Talvivaara Mining Company Interim Report for January-June 2015
(Thomson Reuters ONE) -
Stock Exchange Release
Talvivaara Mining Company Plc
27 August 2015
Talvivaara Mining Company Interim Report for January-June 2015
Requisite support for the draft restructuring programme received from the
creditors
The negotiations on the Company's role in the future of the Sotkamo mining
operations continue
Key events
H1 2015
* Following the bankruptcy of Talvivaara Sotkamo Ltd ("Talvivaara Sotkamo") on
6 November 2014, trading of Talvivaara Mining Company Plc's ("Talvivaara" or
the "Company") shares on the Helsinki Stock Exchange was suspended. The
suspension of trading continues on the date of publication of the Company's
H1 2015 interim results on 27 August 2015
* This interim report has been prepared on a basis other than going concern.
The chosen reporting basis results from the existence of material
uncertainty that casts significant doubt upon the Company's ability to
realise its assets and discharge its liabilities in the normal course of
business and from the lack of visibility on the Company's operational
environment twelve months beyond the date of reporting
* Talvivaara has continued to finance its operations by providing
administrative and technical services and by leasing certain critical
machinery and equipment to the bankruptcy estate of Talvivaara Sotkamo under
agreements entered into by the Company and the bankruptcy estate on 19
November 2014. The other operating income from those activities amounted to
EUR 3.4 million
* The creditors' voting procedure was completed on 6 May 2015 and the
Administrator's draft restructuring programme was supported by approximately
97.5 percent of the creditors of unsecured debt participating in the voting.
The requisite support from the creditors set forth in the Restructuring of
Enterprises Act for the approval of the draft restructuring programme was
obtained. The confirmation and entry into force of the draft restructuring
programme still requires the fulfilment of certain other conditions
* Talvivaara's negotiations with the state of Finland and potential financiers
and investors continue, with the target of securing a participation in the
mining operations
* The Annual General Meeting of the Company held on 25 June 2015 authorised
the Board of Directors to resolve on the share issue of up to 4,500,000,000
new shares in aggregate in deviation from the pre-emptive subscription
rights of the shareholders through one or several share issues to conduct
the conversion of the unsecured restructuring debts into new shares in the
Company as provided by the Administrator's draft restructuring programme.
The subscription price of the shares to be issued by virtue of the
authorisation shall be EUR 0.1144 per share and the subscription price shall
be paid by setting off the subscriber's unsecured restructuring debt claim
* Reported operating loss EUR -0.5 million
Events after the reporting period
* Talvivaara has signed a contract on 13 August 2015 with the state-owned
company Terrafame Oy and its 100% subsidiary Terrafame Mining Oy, whereby
Terrafame Mining Oy assumes the rights and obligations of the bankruptcy
estate of Talvivaara Sotkamo under the agreements of 19 November 2014 on
provision of administrative and technical services and leasing of certain
critical machinery and equipment to the bankruptcy estate
* The transfer of the mining business from the bankruptcy estate of Talvivaara
Sotkamo to Terrafame Mining Oy was completed on 14 August 2015
Talvivaara Mining Company Plc
Key financial figures
Six Six Twelve
months to months to months to
30 Jun 15 30 Jun 14 31 Dec 14
----------------------------------
Other operating income EUR '000 3,437 7,126 12,340
Operating profit/loss EUR '000 (491) 1,334 (702,649)
Operating profit/loss percentage (14.3 %) 18.7 % (5,694.1 %)
Profit/loss before tax EUR '000 (14,978) 7,856 (774,899)
Profit/loss for the period EUR '000 (14,978) 7,856 (774,899)
Return on equity N/A N/A N/A
Equity-to-assets ratio (7,392.8 %) 10.3 % (6480.9 %)
Net interest-bearing debt EUR '000 499,523 424,646 495,374
Debt-to-equity ratio (67.1 %) 820.1 % (67.9 %
Return on investment N/A N/A (558.1 %)
Capital expenditure EUR '000 0 2,316 2,717
Property, plant and equipment EUR '000 5,000 8,526 5,011
Borrowings EUR '000 503,956 425,030 500,720
Cash and cash equivalents EUR '000 4,433 384 5,346
All reported half-yearly figures in this release are unaudited. Full year
figures are audited.
