2011-08-18 08:00:00 CEST
2011-08-18 08:00:11 CEST
REGULATED INFORMATION
Ruukki Group Oyj - Interim report (Q1 and Q3)
RUUKKI GROUP PLC'S Q2 INTERIM REPORT FOR 1 APRIL-30 JUNE 2011
07:00 London, 09:00 Helsinki, 18 August 2011 - Ruukki Group Plc (“Ruukki” or
“the Company”) (LSE: RKKI, OMX: RUG1V) Interim Report
RUUKKI GROUP PLC'S Q2 INTERIM REPORT FOR 1 APRIL-30 JUNE 2011
HIGHLIGHTS
- Production increased by 115% to 92,849 (Q2/2010: 43,150) tonnes
- Revenue from continuing operations increased 13% to EUR 44.5 (Q2/2010: 39.4)
million
- EBITDA from continuing operations was EUR 1.7 (Q2/2010: 0.6) million and the
EBITDA margin was 3.8% (Q2/2010: 1.6%)
- EBIT from continuing operations was EUR -5.4 (Q2/2010: -5.8) million
- Profit for the period from continuing operations totalled EUR -3.9 (Q2/2010:
-2.6) million
- Ruukki completed its strategic transformation into a pure mining and minerals
business with the sale of its pallet and sawmill businesses
- EUR 3.8 million net gains on disposals of wood processing businesses were
recognised
- Cash flow from operations was EUR -5.8 (Q2/2010: 7.9) million and liquid
funds at 30 June were EUR 81.8 (30 June 2010: 36.4) (31 March 2011: 89.2)
million
KEY FIGURES
EUR million Q2/11 Q2/10 Change H1/11 H1/10 Change FY/10
Revenue 44.5 39.4 13.0% 79.3 69.5 14.1% 123.3
EBITDA 1.7 0.6 173.1% 5.1 0.1 6,140.0% -8.4
EBITDA margin 3.8% 1.6% 6.5% 0.1% -6.8%
EBIT -5.4 -5.8 -9.0 -12.7 -75.6
EBIT margin -12.1% -14.8% -11.3% -18.3% -61.3%
Earnings before taxes -5.9 -6.2 -9.8 -12.9 -76.3
Earnings margin -13.2% -15.7% -12.3% -18.5% -61.8%
Profit for the period, -3.9 -2.6 -7.0 -7.8 -65.3
continuing
operations
Profit for the period, 4.1 2.9 40.8% 47.1 3.8 1,149.3% 14.2
discontinued
operations
Profit for the period 0.3 0.4 -29.2% 40.1 -4.1 -51.1
Earnings per share, 0.00 0.00 0.17 -0.02 -0.22
undiluted
Return on equity, - - 32.7% -2.9% -19.6%
% p.a.
Return on capital - - 23.4% -1.9% -15.2%
employed, % p.a.
Equity ratio, % - - 51.1% 52.8% 44.3%
Gearing - - 6.2% 23.2% 46.6%
Personnel at the end - - 781 689 722
of the period
Continuing operations include the Speciality Alloys business segment, the
FerroAlloys business segment and other operations that consist of Group
headquarters and other Group companies, which do not have significant business
operations. Discontinued operations include the house building, pallet and
sawmill businesses.
Commenting on the second quarter results, Thomas Hoyer, CEO, said:
“There was deeply regrettable incident at the Stellite mine where Mr
Kgantitsoe, an employee of drilling contractor Geoserve, was fatally injured.
Our condolences go out to his family. Ruukki strives to achieve “Zero Harm” at
all of our operations; a full root cause analysis has been carried out and we
are implementing all the lessons learned to prevent re-occurrence of a similar
incident. During the first half of the year safety performance at TMS and
Mogale has improved and we are introducing standard procedures across the
Group.
Market conditions during the second quarter continued to be challenging,
exacerbated by adverse currency moves resulting from our exposure to the South
African Rand and the Turkish Lira. However I am pleased to report a second
consecutive quarter of improved revenue and operating profit compared to 2010,
driven by increased production levels and our ongoing focus on cost
efficiencies across the Group which has continued to deliver results. The sale
of the pallet and sawmill businesses now completes our transformation into a
focused chrome producer.
As we enter the second half of the year our strong balance sheet puts us in a
good position to be able to weather the current market uncertainty as we seek
to grow our resource base further.”
2011 OUTLOOK
The Board has updated the Company's outlook regarding the global demand for the
ferroalloys products since the first quarter interim results were published on
11 May 2011.
As previously stated and as result of the Company's decision to focus solely on
the mining, smelting and minerals processing business, Ruukki's financial
performance is dependent on the general market conditions of this sector,
particularly in the chrome industry.
There have been significant price fluctuations in the ferroalloys market during
the first half of 2011. Global financial markets remain turbulent, and economic
conditions uncertain. Ruukki is no longer expecting higher prices for its
products in the second half of 2011, and believes that prices will continue to
be under pressure. However, Ruukki does anticipate its production volumes to be
higher for 2011 compared to 2010 and this is expected to result in increased
revenue and improved financial performance. Previously in the first quarter
interim report on 11 May 2011, Ruukki stated that it expects global demand for
the Company's ferroalloys products to be higher in 2011 compared to that of
2010, which was expected to result in higher prices and improved financial
performance.
Fluctuations of exchange rates between the Euro, the South African Rand, the
Turkish Lira and the US Dollar can significantly impact the Company's financial
performance.
Investor Conference Call
Management will host an investor conference call in English on 18 August 2011
at 12.00 Finnish time, 10.00 UK time. Please dial-in at least 10 minutes
beforehand, quoting the reference: 901488.
