Kotkamills Group Oyj - Interim report (Q1 and Q3)

Kotkamills Group Oyj: KOTKAMILLS INTERIM REPORT FOR JANUARY - JUNE 2016

Kotkamills Group Oyj

STOCK EXCHANGE RELEASE

31 August 2016, at 7 pm (CET + 1)

This is a summary of the January - June 2016 interim report. The complete report
is attached to this release and is also available at
www.kotkamills.com/fi/kotkamillsgroup/keyfinancials




KOTKAMILLS INTERIM REPORT

Due to new group structure since March 2015, stopping magazine paper production
in January 2016 and preparations of entering into new Consumer Boards business
different quarters (like Q2/2016 versus Q2/2015) are not fully comparable.



April-June 2016 (4-6/2015)

The revenue of continuing operations was MEUR 49,5 (49,1).

The operating profit of continuing operations of MEUR -6,1 (0,6) was effected by
annual maintenance shutdown (in 2015 maintenance shutdown in August) and fixed
costs of Consumer Boards.

January-June 2016 (1-6/2015)

The revenue of continuing operations of MEUR 100,5 (49,1) increased clearly
because Q1/2015 does not include business activities of continuing operations
(Kotkamills Group Oyj became the parent company on 24 March 2015, when the
Company acquired the entire share capital of Kotkamills Oy).

The operating profit of continuing operations of MEUR -8,2 (29,4) was clearly
lower due to maintenance shutdown in May (2015 in August), increased fixed costs
of Consumer Boards and in Q1 2015 recognized gain, i.e. negative goodwill, of
MEUR 30,5 on the acquisition of Kotkamills Oy.

Events in April-June 2016

The conversion project of paper machine 2 to board machine continued in the
second quarter. The delivery of the magazine paper will continue until the third
quarter in 2016.

Demand of Industrial Products segment's products continued to stay at a good
level. Consumer Boards had no deliveries during the reporting period.

Company's subsidiary Kotkamills Oy signed a contract of approximately MEUR 20
with a Nordic financial institution concerning sale of trade receivables of the
company to the financial institution (on an ongoing, non-recourse basis on
customary market terms).





Company estimated that the total costs of the Board Machine project to be ca.
170 MEUR instead of the earlier estimation of 155 MEUR. The difference is mainly
coming from civil and piping works and the slightly delayed start-up date.

Key figures

The business of Magazine Papers was classified as a discontinued operation in
January 2016 and thus the net result of the business of Magazine Papers is
presented in the statement of profit or loss under "Profit (loss) from
discontinued operations" separately from continuing operations for all periods
presented.

The Kotkamills Group Oyj became the parent company on 24 March 2015, when the
Company acquired the entire share capital of Kotkamills Oy, thus H1/2015
includes only business activities of Q2/15 of continuing operations. The Group
recognized a gain, i.e. negative goodwill, of EUR 30,5 million on the
acquisition of Kotkamills Oy. The gain has been recognized in the other
operating income in Q1 2015.

 (IFRS)                           4-6/2016 4-6/2015 1-6/2016 1-6/2015 1-12/2015

 Continuing operations

 Revenue, EUR million             49,5     49,1     100,5    49,1     146,4

 EBITDA, EUR million              -4,7     1,9      -5,4     30,7     46,0

 Operating profit, EUR million    -6,1     0,6      -8,2     29,4     40,9

 Operating profit/ Revenue (%)    -12,3    1,2      -8,2     59,7     27,9



 Group Total

 Return on equity (%)             -37,1    -4,3     -57,2    117,4    122,4

 Equity ratio (%)                 7,8      12,5     7,8      12,5     13,1

 Equity ratio, adjusted (%)*      41,8     44,7     41,8     44,7     44,3



 *Equity includes shareholder
 loans


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
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

In July 2016 the Company utilized the EUR 20 million junior loan facility to
complete the board machine conversion project. The summary of the material terms
of the equity hybrid loan is presented in the listing prospectus available in
the company website (www.kotkamills.com/fi/kotkamillsgroup/keyfinancials).

On July 22, 2016, the Company informed, that the new consumer board machine BM2
of Kotkamills Oy, the subsidiary of Kotkamills Group Oyj, has started production
in Kotka, Finland.

At the end of July 2016 the Company informed, that the shareholders of
Kotkamills Group Oyj have unanimously resolved to offer by a directed issue a
maximum of 1,406,277 new series A shares of the company for subscription to the
holders of series A shares pro rata to their holding of series A shares and a
maximum of 153,128 new series B shares of the company for subscription to the
holders of series B shares pro rata to their holding of series B shares. The New
Shares represent in aggregate approximately 15.59 per cent of the existing
shares in the company.

The subscription price for each New Share is EUR 1.00 and the aggregate
subscription price for the New Shares is EUR 1,559,405. Pursuant to the terms of
the share issue of the New A Shares, the holders of series A shares are in
connection with their participation in the share issue required to grant
shareholder loans to the company up to the aggregate amount of EUR 13,437,470.
The terms of such shareholder loans would in material respects be equivalent to
the terms of the existing shareholder loans.

The purpose of the share issue and the utilisation of the shareholder loans is
to strengthen the company's cash position at the time of the start of the new
board machine to fully utilise increased sales potential resulting from the
start.

In August the Company informed, that the holders of series A shares subscribed
the maximum amount of 1,406,277 New A Shares offered for subscription on the
directed issue of the company and the holders of series B shares subscribed
131,252 of the total 153,128 New B Shares offered for subscription on the
directed issue of the company. The subscribed New Shares represent in aggregate
approximately 13.33 per cent of the total number of the shares in the company.

The subscription price for each New Share is EUR 1.00 and the aggregate
subscription price for the New Shares is EUR 1,537,529. 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 EUR 13,437,470.

As a result of the share issue and the utilisation of the new shareholder loans,
Kotkamills Group Oyj will obtain financing in the aggregate amount of EUR
14,974,999.

Outlook for 2016

The revenue and the profit for the third quarter of 2016 is estimated to improve
from the previous quarter although the start-up costs of the new board machine
and Consumer Boards business are estimated to have negative effect on the profit
of the third quarter.

Markets of the other continuing operations' businesses are expected to be at
least at the same level as in the last year, but ongoing uncertain economic
situation in Europe and geopolitical risks may have weakening impact on demand.

Present energy price levels are expected to support the Group's performance, but
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 Boards material
solutions are fully recyclable and repulpable.

Kotkamills has two production sites in Finland, located in Kotka and Imatra, and
a subsidiary L.P. Pacific Films for Imprex® production in Malaysia. 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.

[]

Bifogade filer:

Kotkamills Group Oyj Interim Report Q2-2016.pdf