5 706
Other loans 4 815 4 479
90 600 98 842
Current liabilities
Loans from financial institutions 23, 25, 26 19 680 21 183
Pension loans 24, 26 1 033 1 033
Advances received 351
Trade payables 10 096 9 373
Other liabilities 9 700 8 811
Accruals and deferred income 24 6 399 6 171
47 259 46 570
TOTAL CREDITORS 147 775 152 291
TOTAL LIABILITIES 215 900 223 143
CASH FLOW STATEMENT
CONSOLIDATED
1.1.-31.12.2003 1.1.-31.12.2002
(EUR 1000) (EUR 1000)
Cash flow from operating activities:
Profit before minority interest and taxes 13 050 14 334
Adjustments:
Depreciation and writedown 25 894 13 284
Other income and expenses, not involving payment 102 141
Financial income and expenses 6 265 2 018
Other adjustments -76 -613
Cash flow before change in net working capital 45 235 29 164
Change in net working capital:
Non interest-bearing short-term business receivables
increase (-) / decrease (+) -5 295 -18 687
Inventories increase (-) / decrease (+) 583 208
Non interest-bearing short-term debt
increase (+) / decrease (-) 2 652 17 740
Cash flow before financing activities and taxes 43 175 28 425
Paid interests and payments of
other business financing costs -5 193 -1 252
Interests received from business activities 57 -133
Direct taxes paid -1 190 -3 931
Cash flow from operating activities (A) 36 850 23 109 Cash flow from investing activities:
Investments in tangible and intangible assets -32 732 -104 205
Proceeds from sale of tangible and intangible assets 4 435 4 087
Purchased shares of subsidiaries -455 -12 962
Cash flow from investing activities (B) -28 753 -113 080 Cash flow from financing activities:
Paid share issue 2 569 30 570
Raising of short-term loans -21 183 11 463
Repayment of short-term loans 19 680 -824
Raising of long-term loans 89 166
Repayment of long-term loans -8 242 -32 766
Dividends paid -3 201 -3 518
Cash flow from financing activities (C) -10 377 94 091 Change in liquid assets, increase (+) / decrease (-) (A+B+C) -2 280 4 124
Liquid assets at the beginning of the financial year 7 618 3 498
INCOME STATEMENT
PARENT COMPANY
Note 1.1.-31.12.2003 1.1.-31.12.2002
(EUR 1000) (EUR 1000)
NET SALES 1,2 40 819 41 501
Other operating income 3 300 441
Materials and services 4 -6 835 -7 843
Personnel services 5 -10 346 -10 169
Depreciation and writedown 6 -5 996 -5 420
Other operating expenses -10 822 -11 283
-33 999 -34 715
OPERATING PROFIT 7 120 7 227
Financial income and expenses 7 -4 638 -1 091
PROFIT BEFORE EXTRAORDINARY ITEMS 2 482 6 136
Extraordinary items 8 2 503 3 424
PROFIT BEFORE APPROPRIATIONS
AND TAXES 4 985 9 560
Appropriations 9 -2 495 -1 802
Income taxes 10 -786 -2 248
BALANCE SHEET
PARENT COMPANY Note 31.12.2003 31.12.2002 (EUR 1000) (EUR 1000) ASSETS NON-CURRENT ASSETS Intangible assets Intangible rights 11 95 95 Goodwill 11 1 066 1 554Other capitalized long-term expenditure 11 710 873
1 871 2 521
Tangible assets
Land and water 11 408 76
Buildings 11 1 729 1 170
Machinery and equipment 11 30 233 29 533
32 370 30 778
Investments
Holdings in Group companies 12, 14 112 014 23 877
Other shares and holdings 13, 15 339 339
112 353 24 215
TOTAL NON-CURRENT ASSETS 146 594 57 515 CURRENT ASSETS
Inventories 16 1 023 1 362
Non-current receivables
Receivables from Group companies 17 13 723 49 822
Current receivables
Trades receivables 3 760 3 738
Receivables from Group companies 17 4 069 8 896
Prepayments and accrued income 470 857
Cash in hand and at the banks 417 283
TOTAL CURRENT ASSETS 23 462 64 958
PARENT COMPANY
Note 31.12.2003 31.12.2002
(EUR 1000) (EUR 1000)
LIABILITIES
CAPITAL AND RESERVES
Share capital 18 5 620 5 384
Share premium account 18 35 411 33 078
Retained earnings 18 14 088 11 779
Net profit for the year 18 1 704 5 510
TOTAL CAPITAL AND RESERVES 56 823 55 751
APPROPRIATIONS
Depreciation reserve 20 11 378 8 883
CREDITORS
Non-current liabilities
Loans from financial institutions 22, 25, 26 72 154 26 000
Pension loans 22, 26 3 235 4 281
Loans to Group companies 23 4 718
Other long-term liabilities 24 3 600 4 466
83 707 34 747
Current liabilities
Loans from financial institutions 24, 25, 26 10 000 16 517
Pension loans 24, 26 1 033 1 033
Other short-term liabilities 24 1 350 433
Advances received 68 22
Trade payables 1 108 1 111
Liabilities to Group companies 23 223 263
