2010-02-09 07:30:00 CET
2010-02-09 07:33:11 CET
REGULATED INFORMATION
Outotec Oyj - Company Announcement
Financial Statements Review January-December 2009
OUTOTEC OYJ STOCK EXCHANGE RELEASE FEBRUARY 9, 2010 AT 8.30 AM
Financial Statements Review January-December 2009
Gross margin and balance sheet remained strong in a weak market
Board of Directors' dividend proposal: EUR 0.70 per share
Financial year January 1 - December 31, 2009 in brief (corresponding 2008
figures):
* Sales: EUR 877.7 million (EUR 1,217.9 million)
* Operating profit: EUR 58.6 million (EUR 120.2 million)
* Profit before taxes: EUR 60.9 million (EUR 136.3 million)
* Earnings per share: EUR 1.01 (EUR 2.25)
* Order intake: EUR 557.1 million (EUR 1,153.8 million)
* Order backlog: EUR 867.4 million (EUR 1,176.7 million)
* Net cash flow from operating activities: EUR -28.8 million (EUR 106.6
million)
Q4/2009 in brief (Q4/2008):
* Sales: EUR 219.8 million (EUR 398.8 million)
* Operating profit: EUR 13.3 million (EUR 47.5 million)
* Profit before taxes: EUR 13.3 million (EUR 52.4 million)
* Order intake: EUR 110.5 million (EUR 119.9 million)
* Net cash flow from operating activities: EUR -43.9 million (EUR -36.7
million)
Larox figures for 2009 have been consolidated in Outotec's order backlog,
balance sheet and personnel figures.
President and CEO Pertti Korhonen:"The markets picked up slightly towards the year-end but were still challenging.
Because of unused capacity in the metallurgical industry, many investments for
new capacity were on hold. However, we succeeded in expanding our offering to
adjacent industries. The new oil shale processing plant under implementation
with Eesti Energia was a breakthrough in applying our expertise in the energy
sector. In addition, the acquisition of Larox's filtration solutions and
Ausmelt's smelter technologies will further strengthen our core business. With
the increasing importance of energy efficiency and environmental protection,
there are many business opportunities for our sustainable technologies. This
year, our focus will be on integrating acquired businesses, improving
cost-efficiency and accelerating the growth of service business. A new
operational model, which we are going to launch this spring, will support these
goals."
Summary of key figures Q4 Q4 Q1-Q4 Q1-Q4
2009 2008 2009 2008
--------------------------------------------------------------------------------
Sales, EUR million 219.8 398.8 877.7 1,217.9
Gross margin, % 24.1 22.8 21.7 21.5
Operating profit, EUR million 13.3 47.5 58.6 120.2
Operating profit margin, % 6.1 11.9 6.7 9.9
Profit before taxes, EUR million 13.3 52.4 60.9 136.3
Net cash from operating activities, EUR million -43.9 -36.7 -28.8 106.6
Net interest-bearing debt at the end of period, -191.0 -314.6 -191.0 -314.6
EUR million
Gearing at the end of period, % -55.8 -139.0 -55.8 -139.0
Working capital at the end of period, EUR -62.8 -171.2 -62.8 -171.2
million
Return on investment, % 18.0 92.7 20.9 61.6
Return on equity, % 12.4 64.1 14.9 42.6
Order backlog at the end of period, EUR million 867.4 1,176.7 867.4 1,176.7
Order intake, EUR million 110.5 119.9 557.1 1,153.8
Personnel, average for the period 2,744 2,628 2,612 2,483 Earnings per share, EUR 0.21 0.84 1.01 2.25
Dividend per share, EUR - - 0.70*) 1.00
--------------------------------------------------------------------------------
*) Board of Directors' proposal for dividend per share.
BRIEFING FOR ANALYSTS AND MEDIA
A briefing, in which President and CEO Pertti Korhonen and CFO Vesa-Pekka Takala
will present Outotec's financial statements review 2009 and new operating
structure, will be held in Helsinki, Finland.
BRIEFING
Date: Tuesday, February 9
Time: 2.00-3.00 pm (EET)
Venue: Hotel Scandic Simonkenttä, Meeting room Bulsa-Freda, Simonkatu 9,
Helsinki
JOINING VIA WEBCAST
You may follow the briefing via a live webcast at www.outotec.com. Please, click
in and register approximately 5 to 10 minutes before the briefing. The webcast
will also be recorded and published on Outotec's website for on demand viewing.
JOINING VIA TELECONFERENCE
You may also join the briefing by telephone. To register as a participant for
the teleconference and Q&A session, please dial in 5 to 10 minutes before the
beginning of the event:
FI/UK: +44 20 7162 0025
US/CANADA: +1 334 323 6201
Password: Outotec
In addition, an instant replay service of the conference call will be available
for 3 days from February 9 until February 12, 2010 midnight on the following
numbers:
UK: +44 20 7031 4064
US: +1 954 334 0342
Access code: 856157
The contact information is gathered for registration purposes only and it is not
used for commercial purposes.
FINANCIAL STATEMENTS REVIEW JANUARY-DECEMBER 2009
OPERATING ENVIRONMENT
The market conditions were challenging in the mining and metals industry
throughout the year, although activity picked up towards the end of the year.
Mining and metals companies began to upgrade their investment plans in the
second half of 2009, due to positive market forecasts and continued metals
demand in emerging economies such as China and India. This was indicated by the
recovered activity in negotiations with customers. However, updating large
investment plans, including financing, scoping and pricing and turning them to
orders takes some time. In addition, many production plants still have unused
capacity.
The competitive situation was tight because of fewer new projects. Despite
increased competition and pricing pressures, Outotec was able to defend its
margins because of lower raw material and subcontracting prices. In 2009,
Outotec strengthened its presence in China and India. The company had about 140
employees at the year-end in these markets, and sales to these countries
accounted for EUR 126 million (2008: EUR 142 million).
In addition to mining and metals industry, Outotec designs and delivers
solutions to the energy sector, water treatment and chemical industry. Although
there were new business opportunities for Outotec's environmentally sound
technologies in these areas, the economic recession slowed down investments also
in these industries in 2009.
ORDER INTAKE
Order intake in the reporting period amounted to EUR 557.1 million (Q1-Q4/2008:
EUR 1,153.8 million) including plant deliveries, equipment deliveries and
services to existing customers. The orders received in the fourth quarter came
to EUR 110.5 million (Q4/2008: EUR 119.9 million) and included mainly equipment
deliveries, spare parts and services.
Major new orders in the fourth quarter included:
* thickening technology for the Toromocho project, Peru (EUR 11 million);
* flotation technology to Minera Escondida, Chile; and
* alumina refinery technology to Anrak Aluminium, India.
Major new orders in the third quarter included:
* oil shale technology to Eesti Energia, Estonia (EUR 110 million);
* copper recovery plant to Pueblo Viejo's gold mine in the Dominican Republic
(EUR 16 million);
* engineering and smelter technology to Iran (EUR 10 million); and
* flash smelting technology to Zijin Copper Co. Ltd. China (EUR 7 million).
There were no major orders in the second quarter.
Major new orders in the first quarter included:
* sulfuric acid plant for Noracid S.A. in Mejillones, Chile (EUR 51 million);
* several service contracts for industrial and maintenance services in Chile
and Canada (EUR 15 million); and
* flotation cells and thickeners for Polymetal's Albazino gold mine project in
Russia.
ORDER BACKLOG
The order backlog at the end of the reporting period totaled EUR 867.4 million
(December 31, 2008: EUR 1.176,7 million). Outotec's order backlog excluding
Larox was EUR 834.6 million at the end of the reporting period representing a
29% decline from the comparison period. In 2009, order backlog was reduced by
approximately EUR 50 million mainly due to changes in project scopes which
reduced auxiliary equipment deliveries.