Finnish number +358 (0)9 2313 9201
UK number +44 (0)20 7162 0077
RUUKKI GROUP PLC
Thomas Hoyer
CEO
For additional information, please contact:
Ruukki Group Plc
Thomas Hoyer, CEO, +358 (0)45 6700 491, thomas.hoyer@ruukkigroup.fi
Kalle Lehtonen, General Manager: Finance, +358 (0)400 539 968,
kalle.lehtonen@ruukkigroup.fi
Markus Kivimäki, General Manager: Corporate Affairs, +358 (0)50 3495 687,
markus.kivimaki@ruukkigroup.fi
Investec Bank Plc
Stephen Cooper, +44 (0)20 7597 5104, stephen.cooper@investec.co.uk
RBC Capital Markets
Martin Eales, +44 (0)20 7653 4000, martin.eales@rbccm.com
Peter Barrett-Lennard, +44 (0)20 7653 4000, peter.barrett-lennard@rbccm.com
Financial reports and other investor information are available on the Company's
website.
Ruukki Group is a chrome mining and minerals producer focused on delivering
sustainable growth with a speciality alloys business in southern Europe and a
ferro alloys business in southern Africa. The Company is listed on NASDAQ OMX
Helsinki (RUG1V) and the Main Market of the London Stock Exchange (RKKI).
www.ruukkigroup.fi
Distribution:
NASDAQ OMX Helsinki
London Stock Exchange
main media
www.ruukkigroup.fi
RUUKKI GROUP PLC: Q2 INTERIM REPORT, 1 APRIL-30 JUNE 2011
This Interim Report is prepared in accordance with the IAS 34 standard and is
unaudited. All the figures in this interim report related to the house
building, pallet and sawmill businesses are categorised as discontinued
operations. All the corresponding comparable figures of 2010 are presented in
brackets, unless otherwise explicitly stated.
RUUKKI GROUP'S FINANCIAL PERFORMANCE
REVENUE AND PROFITABILITY
EUR million Q2/11 Q2/10 Change % H1/11 H1/10 Change % FY/10
Revenue 44.5 39.4 13.0% 79.3 69.5 14.1% 123.3
EBITDA 1.7 0.6 173.1% 5.1 0.1 6,140.0% -8.4
EBITDA margin 3.8% 1.6% 6.5% 0.1% -6.8%
EBIT -5.4 -5.8 -9.0 -12.7 -75.6
EBIT margin -12.1% -14.8% -11.3% -18.3% -61.3%
Profit for the 4.1 2.9 40.8% 47.1 3.8 1,149.3% 14.2
period,
discontinued
operations
Profit for the 0.3 0.4 -29.2% 40.1 -4.1 -51.1
period
Discontinued operations include the house building, pallet and sawmill
businesses.
Revenue for the second quarter increased 13% to EUR 44.5 (39.4) million. This
rise in revenue was mainly due to the increased production volumes in both the
Speciality Alloys and FerroAlloys segments.
EBITDA for the quarter was EUR 1.7 (0.6) million and profit for the period was
EUR 0.3 (0.4) million, which includes EUR 3.8 million net gains on disposal of
the wood segment businesses.
Earnings per share was EUR 0.00 (0.00).
BALANCE SHEET, CASH FLOW AND FINANCING
The Group's liquidity, as at 30 June 2011, when taking into account cash and
cash equivalents as well as short-term deposits, remained strong at EUR 81.8
(36.4) (31 March 2011: 89.2) million. During the period under review the
Company received EUR 12.2 million cash from the remaining disposals of its wood
businesses. Operating cash flow was EUR -5.8 (7.9) million. Ruukki's gearing at
the end of the second quarter decreased to 6.2% (23.2%) (31 March 2011: 11.3%).
Net interest-bearing debt was EUR 15.9 (65.2) (31 March 2011: 10.2) million.
As at 30 June, the Group had an unused credit facility of USD 55 million in
place. The facility is available to be drawn down until 31 December 2011.
Total assets on 30 June 2011 stood at EUR 499.0 (553.8) (31 March 2011: 556.3)
million. Equity ratio was 51.1% (52.8%) (31 March 2011: 48.9%).
INVESTMENTS, ACQUISITIONS AND DIVESTMENTS
Capital expenditure during the second quarter totalled EUR 1.4 (7.3) million.
The expenditure related primarily to exploration drilling at Ruukki's mines and
yearly maintenance of its production plants.
On 8 April 2011 Ruukki announced the completion of the sale of its Finnish
pallet business, Oplax Oy, to Pallet Invest Oy, a company founded by a group of
Finnish and Russian investors. The final purchase consideration of
approximately EUR 8.4 million was paid in cash with a vendor note of EUR 1.5
million.
On 24 May 2011 Ruukki signed a definitive agreement to sell its 51 percent
holding in its sawmill business Junnikkala Oy to Junnikkala Oy's minority
shareholders. The total consideration of EUR 6 million will be paid in cash in
two parts: EUR 4.5 million on completion and EUR 1.5 million on 31 August 2011.
The letter of intent to sell the Finnish sawmill business was announced on 31
January 2011. On 16 June 2011 Ruukki's Extraordinary General Meeting approved
the sale of Junnikkala Oy and the transaction was completed on 23 June 2011.
PERSONNEL
At the end of the second quarter 2011, Ruukki's employees in continuing
operations increased to 781 (689). The number of employees increased in both
the Speciality Alloys and FerroAlloys businesses. The average number of
employees during the second quarter of 2011 was 777 (678).