Other liabilities 1 239 944
Accruals and deferred income 24 3 127 2 768
18 148 23 091
TOTAL CREDITORS 101 855 57 839
TOTAL LIABILITIES 170 056 122 473
CASH FLOW STATEMENT
PARENT COMPANY
1.1.-31.12.2003 1.1.-31.12.2002
(EUR 1000) (EUR 1000)
Cash flow from operating activities:
Profit before extraordinary items 2 481 6 136
Adjustments:
Depreciation and writedown 5 996 5 420
Other income and expenses, not involving payment 111 141
Financial income and expenses 4 720 1 091
Other adjustments 507 -254
Cash flow before change in net working capital 13 815 12 534
Change in net working capital:
Non interest-bearing short-term business receivables
increase (-) / decrease (+) -20 174
Inventories increase (-) / decrease (+) 339 319
Non interest-bearing short-term debt
increase (+) / decrease (-) 23 146
Cash flow before financing activities and taxes 14 157 13 173
Paid interests and payments of other
business financing costs -4 814 -1 159
Interests received from business activities 1 477 90
Direct taxes paid -456 -2 877
Cash flow from operating activities (A) 10 364 9 227 Cash flow from investing activities:
Investments in tangible and intangible assets -6 917 -11 983
Proceeds from sale of tangible and intangible assets 862 2 264
Loans granted -84 719 -12 455
Other investments -46 383
Repayments of loans 37 610
Dividends received from investments 6
Cash flow from investing activities (B) -53 158 -68 557 Cash flow from financing activities:
Paid share issue 2 569 30 571
Raising of short-term loans 58 522
Repayment of short-term loans -10 119 -47 437
Raising of long-term loans 60 871 41 153
Repayment of long-term loans -7 392 -19 956
Dividends paid -3 201 -3 518
Cash flow from financing activities (C) 42 728 59 335 Change in liquid assets, increase (+) / decrease (-) (A+B+C) -66 5
Liquid assets at the beginning of the financial year 283 278
NOTES TO THE FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
General
The financial statements have been prepared in accordance to the Finnish Accounting Act and Companies Act. The financial statements are de-nominated in euros.
Scope and principles of consolidation
All Group companies are included in the consoli-dated financial statements of Ramirent Plc. The companies acquired during the 2002 finan-cial year have been included as of their date of acquisition.
All intra-Group transactions, receivables, liabilities and profit distribution have been elimi-nated. The unrealised margins from intra-Group sales have been eliminated insofar as they would affect the Group’s profit and its capital and reserves. Minority interests are presented sepa-rately in the income statement and balance sheet.
Intra-Group holdings have been eliminated using the acquisition cost method. The differ-ences arising from eliminations have been entered either as fixed assets or as Group good-will. The amount allocated as fixed assets on 31 December, 2003, was EUR 517,595 (EUR 575,106). The fixed asset items will be depre-ciated according to plan, while goodwill will be amortised in 10 to 20 years.
The income statements of foreign Group companies have been translated into euros at the average exchange rate for the financial year, and the balance sheets at the exchange rate on 31 December. The differences arising from transla-tion and exchange rates have been entered in ”financial income and expenses” in the income statement, except for exchange rate translation differences in capital and reserves, which are presented under ”capital and reserves” in the balance sheet. The financial statements of the Russian subsidiaries of Ramirent Europe Oy have been translated into euros using the monetary – non monetary method.
Net sales
Net sales include rental income, sales income from technical trade, the sale of services, and gains from the sale of used rental machinery and equipment.
Appropriations
Appropriations are changes in the parent company’s depreciation in excess of plan. In the consolidated balance sheet, the accumu-lated appropriations have been divided between capital and reserves and the deferred tax liability. In the income statement, the change in appropriations for the year has correspondingly been divided between net profit for the year and change in deferred tax liability.
