2009-06-30 08:00:04 CEST
2009-06-30 08:01:09 CEST
Ruukki Group Oyj - Tender offer
RUUKKI GROUP OFFERS TO ACQUIRE THE SHARES OF SYLVANIA RESOURCES LIMITED
Ruukki Group Plc, Stock Exchange Release, 30 June 2009 at 9:00 a.m. RUUKKI GROUP OFFERS TO ACQUIRE THE SHARES OF SYLVANIA RESOURCES LIMITED 1. TRANSACTION HIGHLIGHTS Ruukki Group Plc's (“Ruukki”) purpose is to acquire 100 % of the share capital of Sylvania Resources Limited (“Sylvania”), an Australian incorporated company having its main business located in South Africa. The acquisition will be carried out through a merger to be effected by way of a scheme of arrangement, which is one way of realising tender offers on the securities markets of the target company. The acquisition of Sylvania will be effected by way of a scheme of arrangement governed by the laws of Australia. Sylvania produces platinum group metal (“PGM”) alloys, the majority of which are produced from tailings dumps. Sylvania is listed on the Australian Securities Exchange (“ASX”) and on AIM, a market operated by the London Stock Exchange plc (“AIM”). The conclusion of the Sylvania transaction will enable Ruukki to further expand its minerals business in South Africa and develop its mineral business. The combination of Ruukki and Sylvania will create an vertically integrated chrome and PGM company (the “Enlarged Group”) focused on the production of ferrochrome, other ferroalloys, and PGMs. In parallel with established ferrochrome production, the Enlarged Group will be well positioned to increase production of PGMs through access to processing facilities and the ownership of sources of feed material. The Enlarged Group's parentcompany will continue by the the name “Ruukki Group Plc”. Sylvania shareholders will be offered approximately 0.55249 new Ruukki shares for each Sylvania common share owned. The maximum number of new Ruukki shares to be issued is altogether approximately 119,626,886. In addition, the current outstanding Sylvania options will be replaced with Ruukki option rights. The total number of new Ruukki option rights to be granted as part of this transaction amounts to 10,675,496 options, each entitling the holder to subscribe to one (1) Ruukki share. Ruukki currently has 261,034,022 registered shares. As on 29 June 2009 Ruukki owned 14,360,000 treasury shares. If the contemplated acquisition will be concluded, the current Ruukki shareholders would own approximately 68.6 % of Ruukki and current Sylvania shareholders approximately 31.4 %, assuming that there are no other changes to Ruukki's share capital. Ruukki will later today publish another announcement in relation to the offer's potential effect on changes in the portion of holdings in Ruukki to the extent and in case any current or future Ruukki shareholder's portion of holdings potentially exceeds, reaches or falls below the threshold level set by Finnish Securities Market Act. In the financial year 1 July 2007 to 30 June 2008 Sylvania's audited revenue was AUD 32.8 million (EUR 20.0 m) and profit before tax was AUD 17.0 million (EUR 10.4 m). During the period 1 July 2008 to 31 March 2009, being the first 9 months of the current financial year, which ends on 30 June 2009, Sylvania's unaudited revenue was ZAR 112.2 million (EUR 9.0 m) and profit before tax was ZAR 62.5 million (EUR 5.0 m). The conclusion of the acquisition of Sylvania is conditional upon a number of conditions including, without limitation, opinions from independent experts as to the fairness of the proposed transaction (fairness opinion), shareholder and court approvals and regulatory clearances and approvals. Details of the conditions to which the acquisition is subject to will be set out in due course in documents to be sent to the shareholders of Sylvania. The current EBITDA guidance for the financial year 1 January to 31 December 2009 is unchanged at present. The time frame, in which the target will be consolidated into Ruukki, depends upon a number of variables, including the schedule for the scheme of arrangement as well as a number of regulatory processes. If all conditions are satisfied, Ruukki estimates that it will consolidate the acquired business during first half of the year 2010. Should the contemplated acquisition be concluded, Ruukki intends to split its minerals business into two separate reporting segments: - One segment will focus on ferrochrome and other ferrous metal alloys (including the previously acquired RCS Limited, Türk Maadin Sirketi, Elektrowerk Weisweiler, as well as Mogale Alloys Limited (“Mogale”)); and - One segment will focus on PGM alloys (including Sylvania). As a separate attachment enclosed to this Stock Exchange Release the announcement concerning the tender offer announcement of Sylvania has also been published. This announcement has been published today simultaneously with this Stock Exchange Release in the domicile and business places of the target company as versions in the English language. Moreover, an analyst presentation in relation to the transaction has also been enclosed as an attachment to this Stock Exchange Release. 