Number of employees by segment:
30.6.2011 30.6.2010 Change % 31.12.2010
Speciality Alloys 418 396 5.6% 396
FerroAlloys 353 277 27.4% 316
Other operations 10 16 -37.5% 10
Continuing 781 689 13.4% 722
operations total
SAFETY, HEALTH AND SUSTAINABLE DEVELOPMENT
There was deeply regrettable incident at the Stellite mine where Mr Kgantitsoe,
an employee of drilling contractor Geoserve, was fatally injured. Ruukki
strives to achieve “Zero Harm” at all of its operations; a full root cause
analysis has been carried out and Ruukki is implementing all the lessons
learned to prevent re-occurrence of a similar incident. During the first half
of the year safety performance at TMS and Mogale has improved and standard
procedures are being introduced across the Group.
Ruukki strives to achieve “Zero Harm” to its employees, contractors,
neighbouring communities and the environment. The Group is working constantly
to improve its processes and practices to prevent injuries and accidents.
Alongside the appointment of a Chief Operation Officer, Theuns de Bruyn, who
will have direct responsibility for the Group's overall health, safety,
environment and sustainability policies and procedures, the Group has also
started to formalise a co-ordinated lost time injury metrics system across all
of its operations, in accordance with internationally recognised standards.
Ruukki aims to conduct its business in a sustainable way and to preserve the
environment by minimising the environmental impact of its operations. Ruukki
has a number of programmes in place to monitor and address its impact on the
environment. The environmental studies being conducted at its South African
processing facilities continue and are expected to be completed by the end of
2011.
SEGMENT PERFORMANCE
SPECIALITY ALLOYS BUSINESS
The Speciality Alloys business consists of TMS, the mining and beneficiation
operation in Turkey, and EWW, the chromite concentrate processing plant in
Germany. TMS supplies EWW with high quality chromite concentrate which produces
speciality products including Specialised Low Carbon and Ultralow Carbon
Ferrochrome. Excess chrome ore is exported from TMS mainly to China. As at 30
June 2011, the business had 418 (396) employees.
Production:
Tonnes Q2/11 Q2/10 Change % H1/11 H1/10 Change % FY/10
Mining* 20,631 13,757 50.0% 40,630 20,305 100.1% 54,917
Processing 7,209 6,802 6.0% 14,090 8,744 61.1% 17,994
* Including both chromite concentrate and lumpy ore production
Production totalled 27,840 (20,558) tonnes for the second quarter of 2011. The
increase in production was mainly due to the new concentration plant in Turkey
which is now operating at full capacity and an increased production of lumpy
material.
EUR million Q2/11 Q2/10 Change % H1/11 H1/10 Change % FY/10
Revenue 21.1 21.9 -4.0% 41.3 34.1 21.1% 69.0
EBITDA 3.5 3.9 -9.6% 8.6 3.7 132.7% 7.8
EBITDA margin 16.8% 17.8% 20.8% 10.8% 11.3%
EBIT -1.0 -0.4 -0.3 -4.8 -10.0
EBIT margin -4.7% -1.7% -0.8% -14.0% -14.5%
Revenue for the quarter was EUR 21.1 (21.9) million, representing a decrease of
4%. EBITDA for the quarter was EUR 3.5 (3.9) million. The decrease in both
revenue and EBITDA was due to a decrease in the chrome prices compared to the
equivalent period in 2010, for example the prices of Low Carbon Ferrochrome
were almost 10% less compared to the second quarter 2010 and even the increase
in sales volumes was not enough to compensate for this.
FERROALLOYS BUSINESS
The FerroAlloys business consists of the Stellite mine, the alloy processing
plant Mogale and the Mecklenburg mine development project in South Africa, as
well as the Zimbabwean mine development project Waylox. The business produces
Charge Chrome Ferrochrome, Silico Manganese and Stainless Steel Alloy
(chromium-iron-nickel alloy). Part of the chrome ore is sold directly to global
markets, mainly to China. As at 30 June 2011, the business had 353 (277)
employees.
Production:
Tonnes Q2/11 Q2/10 Change % H1/11 H1/10 Change % FY/10
Mining* 35,669 N/A 67,657 N/A N/A
Processing 29,340 22,592 29.9% 58,282 43,761 33.2% 65,040
* Including both chromite concentrate and lumpy ore production
Production increased significantly to 65,009 (22,592) tonnes, mainly due to the
acquisition of the Stellite mine in December 2010.
EUR million Q2/11 Q2/10 Change % H1/11 H1/10 Change % FY/10
Revenue 23.5 17.3 35.5% 38.1 35.2 8.3% 54.0
EBITDA 0.1 3.4 -98.1% 0.1 6.1 -98.2% -1.0
EBITDA margin 0.3% 19.5% 0.3% 17.4% -1.8%
EBIT -2.5 1.2 -5.0 1.8 -50.2
EBIT margin -10.5% 7.2% -13.2% 5.2% -93.0%
Revenue for the quarter improved significantly to EUR 23.5 (17.3) million,
representing an increase of 35.5%. EBITDA for the quarter was EUR 0.1 (3.4)
million. The increase in revenue was driven by an increase in sales volumes.
The decrease in EBITDA was due to a change in the product mix and weaker
prices, especially in Silico Manganese, where prices were 20% less than the
equivalent period in 2010. The EBITDA also includes EUR 1.8 (0.1) million of
costs related to the feasibility studies for the two new DC furnaces and a
power plant.
DISCONTINUED OPERATIONS
During the period under review Ruukki completed the divestments of its
remaining wood processing businesses. On the Group's income statement these
businesses have been presented as discontinued operations. Profit for the
period from discontinued operations was EUR 4.1 (2.9) million, including a EUR
3.8 million net gain on disposals of the wood processing businesses.
UNALLOCATED ITEMS
For the second quarter of 2011, the EBITDA from unallocated items was EUR -2.1
(-6.7) million including a EUR 0.2 (0.5) million non-cash expense for the
share-based payments.