At the end of the reporting period, Outotec's order backlog included 21 projects
with an order backlog value in excess of EUR 10 million, accounting for 68% of
the total backlog. According to a management estimate, roughly 68% of the
current backlog will be delivered in 2010 and the rest in 2011 and beyond. At
the end of the reporting period, Outotec's order backlog included roughly EUR
70 million (September 30, 2009: EUR 100 million) in suspended projects. The
majority of the change in the value of suspended projects came from
reactivations. Roughly 2% of the projects in Outotec's current backlog are for
mining companies that are developing their first processing plants.
SALES AND FINANCIAL RESULT
Outotec's sales in the reporting period totaled EUR 877.7 million (Q1-Q4/2008:
EUR 1,217.9 million), which was 28% lower than in the comparison period. Sales
for the fourth quarter were EUR 219.8 million (Q4/2008: EUR 398.8 million). The
decline in sales resulted from the smaller order backlog, low order intake
during the first half of the year and the rescheduling of some major projects
under execution. Sales to 'top 10' customers were less than 50% of the total
sales and none of the customers accounted for more than 10% of the total sales
in 2009.
The Services business, which is included in the divisions' and other businesses'
sales figures, totaled EUR 148.6 million in the reporting period (Q1-Q4/2008:
EUR 141.2 million), up 5% from the comparison period. The Services business
overall was affected by customers' lower capacity utilization and plant
closures. Spare part deliveries reduced because of reduced metals production,
but sales of maintenance and technical services increased compared to the
comparison period. Majority of the increase in maintenance services came from
Outotec Auburn, which was acquired in October 2008. The sales volume of the
Services business in the fourth quarter totaled EUR 45.2 million (Q4/2008: EUR
54.2 million). Sales of maintenance services in the fourth quarter of 2009 were
lower than in corresponding period in 2008 mainly due to a plant closure of a
major service customer. In addition, there were fewer spare part deliveries.
Supported by the acquisition of Larox, Outotec remains on track in achieving
its service business sales target of EUR 250-300 million by the end of 2010.
The operating profit for the reporting period was EUR 58.6 million (Q1-Q4/2008:
EUR 120.2 million), representing 6.7% of sales (Q1- Q4/2008: 9.9%). The decrease
was the result of lower sales volume, a decline in license fee income and higher
fixed costs. The operating profit includes the EUR 2.4 million one-time positive
effect from the amicable settlement of all disputes related to the Pattison Sand
project as well as the EUR 2.5 million impairment loss related to fair valuation
of Outotec's shares in Pacific Ore Ltd. The unrealized and realized exchange
losses related to currency forward contracts, which are not included in the
hedge accounting, decreased profitability by EUR 0.1 million (Q1-Q4/2008:
unrealized and realized loss of EUR 9.5 million). The operating profit in the
fourth quarter was EUR 13.3 million (Q4/2008: EUR 47.5 million). The primary
reasons for the lower operating profit were the significantly lower sales
volume, decreased license fee income and fewer project completions.
In the reporting period, Outotec's fixed costs were EUR 131.6 (2008: EUR 123.3
million). The increase was mainly caused by the fixed costs of Outotec Auburn,
increased sales work, developing business operations in India and China,
one-time costs related to adjustments of the office network, increase of bad
debt provisions related to accounts receivable and development of the Services
business worldwide.
Outotec's profit before taxes for the reporting period was EUR 60.9 million
(Q1-Q4/2008: EUR 136.3 million). Profit before taxes was favorably impacted by
the net financial income of EUR 2.2 million (Q1-Q4/2008: EUR 16.1 million) from
the high net cash position. The decline in net financial income was primarily
due to lower interest rates. Net profit for the period was EUR 42.3 million
(Q1-Q4/2008: EUR 93.9 million). Taxes totaled EUR 18.6 million (Q1-Q4/2008: EUR
42.4 million). This represents an effective tax rate of 30.5%. Earnings per
share were EUR 1.01 (Q1-Q4/2008: EUR 2.25).
Outotec's return on equity for the reporting period was 14.9% (Q1-Q4/2008:
42.6%), and return on investment was 20.9% (Q1-Q4/2008: 61.6%).
Sales and operating profit by segment Q4 Q4 Q1-Q4 Q1-Q4
EUR million 2009 2008 2009 2008
---------------------------------------------------------------------
Sales
Minerals Processing 83.2 144.8 338.2 419.6
Base Metals 34.0 86.4 136.4 295.3
Metals Processing 100.8 163.9 378.8 494.7
Other Businesses 10.7 18.8 60.4 56.0
Unallocated items*) and intra-group sales -8.9 -15.1 -36.2 -47.7
---------------------------------------------------------------------
Total 219.8 398.8 877.7 1,217.9
Operating profit
Minerals Processing 6.1 12.1 29.2 22.5
Base Metals 2.8 17.2 8.4 48.7
Metals Processing 11.5 22.1 36.0 61.1
Other Businesses -0.5 0.7 -1.5 3.9
Unallocated**) and intra-group items -6.5 -4.6 -13.5 -16.0
---------------------------------------------------------------------
Total 13.3 47.5 58.6 120.2
*) Unallocated items primarily include invoicing of internal management and
administrative services.
**) Unallocated items primarily include internal management and administrative
services.
Minerals Processing
The Minerals Processing division's sales in the reporting period decreased by
19% from the comparison period and totaled EUR 338.2 million (Q1-Q4/2008: EUR
419.6 million). Operating profit increased to EUR 29.2 million (Q1-Q4/2008: EUR
22.5 million). A high starting order backlog, good project execution and reduced
bottlenecks in the delivery pipeline were factors affecting sales, however, due
to lower order intake, sales in the reporting period were less than in the
comparison period. Operating profit for the reporting period includes a EUR 2.4
million one-time positive effect (2008: EUR 8.5 million one-time negative
effect) from the amicable settlement of all disputes related to the Pattison
Sand project. Operating profit for the reporting period also included unrealized
and realized exchange loss related to currency forward contracts of EUR 0.2
million (Q1-Q4/2008: unrealized and realized loss of EUR 8.9 million).
Base Metals
The Base Metals division's sales in the reporting period decreased by 54% from
the comparison period and totaled EUR 136.4 million (Q1-Q4/2008: EUR 295.3
million). The decrease in sales was primarily due to low order intake in 2009,
lower starting order backlog, and the rescheduling of some projects. The
operating profit was EUR 8.4 million (Q1- Q4/2008: EUR 48.7 million). The
significantly lower sales relative to the division's fixed costs and decreased
license fee income were the primary reasons for the division's low operating
profit.
Metals Processing
The Metals Processing division's sales in the reporting period decreased 23%
from the comparison period to EUR 378.8 million (Q1-Q4/2008: EUR 494.7 million).
The decrease in sales was mainly due to the rescheduling of some projects and
lower order intake. Operating profit came to EUR 36.0 million (Q1-Q4/2008: EUR
61.1 million). Operating profit declined due to lower sales volume, higher fixed
costs and decreased license fee income. Operating profit for the reporting
period also included unrealized and realized exchange gains related to currency
forward contracts of EUR 2.9 million (Q1-Q4/2008: unrealized and realized loss
of EUR 0.9 million).
Sales by destination, % 2009 2008
-------------------------------------------
Europe (including CIS) 22 23
Africa 9 12
Asia (including Middle East) 31 29
Australia and Pacific countries 6 8
North America 5 5
South America 27 23
-------------------------------------------
Total 100 100
Sales by metals, % 2009 2008
------------------------------
Copper 20 22
Iron 17 12
Aluminium 10 12
Ferroalloys 3 6
Precious metals 15 10
Zinc 5 9
Nickel 6 7
Sulfuric acid 16 13
Other 8 9
------------------------------
Total 100 100
BALANCE SHEET, FINANCING, AND CASH FLOW
Outotec's balance sheet structure remained strong also after acquisitions. Larox
has been consolidated into Outotec's balance sheet as a subsidiary at the end of
the year and the minority has been separated from the shareholders' equity. The
major impacts of the Larox acquistion on the Outotec's balance sheet were: an
increase of intangible assets by EUR 41.0 million; goodwill by EUR 45.2 million
and interest-bearing liabilities by EUR 34.6 million. The acquisition was
financed by issuing Outotec's new shares, and thus, Outotec's shareholders
equity increased by EUR 63.4 million. The acquisition had no significant impact
on Outotec's cash flow, and cash and cash equivalents.
