Kotkamills Group Oyj - Interim report (Q1 and Q3)

Kotkamills Group Oyj: INTERIM REPORT FOR JANUARY-MARCH 2017

Kotkamills Group Oyj

STOCK EXCHANGE RELEASE

31 May 2017, at 10:30 pm (CET + 1)



This is a summary of the January - March 2017 interim report. The complete
report is attached to this release and is also available at
www.kotkamills.com/fi/kotkamillsgroup/keyfinancials



KOTKAMILLS INTERIM REPORT


January - March 2017 (1-3/2016)

The revenue of continuing operations of EUR 59,9 (EUR 51,0) million improved by
EUR 8,9 million mainly due to increased Consumer Boards sales.

The operating profit of continuing operations was EUR -4,1 million (EUR -2,1
million)  mainly due a negative impact from the commercial ramp-up of Consumer
Boards business. The good financial performance of Industrial Products segment
with operating profit of EUR 6,8 million (EUR 3,8 million) continued also in
Q1/2017.



Events in January - March 2017

In January the Company was informed by Nordic Trustee Oy, acting as the Trustee
under the bonds, that the bondholders have given the requested consent (as
revised on 23 December 2016) for a disposal of the Imprex Business in accordance
with the terms and conditions of the bonds.

In February the shareholders of the Company unanimously resolved to offer by
direct issue both New A and B series shares. Pursuant to the terms of the share
issue of the New A Shares, the holders of series A shares granted in connection
with their participation in the share issue shareholder loans to the company in
the aggregate amount of approximately EUR 17,9 million. The terms of the
shareholder loans are in material respects equivalent to the terms of the
existing shareholder loans.

As a result of the share issue and the utilisation of the new shareholder loans,
the Company obtained financing in the aggregate amount of approximately EUR
20,0 million.

The purpose of the share issue and the utilisation of the shareholder loans was
to ensure full utilization of the commercial ramp-up of the new board machine.

The delivery volumes of Industrial Products segment increased compared to the
previous quarter and the demand continued to stay at a good level.

The commercial ramp-up of Consumer Boards products continued in the first
quarter.



Key figures

 (IFRS)                                         1-3/2017 1-3/2016 1-12/2016

 Continuing operations

 Revenue, EUR million                           59,9     51,0     219,1

 EBITDA, EUR million                            0,0      -0,7     9,5

 Operating profit, EUR million                  -4,1     -2,1     -0,4

 Operating profit/ Revenue (%)                  -6,8     -4,1     -0,2



 Group Total

 Return on equity (%)                           -35,2    -20,9    -53,2

 Equity ratio (%)                               5,9      11,5     7,8

 Equity ratio, adjusted (%)*                    53,7     45,3     50,1



 *Equity includes shareholder loans and the
 junior term loan



The Group monitors capital using an equity ratio and an adjusted equity ratio
based on the financial covenants, which is total equity added with shareholder
loans and the junior term loan and divided by total assets. The Group's policy
is to keep the adjusted equity ratio above 30%. There have been no breaches of
the financial covenants of equity ratio in the current period.



Events after reporting date

At the closing date the pending litigation of termination of an agent contract
was in review process in the Court of Appeals in Turkey. On April 7, 2017 the
Court of Appeals approved the decision of the court of first instance (it had
dismissed the lawsuit based on the grounds that it lacks competence since the
parties have agreed to settle all disputes arising out of the agency agreement
by arbitration) and sent the lawsuit file back to court of first instance for
finalization of the decision. Kotkamills Oy has not recognized any provision
because of the claim.

At the closing date Kotkamills Oy's Seller and former owner prior to the Seller
had a dispute related to the terms and conditions of the former acquisition. The
dispute was related to certain voluntary pension obligations. Kotkamills Oy was
a party to the dispute. Arbitration award was given on May 2, 2017. Based on
both award and agreement between Kotkamills Group Oyj and Kotkamills Oy's Seller
there won't be any financial impacts on Kotkamills Oy.

Kotkamills Oy has also one unsettled contractual dispute. The dispute relates to
a potential compensation claim by a supplier related to performed construction
work. In a pending arbitration the supplier claims Kotkamills Oy for
compensation of preliminary EUR 1,5 million by appealing to rushing costs and
increases of unit prices.  Kotkamills Oy has disputed the claims as unfounded
and has not recognized any provision because of the claim.



Outlook for 2017

The revenue of the second quarter in 2017 is estimated to be higher than in the
first quarter 2017 due to increase in especially Consumer Boards delivery
volumes. The profit of continuing operations for the second quarter of 2017 is
estimated to improve from the previous quarter although the continuing
commercial ramp-up of Consumer Boards business is estimated to have a diluting
effect on the profit of the second quarter.

The demand of all business segments is expected to stay at the good level, but
changes in economic situation in Europe and geopolitical risks may have
weakening impact on demand.

Currency exchange rate changes and possible increases in raw material prices
could adversely impact the Group's profit development.



Kotkamills Group Oyj
Board of Directors



For additional information, please contact:

CFO Petri Hirvonen, tel.+358 40 571 0834, petri.hirvonen@kotkamills.com



DISTRIBUTION:
Nasdaq Helsinki Ltd
Key media
www.kotkamills.com



Kotkamills Group in brief

Kotkamills is a responsible partner that delivers renewable products and
performance to its customers' processes via product innovations created from
wood, a renewable raw material. The key brands of the company include Absorbex®
and Imprex®, both innovative laminating paper products for the laminate, plywood
and construction industries. Moreover, Kotkamills offers ecological, technically
sound and visually attractive wood products for demanding joinery and
construction. In summer 2016, Kotkamills started up a new board machine
producing AEGLE(TM) Folding Boxboard and ISLA(TM) Food Service Boards, including
the capability to add barriers on-machine. All Consumer Board material solutions
are fully recyclable and repulpable.

Kotkamills has two production sites in Finland, located in Kotka and Imatra. The
majority shareholder of Kotkamills is MB Funds, a Finnish private equity firm.

www.kotkamills.com



Disclaimer
The information contained in this release shall not constitute an offer to sell
or the solicitation of an offer to buy securities of Kotkamills Group Oyj in any
jurisdiction.











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Priedai:

Kotkamills Group Oyj Interim Report Q1-2017.pdf