LITIGATION
Rautaruukki Oyj, another listed Finnish company, initiated legal proceedings
against Ruukki Group Plc in 2009 concerning claims to the Ruukki name, which
Ruukki is vigorously defending. These legal proceedings are still ongoing and
hence its outcome or timing is not yet known. Rautaruukki has claimed for: (i)
fixed EUR 5.0 million for damages; (ii) EUR 12.1 million for royalties that
Rautaruukki has calculated based on Ruukki Group's 2004 - 2008 actual revenue;
and (iii) reasonable legal fees.
One of the aforementioned proceedings related to Ruukki Group's subsidiary
Ruukki Wood Oy. These proceedings were settled in May 2011 when Rautaruukki
withdrew their claims. Due to this the Helsinki District Court ordered
Rautaruukki to compensate Ruukki Group's costs and expenses in the amount of
EUR 0.1 million.
Ruukki sees this as a significant positive sign also in relation to the other
ongoing proceedings with Rautaruukki and remains confident that Ruukki will
prevail in these proceedings.
PLEDGES AND CONTINGENT LIABILITIES, CHANGES DURING THE REVIEW PERIOD
Pledges given by the Group decreased during the period under review mainly due
to divestments of the wood processing companies Oplax and Junnikkala. However,
Ruukki Group Plc has given guarantees in connection with certain borrowings of
Junnikkala shortly after the Group acquired its interest in Junnikkala in 2008.
These guarantees will continue to be in force until 30 June 2018. As part of
the terms of the disposal it has been agreed that Junnikkala will pay a fee of
two per cent per annum to Ruukki Group Plc in consideration for the
continuation of these guarantees. At 30 June 2011 the indebtedness subject to
these guarantees was EUR 1.6 million in aggregate.
On 30 June 2011, the Group's subsidiaries had given business mortgages as
collateral for loans and other liabilities totalling EUR 0.0 (31 December 2010:
14.0) million. Of the parent company's EUR 4.2 million business mortgages, EUR
0.0 (1.7) million had been pledged as security with external financial
institutions. Equipment and real estate mortgages amounted to EUR 0.3 (21.5)
million.
MANAGEMENT CHANGES
On 4 May 2011 the Board of Directors appointed Thomas Hoyer as Chief Executive
Officer. The previous Acting Managing Director, Dr Danko Koncar, was appointed
Enterprise Director and is responsible for Ruukki's strategic direction and new
business development. Theuns de Bruyn was appointed as Chief Operating Officer,
effective from 1 July 2011.
SHAREHOLDERS' MEETINGS
ANNUAL GENERAL MEETING
Ruukki's Annual General Meeting (“AGM”) was held on 11 May 2011.
The AGM adopted the financial statements, the group financial statements and
discharged the Board of Directors and the CEO from liability for the financial
period 2010. The AGM resolved that no dividend would be paid for 2010.
The AGM resolved that the Company would make a capital repayment from the paid
unrestricted equity reserve to shareholders in such a way that assets to be
distributed totalled EUR 0.04 per share. The capital repayment was paid to the
shareholders who, on the record date 16 May 2011, were registered in the
shareholders' register of the Company held by Euroclear Finland Ltd. The date
of payment was 23 May 2011.
As proposed by the Nomination Committee, the AGM resolved that there are eight
(8) members on the Board of Directors. Philip Baum, Paul Everard, Markku
Kankaala, Danko Koncar, Jelena Manojlovic, Chris Pointon and Barry Rourke were
re-elected to the Board. The Board of Directors appointed Jelena Manojlovic as
Chairman and Chris Pointon as Deputy Chairman and elected the chairmen and
members of the Audit Committee, Nomination Committee, Remuneration Committee
and the Safety, Health and Sustainable Development Committee.
On 4 May 2011 Thomas Hoyer was appointed Chief Executive Officer and joined the
Board on 11 May 2011 as an Executive Director.
The AGM approved the Board of Directors and the board committees' remuneration
as proposed by the Nomination Committee. Following the recommendation by the
Audit committee the Authorised Public Accountant Firm Ernst & Young Oy was
re-elected as the Auditor of the Company.
The AGM resolved that as a part of the Company's remuneration and incentive
scheme, the Company would give a maximum 6,900,000 option rights to the key
personnel of the Company and its subsidiaries, including Rekylator Oy, a wholly
owned subsidiary of the Company.
As proposed by the Nomination Committee the AGM authorised the Board of
Directors to decide to issue a maximum of 460,000 new shares or shares from the
Company's treasury shares, by a directed free issue to the members of the Board
of Directors.
The AGM authorised the Board of Directors to decide on the share issue and on
the issuing of stock options and other special rights that entitle to shares.
By virtue of the authorisation shares could be issued in one or more tranches
in total a maximum of 24,820,700 new shares or shares owned by the Company. The
Board of Directors may use the authorisation among other things in financing
and enabling corporate and business acquisitions or other arrangements and
investments of business activity or in the incentive and commitment programmes
of the personnel.
The AGM authorised the Board of Directors to decide upon acquiring a maximum of
15,000,000 of the Company's own shares.
All the AGM resolutions and the organisation of the Board of Directors were
published in stock exchange releases on 11 May 2011 and are available on
Ruukki's website, www.ruukkigroup.fi.
EXTRAORDINARY GENERAL MEETING
Ruukki's Extraordinary General Meeting (“EGM”) was held on 16 June 2011.
The EGM approved the arrangements as detailed in the circular dated 24 May 2011
between the Group, Junnikkala and the Junnikkala Minority Shareholders relating
to the proposed disposal of the Group's interest in Junnikkala Oy and
authorised the Directors of the Company to take all such steps as may be
necessary or acceptable in relation thereto and to carry the same into effect.
SHARE CAPITAL
Ruukki Group Plc's shares are listed on NASDAQ OMX Helsinki (RUG1V) and on the
Main Market of the London Stock Exchange (RKKI).