2. GROUP STRATEGY POST-ACQUISITION Ruukki's board believes that the Enlarged Group will consist of complementary businesses combining access to significant PGM resources in the form of conventional mineral deposits and tailings dumps in the Bushveld Igneous Complex of South Africa together with tailings reprocessing technology. In addition Ruukki anticipates that the Enlarged Group will be well positioned to realise substantial synergies between traditionally separate chrome and PGM industries, particularly given their close geological association in South Africa's Bushveld Igneous Complex. In addition, Ruukki's board anticipates that the Enlarged Group may, through the conversion of existing furnaces, accelerate the development of independent PGM smelting capacity, thereby relieving the bottle neck to growth in the emerging PGM sector. Ruukki's recent acquisition of Mogale will provide the Enlarged Group with access to production facilities including DC arc furnaces which, when combined with Sylvania's existing resources, tailings recovery processing and retreatment operations will enable vertical integration and synergies. The Enlarged Group will initially source feed from the tailings reprocessing operations currently operated by Sylvania and will seek to secure future sources of feed from Ruukki's existing Platreef deposits. Ruukki specialises in the industrial refining of selected natural resources. Ruukki has two focus areas: wood processing and minerals. The wood processing business is concentrating in the northern parts of Finland while the minerals business is in addition to Mogale smelter business concentrationg on mining operations in Turkey and on special grade ferrochrome smelting operations in Germany. Alwyn Smit, CEO of Ruukki commented on the strategic rationale of the Sylvania transaction, saying that: “This transaction, following on from our recent acquisition of 84.9% of Mogale Alloys, represents a very significant step towards the realisation of our strategy to develop a fully integrated mine to metals PGM and ferrochrome business.” 3. DECISION MAKING PROCESSES Ruukki will subsequently convene an Extraordinary General Meeting for its shareholders to decide on the acquisition of Sylvania and on the execution of the share issue in relation to the acquisition. It is envisaged that this Extraordinary General Meeting will be held approximately in October 2009. Ruukki will in relation to the transaction publish a prospectus in accordance with the Finnish Securities Markets Act. As referred to above, the acquisition of Sylvania will be effected by way of a scheme of arrangement. Finnish law does not contain a similar merger/takeover provision. Accordingly, set out below is a brief summary of the scheme of arrangement governed by the laws of Australia. A scheme of arrangement governed by the laws of Australia A scheme of arrangement is a plan which, by law, binds a company's shareholders to rearrangement of their rights and obligations. Under the proposed scheme in relation to Sylvania, Sylvania will be the target company and Sylvania shareholders will vote on the scheme at a meeting convened by Sylvania. The five main steps in the scheme are: (i) the target company and its directors will have primary responsibility and control of the preparation of a scheme booklet concerning the scheme; (ii)the scheme booklet will be reviewed by the Australian Securities and Investments Commission (“ASIC”) and a court; (iii) a court will order that a meeting of affected target company shareholders be convened; before ordering the meeting, a court will review the scheme booklet and must be satisfied that ASIC has had a reasonable opportunity to examine the terms of the scheme booklet and to make submissions to the court; (iv) the target company shareholders will vote on whether to approve the scheme; and (v) if the scheme is approved by the required majorities of target company's shareholders, the court shall make an order or orders approving implementation of the scheme (although the court does have the discretion whether or not to approve the scheme). 4. TRANSACTION DESCRIPTION Transaction Ruukki has entered into a Merger Implementation Agreement with Sylvania pursuant to which Ruukki intends to acquire 100 % of the issued and to be issued share capital of Sylvania, an Australian incorporated company. The acquisition of Sylvania will be carried out by way of an Australian law governed scheme of arrangement pursuant to which Sylvania shareholders will receive approximately 0.55249 Ruukki shares for each Sylvania common share owned. The acquisition of Sylvania has been unanimously recommended by the Independent Committee of the board of directors of Sylvania and has also been approved by the independent board of directors of Ruukki (meaning that each of the directors of Ruukki other than Terry McConnachie, who is also a director of Sylvania, have participated in the decision making) to be later presented to Ruukki Extraordinary General Meeting. If the acquisition and the share issue connected to it are approved by Ruukki Extraordinary General Meeting and the other requirements are met, Sylvania will become a wholly-owned subsidiary of Ruukki, and Ruukki will have approximately 381 million issued and outstanding shares of which approximately 68.6 % will be held by existing Ruukki shareholders. These calculations are based on the assumption that the related acquisitions by Sylvania of 100% of the issued and to be issued share capital of each of Great Australian Resources and SA Metals are also completed assuming that there are no other changes to Ruukki's share capital. In the event that the acquisition of Sylvania would not in certain conditions proceed in accordance with the terms and conditions of the Merger Implementation Agreement, a break fee of AUD 3.0 million (approximately EUR 1.7 m) or in some situations AUD 1.5 million (approximately EUR 0.9 m) will be payable by either Sylvania or Ruukki (depending on which party is deemed liable for the transaction not proceeding). More details of the acquisition will be included in the invitation to an Extraordinary General Meeting of Ruukki as well in a scheme booklet to be filed with the regulatory authorities and mailed to Sylvania shareholders in accordance with applicable legislation. Before the acquisition can be completed a resolution in favour of the scheme must be approved at a Court convened meeting of Sylvania shareholders. The resolution must be passed by a majority in number of Sylvania shareholders present and voting (in person or by proxy) and by 75% of the votes cast on the resolution. In the Ruukki Extraordinary