Taxes
The taxes due on the taxable profit for the financial year have been entered as income taxes in the parent company’s income state-ment.
The taxes due on the taxable profits of Group companies have been entered as income taxes in the consolidated income statement. The taxes have been calculated in accordance with each company’s local tax regulations, on the basis of computed taxable income.
Deferred tax liabilities and assets in the consolidated figures have been accounted for temporary differences between taxation and the financial statements and of consolidation measures, and are based on the following year’s tax rate confirmed on the balance sheet date. The consolidated balance sheet includes the deferred tax liability in total and deferred tax as-sets computed as the estimated probable asas-sets.
Comparability of figures with those of the previous year
The figures of the 2003 financial year are not comparable with those of 2002, regarding the income statement, due to the acquisition that was implemented on 30 September, 2002 and the related share offering.
Foreign currency items
At the end of the financial year, unsettled foreign currency assets and liabilities are trans-lated into Finnish currency at the average rate on 31 December. Realised exchange rate differ-ences are presented in the income statement, whereas unrealised exchange rate differences are presented under adjustments.
The principal foreign exchange rates used were:
Income statement rate Balance sheet rate
2003 2002 2003 2002 EUR/RUB 34.65474 32.35199 36.54500 33.27787 EUR/EEK 15.64660 15.64700 15.64660 15.64700 EUR/LVL 0.64050 0.60491 0.67250 0.61230 EUR/LTL 3.45274 3.45256 3.45240 3.45244 EUR/PLN 4.39804 3.99106 4.70190 4.00048 EUR/SEK 9.12425 9.09433 9.08000 9.15280 EUR/NOK 7.99845 7.30810 8.41410 7.27560 EUR/HUF 253.52056 237.52969 262.50000 235.84906 Financial instruments
The Group companies have no derivatives contracts.
Pension costs
Pension cover is arranged through an external pen-sion insurance company. Penpen-sion insurance costs are booked as they occur. Pension insurance costs of foreign subsidiaries are presented as required by each respective country’s local legislation.The Nor-wegian subsidiary has liabilities for early retire-ment pensions, which are not entered in to the books.
Maintenance and repairs
Except for major refurbishment costs, which are capitalised and depreciated over their period of im-pact, maintenance and repair costs are booked as ex-penses during the financial year in which they oc-cur.
Fixed assets
Fixed assets are capitalised at their direct acquisi-tion cost in the balance sheet, reduced by the depre-ciation made according to plan. The planned depreci-ation is calculated on the basis of the economic life expectancies of the fixed assets either as straight-line depreciation or as a percentage (reducing balance method). The depreciation periods for the fixed assets are as follows:
Goodwill 10–20 years
Other long-term expenditure 3–8 years
Buildings and structures 20 years
Machinery and equipment for own use 3–10 years Rental machinery, fixtures and equipment, itemised Lifting and loading equipment 8–15 years
Small machines 3–8 years
Portable spatial units 10 years
Rental machinery and equipment, non-itemised
Scaffolding 10%
Reducing balance method
Formwork and supporting fixtures 10% Reducing balance method
Other non-itemised 10–33%
Reducing balance method
Goodwill arising from restructuring of the Group is amortised over 10–20 years depending on the perceived importance of the restructuring to Group strategy. The goodwill amortisation period relating to the Bautas/Stavdal acquisition on 30 September, 2002 is defined as 20 years. The importance of the acquisition and the Group’s strategic shift to new Scandinavian markets influenced the length of the amortisation period.
Inventories
Inventories are shown at the lowest of the weighted average price, the replacement price or the probable selling price. The direct acquisition costs are included in the value of the inventories.
Cash in hand and at the bank
Cash in hand and at the bank includes cash and bank accounts.
Preparations for adopting IFRS
(International Financial Reporting Standards)
Ramirent Plc will report in accordance with the IAS/FRS standards in its 2005 financial statements. The Group began preparations in 2003 for the adoption of IFRS.