On 30 June 2011, the registered number of Ruukki Group Plc shares was
248,207,000 (247,982,000) and share capital was EUR 23,642,049.60
(23,642,049.60).
On 30 June 2011 the Company had altogether 7,790,895 (8,740,895) own shares,
which was equivalent to about 3.14% (3.52%) of all registered shares. The total
amount of shares outstanding, excluding the treasury shares held by the Company
on 30 June 2011 was 240,416,105 (239,241,105).
Based on the resolution at the AGM on 11 May 2011, the Board has currently been
authorised for a buy-back of maximum 15,000,000 own shares. This authorisation
is valid until 11 November 2012.
NOTIFICATION OF TRANSACTIONS OF DIRECTORS, PERSONS DISCHARGING MANAGERIAL
RESPONSIBILITY OR CONNECTED PERSONS
On 20 May 2011 Ruukki announced that, following a notification received on 19
May 2011, Markku Kankaala, Non-executive Director, has sold 200,000 ordinary
shares ("shares") in the Company at an average price of EUR 1.60 per share on
18 May 2011. The trade was made manually on the NASDAQ OMX Helsinki Exchange.
Accordingly Markku Kankaala now holds voting rights attached to 7,977,533
shares, representing 3.32% of the issued share capital of the Company excluding
treasury shares.
SHAREHOLDER NOTIFICATIONS
Ruukki Group Plc has received the following shareholder notification during or
after the review period 1 April-30 June 2011. This notification can be found in
full on the Company website.
On 1 April 2011 Finaline Business Limited signed a share transfer agreement
with Hanwa Co. Ltd concerning a sale and transfer of 27,000,000 shares in
Ruukki Group Plc. After the completion, the transaction will result in Finaline
Business Limited increasing above 10 per cent and becoming a 10.88 per cent
holder of the shares and voting rights in Ruukki. Pursuant to the share
transfer agreement, the transaction shall be completed on 28 December 2011 at
the latest but all or part of the transaction shares may be transferred prior
to that date.
MOST SIGNIFICANT RISKS AND UNCERTAINTIES, CHANGES DURING AND AFTER THE PERIOD
UNDER REVIEW
The changes in the key risks and uncertainties are set out below. Further
details of the risks and uncertainties have been published in the Group's 2010
Annual Report.
Following the Company's transformation into a focused mining and minerals
processing company, the Group has become more exposed to foreign exchange rate
risks, commodity price risks and the risks of fluctuating demand in the mining
and minerals sector.
The changes in exchange rates, if adverse, could have a substantial negative
impact on the Group's profitability, in particular changes in US Dollar/South
African Rand. Changes in the South African Rand exchange rate could also have
an effect on the Euro value of the deferred purchase consideration of Mogale
Alloys.
Due to the increased volatility in the global financial markets, there is
uncertainty as to how commodity prices will respond during the second half of
2011 and this could impact the Company's revenue and financial performance.
The Group is considering a number of options to grow the Company's resources,
mining and processing operations, including organic growth as well as mergers
and acquisitions. These growth options could expose the Group to funding,
implementation and integration related risks.
2011 OUTLOOK
The Board has updated the Company's outlook regarding the global demand for the
ferroalloys products since the first quarter interim results were published on
11 May 2011.
As previously stated and as result of the Company's decision to focus solely on
the mining, smelting and minerals processing business, Ruukki's financial
performance is dependent on the general market conditions of this sector,
particularly in the chrome industry.
There have been significant price fluctuations in the ferroalloys market during
the first half of 2011. Global financial markets remain turbulent, and economic
conditions uncertain. Ruukki is no longer expecting higher prices for its
products in the second half of 2011, and believes that prices will continue to
be under pressure. However, Ruukki does anticipate its production volumes to be
higher for 2011 compared to 2010 and this is expected to result in increased
revenue and improved financial performance. Previously in the first quarter
interim report on 11 May 2011, Ruukki stated that it expects global demand for
the Company's ferroalloys products to be higher in 2011 compared to that of
2010, which was expected to result in higher prices and improved financial
performance.
Fluctuations of exchange rates between the Euro, the South African Rand, the
Turkish Lira and the US Dollar can significantly impact the Company's financial
performance.
EVENTS AFTER THE REVIEW PERIOD
Ruukki announced on 5 July 2011 that a total of 225,000 ordinary shares of no
par value (“Ordinary Shares”) have been subscribed to based on B series stock
options under the Option Programme I/2005. According to the terms of the Option
Programme, the subscription period ended on 30 June 2011 and the subscription
price was EUR 0.38 per share. The subscription price has been entered in whole
in the Company's paid-up unrestricted equity reserve.
The Ordinary Shares have been registered on the Trade Register on 12 July 2011
whereafter they have been admitted to public trading on the NASDAQ OMX Helsinki
and the London Stock Exchange.
After the registration, the Company has in total 248,432,000 shares with voting
rights and the share capital is EUR 23,642,049.60.