General Meeting the issuance on new shares in relation to the proposed transaction will require a majority of at least two thirds of the shares and votes present. In addition the requirement for approval of the scheme by Ruukki shareholders and Sylvania shareholders, the scheme is also conditional upon, inter alia, regulatory clearances and approval. The planned completion date of the acquisition is no later than 30 April 2010. Sylvania's business Sylvania is a fast-growing PGM producer with tailings retreatment operations and shallow mining exploration interests located in South Africa's PGM rich Bushveld Igneous Complex. Sylvania's interests comprise: - a 74% interest in Sylvania Metals (Pty) Limited, which treats chrome tailings from Samancor Chrome (Pty) Limited's mines on the western and eastern limbs of the Bushveld Igneous Complex; - a 25% interest in a chrome tailings retreatment project at Kroondal on the western limb of Bushveld Igneous Complex, managed by Aquarius Platinum Limited; and - an exploration project on the eastern limb of the Bushveld Igneous Complex. The nature of Sylvania's business is that the company is less dependent on, and requires less, scarce national resources such as water and power. In addition, its deposition of retreated tailings is to the highest and most modern standards, with resulting long-term environmental benefits. Sylvania is listed on the Australian Stock Exchange (“ASX”) and on AIM in London. Purchase consideration The purchase price for the acquisition of the entire issued and to be issued share capital of Sylvania will be the allotment and issue of approximately 119,626,886 new Ruukki shares, which are valued at approximately EUR 268 million based on the Ruukki's closing share price of EUR 2.24 as at 29 June 2009. In addition, approximately 10,675,496 Ruukki option rights will be issued to Sylvania option holders and the existing Sylvania option schemes will be cancelled. The issue of these shares and options is subject to the decision of the Ruukki General Meeting. Terms and conditions of the option rights The Ruukki option rights shall replace current Sylvania options, and the main terms and conditions of the Ruukki option rights, to be issued in relation to this transaction, are as follows: Number of option rights in total approximately: 10,675,496 Ruukki option rights each entitle to subscribe for one (1) Ruukki share; The expiry dates varies depending on the class of option rights: 30 Jun 2010, 30 Jun 2011 and 30 Jun 2012; and the exercise prices of the shares varies depending of the subscription class range being: EUR 0.76 - 2.93. The indicative preliminary economic value of the option rights in aggregate: EUR 10.2 million, which shall be reflected in Ruukki's future income statements. Due Diligence As part of the preparation process for the Sylvania acquisition Ruukki has instructed several external advisers, including accountancy, financial, tax, technical and legal advisers. Description of the Target of the Transaction, Business Tailings treatment At present the principal part of Sylvania's tailings retreatment business comprises a 74% interest in Sylvania Dump Operations (SDO), which, pursuant to a service and supply agreement with Samancor Chrome (Pty) Limited (“Samancor Chrome”), treats chrome tailings to recover PGMs from Samancor Chrome's mines on the western and eastern limbs of the Bushveld Igneous Complex. Two plants, Millsell and Steelpoort, became fully operational during the 2007-2008 financial year to service Sylvania's agreement with Samancor Chrome. Process improvement projects at both plants, involving the addition of beadmills and extra cleaner flotation cells, have improved recovery rates. Construction of two additional plants, Lannex and Mooinooi, is under way with commissioning and ramp-up of production at both begun during the first half of 2009. An addendum to the agreement with Samancor Chrome has secured the right to treat an estimated annual 300,000 tonnes of [run of mine] (“ROM”) from Samancor Chrome's Broken Hill, Spitzkop and Buffelsfontein East chrome mines to obtain PGMs. ROM from the Broken Hill and Spitzkop mines will be taken to the Lannex plant for treatment and ROM from the Buffelsfontein East mine will be taken to the Mooinooi plant for treatment. The Doornbosch and Tweefontein plants, due for construction in the latter half of the 2009-2010 financial year, will increase the production capacity to 61,000 PGM oz. Sylvania also has a 25% interest in the chrome tailings retreatment plant at Kroondal which is managed by Aquarius Platinum Limited and which treats the Xstrata and Beyer chrome tailings to recover PGMs. Near-surface mining exploration projects Sylvania's shallow exploration sites are spread widely across the northern and eastern limbs of the Bushveld Igneous complex and comprise: (a) the Everest North UG2 exploration project on the eastern limb, which has measured reserves of 5.1 million tons of ore grading 4.7g/t of combined platinum, palladium, rhodium and gold. Pursuant to the terms of an agreement with Aquarius Platinum (South Africa) (Pty) Ltd, notice has been served that the project is viable and that Sylvania intends to mine the property. Sylvania and Eastern Platinum Limited are also in discussions relating to a possible joint venture project in respect of the Vygenhoek and Mareesburg properties; and (b) the Harriet's Wish, Cracouw and Aurora exploration projects on the northern limb of the Bushveld Igneous Complex and the near-surface Merensky Reef platinum/nickel exploration project, Mooiplats, which are held by Great Australian Resources Limited, an Australian incorporated company listed on ASX, in which Sylvania holds an 19.9% interest. Great Australian Resources and SA Metals Sylvania is currently entitled to the following: - a 12.89% relevant interest in SA Metals Limited “SA