CEO Pekka Perä comments: "When the unsecured creditors approved the draft
restructuring programme, an important milestone was achieved. Although there are
still significant challenges ahead, it was a major tick in the box in this
prolonged restructuring process. As we have received continuous support from the
shareholders and the creditors, the weakness in the commodities market is still
effecting on the mining finance space as a whole. A good sign is that some
investors are getting active with the view that the bottom has been found in the
base metals market.
The operational result of the Company was in loss as anticipated, but as the
restructuring costs will decrease, it is expected that the cash position will
remain roughly on the same as level as at the end of the period for the next
months to come or until a solution for the Company's future has been found.
The management and the staff have been working hard despite all the
uncertainties around the Company. The transfer of the leasing and services
contract to Terrafame provides visibility for the personnel in the short term.
I would like to thank departing board members Mr. Edward Haslam, Mr. Graham
Titcombe and Mrs. Maija-Liisa Friman for their efforts. Their experience,
skills, commitment, strength of character and sense of humour will be deeply
missed."
Enquiries:
Talvivaara Mining Company Plc Tel. +358 20 712 9800
Pekka Perä, CEO
Pekka Erkinheimo, Deputy CEO
Financial review
Introduction
Following the bankruptcy of Talvivaara Mining Company Plc's ("Talvivaara" or the
"Company") operating subsidiary Talvivaara Sotkamo Ltd ("Talvivaara Sotkamo") on
6 November 2014, trading of Talvivaara's shares on the Helsinki Stock Exchange
was suspended. The suspension of trading continues as at the date of the
publication of the Company's H1 2015 interim results on 27 August 2015.
This interim report has been prepared on a basis other than going concern. The
chosen reporting basis results from the existence of material uncertainty that
casts significant doubt upon the Company's ability to realise its assets and
discharge its liabilities in the normal course of business and from the lack of
visibility on the Company's operational environment twelve months beyond the
date of reporting.
Following the bankruptcy of Talvivaara Sotkamo on 6 November 2014, Talvivaara
has not had control over the operations at the Sotkamo mine and is therefore no
longer in a position to continue reporting on the status and development of the
Sotkamo mining operations, including information on production levels and water
management. Talvivaara has continued to finance its operations by providing
administrative and technical services and by leasing certain critical machinery
and equipment to the bankruptcy estate of Talvivaara Sotkamo and for the time
being continues to pursue its target of securing sufficient financing to
participate, as a member of a consortium, in the acquisition of the Sotkamo
mining operations or securing a different financial and/or operative arrangement
that will secure the continuance of the Company's eligible business.
H1 2015 (January-June)
Net sales and financial result
The operating loss for the period was EUR (0.49) million (operating profit H1
2014: EUR 1.3 million). Earnings per share was EUR (0.02) (H1 2014: EUR 0.01).
The loss for the period amounted to EUR (15.0) million (profit for the period H1
2014: EUR 7.9 million) based mainly on the reported finance costs of EUR (14.5)
million. The finance costs include EUR 14 million of computational interest
expenses accrued on the restructuring debts. The profit from the comparison
period of H1 2014 included EUR 22 million of computational interest income on
the debts owed by Talvivaara Sotkamo to the Company. Following the bankruptcy
and public receivership of Talvivaara Sotkamo, no such interest income has been
recorded for H1 2015.
Liquidity
As at 30 June 2015, the Company's cash and cash equivalents amounted to EUR 4.4
million (31 December 2014: EUR 5.3 million). The cash position has stayed the
same or slightly improved since March 2015.
The Company has financed its day-to-day operations by providing administrative
and technical services and the lease of critical machinery and equipment to the
bankruptcy estate of Talvivaara Sotkamo.
Balance sheet
Termination of the Zinc Streaming Agreement
Following the termination of the Zinc Streaming Agreement by the bankruptcy
estate of Talvivaara Sotkamo on 30 March 2015, Nyrstar sent a notice to the
Company, reserving their right to issue a demand to the Company as a guarantor
for a payment of all sums due by Talvivaara Sotkamo under the Zinc Streaming
Agreement and the Streaming Holiday Agreement (including the termination sum of
EUR 203.4 million), should the bankruptcy estate of Talvivaara Sotkamo fail to
do so.