Helsinki, 17 August 2011
RUUKKI GROUP PLC
BOARD OF DIRECTORS
FINANCIAL REPORTING IN 2011
Closed period Reporting date
Q3 Interim Report 2011 11.10.-10.11.2011 10 November 2011
FINANCIAL TABLES
FINANCIAL DEVELOPMENT AND ASSETS AND LIABILITIES BY SEGMENT
1.1.- 30.6.2011 Speciality Ferro Unallocated Eliminations Continuing
6 months Alloys Alloys items operations
EUR '000 total
Revenue 41,250 38,086 348 -348 79,337
EBITDA 8,586 112 -3,778 215 5,136
EBIT -328 -5,038 -3,805 215 -8,956
Segment's assets 199,353 234,038 77,220 -18,865 491,746
Segment's 76,280 132,875 54,078 -19,351 243,882
liabilities
1.1.- 30.6.2010 Speciality Ferro Unallocated Eliminations Continuing
6 months Alloys Alloys items operations
EUR '000 total
Revenue 34,066 35,155 402 -103 69,521
EBITDA 3,691 6,102 -9,842 132 82
EBIT -4,780 1,821 -9,876 132 -12,703
Segment's assets 178,447 244,282 15,935 -9,383 429,281
Segment's 69,999 102,812 44,517 -9,362 207,966
liabilities
1.1.-31.12.2010 Speciality Ferro Unallocated Eliminations Continuing
12 months Alloys Alloys items operations
EUR '000 total
Revenue 69,017 54,006 967 -643 123,347
EBITDA 7,803 -972 -15,369 99 -8,439
EBIT -10,009 -50,216 -15,433 99 -75,559
Segment's assets 182,347 248,011 15,919 -10,616 435,661
Segment's 77,265 136,702 51,918 -6,840 259,045
liabilities
CONSOLIDATED INCOME STATEMENT, SUMMARY
EUR '000 H1/11 H1/10 Q2/11 Q2/10 FY/10
Continuing operations
Revenue 79,337 69,521 44,538 39,424 123,347
Other operating income 635 182 295 150 1,248
Operating expenses -75,042 -69,647 -43,140 -38,987 -133,424
Depreciation and amortisation -14,092 -12,785 -7,069 -6,441 -27,023
Impairment 0 0 0 0 -40,097
Items related to associates 206 27 -15 28 390
(core)
Operating profit -8,956 -12,703 -5,390 -5,826 -75,559
Financial income and expense -1,015 -201 -494 -338 -595
Items related to associates 196 31 0 -11 -99
(non-core)
Profit before tax -9,775 -12,873 -5,884 -6,176 -76,253
Income tax 2,795 5,040 2,015 3,615 10,942
Profit for the period from -6,980 -7,834 -3,869 -2,560 -65,311
continuing operations
Discontinued operations
Profit for the period from 47,124 3,772 4,137 2,938 14,186
discontinued operations
Profit for the period 40,144 -4,062 268 378 -51,125
Profit attributable to
Owners of the parent 39,902 -4,153 170 -694 -52,611
Non-controlling interests 241 91 97 1,072 1,486
Total 40,144 -4,062 268 378 -51,125
Earnings per share (counted from profit attributable to owners of the parent):
basic (EUR), group total 0.17 -0.02 -0.22
diluted (EUR), group total 0.15 -0.02 -0.22
basic (EUR), continuing operations -0.03 -0.03 -0.27
diluted (EUR), continuing -0.03 -0.03 -0.27
operations
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR ‘000 H1/11 H1/10 Q2/11 Q2/10 FY/10
Profit for the period 40,144 -4,062 268 378 -51,125
Other comprehensive income
Exchange differences on -10,518 15,176 -1,899 6,708 19,412
translating foreign operations
Income tax relating to other 5,436 -6,499 378 -2,951 -9,815
comprehensive income
Other comprehensive -5,082 8,677 -1,521 3,757 9,597
income, net of tax
Total comprehensive income 35,062 4,615 -1,253 4,135 -41,528
for the period
Total comprehensive income
attributable to:
Owners of the parent 36,283 3,245 -1,074 2,507 -44,854
Non-controlling interests -1,221 1,370 -179 1,628 3,327
CONSOLIDATED STATEMENT OF FINANCIAL POSITION, SUMMARY
EUR '000 30.6.2011 30.6.2010 31.12.2010
ASSETS
Non-current assets
Investments and intangible assets
Goodwill 122,673 186,456 129,120
Investments in associates 65 537 284
Other intangible assets 77,617 99,527 94,154
Investments and intangible assets total 200,355 286,520 223,559
Property, plant and equipment 77,827 86,544 87,468
Other non-current assets 44,991 31,125 44,022
Non-current assets total 323,173 404,189 355,050
Current assets
Inventories 51,406 67,570 45,160
Receivables 35,349 45,275 26,853
Other investments 0 366 0
Cash and cash equivalents 21,817 36,407 8,598
Bank deposits 60,000 0 0
Liquid funds total 81,817 36,407 8,598
Current assets total 168,573 149,618 80,611
Assets held for sale 7,239 20 110,809
Cash and cash equivalents held for sale 0 0 10,561
Assets held for sale total 7,239 20 121,369
Total assets 498,985 553,827 557,030
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 23,642 23,642 23,642
Share premium reserve 25,740 25,740 25,740
Revaluation reserve 0 2,193 2,193
Paid-up unrestricted equity reserve 241,318 250,849 250,849
Translation reserves 10,302 13,563 13,921
Retained earnings -62,197 -53,480 -104,772
Equity attributable to owners of the parent 238,805 262,508 211,574
Non-controlling interests 16,298 19,003 24,781
Total equity 255,103 281,511 236,355
Liabilities
Non-current liabilities 197,205 188,888 216,556
Current liabilities
Advances received 0 20,733 0
Other current liabilities 46,677 62,696 42,489
Current liabilities total 46,677 83,428 42,489
Liabilities classified as held for sale 0 0 61,630
Total liabilities 243,882 272,316 320,675
Total equity and liabilities 498,985 553,827 557,030
SUMMARY OF CASH, INTEREST-BEARING RECEIVABLES AND INTEREST-BEARING LIABILITIES
EUR '000 30.6.2011 30.6.2010 31.12.2010
Liquid funds 81,817 36,407 8,598
Interest-bearing receivables
Current 1,915 1,682 2,200
Non-current 29,138 15,206 28,865