Metals”); and - a 19.90% relevant interest in Great Australian Resources Limited (“Great Australian Resources”). On 11 May 2009 Sylvania announced its intention to make an off-the-market takeover offer for the entire ordinary issued and to be issued share capital of SA Metals and Great Australian Resources. The proposed acquisition announced today by Ruukki of the entire issued and to be issued share capital of Sylvania is not conditional upon the success of these two offers. Great Australian Resources and SA Metals have mineral exploration rights and projects in South African and intend to develop future PGM mining operations. Description of the Target of the Transaction, Historical Financial Information Information related to Sylvania's income statement and balance sheet is presented below. Sylvania's financial year (“FY”) runs from 1 July to 30 June. All figures below are denominated either in thousand Australian dollars (“AUD”), and thereafter separately in thousand Euros (“EUR”): SYLVANIA RESOURCES LIMITED -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INCOME STATEMENT | Half-year | FY 08 (12 | FY 07 (12 | | | ended (6 | months) | months) | | | months) | | | -------------------------------------------------------------------------------- | AUD'000 | 1.7.2008-31 | 1.7.2007-30. | 1.7.2006-30. | | | .12.2008 | 6.2008 | 6.2007 | -------------------------------------------------------------------------------- | Revenue | 10 131 | 32 790 | 389 | -------------------------------------------------------------------------------- | Other income | 1 843 | 2 261 | 2 156 | -------------------------------------------------------------------------------- | Share of net profits of jointly | 6 | 5 022 | 1 650 | | controlled entity accounted for | | | | | using the equity method | | | | -------------------------------------------------------------------------------- | Raw materials and consumables | -5 072 | -7 632 | -609 | | used | | | | -------------------------------------------------------------------------------- | Consulting fees | -899 | 0 | 0 | -------------------------------------------------------------------------------- | Depreciation | -852 | -1 506 | -406 | -------------------------------------------------------------------------------- | Impairment of available-for-sale | 0 | -2 567 | 0 | | financial assets | | | | -------------------------------------------------------------------------------- | Finance costs | 0 | -13 | -6 | -------------------------------------------------------------------------------- | Foreign exchange gain / loss | 406 | -4 595 | -2 658 | -------------------------------------------------------------------------------- | Project generation costs | 0 | 0 | -5 546 | -------------------------------------------------------------------------------- | Devaluation of impaired | -1 711 | 0 | 0 | | investment | | | | -------------------------------------------------------------------------------- | Share based payment expense | -1 223 | -674 | -795 | -------------------------------------------------------------------------------- | Other expenses | -2 711 | -6 051 | -5 644 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit / loss before income tax | -80 | 17 034 | -11 469 | | expense / benefit | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income tax expense / benefit | -874 | -5 347 | 352 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit / loss after income tax | -954 | 11 687 | -11 117 | | expense (from continuing | | | | | operations) | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net profit / loss for the period | -954 | 11 687 | -11 117 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit attributable to minority | -625 | -1 825 | 0 | | interest | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net profit / loss attributable | -1 579 | 9 862 | -11 117 | | to shareholders of the parent | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | BALANCE SHEET | 31.12.2008 | 30.6.2008 | 30.6.2007 | -------------------------------------------------------------------------------- | AUD'000 | | | | -------------------------------------------------------------------------------- | Assets | | | | -------------------------------------------------------------------------------- | Non-Current Assets | | | | -------------------------------------------------------------------------------- | Available-for-sale financial | 541 | 2 252 | 1 516 | | assets | | | | -------------------------------------------------------------------------------- | Investments accounted for using | 4 348 | 4 404 | 4 692 | | the equity method | | | | -------------------------------------------------------------------------------- | Deferred exploration expenditure | 1 702 | 1 728 | 1 323 | -------------------------------------------------------------------------------- | Property, plant and equipment | 53 694 | 29 578 | 15 864 | -------------------------------------------------------------------------------- | Deferred tax asset | 0 | 0 | 470 | -------------------------------------------------------------------------------- | Total Non-Current Assets | 60 285 | 37 963 | 23 866 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current Assets | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 40 630 | 43 624 | 56 226 | -------------------------------------------------------------------------------- | Trade and other receivables | 10 325 | 15 886 | 839 | -------------------------------------------------------------------------------- | Inventories | 320 | 227 | 0 | -------------------------------------------------------------------------------- | | 51 275 | 59 737 | 57 065 | -------------------------------------------------------------------------------- | Assets classified as held for | 352 | 0 | 0 | | sale | | | | -------------------------------------------------------------------------------- | Total