The net cash flow from operating activities in the reporting period was at EUR
-28.8 million (Q1-Q4/2008: EUR 106.6 million). The net cash flow in 2009 was
negative because order intake contained only few large projects, and thus there
was a lack of substantial advance payments, which create strong positive cash
flow in the beginning of the project.
Outotec's working capital amounted to EUR -62.8 million on December 31, 2009
(December 31, 2008: EUR -171.2 million). The change in working capital resulted
from low order intake and subsequently lower advance payments received from
customers in the reporting period. Consolidation of Larox also negatively
affected Outotec's working capital.
At the end of the reporting period, Outotec's cash and cash equivalents totaled
EUR 258.5 million (December 31, 2008: EUR 317.8 million). The net change in cash
and cash equivalents was affected by the dividend payment of EUR 42.0 million in
March2009 (April 2008: EUR 39.9 million). The company invests its excess cash in
short-term money market instruments such as bank deposits and corporate
commercial papers. Investments are made within pre-approved
counterparty-specific limits and tenors, which Outotec regularly reviews. On
December 31, 2009, no money market investment had remaining maturity exceeding
three months.
Outotec's financing structure remained strong. Net interest-bearing debt on
December 31, 2009 came to EUR -191.0 million (December 31, 2008: EUR -314.6
million). The advances received at the end of the reporting period totaled EUR
150.9 million (December 31, 2008: EUR 214.0 million), representing a decrease of
29% from the comparison period. Outotec's gearing at the end of the reporting
period was -55.8% (December 31, 2008: -139.0%), and the equity-to-assets ratio
was 45.1% (December 31, 2008: 35.0%).
The company's capital expenditure in the reporting period was EUR 98.0 million
(Q1-Q4/2008: EUR 23.9 million), of which EUR 75.9 million was related to
acquisitions of Larox Corporation and Ausmelt Ltd. Other capital expenditure
included the establishment of a joint venture company, GreenExergy for
bio-energy technology business, investments in information technology,
intellectual property rights, as well as building and machinery for the Outotec
Turula workshop.
Guarantees for commercial commitments, including advance payment guarantees
issued by the parent and other Group companies decreased from the comparison
period due to lower order intake and were EUR 321.3 million (December 31, 2008:
EUR 353.8 million) at the end of the reporting period.
Outotec has an agreement with a third-party service provider concerning
administration and hedging of the share-based incentive program for key
personnel. As part of this agreement, for hedging the underlying cash flow risk,
the service provider has purchased a total of 550,000 Outotec shares (in
2008: 265,000), which have been funded by Outotec and accounted as treasury
shares in Outotec's consolidated balance sheet. At the end of the reporting
period, the amount of these treasury shares was 332,534.
EXPANSION OF BUSINESS NETWORK
At the year-end, Outotec had acquired 70.5% of the shares (94.4% of all the
votes) of Larox Corporation through share transfer and made a mandatory public
tender offer for all the remaining Larox shares (January 22, 2010: as a result
of the public tender offer, Outotec's ownership was 98.5% of the shares).
Combining the businesses of Outotec and Larox will further strengthen Outotec's
position as a leading global provider of technology solutions and services to
the mining and metals industry and will allow Larox to develop its business in
an international, financially solid technology group operating in the same
industry. The acquisition price of Larox's shares is approximately EUR 91
million.
At the year-end, Outotec had increased its holding in the Australian public
company Ausmelt Ltd to 37.6%. As a result of the share purchases, Ausmelt became
an associated company of Outotec Oyj (February 8, 2010: Outotec's ownership was
96.4%). Ausmelt's principal activities are the development, design, engineering
and supply of Top Submerged Lance (TSL) smelting technology for the production
of metals and processing of industrial wastes. Ausmelt's TSL technology
complements Outotec's smelting technology portfolio. Outotec currently has flash
smelting technology for copper and nickel primary smelting in large scale
plants, whereas Ausmelt's TSL technology is suitable for small to mid-size
plants and also for a variety of other feed materials, such as ferrous metals,
zinc, lead and tin concentrates, zinc bearing residues, and various secondary
and waste materials. The additional benefit of the technology is that it enables
the recovery of valuable metals from by-products.
In July, Outotec and Eesti Energia entered into a joint venture for the
commercialization of sustainable oil shale processing technology and for holding
of the intellectual property rights related to new Enefit technology. Eesti
Energia has a 60% stake in the company with Outotec owning 40%.
In February, Outotec and a Swedish company Skellefteå Kraft AB agreed to
establish a joint company, GreenExergy AB. The company focuses on the
development, marketing and delivery of bio-energy technologies to power plants
for the production of bio-energy from forestry and sawmill residues. Outotec's
stake is 45%, Skellefteå Kraft's 33%, and three additional Swedish companies
each have a minor stake in the joint venture.
In May, Outotec announced an agreement with a Finnish company, Real Time Systems
Oy, to cooperate in the development of a new-generation measuring and regulating
system for electric arc furnaces. Outotec is funding the development work and is
a minor shareholder of Real Time Systems Oy and has a call option on the
company.
RESEARCH AND TECHNOLOGY DEVELOPMENT
In 2009, Outotec's research and technology development expenses totaled EUR
20.5 million (2008: EUR 20.2 million), representing 2.3% of sales (2008: 1.7%).
Outotec filed 56 new priority patent applications (2008: 45), and 286 new
national patents were granted (2008: 277).
In the reporting period, oil shale combustion test work was conducted at
Outotec's Frankfurt Research Center. The test work related to basic engineering
for the oil-shale-based oil production plant to be built in Narva, Estonia. In
July, Outotec announced EUR 110 million project to build the oil-shale-based oil
production plant.
In January, Outotec launched a new OKTOP® reactor family. While all reactors
were previously individually designed, the new OKTOP® reactors are built from
modules which are tailored to give optimum results. The contract signed with
Pueblo Viejo for a copper recovery plant is a breakthrough in combining
Outotec's hydrometallurgical expertise, including new OKTOP® reactors, and
Paques THIOTEQ® biotechnology in copper production.
Outotec and Codelco finished testing the TankCell® 300 flotation cells at
Chuquicamata, Chile. The results showed a better recovery and lower energy
consumption than the previous solution.
Outotec commissioned a new automated Courier® 6i SL slurry analyzer and sampling
system at Australia's largest underground mine. It is one of the world's most
advanced systems in the field of minerals processing.
In August, Outotec launched new proprietary cooling towers for efficient liquid
cooling at process plants. Outotec cooling towers enable lower emissions and
larger cooling capacity than conventional ones.
Outotec's technology portfolio expanded when the Swedish joint venture
GreenExergy AB was established to offer bio-energy technologies for power
plants.
The cooperation with Real Time Systems Oy in the development of a new-generation
measuring and regulating system will bring significant savings for the furnace
operators, who use electric arc furnaces in the production of steel from scrap.
In May, Outotec committed to the Baltic Sea Action Summit project, which is
supported by the Finnish government. As part of its commitment to a healthier
Baltic Sea, Outotec will focus on minimizing metal-containing dusts and sulfur
dioxide emissions within the metals industry as well as on reducing
metal-containing effluents.
PERSONNEL
At the end of the reporting period, Outotec had a total of 3,128 employees
(December 31, 2008: 2,674) of which 562 employees worked for Larox. Outotec's
personnel excluding Larox decreased by 108 employees or 4% during the reporting
period. The reductions were primarily related to the temporary employee
contracts in the Americas, Finland and Australia. In contrast, Outotec has
continued to increase its personnel in Asia. For the reporting period, Outotec
had on average 2,612 employees (Q1-Q4/2008: 2,483). The average number of
personnel increased by 129 individuals from the comparison period through
acquisition, business growth, and active recruitment in 2008. Temporary
personnel accounted for about 8% of the total number of employees.