Interest-bearing receivables 31,053 16,888 31,065
Interest-bearing liabilities
Current 2,639 13,911 4,577
Non-current 95,060 87,738 102,244
Interest-bearing liabilities 97,700 101,649 106,821
NET TOTAL 15,170 -48,354 -67,157
Excluding interest-bearing assets and liabilities classified as held for sale
SUMMARY OF GROUP'S PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
EUR '000 Property, plant Intangible
and equipment assets
Acquisition cost 1.1.2011 132,715 354,221
Additions 2,271 912*
Disposals -306 -47
Transfer to assets held for sale -353 1
Reclass between items 6,221 -1,111
Effect of movements in exchange rates -10,628 -20,453
Acquisition cost 30.6.2011 129,920 333,523
Acquisition cost 1.1.2010 127,541 337,547
Additions 51,968 8,231*
Disposals -4,044 0
Transfer to assets held for sale -49,614 -26,519
Reclass between items 298 -240
Effect of movements in exchange rates 6,566 35,201
Acquisition cost 31.12.2010 132,715 354,221
* Including changes in earn-out liabilities
CONSOLIDATED STATEMENT OF CASH FLOWS, SUMMARY
EUR '000 H1/11 H1/10 FY/10
Net profit 40,144 -4,062 -51,125
Adjustments to net profit -30,794 6,400 57,700
Changes in working capital -13,382 3,985 4,604
Discontinued operations 2,002 6,055 -616
Net cash from operating activities -2,030 12,378 10,563
Acquisition of subsidiaries and associates, -2,098 -392 -21,855
net of cash acquired
Acquisition of joint ventures, net of cash 0 0 -20,372
acquired
Payments of earn-out liabilities 0 -63 -65
Disposal of subsidiaries and associates, 81,776 0 1,640
net of cash sold
Capital expenditure and other investing -1,957 -5,006 -14,229
activities
Proceeds from repayments of loans and -2,949 -94 -11,222
loans given
Discontinued operations -77 9,330 10,885
Net cash used in investing activities 74,695 3,774 -55,218
Acquisition of own shares 0 -10 -10
Capital redemption -9,617 -9,570 -9,570
Dividends paid to non-controlling interests -64 -29 -129
Deposits and interest received on investments 0 2,503 2,509
Proceeds from borrowings 12,128 0 23,312
Repayment of borrowings, and other -11,947 -19,639 -2,037
financing activities
Discontinued operations -339 -9,275 -6,585
Net cash used in financing activities -9,840 -36,020 7,491
Net increase in cash and cash equivalents 62,825 -19,868 -37,165
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
A = Share capital
B = Share premium reserve
C = Fair value and revaluation reserves
D = Paid-up unrestricted equity reserve
E = Translation reserve
F = Retained earnings
G = Equity attributable to owners of the parent, total
H = Non-controlling interests
I = Total equity
EUR A B C D E F G H
I
‘000
Equity 23,642 25,740 2,193 260,357 6,165 -49,953 268,144 17,878
286,022
at
31.12
.2009
Divide 0 -247
-247
nd
distr
ibutio
n
Total 7,398 -4,153 3,245 1,370
4,615
compr
ehensi
ve
income
1-6/2
010
Share- 590 590
590
based
payme
nts
Share 72 72
72
subsc
riptio
ns
based
on
optio
n
right
s
Acquis -10 -10
-10
ition
of
own
shares
Capita -9,570 -9,570
-9,570
l
redem
ption
Acquis 17 17 1
18
itions
and
dispos
als of
subsid
iaries
Other 20 20
20
chang
es
Equity 23,642 25,740 2,193 250,849 13,563 -53,480 262,508 19,003
281,511
at
30.6.
2010
Divide 0 -110
-110
nd
distr
ibutio
n
Total 359 -48,458 -48,099 1,956
-46,143
compr
ehensi
ve
income
7-12/
2010
Share- 1,098 1,098
1,098
based
payme
nts
Acquis -3,932 -3,932 3,931
-1
itions
and
dispos
als of
subsid
iaries
Equity 23,642 25,740 2,193 250,849 13,921 -104,772 211,574 24,781
236,355
at
31.12
.2010
Divide 0 -613
-613
nd
distr
ibutio
n
Total -3,620 39,902 36,283 -1,221
35,062
compr
ehensi
ve
income
1-6/2
011
Share- 479 479
479
based
payme
nts
Share 86 86
86
subsc
riptio
ns
based
on
optio
n
right
s
Capita -9,617 -9,617
-9,617
l
redem
ption
Acquis -2,193 2,193 0 -6,649
-6,649
itions
and
dispos
als of
subsid
iaries
Equity 23,642 25,740 0 241,318 10,302 -62,197 238,805 16,298
255,103
at
30.6.
2011
RELATED PARTY TRANSACTIONS DURING THE REVIEW PERIOD
During the first half of 2011 the Group had sold goods and rendered services to
related parties and joint ventures worth EUR 3.2 million. The Group had also
made raw material purchases from a joint venture amounting to EUR 0.5 million
and accrued interest on loans from a related party amounting to EUR 0.3
million. Interest income from a joint venture company totalled EUR 0.2 million
during the first half of 2011.
On 30 June the Group had loan and other receivables from joint venture
companies totalling EUR 15.1 million and a loan receivable from a related party
amounting to EUR 10.1 million. The Group's loans from a related party amounted
to EUR 6 million and the Group's joint venture's loans from a related party EUR
10.3 million. The Group also had an acquisition related earn-out liability to a
related party amounting to EUR 36 million.
The Group has an unused credit facility from its major shareholder Kermas Ltd
amounting to USD 55 million. The facility is available to be drawn down until
31 December 2011.
EXCHANGE RATES
The balance sheet date rate is based on exchange rate published by the European
Central Bank for the closing date. The average exchange rate is calculated as
an average of daily rates from the European Central Bank during the year.