Current Assets | 51 627 | 59 737 | 57 065 | -------------------------------------------------------------------------------- | Total Assets | 111 912 | 97 700 | 80 930 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current Liabilities | | | | -------------------------------------------------------------------------------- | Trade and other payables | 6 110 | 2 654 | 3 295 | -------------------------------------------------------------------------------- | Borrowings | 138 | 78 | 22 | -------------------------------------------------------------------------------- | Current tax | 1 863 | 1 025 | 0 | -------------------------------------------------------------------------------- | Total current liabilities | 8 112 | 3 757 | 3 317 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-Current Liabilities | | | | -------------------------------------------------------------------------------- | Borrowings | 304 | 251 | 91 | -------------------------------------------------------------------------------- | Provisions | 412 | 355 | 0 | -------------------------------------------------------------------------------- | Deferred tax | 3 834 | 3 544 | 0 | -------------------------------------------------------------------------------- | Total non-current liabilities | 4 550 | 4 150 | 91 | -------------------------------------------------------------------------------- | Total Liabilities | 12 662 | 7 907 | 3 409 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net assets | 99 250 | 89 793 | 77 522 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity | | | | -------------------------------------------------------------------------------- | Issued Capital | 117 225 | 117 274 | 105 950 | -------------------------------------------------------------------------------- | Reserves | -1 999 | -12 459 | -1 719 | -------------------------------------------------------------------------------- | Accumulated losses | -18 426 | -16 847 | -26 709 | -------------------------------------------------------------------------------- | Capital and reserves | 96 800 | 87 968 | 77 522 | | attributable to equity holders | | | | | of Sylvania Resources Limited | | | | -------------------------------------------------------------------------------- | Minority interest | 2 450 | 1 825 | 0 | -------------------------------------------------------------------------------- | Total equity | 99 250 | 89 793 | 77 522 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW STATEMENT | Half-year | FY 08 (12 | FY 07 (12 | | | ended (6 | months) | months) | | | months) | | | -------------------------------------------------------------------------------- | AUD'000 | 1.7.2008-31 | 1.7.2007-30. | 1.7.2006-30. | | | .12.2008 | 6.2008 | 6.2007 | -------------------------------------------------------------------------------- | Cash flows from operating activities | | | -------------------------------------------------------------------------------- | Receipts from customers | 17 817 | 26 158 | 1 978 | -------------------------------------------------------------------------------- | Joint venture partnership | 1 002 | 0 | 0 | | distribution received | | | | -------------------------------------------------------------------------------- | Payments to suppliers and | -8 415 | -18 509 | -8 480 | | employees | | | | -------------------------------------------------------------------------------- | Interests received | 1 680 | 2 324 | 1 083 | -------------------------------------------------------------------------------- | Other revenue | 80 | 561 | 2 264 | -------------------------------------------------------------------------------- | Net cash inflow / outflow from | 12 164 | 10 534 | -3 155 | | operating activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from investing activities | | | -------------------------------------------------------------------------------- | Payments for plant and equipment | -20 888 | -12 086 | -16 619 | -------------------------------------------------------------------------------- | Payments for exploration and | -49 | -375 | -875 | | evaluation | | | | -------------------------------------------------------------------------------- | Payments for available-for-sale | 0 | -4 716 | -575 | | financial assets | | | | -------------------------------------------------------------------------------- | Payments of loans to other | -3 | 0 | 0 | | parties | | | | -------------------------------------------------------------------------------- | Payments for mineral rights | 0 | -303 | 0 | -------------------------------------------------------------------------------- | Loans to related parties | 0 | -1 314 | 922 | -------------------------------------------------------------------------------- | Proceeds from sale of plant and | 0 | 0 | 1 233 | | equipment | | | | -------------------------------------------------------------------------------- | Proceeds from sale of | 0 | 345 | 591 | | available-for-sale financial | | | | | assets | | | | -------------------------------------------------------------------------------- | Repayment of loans by other | -392 | 0 | 0 | | parties | | | | -------------------------------------------------------------------------------- | Repayment of loan from related | 0 | 0 | 115 | | party | | | | -------------------------------------------------------------------------------- | Net cash outflow from investing | -21 332 | -18 449 | -15 208 | | activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from financing activities | | | -------------------------------------------------------------------------------- | Proceeds from the issue of | 0 | 1 815 | 75 478 | | shares | | | | -------------------------------------------------------------------------------- | Capital raising costs | -45 | -58 | -4 177 | -------------------------------------------------------------------------------- | Net