Distribution of personnel by country Dec 31, Dec 31,
2009 2008 change %
---------------------------------------------------------------
Finland 1,145 925 23,8
Germany 472 380 24,2
Rest of Europe 283 249 13,7
Americas 740 758 -2,4
Australia 239 225 6,2
Rest of the world 249 137 81,8
---------------------------------------------------------------
Total 3,128 2,674 17,0
At the end of December 2009, the company had, in addition to own personnel on
Outotec's payroll, approximately 250 (September 30, 2009: 240) full-time
equivalent, contracted people working in project execution. The number of
contracted workers at any given time changes with the active project mix and
project commissioning, local legislation and regulations, and seasonal
fluctuations.
In the reporting period, salaries and other employee benefits totaled EUR 159.5
million (Q1-Q4/2008: EUR 157.7 million).
CHANGES IN TOP MANAGEMENT
In June, Outotec's Board of Directors appointed Mr. Pertti Korhonen, 48, M. Sc.
(Eng.), as the new President and Chief Executive Officer of Outotec Oyj. Mr.
Korhonen joined Outotec on September 1, 2009, and began serving as Chief
Operating Officer on October 1, 2009. He assumed the CEO duties on January
1, 2010. Former CEO, Mr Tapani Järvinen retired at the end of 2009.
SHARE-BASED INCENTIVE PROGRAMS
Outotec has two share-based incentive programs for the company's key personnel:
the first, Incentive Program 2007-2008, was announced on March 23, 2007, and the
second, Incentive Program 2008-2010, was announced on March 3, 2008.
Share-based incentive program 2007-2008
The program began on January 1, 2007, and ended December 31, 2008. The reward
compensated to the key personnel was determined by based on whether the targets
set for the development of the company's net profit and order backlog had been
reached. The total reward for the two earning periods was EUR 6.5 million, which
was paid to 22 individuals in the second quarter of 2009, with 202,779 shares
allocated and EUR 3.4 million paid in cash to cover taxes.
Share-based incentive program 2008-2010
The incentive program for 2008-2010 comprises three earning periods: calendar
years 2008, 2009, and 2010. The Board of Directors determines the amount of the
maximum reward for each individual, the earning criteria and the targets
established for them separately on an annual basis. Reaching the targets
established for the earning criteria will determine how great a portion of the
maximum reward will be paid. For the 2009 and 2010 earning periods, the
incentive program involves approximately 60 individuals. The reward is paid in
shares and as a cash payment. The reward will not be paid if the individual's
employment ends before the close of the earning period. The individual must also
hold the earned shares and remain employed with the company for at least two
years after the close of the earning period.
For the earning period 2008, 14,687 shares were allocated to 33 individuals and
EUR 0.2 million paid in cash to cover taxes. Individuals who were included in
the initial share-based incentive program 2007-2008 were not included in the
2008 earning period.
RESOLUTIONS OF THE 2009 ANNUAL GENERAL MEETING
Outotec Oyj's Annual General Meeting (AGM) was held on March 18, 2009, in
Helsinki, Finland. The Annual General Meeting approved the parent company and
the consolidated financial statements, and discharged the members of the Board
of Directors and the CEO from liability for the 2008 financial year.
Dividend
The Annual General Meeting decided that a dividend of EUR 1.00 per share be paid
for the financial year that ended on December 31, 2008. The dividends, totaling
EUR 42.0 million, were paid on March 30, 2009.
The Board of Directors
The Annual General Meeting decided on the number of the Board members, including
chairman and vice chairman, to be five (5). Mr. Carl-Gustaf Bergström, Mr. Karri
Kaitue, Mr. Hannu Linnoinen, Mr. Anssi Soila and Mr. Risto Virrankoski were
re-elected as members of the Board of Directors for the term expiring at the end
of the next Annual General Meeting.
The Annual General Meeting re-elected Mr. Risto Virrankoski as the chairman of
the Board of Directors. In its assembly meeting, the Board re-elected Mr. Karri
Kaitue as the vice chairman of the Board of Directors. In addition, the Board
re-elected Mr. Carl-Gustaf Bergström and Mr. Hannu Linnoinen as members of the
Audit Committee, Mr. Linnoinen acting as the chairman of the Audit Committee.
The Annual General Meeting also confirmed the remunerations to the Board members
as follows: chairman EUR 5,000 per month and other Board members EUR 3,000 per
month each, vice chairman and chairman of the Audit Committee an additional EUR
1,000 per month each. Each Board member also EUR 500 for attendance at each
Board and Committee meeting as well as reimbursement for direct costs related to
Board work.
Board's authorizations
The Annual General Meeting authorized the Board of Directors to resolve the
repurchasing of the company's shares as follows:
* The company may repurchase a maximum number of 4,200,000 shares using free
equity and deviating from the shareholders' pre-emptive rights to the
shares, provided that the number of shares held by the company will not
exceed ten (10) percent of all shares in the company.
* The shares are to be repurchased in public trading on the NASDAQ OMX
Helsinki at the price established in the trading at the time of
acquisition.
The authorization has not been exercised as of February 9, 2010. The
authorization shall be valid until the next Annual General Meeting.
The Annual General Meeting authorized the Board of Directors to resolve the
issuance of shares as follows:
* The authorization includes the right to issue new shares, distribute shares
held by the company, and the right to issue special rights referred to in
Chapter 10, Section 1 of the Companies Act. This authorization to the Board
of Directors does not, however, entitle the Board of Directors to issue
share option rights as an incentive to personnel.
* The total number of new shares to be issued and shares held by the company
to be distributed under the authorization may not exceed 4,200,000 shares.
* The Board of Directors is entitled to decide on the terms of the share
issue, such as the grounds for determining the subscription price of the
shares and the final subscription price as well as the approval of the
subscriptions, the allocation of the issued new shares and the final amount
of issued shares.
This authorization was executed in conjunction with the Larox acquisition. Total
number of shares issued was 3,780,373 (2,763,419 shares in December 2009 and
1,016,954 shares in February 2010). This authorization shall be valid until the
next Annual General Meeting.
Auditors
KPMG Oy Ab, authorized public accountants, has been re-elected as the company's
auditor, with Mauri Palvi as auditor in charge. The fees for the auditor are
paid according to invoice.
The Annual General Meeting decided to amend Section 9 of the Articles of
Association so that notice to convene the General Meeting shall be issued no
later than 21 days prior to the General Meeting.
SHARES AND SHARE CAPITAL
Outotec's shares are listed on the NASDAQ OMX Helsinki (OTE1V). On December
31, 2009, Outotec's share capital was EUR 16.8 million, consisting of
44,763,419 shares. Each share entitles its holder to one vote at the company's
general shareholder meetings.
TRADING, MARKET CAPITALIZATION AND SHAREHOLDERS
In the reporting period, the volume-weighted average price for a share in the
company was EUR 17.39, the highest quotation for a share was EUR 24.87 and the
lowest EUR 9.30. The trading of Outotec shares in the reporting period exceeded
107 million shares, with a total value of over EUR 1,850 million. On December
31, 2009, Outotec's market capitalization was EUR 1,107 million and the last
quotation for the share was EUR 24.74. On December 31, 2009, the company did not
hold any treasury shares for trading purposes.
Outotec has an agreement with a third-party service provider concerning the
administration and hedging of a share-based incentive program for key personnel.
As part of this agreement, for hedging the underlying cash flow risk, the
service provider has purchased a total of 550,000 Outotec shares (in
2008: 265,000) which have been funded by Outotec and accounted as treasury
shares in Outotec's consolidated balance sheet. At the end of the reporting
period, the amount of these treasury shares was 332,534.