Based on the Intercreditor Agreement binding on the Company and Nyrstar, the
Administrator did not include the Company's guarantee liability for the
termination sum in the restructuring debts or in the new liabilities arisen
during the proceedings in his final draft restructuring programme. Consequently,
the view of the Company and the Administrator is that the Company cannot make
any payments to Nyrstar in relation to the termination sum if full payment has
not been made to the Company's lenders having receivables with a higher ranked
priority.
The Company has provided the full amount as a provision on the balance sheet
based on uncertainties related to the treatment of the Company's guarantee
obligation. The discussions with Nyrstar on the treatment of the termination sum
continue as at the date of the Company's H1 2015 interim results 27 August 2015.
For more information on the termination sum guarantee, please refer to pages
9, 14-15, 22-23 and 31 of the Company's 2014 Financial Statements.
Provisions and other items recognised based on restructuring programme
The Company has issued a floating charge security for the loans drawn from
Finnvera by Talvivaara Sotkamo, amounting in aggregate to EUR 58.7 million,
including accrued interest. For more information, please refer to pages
23, 36, 41 and 44 of the Company's 2014 Financial Statements.
Off-balance sheet and contingent liabilities
Talvivaara Sotkamo has largely covered the environmental bond requirement under
the current environmental permit by a guarantee insurance provided by Atradius
Credit Insurance NV ("Atradius"). The coverage amounts to EUR 31.9 million as at
the date of the publication of the Company's H1 2015 interim results 27 August
2015. In the event restoration of the mine site took place without Talvivaara
Sotkamo carrying the cost, the expenses would initially be covered by Atradius.
However, eventually Atradius would claim the cost back from the Company, which
has given counter-indemnity for such costs to Atradius. The guaranteed liability
is part of the Company's restructuring debt and any payments that fall due under
the guarantee are finally determined in the Company's restructuring programme
and repaid according to the authorized payment schedule.
Furthermore, even if the Company's restructuring debts were cut in accordance
with the Administrator's final draft restructuring programme, the assets of the
Company would still be less than the aggregate amount of the Company's remaining
liabilities following the 99-percent-haircut of the unsecured restructuring
debts or even following a 100% conversion of the unsecured restructuring debts
into equity of the Company. The exact amount of the negative funding balance
will depend, among others, on the extent to which unsecured restructuring debts
are converted into equity of the Company, and on the aggregate amount of the
Company's other liabilities not subject to restructuring at the date of entry
into force of the restructuring programme. More information on the negative
equity is provided in Note 1.
Assets
On the statement of financial position as at 30 June 2015, property, plant and
equipment totalled EUR 5.0 million (31 December 2014: EUR 5 million). Intangible
assets totalled EUR 0.5 million (31 December 2014: EUR 0.56 million).
Shares in Majakkavoima Oy and Katternö Kärnkraft Ab, companies holding shares in
Fennovoima nuclear power company, continue to be valued at zero, as under the
reporting basis other than going concern, the Company does not recognise any
value in such holdings with a view to its current business operations.
No investments have been made during H1 2015.
Reporting basis - other than going concern
This interim report has been prepared on a basis other than going concern. The
chosen reporting basis results from the existence of material uncertainty that
casts significant doubt upon the Company's ability to realise its assets and
discharge its liabilities in the normal course of business and from the lack of
visibility on the Company's operational environment twelve months beyond the
date of reporting. However, the contractual arrangements regarding the
administrative and technical services and the lease of critical machinery and
equipment have helped the Company to discharge all of its new liabilities as and
when they fell due. Therefore, the chosen reporting basis is, where applicable,
reflected in the carrying amounts of the Company's assets and liabilities, but
no reserve has been made in the Company's balance sheet for the costs relating
to winding down of the operations.
Talvivaara's ability to revise its reporting basis and to regain its status as a
going concern is dependent, among other things, on the successful completion of
the Company's corporate reorganisation proceedings, which requires among other
things that (i) Talvivaara succeeds in completing an arrangement that will
secure the necessary cash flow for the Company to discharge all of its
liabilities and the continuance of the Company's eligible business, and (ii) the
shareholders of Talvivaara approve the financial arrangement required to
discharge the remaining restructuring debts and for covering other possible
liabilities to the extent the Company's other funds are not sufficient for such
purpose. As of the date of the Company's H1 2015 interim results 27 August
2015, there is no certainty as to whether the Company can fulfil all the set
requirements within the given time frame.