cash inflow from financing | -45 | 1 757 | 71 301 | | activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net increase / decrease in cash | -9 212 | -6 159 | 52 938 | | held | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash at the beginning of | 43 624 | 56 226 | 5 946 | | reporting period | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Effect of foreign exchange on | 6 219 | -6 444 | -2 658 | | cash | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash at the end of the reporing | 40 630 | 43 624 | 56 226 | | period | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR/AUD | 1,83 | 1,64 | 1,66 | -------------------------------------------------------------------------------- | INCOME STATEMENT | Half-year | FY 08 (12 | FY 07 (12 | | | ended (6 | months) | months) | | | months) | | | -------------------------------------------------------------------------------- | EUR '000 | 1.7.2008-31.1 | 1.7.2007-30.6. | 1.7.2006-30.6. | | | 2.2008 | 2008 | 2007 | -------------------------------------------------------------------------------- | Revenue | 5 540 | 19 986 | 234 | -------------------------------------------------------------------------------- | Other income | 1 008 | 1 378 | 1 298 | -------------------------------------------------------------------------------- | Share of net profits of | 3 | 3 061 | 993 | | jointly controlled entity | | | | | accounted for using the | | | | | equity method | | | | -------------------------------------------------------------------------------- | Raw materials and | -2 774 | -4 652 | -366 | | consumables used | | | | -------------------------------------------------------------------------------- | Consulting fees | -491 | 0 | 0 | -------------------------------------------------------------------------------- | Depreciation | -466 | -918 | -244 | -------------------------------------------------------------------------------- | Impairment of | 0 | -1 565 | 0 | | available-for-sale | | | | | financial assets | | | | -------------------------------------------------------------------------------- | Finance costs | 0 | -8 | -4 | -------------------------------------------------------------------------------- | Foreign exchange gain / | 222 | -2 801 | -1 600 | | loss | | | | -------------------------------------------------------------------------------- | Project generation costs | 0 | 0 | -3 338 | -------------------------------------------------------------------------------- | Devaluation of impaired | -936 | 0 | 0 | | investment | | | | -------------------------------------------------------------------------------- | Share baysed payment | -669 | -411 | -479 | | expense | | | | -------------------------------------------------------------------------------- | Other expenses | -1 482 | -3 688 | -3 397 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit / loss before | -44 | 10 382 | -6 902 | | income tax expense / | | | | | benefit | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income tax expense / | -478 | -3 259 | 212 | | benefit | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit / loss after income | -522 | 7 123 | -6 691 | | tax expense (from | | | | | continuing operations) | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net profit / loss for the | -522 | 7 123 | -6 691 | | period | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit attributable to | -342 | -1 112 | 0 | | minority interest | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net profit / loss | -863 | 6 011 | -6 691 | | attributable to | | | | | shareholders of the parent | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR/AUD | 2,03 | 1,64 | 1,59 | -------------------------------------------------------------------------------- | BALANCE SHEET | 31.12.2008 | 30.6.2008 | 30.6.2007 | -------------------------------------------------------------------------------- | EUR '000 | | | | -------------------------------------------------------------------------------- | Assets | | | | -------------------------------------------------------------------------------- | Non-Current Assets | | | | -------------------------------------------------------------------------------- | Available-for-sale | 267 | 1 376 | 955 | | financial assets | | | | -------------------------------------------------------------------------------- | Investments accounted for | 2 145 | 2 690 | 2 954 | | using the equity method | | | | -------------------------------------------------------------------------------- | Deferred exploration | 839 | 1 056 | 833 | | expenditure | | | | -------------------------------------------------------------------------------- | Property, plant and | 26 484 | 18 068 | 9 987 | | equipment | | | | -------------------------------------------------------------------------------- | Deferred tax asset | 0 | 0 | 296 | -------------------------------------------------------------------------------- | Total Non-Current Assets | 29 735 | 23 189 | 15 024 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current Assets | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 20 040 | 26 647 | 35 396 | -------------------------------------------------------------------------------- | Trade and other | 5 093 | 9 704 | 528 | | receivables | | | | -------------------------------------------------------------------------------- | Inventories | 158 | 139 | 0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets classified as held | 174 | 0 | 0 | | for sale | | | | -------------------------------------------------------------------------------- | Total Current Assets | 25 464 | 36 490 | 35 924 | -------------------------------------------------------------------------------- | Total Assets | 55 200 | 59 679 | 50 948 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current Liabilities | | | | -------------------------------------------------------------------------------- | Trade and other payables | 3 014 | 1 621 | 2 075 | -------------------------------------------------------------------------------- | Borrowings | 68 | 48 | 14 | -------------------------------------------------------------------------------- | Current tax | 919 | 626 | 0 | -------------------------------------------------------------------------------- | Total current liabilities | 4 001 | 2 295 | 2 088 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-Current Liabilities | | | | -------------------------------------------------------------------------------- | Borrowings | 150 | 154 | 57 | -------------------------------------------------------------------------------- | Provisions | 203 | 217 | 0 | -------------------------------------------------------------------------------- | Deferred tax | 1 891 | 2 165 | 0 | -------------------------------------------------------------------------------- | Total non-current | 2 244 | 2 535 | 57 | | liabilities | | | | -------------------------------------------------------------------------------- | Total Liabilities | 6 245 | 4 830 | 2 146 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net assets | 48 954 | 54 849 | 48 802 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity | | | | -------------------------------------------------------------------------------- | Issued Capital | 57 820 | 71 635 | 66 698 | -------------------------------------------------------------------------------- | Reserves | -986 | -7 610 | -1 082 | -------------------------------------------------------------------------------- | Accumulated losses | -9 088 | -10 291 | -16 814 | -------------------------------------------------------------------------------- | Capital and reserves | 47 746 | 53 734 | 48 802 | | attributable to equity | | | | | holders of Sylvania | | | | | Resources Limited | | | | -------------------------------------------------------------------------------- | Minority interest | 1 208 | 1 115 | 0 | -------------------------------------------------------------------------------- | Total equity | 48 954 | 54 849 | 48 802 | -------------------------------------------------------------------------------- | EUR/AUD | 1,83 | 1,64 | 1,66 | -------------------------------------------------------------------------------- | CASH FLOW STATEMENT | Half-year | FY 08 (12 | FY 07 (12 | | | ended (6 | months) | months) | | | months) | | | -------------------------------------------------------------------------------- | EUR '000 | 1.7.2008-31.1 | 1.7.2007-30.6. | 1.7.2006-30.6. | | | 2.2008 | 2008 | 2007 | -------------------------------------------------------------------------------- | Cash flows from operating | | | | | activities | | | | -------------------------------------------------------------------------------- | Receipts from customers | 9 743 | 15 944 | 1 191 | -------------------------------------------------------------------------------- | Joint venture partnership | 548 | 0 | 0 | | distribution received | | | | -------------------------------------------------------------------------------- | Payments to suppliers and | -4 602 | -11 281 | -5 104 | | employees | | | | -------------------------------------------------------------------------------- | Interests received | 919 | 1 416 | 652 | -------------------------------------------------------------------------------- | Other revenue | 44 | 342 | 1 362 | -------------------------------------------------------------------------------- | Net cash inflow / outflow | 6 652 | 6 420 | -1 899 | | from operating activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from investing | | | | | activities | | | | -------------------------------------------------------------------------------- | Payments for plant and | -11 422 | -7 366 | -10 002 | | equipment | | | | -------------------------------------------------------------------------------- | Payments for exploration | -27 | -229 | -527 | | and evaluation | | | | -------------------------------------------------------------------------------- | Payments for | 0 | -2 874 | -346 | | available-for-sale | | | | | financial assets | | | | -------------------------------------------------------------------------------- | Payments of loans to other | -2 | 0 | 0 | | parties | | | | -------------------------------------------------------------------------------- | Payments for mineral | 0 | -185 | 0 | | rights | | | | -------------------------------------------------------------------------------- | Loans to related parties | 0 | -801 | 555 | -------------------------------------------------------------------------------- | Proceeds from sale of | 0 | 0 | 742 | | plant and equipment | | | | -------------------------------------------------------------------------------- | Proceeds from sale of | 0 | 210 | 356 | | available-for-sale | | | | | financial assets | | | | -------------------------------------------------------------------------------- | Repayment of loans by | -214 | 0 | 0 | | other parties | | | | -------------------------------------------------------------------------------- | Repayment of loan from | 0 | 0 | 69 | | related party | | | | -------------------------------------------------------------------------------- | Net cash outflow from | -11 665 | -11 245 | -9 153 | | investing activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from financing | | | | | activities | | | | -------------------------------------------------------------------------------- | Proceeds from the issue of | 0 | 1 106 | 45 426 | | shares | | | | -------------------------------------------------------------------------------- | Capital raising costs | -24 | -35 | -2 514 | -------------------------------------------------------------------------------- | Net cash inflow from | -24 | 1 