On May 6, 2009, Barclays Global Investors UK Holdings Ltd's holding in shares of
Outotec Oyj fell below 5% and was 2,068,377 shares, which represented 4.92% of
the share capital and votes in the company. On April 7, 2009, Barclays Global
Investors UK Holdings Ltd's holding in shares of Outotec Oyj exceeded 5% and was
2,111,054 shares, which represented 5.02% of the share capital and votes in the
company.
On December 31, 2009, Outotec had 15,478 shareholders and shares held in 11
nominee registers accounted for 56.6% of all Outotec shares.
EVENTS AFTER THE REPORTING PERIOD
Outotec increased its shareholding in Australian public company Ausmelt Ltd
through takeover offer acceptances and market purchases. On February 8, 2010,
Outotec's holding in Ausmelt was 96.4%, which, in accordance with the Australian
corporations law, entitles Outotec to proceed with the compulsory acquisition of
all of the outstanding Ausmelt shares. The compulsory acquisition is expected to
take approximately 4 to 6 weeks. The acquisition price for Ausmelt shares is
approximately AUD 47 million (approximately EUR 30 million).
Outotec made a directed share issue to all shareholders of Larox Corporation who
accepted Outotec's mandatory public tender offer, which expired January
22, 2010, for Larox against share consideration. Outotec's new shares and
increase of share capital was entered in the Trade Register on February
2, 2010. Following the entering of the shares and the increase of the share
capital in the Trade Register, the total number of Outotec shares amounts to
45,780,373 shares and the share capital to EUR 17,186,442.52.
In January, as part of its plans to launch a new operating structure in spring
2010, Outotec appointed Pekka Erkkilä to its Executive Committee as of May
1, 2010.
Outotec signed a contract on the delivery of sintering technology for JSW Steel
Limited's (JSW) new iron ore sinter plant to be built in Toranagallu. The
commissioning for the plant is scheduled for 2011.
Outotec has signed a contract with Baiyin Non Ferrous Group for the design and
delivery of a new precious metals plant in Gansu Province, China. The contract
value is approximately EUR 6 million. The plant is expected to be operational
during the first half of 2011.
The board of the Helsinki University of Technology has established a fund named
after Outotec's now retired CEO Tapani Järvinen. The fund aims at promoting the
research of environmental technology and will fund distinguished individuals'
research and development work. Outotec donated the basic capital for the fund.
SHORT-TERM RISKS AND UNCERTAINTIES
Risks related to global operating environment
Outotec's global business operations are subject to various political, economic
and social conditions. Operations in emerging markets may present risks that are
not encountered in countries with well-established economic and political
systems, including economic instability and a potential difficulty to anticipate
future business conditions in these markets. These market conditions, which can
rapidly change, may cause delays in the placement of orders for projects that
have already been awarded, thereby subjecting Outotec to volatile markets.
The demand for export credits remained high in the reporting period. Possible
limitations on the availability of export credits and financing as well as
changes to project scopes and prices in the offer stages may further lengthen
sales negotiations and postpone order effectiveness.
Risks related to Outotec's business
Outotec has systematic risk management procedures - Project Risk Identification
and Management (PRIMA) - in place to monitor projects. In conjunction with
Outotec's risk assessment for the fourth quarter in 2009, all unfinished work
and projects, which use the percentage of completion and completed contract
method, were monitored and evaluated and contingencies were updated. Also,
projects where the stage of completion was close to 100%, were evaluated and
provisions for performance guarantees and warranty period guarantees, along with
possible provisions for project losses were updated. There were no material
changes in the total project risk provisions.
Because of the international nature of Outotec's business and projects in
various countries, different interpretations of international and local tax
rules and regulations may cause additional direct or indirect taxes for Outotec,
which would reduce Outotec's net result.
At the end of the reporting period, Outotec's order backlog included roughly EUR
70 million in suspended projects. Some of the suspended projects may be
cancelled or renegotiated. In any market situation, there is a risk of
postponement in project business.
Acquisitions are an integral part of Outotec's growth strategy. There is a risk
that the estimated synergy benefits will not materialize as planned.
In December, Outotec, Nordea and Bagfas reached a final settlement in the Swiss
arbitration and related processes before public courts in Turkey and Finland.
According to the settlement provisions, all claims pending have been
reciprocally withdrawn and Nordea paid EUR 0.9 million to Bagfas, in addition to
the previously paid bank guarantee capital of EUR 3.4 million. In accordance
with the provisions of its credit facility agreements, Outotec was responsible
for all payments made by Nordea to Bagfas. The outcome of the settlement did not
have an effect on Outotec's result.
Outotec is further involved in a few other arbitral and court proceedings.
Outotec management expects that those cases and their outcome will have no
material effect on Outotec's financial result.
The economic uncertainty may further reduce the demand for Outotec's products
and services. Outotec's gross margin is impacted by license fee income related
to certain technologies. A lack of these types of orders may reduce gross
margin.
Financial risks
In 2009, there were no material credit losses related to payments by Outotec's
counter-parties. The counterparties may be faced with having to renegotiate
payment terms. In addition, there is a risk that customers and suppliers
experience financial difficulties and a lack of financing may result in
bankruptcies, which can also result in some losses for Outotec.
More than half of Outotec's total cash flow is denominated in euros. The rest is
divided among various currencies, including the US dollar, Australian dollar,
Brazilian real, Canadian dollar, and South African rand. The weight of any given
currency in new projects can fluctuate substantially, but most cash-flow-related
risks are hedged in the short and long term. In the short-term, currency
fluctuations may create volatility in the operating profit. The forecasted and
probable cash flows are selectively hedged and are always on the basis of
separate decisions and risk analysis. The cost of hedging is taken into account
in project pricing.
Outotec's business model is based primarily on customer advance payments and
on-demand guarantees issued by Outotec's relationship banks. Changes in advance
payments received have an impact on the liquidity of Outotec. Exposure to
on-demand guarantees has remained high. Cash held by Outotec is invested mainly
in short-term bank deposits and, to a lesser extent, in Finnish corporate
short-term commercial papers. The lower interest rate levels reduce the interest
income generated from these investments.
MARKET OUTLOOK
According to market research, the investments in the mining and metals industry
are expected to increase from the previous year; however, there is still unused
capacity. Most of the growth in metals consumption will come from developing
economies. China is expected to represent nearly 50% of the growth in 2010.
India continues to develop its infrastructure utilizing its large natural
resource base.
There is increased activity in the beginning of the value chain from mine to
metal. Many of the sales prospects are expected to turn into new orders in 2010
or later, which is in line with normal industry lead times.
There is continuous demand for modernization and debottlenecking at mine sites
and metals processing plants as well as for energy-efficient and environmentally
friendly technologies, equipment and services. As ore grades decline, more
processing capacity will be needed. Also, complex ore bodies require new or
modernized solutions, which enable economically viable production and better
metals recovery. All these factors create good opportunities for Outotec's
further growth.
Outotec's new markets include utilization of alternative energy resources, such
as oil shale and oil sands and industrial water treatment. The world's
recoverable oil shale resources are many times greater than those of
conventional oil reserves, with large oil shale deposits found in the US,
Brazil, China, Jordan, Russia and Estonia. Through two joint ventures
established in 2009, Outotec offers solutions for oil shale processing and
bio-energy production for power plants.
Outotec's technologies can also be applied to materials recycling and chemical
industry.
FINANCIAL GUIDANCE FOR 2010
Due to post-cyclical nature of Outotec's business and low order intake in 2009,
the year 2010 will be challenging. However, the management believes that order
intake will pick up this year.
The management expects that in 2010:
- sales will grow to approximately EUR 1 billion due to the Larox and Ausmelt
acquisitions, and
- operating profit will remain on the same level as in 2009, excluding one-time
cost provisions which relate to restructuring, and integration of acquired
businesses, and which are estimated to be recorded in the financial results of
the first half of 2010.
Operating profit is dependent on exchange rates, product mix, timing of new
orders, and project completions.
ANNUAL GENERAL MEETING 2010
Annual General Meeting 2010 is scheduled to be held on March 18, 2010. Outotec's
Annual Report 2009 will be published in week 8 and will be available in PDF and
HTML format at www.outotec.com.