Talvivaara Sotkamo has drawn down EUR 12.8 million (including interest through
October 2014), in loans from Nyrstar under the Streaming Holiday Agreement
between Talvivaara, Talvivaara Sotkamo and Nyrstar. Upon the bankruptcy of
Talvivaara Sotkamo, Nyrstar is entitled to declare that all or part of the
loans, together with accrued interest, be payable on demand by Talvivaara
Sotkamo or Talvivaara, in its capacity as the guarantor. If Nyrstar was to
demand immediate repayment of the EUR 12.8 million loans guaranteed by the
Company, the Company might not have sufficient cash reserves or access to
additional liquidity to make the required payment.
Furthermore, the Company has issued a guarantee for the termination sum
amounting to approximately EUR 203.4 million that Talvivaara Sotkamo would have
to pay to Nyrstar due to a premature termination of the Zinc Streaming Agreement
between the companies. On 30 March 2015, the bankruptcy estate of Talvivaara
Sotkamo notified Nyrstar that it does not commit to the Zinc Streaming Agreement
or the Streaming Holiday Agreement. Consequently, on 9 April 2015 Nyrstar sent a
notice to the Company, reserving their right to issue a demand to the Company as
a guarantor for a payment of all sums due by Talvivaara Sotkamo under the Zinc
Streaming Agreement and the Streaming Holiday Agreement, should the bankruptcy
estate of Talvivaara Sotkamo fail to do so. However, based on the Intercreditor
Agreements binding on the Company and Nyrstar, the Company cannot make any
payments to Nyrstar in relation to the termination sum if full payment has not
been made to the Company's other lenders having receivables with a higher
ranking priority. As the lenders having a higher ranking priority will not
receive a full payment on their receivables due to Talvivaara Sotkamo's
bankruptcy and the Company's restructuring proceedings, the Company cannot make
payments relating to the termination sum to Nyrstar due to the subordinate
position of Nyrstar's claim. Based on the above, the Administrator did not
include the Company's guarantee liability for the termination sum in the
restructuring debts or in the new liabilities arisen during the proceedings in
his final draft restructuring programme, which decision was not contested by
Nyrstar within the given time frame. However, if Nyrstar was later to contest
the treatment of the Company's guarantee liability successfully and thereby be
allowed to demand payment from the Company under the guarantee, the Company
would likely not have sufficient cash reserves or access to additional liquidity
to make the required payment. In addition, any uncertainty surrounding the issue
would have a significant negative effect on the Company's ability to raise new
funds required for the successful fulfilment of the conditions for the entry
into force of the Company's restructuring programme. Based on the above and on
the applied non-going concern principle, the Company has provided the full
amount of the guarantee liability as a provision on its balance sheet.
Operational review
Talvivaara's negotiations with the state of Finland and prospective investors
continue as at the date of this interim report. Target of the negotiations is to
secure sufficient financing to participate in the acquisition of the mining
operations, or to secure a different financial and/or operative arrangement that
will enable the continuance of the Company's eligible business.
In December 2014, Talvivaara decided to place its dormant subsidiaries
Talvivaara Exploration Oy, Talvivaara Infrastructure Oy, Bream Lake Energy Oy
and Talvivaara Management Oy in liquidation. Prior to the decision to liquidate
these subsidiaries, Talvivaara converted all its receivables from these
companies into equity and the subsidiaries wrote off all their receivables from
the bankruptcy estate of Talvivaara Sotkamo. In addition, Talvivaara sold on 30
December 2014 all the shares of its subsidiary incorporated under the laws of
Sweden, Hyena Holding AB, to a third party independent of the management and
significant shareholders against a nominal purchase price basing on the amount
of liquid assets of Hyena Holding AB at the time of transaction. Placing the
subsidiaries in liquidation and the conveyance of the shares in Hyena Holding AB
was in line with the Company's plan to simplify the group structure and leave
the Company as the single reporting entity.The liquidation processes were
completed and dormant subsidiaries dissolved on 26 June 2015.