071 | 42 912 | | financing activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net increase / decrease in | -5 038 | -3 754 | 31 860 | | cash held | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash at the beginning of | 23 855 | 34 270 | 3 578 | | reporting period | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Effect of foreign exchange | 3 401 | -3 927 | -1 600 | | on cash | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash at the end of the | 22 218 | 26 589 | 33 839 | | reporting period | | | | -------------------------------------------------------------------------------- Risks and Uncertainties There is a risk that the contemplated transaction to acquire the entire share capital of Sylvania may not come into effect, as the scheme of arrangement may not be approved by the court or by the shareholders, and Ruukki cannot rule out the possibility that a competing bid might be made for Sylvania. Notwithstanding Ruukki's belief that the current management of Sylvania is committed to remain following completion of the acquisition, there remains a risk that key personnel of Sylvania may leave. This would have an adverse impact on the Enlarged Group and therefore Ruukki intends to mitigate this risk through the use of option-based incentives for key employees and external contractors. Ruukki believes that the current management team of Sylvania is committed to remain in place after the acquisition of Sylvania by Ruukki is completed. Ruukki has limited prior business know how, experience and background information on conducting PGM-related business and, as a result of the acquisition of Sylvania, Ruukki will be exposed to the risks of this business. There is a risk that the integration of Sylvania into Ruukki, or related synergy benefits, may be delayed, or their impact may be lower than expected, e.g.as a result of difficulties in adapting the business activities or management of Sylvania to satisfy the requirements of a listed company, including for example satisfying the reporting and administrative requirements. Sylvania is affected by fluctuations in supply and demand in a number of global markets. In particular, changes in (i) global autocatalyst demand characteristics, (ii) markets for new fuel sources, and (iii) markets for jewellery may have a significant impact on the future profitability of Sylvania. Fluctuations in exchange rates will affect the equivalent purchase consideration price that will be paid for Sylvania when considered in EUR, and could also significantly affect Sylvania's underlying profitability. The due diligence that was undertaken prior to the acquisition of Sylvania was completed with limited time and under certain other limitations. Therefore there is a risk that certain material issues may not have been identified or, if identified, may not have been fully appreciated and/or investigated. There is a risk that South African exchange control legislation may limit Ruukki's ability to repatriate profits out of South Africa. In order to develop Sylvania, future additional capital outlays may be needed for increased feed, resources and processing facilities, and the success, timing and funding of these potential capital expenditures would be uncertain. Ruukki has given due consideration to the various transactional risks pertaining to the acquisition and has attempted to mitigate certain of the risks involved, for example Sylvania and Ruukki have entered into a merger implementation agreement. The acquisition of Sylvania is expected not only to diversify Ruukki's minerals business operations, but also to create a more flexible platform to respond more effectively to future changes in market conditions. 5. RUUKKI STRUCTURE AFTER THE TRANSACTION Ruukki currently has two reporting segments: wood processing and minerals. Sylvania will be included in the minerals business segment. If the acquisition of Sylvania is concluded Ruukki intends for that segment to be split into two: - one group will focus on ferrochrome and ferrous metal alloys, and - one group will focus on PGMs. After the execution of the transaction the management group of the Enlarged Group will be combined from the management of Ruukki and Sylvania with the Chief Executive Officer of Ruukki, Mr. Alwyn Smit continuing in this role, and the Chief Executive Officer of Sylvania, Mr. Terry McConnachie continuing in a full-time consulting capacity and as a member of the board of directors of Ruukki. Ruukki aims to become a vertically integrated minerals company with emphasis on ferrochrome, PGMs and other alloys. Accordingly, on 7 May 2009, Ruukki announced that its Board had resolved to initiate the process to divide its wood processing and minerals businesses, ultimately resulting in two separately listed companies during 2010. The separation of the wood processing and minerals businesses will commence after completion of the Scheme. ESPOO, ON 30 JUNE 2009 RUUKKI GROUP PLC BOARD OF DIRECTORS Ruukki specialises in industrial refining of certain natural resources. Ruukki has two focus areas: Wood Processing and Minerals. Ruukki's shares are listed on Nasdaq OMX Helsinki and traded in the mid cap segment, in the industrials sector. For additional information, please contact: Alwyn Smit Chief Executive Officer Ruukki Group Plc Telephone +358 50 442 1663 / +41 7960 19094 www.ruukkigroup.fi For additional information of Sylvania Resources Limited: www.sylvaniaresources.com NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, AS A WHOLE OR PARTLY IN ANY COUNTRY OR AREA, WHERE IT WOULD LEAD INTO A BREACH OF APPLICABLE LAW OR REGULATION. This stock exchange release is based on a translation into English of a document originally written in Finnish. In case of any discrepancies, inconsistencies or inaccuracies, the Finnish version shall prevail.
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