Espoo, on February 9, 2010
Outotec Oyj
Board of Directors
For further information, please contact:
Outotec Oyj
Pertti Korhonen, President and CEO
tel. +358 20 529 211
Vesa-Pekka Takala, CFO
tel. +358 20 529 211, mobile +358 40 570 0074
Eila Paatela, Vice President - Corporate Communications
tel. +358 20 529 2004, mobile +358 400 817198
Rita Uotila, Vice President - Investor Relationstel. +358 20 529 2003, mobile +358 400 954141
Format for e-mail addresses: firstname.lastname@outotec.com<mailto:firstname.lastname@outotec.com>
CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Statement of Comprehensive Income Q4 Q4 Q1-Q4 Q1-Q4
EUR million 2009 2008 2009 2008
--------------------------------------------------------------------------------
Sales 219.8 398.8 877.7 1,217.9
Cost of sales -166.7 -308.0 -687.5 -956.2
--------------------------------------------------------------------------------
Gross profit 53.1 90.8 190.1 261.7
Other income 0.6 0.6 4.1 0.9
Selling and marketing expenses -16.4 -14.2 -56.5 -48.0
Administrative expenses -14.7 -15.7 -54.6 -55.1
Research and development expenses -4.6 -5.5 -20.5 -20.2
Other expenses -4.5 -8.5 -3.9 -19.1
Share of results of associated companies -0.1 - -0.2 -
--------------------------------------------------------------------------------
Operating profit 13.3 47.5 58.6 120.2
Finance income and expenses
Interest income and expenses 1.0 3.9 5.2 16.4
Market price gains and losses -0.3 1.6 0.6 3.2
Other finance income and expenses -0.8 -0.6 -3.5 -3.4
--------------------------------------------------------------------------------
Net finance income -0.1 4.9 2.2 16.1
Profit before income taxes 13.3 52.4 60.9 136.3
Income tax expenses -4.3 -17.3 -18.6 -42.4
--------------------------------------------------------------------------------
Profit for the period 9.0 35.1 42.3 93.9
--------------------------------------------------------------------------------
Other comprehensive income
Exchange differences on translating foreign 4.4 -16.0 19.5 -21.7
operations
Cash flow hedges 1.5 -4.9 2.7 -12.6
Income tax relating to cash flow hedges -0.2 1.2 -0.3 3.1
Available for sale financial assets 2.6 -0.1 2.4 -2.1
Income tax relating to available for sale -0.0 - -0.0 -
financial assets
--------------------------------------------------------------------------------
Other comprehensive income for the period 8.2 -19.7 24.3 -33.3
Total comprehensive income for the period 17.2 15.4 66.6 60.6
--------------------------------------------------------------------------------
Profit for the period attributable to:
Equity holders of the parent company 9.0 35.1 42.3 94.0
Minority interest - - - -0.0
Total comprehensive income for the period
attributable to:
Equity holders of the parent company 17.2 15.4 66.6 60.6
Minority interest - - - -0.0
Earnings per share for profit attributable to the
equity
holders of the parent company:
Basic earnings per share, EUR 0.21 0.84 1.01 2.25
Diluted earnings per share, EUR 0.21 0.84 1.01 2.25
All figures in the tables have been rounded and consequently the sum of
individual figures may deviate from the sum presented. Key figures have been
calculated using exact figures.
Condensed Statement of Financial Position December 31, December 31,
EUR million 2009 2008
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 170.2 81.4
Property, plant and equipment 52.1 29.5
Non-current financial assets
Interest-bearing 5.1 0.5
Non interest-bearing 37.2 21.3
--------------------------------------------------------------------------------
Total non-current assets 264.6 132.7
Current assets
Inventories *) 93.2 87.7
Current financial assets
Interest-bearing 0.7 0.4
Non interest-bearing 292.7 323.2
Cash and cash equivalents 258.5 317.8
--------------------------------------------------------------------------------
Total current assets 645.0 729.1
TOTAL ASSETS 909.6 861.8
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders of the 315.0 226.4
parent company
Minority interest 27.4 -
--------------------------------------------------------------------------------
Total equity 342.4 226.4
Non-current liabilities
Interest-bearing 41.2 2.6
Non interest-bearing 98.2 74.3
--------------------------------------------------------------------------------
Total non-current liabilities 139.4 76.9
Current liabilities
Interest-bearing 32.0 1.5
Non interest-bearing
Advances received **) 150.9 214.0
Other non interest-bearing liabilites 244.9 343.0
--------------------------------------------------------------------------------
Total current liabilities 427.8 558.4
Total liabilities 567.2 635.4
TOTAL EQUITY AND LIABILITIES 909.6 861.8
--------------------------------------------------------------------------------
*) Of which advances paid for inventories amounted to EUR 17.0 million at
December 31, 2009 (December 31, 2008: EUR 16.4 million).
**) Gross advances received before percentage of completion revenue recognition
amounted to EUR 1,041.2 million at December 31, 2009 (December 31, 2008: EUR
909.3 million).
Condensed Statement of Cash Flows Q1-Q4 Q1-Q4
EUR million 2009 2008
-----------------------------------------------------------------------
Cash flows from operating activities
Profit for the period 42.3 93.9
Adjustments for
Depreciation and amortization 12.1 11.0
Other adjustments 21.4 13.5
Increase (-) / decrease (+) in working capital -75.0 7.9
Interest received 6.1 17.2
Interest paid -0.7 -0.4
Income tax paid -34.9 -36.6
-----------------------------------------------------------------------
Net cash from operating activities -28.8 106.6
Purchases of assets -17.0 -15.2
Acquisition of subsidiaries, net of cash -1.9 -7.6
Acquisition of shares in associated companies -10.4 -
Proceeds from sale of assets 0.0 0.7
Change in other investing activities -0.2 -
-----------------------------------------------------------------------
Net cash used in investing activities -29.5 -22.1
Cash flow before financing activities -58.3 84.5
Borrowings of non-current debt 30.3 0.2
Increase in current debt 1.7 1.1
Purchase of treasury shares -3.3 -9.4
Dividends paid -42.0 -39.9
Change in other financing activities -0.2 0.8
-----------------------------------------------------------------------
Net cash used in financing activities -13.4 -47.3
Net change in cash and cash equivalents -71.7 37.3
Cash and cash equivalents at the beginning of the period 317.8 291.0
Foreign exchange rate effect on cash and cash equivalents 12.5 -10.5
Net change in cash and cash equivalents -71.7 37.3
-----------------------------------------------------------------------
Cash and cash equivalents at the end of the period 258.5 317.8
-----------------------------------------------------------------------
Statement of Changes in Equity
A = Share capital
B = Share premium fund
C = Other reserves
D = Fair value reserves
E = Treasury shares
F = Reserve for invested non- restricted equity
G = Cumulative translation differences
H = Retained earnings
I = Minority interest
J = Total equity
Statement of Changes in Equity
-------------------------------------------------
Attributable to the equity holders of the
parent company
-------------------------------------------------
EUR million A B C D E F G H I J
--------------------------------------------------------------------------------
Equity at January
1, 2008 16.8 20.2 0.2 7.9 - - 5.7 164.0 0.1 214.8
--------------------------------------------------------------------------------
Dividends paid - - - - - - - -39.9 - -39.9
Purchase of
treasury - - - - -9.4 - - - - -9.4
shares *)
Share-based
payments:
value of
received - - - - - - - 0.1 - 0.1
services
Acquisition of
minority interest - - - - - - - - -0.0 -0.0
Total comprehensive
income for the - - - -11.6 - - -21.7 94.0 -0.0 60.6
period
Other changes - - -0.0 - - - 0.2 - 0.2
--------------------------------------------------------------------------------
Equity at December
31, 2008 16.8 20.2 0.1 -3.7 -9.4 - -16.0 218.5 - 226.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity at January
1, 2009 16.8 20.2 0.1 -3.7 -9.4 - -16.0 218.5 - 226.4
--------------------------------------------------------------------------------
Dividends paid - - - - - - -42.0 - -42.0
Share issue - - - - - 63.4 - - - 63.4
Purchase of
treasury shares *) - - - - -3.3 - - - - -3.3
Treasury shares
issued to key
employees - - - - 8.1 - - -4.8 - 3.3
Share-based
payments:
value of
received - - - - - - - 0.0 - 0.0
services
Total comprehensive
income for the
period - - - 4.8 - - 19.5 42.3 - 66.6
Minority related to
Larox Group
acquisition - - - - - - - - 27.4 27.4
Other changes - - 0.2 - - - 0.4 - 0.6
--------------------------------------------------------------------------------
Equity at December
31, 2009 16.8 20.2 0.3 1.1 -4.6 63.4 3.5 214.3 27.4 342.4
--------------------------------------------------------------------------------
*) Outotec has an agreement with a third-party service provider concerning
administration and hedging of share-based incentive program for key personnel.