During 2004 the company will decide on the optional accounting principles to be applied to the financial statements and will calculate the opening information for the first IFRS balance sheet in 2005 and the comparative data for 2004. This will be accompanied by any necessary system adjustments in order to begin IFRS-based reporting in 2005. The
NOTES TO THE INCOME STATEMENT
1) Distribution of net sales by market,
parent company (EUR million) 2003 2002
Finland 40 41
Other European countries 1 1
Total 41 42
2) Distribution of net sales,
Group (EUR million) 2003 2002
Finnish operations 57 60
Scandinavian operations 95 26
Other international operations 21 16
Total 173 102
Group Group Parent Parent Company Company 3) Other operating income (EUR) 2003 2002 2003 2002
Profits from disposal of fixed assets 172,364 613,185 16,273.79 254,470.78
Other income 338,243 227,622 28,874.95 186,103.87
Total 510,607 840,807 300,148.74 440,574.65
4) Materials and services (EUR)
Materials and accessories
Purchases during financial year 21,370,929 12,554,067 3,788,802.58 4,682,647.60
Change in inventory 583,263 207,595 339,492.18 318,997.22
Services purchased from outside 7,974,973 8,910,492 2,706,109.65 2,841,094.04
Total 29,929,165 21,672,154 6,834,404.41 7,842,738.86
5) Personnel expenses (EUR)
Salaries and wages 42,791,873 21,332,359 8,227,361.60 8,099,647.73
Pension costs 3,626,213 3,496,037 1,389,153.14 1,317,298.82
Other indirect personnel costs 5,360,072 2,588,231 729,740.09 751,698.04
Total 51,778,158 27,416,627 10,346,254.83 10,168,644.59
Emoluments and other benefits and stock options of management (EUR 1,000)
CEOs 1,557 962
Total 1,557 962
Average number of personnel
Finnish operations 510 492 323 331
Scandinavian operations 595 147
Other international operations 359 245
Total 1,464 884 323 331
6) Depreciation and write-down (EUR)
Tangible and intangible assets 25,894,069 13,283,707 5,996,283.16 5,420,137.54 Depreciation is itemised under “fixed assets”.
Group Group Parent Parent Company Company 7) Financial income and expenses (EUR) 2003 2002 2003 2002
Dividend income 6,003 1,380 6,003.19 1,380.55
Interest income from long-term
investmentsfrom Group companies - - 634,785.96 368,784.41
Other interest and financial income
from Group companies - - 171,858.85
-from others 57,160 62,355 50,464.05 44,045.44
Exchange rate differences 475,687 127,131 32,149.29
-Other interest and financial income, total 532,847 189,486 254,472.19 44,045.44 Interest income from long-term
invest-ments and other interest income, total 532,847 189,486 889.258,15 412,829.85 Interest expenses and other financial
expenses from Group companies - - 95,842.61
-from others 6,231,476 2,228,782 5,324,708.83 1,504,759.86
Exchange rate and translation differences 572,001 19,809 113,322.32 74.98
Total 6,803,477 2,208,973 5,533,873.76 1,504,834.84
Total financial income and expenses 6,264,627 2,018,107 4,638,612.42 1,090,624.44
8) Extraordinary items (EUR)
Extraordinary income
Group contribution - - 2,503,000.00 3,424,000.00
Total - - 2,503,000.00 3,424,000.00
9) Appropriations (EUR)
Difference between depreciation made
according to plan and in taxation - - 2,494,526.40 1,802,238.11
10) Income taxes (EUR)
Income taxes on actual operations 753,000 3,301,244 60,422.67 1,254,827.18
Income taxes on extraordinary items - - 725,870.00 992,960.00
Change in deferred tax assets
and liability 695,471 807,046 -
NOTES TO THE BALANCE SHEET
NON-CURRENT ASSETS Group Group Parent Parent Company Company 11) Intangible assets (EUR) 2003 2002 2003 2002 Intangible rights
Acquisition cost, 1 Jan 516,836 96,829 94,928.62 94,928.62
Increase 42,456 420,007
-Transfers between items -307,000
-Acquisition cost, 31 Dec 252,292 516,836 94,928.62 94,928.62