Status of the corporate reorganisation
On 13 March 2015, the Administrator of the corporate reorganisation of
Talvivaara filed the final draft restructuring programme to the District Court
of Espoo. The total amount of the restructuring debts to be taken into account
in the restructuring proceedings is approximately EUR 513 million, out of which
EUR 508 million is considered unsecured debt. This amount does not include debts
with lowest priority. In addition, the Company has approximately EUR 8 million
liability relating to a granted third-party security. The Administrator proposed
that the restructuring debts be cut by 99% which would leave 1% of the amount of
such debt to be repaid. The restructuring debts secured by business mortgage
will not be cut and no payments would be made on debts with lowest priority. The
draft restructuring programme does not include a provision on a duty to make
supplementary payments.
Please refer to the Company's 2014 Financial Statements for more detailed
description of the terms of the final draft restructuring programme and the
conditions for the entry into force thereof.
The approval of the draft restructuring programme required, inter alia, express
support from the necessary number of creditors. The creditors' voting procedure
was completed on 6 May 2015 and the Administratorsubmitted the voting report on
the outcome of the creditors' voting procedure to the District Court of Espoo on
25 May 2015.The Administrator's draft restructuring programme was supported by
approximately 97.5 percent of the creditors of unsecured debt participating in
the voting. In total, creditors whose receivables represent over 53 percent of
all known debts recognized for the purposes of the voting procedure voted in
favour of the draft restructuring programme. The requisite support from the
creditors set forth in the Restructuring of Enterprises Act for the approval of
the draft restructuring programme was thereby obtained.
The Annual General Meeting held on 25 June 2015 authorised the Board of
Directors to resolve on the share issue of up to 4,500,000,000 new shares in
aggregate in deviation from the pre-emptive subscription rights of the
shareholders through one or several share issues to conduct the conversion of
the unsecured restructuring debts. The decision made was one of the special
conditions set for the confirmation and entry into force of the draft
restructuring programme. The confirmation and entry into force of the draft
restructuring programme is still subject to a number of the conditions relating
to inter alia the business and financing arrangements of the Company.
Business development projects
Talvivaara acquired in 2011-2012 an approximately 60MW capacity share in the
Fennovoima nuclear project in Finland. Due to the Company's ongoing corporate
reorganisation proceedings, Talvivaara is currently not in a position to make
further investments into the project. There was no change in Talvivaara's
position relating to Fennovoima during the first half of 2015.
Legal proceedings
In April 2015, Talvivaara confirmed that a number of current and former members
of Talvivaara's Board of Directors and management have been heard in connection
with an investigation relating to the Company's disclosure practices. Talvivaara
believes that the investigation will establish the appropriateness of the
Company's conduct in all respects, and emphasizes that the Company has already
in the past gone through the applied disclosure practices extensively and in
great detail with the Financial Supervisory Authority.
Annual General Meeting
Talvivaara's Annual General Meeting was held on 25 June 2015 in Espoo, Finland.
The resolutions of the AGM included:
- that no dividend be paid for the financial year 2014;
- that the annual fee payable to the members of the Board for the term until the
close of the Annual General Meeting in 2016 be as follows: Chairman of the Board
of Directors EUR 84,000/year and other Non-executive Directors: EUR
48,000/year. No separate meeting fees are paid for the Board or the Committee
work. The remuneration of the Executive Directors is included in their base
salary, and it is not paid out separately;
- that the number of Board members be five (5) and that Mr. Tapani Järvinen, Mr.
Pekka Perä, Mr. Stuart Murray and Ms. Solveig Törnroos-Huhtamäki were re-
elected. Mr. Kari Järvinen was elected as a new member to the Board;
- that the auditor be reimbursed according to the approved auditor's invoice and
authorised public accountants PricewaterhouseCoopers Oy be elected as the
Company's auditor for the financial year 2015;
- that the Board of Directors be authorised to resolve on the share issueof up
to 4,500,000,000 new shares in aggregate in deviation from the pre-emptive
subscription rights of the shareholders through one or several share issues to
conduct the conversion of the unsecured restructuring debts into new shares in
the Company. The subscription price of the shares shall be EUR 0.1144 per share
and the subscription price shall be paid by setting off the subscriber's
unsecured restructuring debt claim including any possible interest and costs
relating thereto from the Company. The share issue authorisation is valid until
31 December 2017.
At its constituent meeting on 25 June 2015, the Board of Directors re-elected
Mr. Tapani Järvinen as the chairman of the Board.
Risk management and key risks
Talvivaara's near-term risk factors include particularly such risks that relate
to its ongoing corporate reorganisation proceedings, financing and sufficiency
of funds to meet its actual and potential liabilities.