As part of this agreement, for hedging the underlying cash flow risk, the
service provider has purchased 285,000 Outotec shares during year 2009 (2008:
265,000) that have been funded by Outotec and accounted as treasury shares in
Outotec's consolidated balance sheet.
Key figures Q4 Q4 Q1-Q4 Q1-Q4
2009 2008 2009 2008
--------------------------------------------------------------------------------
Sales, EUR million 219.8 398.8 877.7 1,217.9
Gross margin, % 24.1 22.8 21.7 21.5
Operating profit, EUR million 13.3 47.5 58.6 120.2
Operating profit margin, % 6.1 11.9 6.7 9.9
Profit before taxes, EUR million 13.3 52.4 60.9 136.3
Profit before taxes in relation to sales, % 6.0 13.1 6.9 11.2
Net cash from operating activities, EUR million -43.9 -36.7 -28.8 106.6
Net interest-bearing debt at the end of period, -191.0 -314.6 -191.0 -314.6
EUR million
Gearing at the end of period, % -55.8 -139.0 -55.8 -139.0
Equity-to-assets ratio at the end of period, % 45.1 35.0 45.1 35.0
Working capital at the end of period, EUR -62.8 -171.2 -62.8 -171.2
million
Capital expenditure, EUR million 84.8 14.0 98.0 23.9
Capital expenditure in relation to sales, % 38.6 3.5 11.2 2.0
Return on investment, % 18.0 92.7 20.9 61.6
Return on equity, % 12.4 64.1 14.9 42.6
Order backlog at the end of period, EUR million 867.4 1,176.7 867.4 1,176.7
Order intake, EUR million 110.5 119.9 557.1 1,153.8
Personnel, average for the period 2,744 2,628 2,612 2,483
Profit for the period in relation to sales, % 4.1 8.8 4.8 7.7
Research and development expenses, EUR million 4.6 5.5 20.5 20.2
Research and development expenses in relation to 2.1 1.4 2.3 1.7
sales, %
Earnings per share, EUR 0.21 0.84 1.01 2.25
Equity per share, EUR 7.09 5.43 7.09 5.43
Dividend per share, EUR - - 0.70*) 1.00
--------------------------------------------------------------------------------
*) Board of Directors' proposal for dividend per share
NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME AND FINANCIAL POSITION
This financial statements review is prepared in accordance with IAS 34 Interim
Financial Reporting. The same accounting policies and methods have been applied
in this financial statements review as in the recent annual financial
statements. This financial statements review is unaudited.
Adoption of new interpretations
Outotec has applied the following revised standards from the beginning of 2009:
* IAS 1 Presentation of financial statements. The revised standard aims to
separate the transactions in equity to transactions with owners and other
changes in equity. The changes have impact on presentation of interim and
financial statements.
* IFRS 7 Financial Instruments: Disclosures. The revised standard increases
the amount of the notes related to the measurement of fair values of
financial instruments and liquidity risk in the financial statements.
* IFRS 8 Operating segments. The new standard aims the entity to adopt
management approach in reporting the segments' financial performance. The
application of the new standard has not changed the operating segments of
Outotec, because company has previously been reporting the same segments as
in management reporting. The new standard's main impact will be on the
disclosure information.
* IFRS Annual Improvements.
In addition Outotec has applied the following revised standards and
interpretation from the beginning of 2009, which do not have impact on the
Group's financial statements.
* IFRS 2 Share-based Payment - Vesting Conditions and Cancellations.
* IAS 23 Borrowing costs.
* IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of
Financial Statements - Puttable Financial Instruments and Obligations
Arising on Liquidation.
* IFRIC 13 Customer Loyalty Programmes.
* IFRIC 15 Agreements for the Construction of Real Estate.
* IFRIC 16 Hedges of a Net Investment in a Foreign Operation.
* IFRIC 17 Distributions of Non-cash Assets to Owners
Outotec will estimate the impacts of the following standards and will apply the
new standards from the financial period beginning January 1, 2010 onwards:
* IFRS 2 Share-based Payment - Group Cash Settled Transactions (effective date
January 1, 2010). The amended standard has not yet been approved to be
applied in the EU.
* IFRS 3 Business combinations (effective date for annual periods beginning on
or after July 1, 2009).
* IAS 27 Consolidated and separate financial statements (effective date for
annual periods beginning on or after July, 1 2009).
* IAS 39 Financial instruments: Recognition and Measurement (effective date
for annual periods beginning on or after July, 1 2009).
* IFRS Annual Improvements. EU has not yet approved the amendments.
Use of estimates
IFRS requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, as well as the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of income and expenses during the reporting period.
Accounting estimates are employed in the financial statements to determine
reported amounts, including the realizability of certain assets, the useful
lives of tangible and intangible assets, income taxes, provisions, pension
obligations, impairment of goodwill. These estimates are based on management's
best knowledge of current events and actions; however, it is possible that the
actual results may differ from the estimates used in the financial statements.
Major Non-Recurring Items in Operating Profit Q1-Q4 Q1-Q4
EUR million 2009 2008
--------------------------------------------------------------------------------
Loss on sale of Intune Circuits Ltd. - -1.1
Impairment loss from Pacific Ore Ltd's shares -2.5 -
Arbitration settlement 2.4 -8.5
--------------------------------------------------------------------------------
Income Tax Expenses Q1-Q4 Q1-Q4
EUR million 2009 2008
--------------------------------------------------------------------------------
Current taxes -13.7 -37.4
Deferred taxes -4.9 -5.0
--------------------------------------------------------------------------------
Total income tax expenses -18.6 -42.4
Property, Plant and Equipment December 31, December 31,
EUR million 2009 2008
--------------------------------------------------------------------------------
Historical cost at the beginning of the period 87.6 81.3
Translation differences 3.3 -3.3
Additions 14.9 10.7
Disposals -0.9 -3.3
Acquired subsidiaries 12.9 2.1
Reclassifications -0.0 0.0
--------------------------------------------------------------------------------
Historical cost at the end of the period 117.8 87.6
Accumulated depreciation and impairment at the -58.1 -56.7
beginning of the period
Translation differences -1.8 2.0
Disposals 1.0 3.1
Reclassifications 0.2 0.0
Depreciation during the period -7.0 -6.4
--------------------------------------------------------------------------------
Accumulated depreciation and impairment at the end -65.7 -58.1
of the period
Carrying value at the end of the period 52.1 29.5
--------------------------------------------------------------------------------
Commitments and Contingent Liabilities December 31, December 31,
EUR million 2009 2008
--------------------------------------------------------------------------------
Pledges and mortgages 33.4 3.0
Guarantees for commercial commitments 218.2 166.5
Minimum future lease payments on operating leases 64.4 68.7
--------------------------------------------------------------------------------
The pledges and mortgages are used to secure credit facilities in Larox and its
subsidiaries.