Accumulated depreciation, 1 Jan -1,900 -1,900
Depreciation for year -44,403
Accumulated depreciation, 31 Dec -46,303 -1,900
Exchange rate differences 12,280
Book value, 31 Dec 218,269 514,936 94,928.62 94,928.62
Goodwill
Acquisition cost, 1 Jan 28,326,028 5,412,827 5,263,471.64 5,186,396.52
Increase 96,170 924,305 25,228.20 77,075.12
Bautas, 1 Oct, 2002 - 21,988,896 -
-Decrease - - -
-Transfers between items 307,000 - -
-Acquisition cost, 31 Dec 28,729,198 28,326,028 5,288,699.84 5,263,471.64
Accumulated depreciation and
write-down, 1 Jan -4,257,311 -3,257,637 -3,709,828.22 -3,201,029.47
Depreciation for year -1,568,971 -999,674 -512,835.50 -508,798.75
Accumulated depreciation, 31 Dec -5,826,282 -4,257,311 -4,222,663.72 -3,709,828.22
Exchange rate differences -3,137,497 - -
-Book value, 31 Dec 19,765,419 24,068,717 1,066,036.12 1,553,643.42
Other capitlalized long-term expenditure
Acquisition cost, 1 Jan 4,486,929 2,469,541 2,220,911.95 2,105,266.80
Increase 553,663 635,994 157,654.38 115,645.15
Bautas, 1 Oct, 2002 - 1,406,496 -
-Decrease -347,304 -25,102 -
-Transfers between items -711,355 - -
-Acquisition cost, 31 Dec 3,981,933 4,486,929 2,378,566.33 2,220,911.95
Accumulated depreciation and
write-down, 1 Jan -1,580,559 -1,118,248 -1,348,186.47 -1,026,020.60
Depreciation for year -859,513 -462,311 -319,934.81 -322,165.87
Accumulated depreciation, 31 Dec -2,440,072 -1,580,559 -1,668,121.28 -1,348,186.47
Exchange rate differences -11,601
Book value, 31 Dec 1,530,261 2,906,370 710,445.05 872,725.48
Consolidation goodwill
Acquisition cost, 1 Jan 9,986,797 2,989,741
Increase 443,988 5,472,535
Bautas, 1 Oct, 2002 - 1,524,521
Transfers between items 222,355
Depreciation for year -846,515 -328,067 Accumulated depreciation, 31 Dec -1,470,903 -624,388
Exchange rate differences 54,256
Book value, 31 Dec 9,236,493 9,362,409
Total intangible assets 30,750,442 36,852,432 1,871,409.79 2,521,297.52 Tangible assets
Land and water
Acquisition cost, 1 Jan 1,557,616 740,674 76,126.90 76,126.90
Increase - 339,929 331,570.49
-Bautas 1 Oct, 2002 - 709,550
Decrease - -232,537 -
-Transfers between items 233,000 - -
-Acquisition cost, 31 Dec 1,790,616 1,557,616 407,697.39 76,126.90
Exchange rate differences -73,835
Book value, 31 Dec 1,716,781 1,557,616 407,697.39 76,126.90
Buildings
Acquisition cost, 1 Jan 4,993,817 2,172,147 1,475,086.03 1,474,565.78
Increase 1,102,493 1,012,043 634,276.33 520.25
Bautas 1 Oct, 2002 - 1,920,870
Decrease -3,658 -111,243 -
-Transfers between items 256,000
Acquisition cost, 31 Dec 6,348,652 4,993,817 2,109,362.36 1,475,086.03
Accumulated depreciation and
write-down, 1 Jan -668,164 -311,292 -305,269.62 -230,732.12
Bautas 1 Oct, 2002 - -172,665
Depreciation for year -305,455 -184,207 -74,629.10 -74,537.50
Accumulated depreciation, 31 Dec -973,619 -668,164 -379,898.72 -305,269.62
Exchange rate differences -114,859
Book value, 31 Dec 5,260,174 4,325,653 1,729,463.64 1,169,816.41
Machinery and equipment
Acquisition cost, 1 Jan 182,365,251 67,977,995 52,993,064.36 44,487,547.98
Increase 30,005,166 26,499,572 6,737,851.37 11,789,555.85
Bautas 1 Oct, 2002 - 93,213,816
Decrease -2,792,649 -5,326,132 -1,553,933.88 -3,284,039.47
Transfers between items -3,464 - -
-Acquisition cost, 31 Dec 209,574,304 182,365,251 58,176,981.85 52,993,064.36 Accumulated depreciation and
write-down, 1 Jan -46,345,402 -24,162,394 -23,460,552.04 -20,079,940.28
Bautas 1 Oct, 2002 - -12,345,494
Accumulated depreciation on decreases - 1,471,934 605,550.10 1,134,023.66
Depreciation for year -22,269,109 -11,309,448 -5,088,883.00 -4,514,635.42
Accumulated depreciation, 31 Dec -68,614,511 -46,345,402 -27,943,884.94 -23,460,552.04 Exchange rate differences -7,223,186
Group Group Parent Parent Company Company