The key exchange rates applied in the accounts:
Average rates
H1/11 H1/10 FY/10
TRY 2.2081 2.0213 1.9965
USD 1.4032 1.3268 1.3257
ZAR 9.6856 9.9913 9.6984
Balance sheet rates
30.6.2011 30.6.2010 31.12.2010
TRY 2.3500 1.9400 2.0694
USD 1.4453 1.2271 1.3362
ZAR 9.8569 9.3808 8.8625
FORMULAS FOR FINANCIAL INDICATORS
Financial ratios and indicators have been calculated with the same principles
as applied in the 2010 financial statements. These principles are presented
below.
Return on equity, % = Profit for the period / Total equity (average for the
period) * 100
Return on capital employed, % = Profit before taxes + financing expenses /
(total assets - interest-free liabilities) average * 100
Equity ratio, % = Total equity / total assets - prepayments received * 100
Gearing, % = (Interest-bearing debt - liquid funds) / Total equity * 100
Net interest-bearing debt = Interest-bearing debt - liquid funds
Earnings per share, basic, EUR = Profit attributable to owners of the parent
company / Average number of shares during the period
Earnings per share, diluted, EUR = Profit attributable to owners of the parent
company / Average number of shares during the period, diluted
Operating profit (EBIT) = Operating profit is the net of revenue plus other
operating income, plus gain/loss on finished goods inventory change, minus
employee benefits expense, minus depreciation, amortisation and impairment and
minus other operating expense. Foreign exchange gains or losses are included in
operating profit when generated from ordinary activities. Exchange gains or
losses related to financing activities are recognised as financial income or
expense.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) =
Operating profit + depreciation + amortisation + impairment losses
ACCOUNTING POLICIES
This Interim Report is prepared in accordance with the IAS 34 standard. Ruukki
Group Plc applies the same accounting and IFRS principles as in the 2010
financial statements with the exception that from the beginning of 2011 the
Company has applied a new reporting business segment structure. The new
reporting business segments are the FerroAlloys and the Speciality Alloys
segments. In 2010 the Company had two reporting segments: Wood Processing
Business and Minerals Business. The Company has published the comparative
financial information for the new segments on 28 April 2011.
The preparation of the Interim Report in accordance with IFRS requires
management to make estimates and assumptions that affect the valuation of the
reported assets and liabilities and other information, such as contingent
liabilities and the recognition of income and expenses in the income statement.
Although the estimates are based on the management's best knowledge of current
events and actions, actual results may differ from the estimates.
The figures in the tables have been rounded off to one decimal point, which
must be considered when calculating totals. Average exchange rates for the
period have been used for income statement conversions, and period-end exchange
rates for balance sheet.
The Interim Report data are unaudited.
Share-related key figures
Q2/11 Q2/10 H1/11 H1/10 FY/10
Share price
development in London
Stock Exchange*
Average share price** EUR 1.60 N/A 1.76 N/A 1.64
GBP 1.41 N/A 1.53 N/A 1.39
Lowest share price** EUR 1.52 N/A 1.54 N/A 1.60
GBP 1.34 N/A 1.34 N/A 1.36
Highest share price** EUR 1.81 N/A 1.84 N/A 2.10
GBP 1.60 N/A 1.60 N/A 1.78
Share price at the end of EUR 1.48 N/A 1.48 N/A 1.68
the period***
GBP 1.34 N/A 1.34 N/A 1.45
Market capitalisation at EUR million 368.5 N/A 368.5 N/A 416.7
the end of the period***
GBP million 332.6 N/A 332.6 N/A 358.7
Share trading
development
Share turnover thousand 11 N/A 93 N/A 712
shares
Share turnover EUR 17 N/A 164 N/A 1,168
thousand
Share turnover GBP 15 N/A 142 N/A 990
thousand
Share turnover % 0.0% N/A 0.0% N/A 0.3%
Share price
development in
NASDAQ OMX Helsinki
Average share price EUR 1.56 1.47 1.67 1.54 1.59
Lowest share price EUR 1.40 1.00 1.40 1.00 1.00
Highest share price EUR 1.80 2.07 2.03 2.30 2.30
Share price at the end of EUR 1.62 1.55 1.62 1.55 1.70
the period
Market capitalisation at EUR million 402.1 384.4 402.1 384.4 422.0
the end of the period
Share trading
development
Share turnover thousand 3,623 14,342 5,707 16,430 21,042
shares
Share turnover EUR 5,639 21,083 9,534 25,359 33,414
thousand
Share turnover % 1.5% 5.8% 2.3% 6.6% 8.5%
* Ruukki's shares have been listed on the London Stock Exchange as of 26 July
2010, therefore share information on the LSE is available only from that day
onwards.
** Share prices have been calculated on the average EUR/GBP exchange rate
published by Bank of Finland.
*** Share price and market capitalisation at the end of the period have been
calculated on the EUR/GBP exchange rate published by Bank of Finland at the end
of the period.
Formulas for share-related key indicators
Average share price = Total value of shares traded in currency / Number of
shares traded during the period
Market capitalisation, million = Number of shares * Share price at the end of
the period
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements. Often, but not always,
forward-looking statements can be identified by the use of forward-looking
terminology, including the terms “believes”, “expects”, “intends”, “may”,
“will” or “should” or, in each case, their negative or other variations or
comparable terminology. By their nature, forward-looking statements involve
uncertainty because they depend on future circumstances, and relate to events,
not all of which are within the Company's control or can be predicted by the
Company.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. Actual results could differ
materially from those set out in the forward-looking statements. Save as
required by law (including the Finnish Securities Markets Acts (495/1989), as
amended, or by the Listing Rules or the Disclosure and Transparency Rules of
the UK Financial Services Authority), the Company undertakes no obligation to
update any forward-looking statements in this report that may occur due to any
changes in the Directors' expectations or to reflect events or circumstances
after the date of this report.
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