The above value of commercial guarantees does not include advance payment
guarantees issued by the parent or other group companies. The total amount of
guarantees for financing issued by group companies amounted to EUR 47.1 million
at December 31, 2009 (December 31, 2008: EUR 8.5 million) and for commercial
guarantees including advance payment quarantees EUR 321.3 million at December
31, 2009 (December 31, 2008: EUR 353.8 million).
Derivative Instruments
Currency Forwards December 31, December 31,
EUR million 2009 2008
--------------------------------------------------
Fair values, net -1.9*) -12.7**)
Nominal values 319.3 378.3
--------------------------------------------------
*) of which EUR 1.4 million designated as cash flow hedges.
**) of which EUR -5.1 million designated as cash flow hedges.
Related Party Transactions
Transactions and Balances with Associated Companies Q1-Q4 Q1-Q4
EUR million 2009 2008
-----------------------------------------------------------------
Sales 0.1 -
Trade and other receivables 0.1 -
Current liabilities 0.4 -
-----------------------------------------------------------------
Business Combinations
Acquisition of Larox Group
----------------------------
Outotec has completed the acquisition of control in Larox through directed share
issue at December 21, 2009 and has made a mandatory public tender offer for the
remaining Larox shares. The shares correspond altogether to 94.40 per cent of
all the votes in Larox and 70.48 per cent of all the shares in Larox. Upon the
completion of the share transactions Larox has become a subsidiary of Outotec.Shares owned at the completion of the tender offer, expired in January
22, 2010, together with the Larox shares already owned by Outotec, represented
approximately 98.5 per cent of all the Larox shares and approximately 99.7 per
cent of all the votes attached to the Larox shares.
Larox develops and delivers industrial filters for separating solids from
liquids. Larox's filtration solutions are mainly used worldwide in the mining
and metallurgical industries as well as in chemical processing. Larox operates
in over 40 countries. The company is headquartered in Lappeenranta, Finland and
it has production facilities in Finland and China.
The combination of the businesses of Outotec and Larox will further strengthen
Outotec's position as a globally leading provider of technology solutions and
services to the mining and metals industry and enable the development and growth
of the Larox business in an international, financially solid technology group
operating in the same industry.
The consideration for the Larox shares purchased was paid in the form of
2,763,419 new Outotec shares which totalled to EUR 63.4 million. Total
acquisition cost includes also EUR 2 million of capitalized transaction costs.
The below purchase price allocation is preliminary and the final purchase price
allocation will be completed during year 2010. In the preliminary purchase price
allocation the purchase price has been allocated to intangible assets such as
technologies, trademarks and customer relationships.
Fair values recorded on Carrying amounts prior
acquisition to acquisition
EUR million
--------------------------------------------------------------------------------
Intangible assets 41.0 17.4
Property, plant and equipment 12.9 12.9
Inventories 26.3 22.8
Trade and other receivables 41.0 39.0
Cash and cash equivalents 1.5 1.5
--------------------------------------------------------------------------------
Total assets 122.8 93.7
Interest-bearing liabilities 34.6 34.6
Deferred tax liabilities 8.7 1.7
Trade and other payables 32.0 32.0
--------------------------------------------------------------------------------
Total liabilities 75.3 68.3
Net assets 47.6 25.5
Acquisition cost (equity) 63.4
Capitalized transaction costs 2.0
Minority at fair value 27.4
--------------------------------------------------------------------------------
Goodwill 45.2
Cash and cash equivalents in 1.5
subsidiaries acquired
Transaction costs paid at 0.5
December 31, 2009
--------------------------------------------------------------------------------
Cash flow effect of 1.0
acquisition
In 2009, the sales of Larox Group was approximately EUR 150.2 million and the
operating loss approximately EUR -1.9 million.
Effect of Larox acquisition on Outotec Group's Sales and Operating Profit in
2009
Outotec's sales for January 1, 2009- December 31, 2009 would have been EUR
1,027.9 million and profit for the period EUR 31.8 million if the acquisition
carried out during the period had been completed on January 1, 2009.
Acquisition of Ausmelt Limited
Outotec owned 37.62% of Ausmelt Ltd, which is listed on the Australian Stock
Exchange, on December 31, 2009 and Outotec had launched an off-market takeover
bid to acquire all shares. Outotec reached majority ownership on January
18, 2010 and owns 96.42% of Ausmelt Ltd on February 8, 2010. The acquisition
price of the shares was approximately AUD 47.4 million (approximately EUR 30.1
million). Total acquisition cost includes also EUR 0.9 million of capitalized
transaction costs.
Ausmelt's principal activities are the development, design, engineering and
supply of Top Submerged Lance (TSL) smelting technology for the production of
metals and processing of industrial wastes. Ausmelt's sales in its fiscal year
that ended on June 30, 2009 *) were AUD 18.5 million (approximately EUR 10.4
million) and its net profit from continuing operations AUD 4.3 million
(approximately EUR 2.4 million).
Ausmelt has been consolidated as associated company in Financial Statements at
December 31, 2009. Ausmelt has not published its financial statements for the
reporting period ended on December 31, 2009 and therefore the initial accounting
for business combination related to Ausmelt acquisition was preliminary at the
time the financial statements 2009 were authorised for issue. The purchase price
allocation will be done during the first half of 2010. Preliminary assumption is
that the excess value will be allocated to intangible assets (technology, order
backlog, customer relations) and property, plant and equipment.
*) Latest published financial information
Segments' Sales and Operating Profit by Quarters
EUR million Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
--------------------------------------------------------------------------------
Sales
Minerals Processing 110.5 60.1 92.7 122.0 144.8 84.5 91.1 79.4 83.2
Base Metals 85.6 60.1 72.0 76.9 86.4 44.8 29.6 28.0 34.0
Metals Processing 120.8 104.6 109.2 116.9 163.9 97.2 103.4 77.4 100.8
Other Businesses 11.1 9.1 16.7 11.4 18.8 18.3 20.0 11.5 10.7
Unallocated items *) and
intra-group sales -12.5 -8.3 -15.0 -9.2 -15.1 -13.2 -6.5 -7.6 -8.9
--------------------------------------------------------------------------------
Total 315.5 225.6 275.5 318.1 398.8 231.6 237.6 188.7 219.8
Operating profit
Minerals Processing 16.3 4.1 3.2 3.1 12.1 6.1 7.9 9.1 6.1
Base Metals 9.3 6.3 11.9 13.3 17.2 4.3 -0.4 1.6 2.8
Metals Processing 11.5 12.3 11.8 14.9 22.1 8.9 9.3 6.3 11.5
Other Businesses 0.3 0.4 1.2 1.7 0.7 -0.4 -0.1 -0.5 -0.5
Unallocated and -4.4 -2.2 -5.1 -4.1 -4.6 -2.7 -2.7 -1.5 -6.5
intra-group items **)
--------------------------------------------------------------------------------
Total 33.0 21.0 22.9 28.9 47.5 16.3 13.9 15.1 13.3
*) Unallocated items primarily include invoicing of internal management and
administrative services.
**) Unallocated items primarily include internal management and administrative
services and share of the result of associated companies.
Definitions for Key Financial Figures
--------------------------------------------------------------------------------
Net interest-bearing debt = Interest-bearing debt -
interest-bearing assets
Gearing = Net interest-bearing debt × 100
--------------------------------------
Total equity
Equity-to-assets ratio = Total equity × 100
--------------------------------------
Total assets - advances received
Return on investment = Operating profit + finance income × 100
--------------------------------------
Total assets - non interest-bearing
debt (average for the period)
Return on equity = Profit for the period × 100
--------------------------------------
Total equity (average for the
period)
Research and development expenses = Research and development expenses in
the statement of comprehensive
income
(including expenses covered by
grants received)
Earnings per share = Profit for the period attributable
to the equity holders of the parent
company
--------------------------------------
Average number of shares during the
period, as adjusted for stock split
Dividend per share = Dividend for the financial year
--------------------------------------
Number of shares at the end of the
period, as adjusted for stock split
[HUG#1382008]
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