The approval and authorisation of the proposed restructuring programme of
Talvivaara is conditional, among other things, on (i) Talvivaara succeeding in
completing an arrangement that will secure the necessary cash flow for the
Company to discharge all of its liabilities and the continuance of the Company's
eligible business, and (ii) the shareholders of Talvivaara approving the
financial arrangement required to discharge the remaining restructuring debts
and to cover other possible liabilities to the extent the Company's other funds
are not sufficient for such purpose. As at the date of the Company's H1 2015
interim results on 27 August 2015, there is no certainty as to whether the
Company can fulfil all the set requirements within the given time frame.
Although the Board of Directors believes that a corporate reorganisation is a
viable option for Talvivaara, there can be no assurance that the proposed
restructuring programme of the Company will be approved and authorised or be
ultimately successful. The corporate reorganisation process can fail for a
number of reasons, including due to an insufficiency of funds to implement or
complete the restructuring programme, changes in circumstances affecting the
financial viability of Talvivaara, including, for example, termination of the
service and lease agreements, or insufficient income from the services provided.
If the corporate reorganisation fails for these or any other reasons, it could
result in the bankruptcy of the Company.
Furthermore, even if the Company's restructuring debts were cut in accordance
with the Administrator's final draft restructuring programme, the assets of the
Company would still be less than the aggregate amount of the Company's remaining
liabilities following the 99-percent-haircut of the unsecured restructuring
debts or even following a 100% conversion of the unsecured restructuring debts
into equity of the Company. The exact amount of the negative funding balance
will depend, among others, on the extent to which unsecured restructuring debts
are converted into equity of the Company, and on the aggregate amount of the
Company's other liabilities not subject to restructuring at the date of entry
into force of the restructuring programme. As at the date of the Company's H1
2015 interim results on 27 August 2015, there is no certainty as to whether the
Company succeeds in bridging the negative funding balance. More information on
the negative equity is provided in Note 1.
Failure by the Company to reach final clarity on the treatment of its guarantee
obligation for the termination sum set forth in the Zinc Streaming Agreement or
for the EUR 12.8 million guarantee liability under the Streaming Holiday
Agreement may impair or even hinder the Company's efforts to raise new funds for
the successful fulfilment of the conditions for the entry into force of the
Company's restructuring programme. Whilst the Company shares the view of the
Administrator on the treatment of the guarantee obligation for the termination
sum under the Zinc Streaming Agreement and considers the view well-founded,
there is no certainty that a competent court or a dispute resolution authority
would arrive at the same outcome, should Nyrstar take legal actions to contest
the chosen view. Furthermore, even if such legal actions were not initiated by
Nyrstar, any uncertainty surrounding the issue would have a significant negative
effect on the Company's ability to raise new funds required for the successful
fulfilment of the conditions for the entry into force of the Company's
restructuring programme.
The right of conversion of debt into equity included in the restructuring
programme of Talvivaara and/or the issuance of new equity instruments may lead
to a significant dilution of the existing shareholding of the Company. The
extent of dilution will eventually be determined by the aggregate amount of the
restructuring debts to be converted into shares at the determined conversion
rate of EUR 0.1144 per share as well as by the subscription price of the newly
issued shares offered and the amount of funds raised in, the potential equity
financing.
The Sotkamo mine has faced various difficulties since the commissioning of the
mine in 2008 and 2009. These difficulties include, among others, operational
difficulties concerning the mine's production and performance, environmental
issues as well as legal and administrative proceedings involving the Sotkamo
mine and certain members of Talvivaara's management. Therefore, even in case
Talvivaara acquires a stake in the company carrying on the Sotkamo mining
operations, the Sotkamo mine may not be able to successfully address various
operational, environmental and other difficulties facing the Sotkamo mine and
shareholders could ultimately lose their entire investment in the Company.
Further, there can be no certainty that the financing potentially available to
Talvivaara would be sufficient to ramp-up production at the Sotkamo mine or that
it would ever achieve profitability.
Personnel
Headcount and remuneration
The number of personnel employed by the Company on 30 June 2015 was 51 (31
December 2014: 53).
Talvivaara's personnel comprises an expert organisation, the core competences of
which include, for example, analytical laboratory services, bioheapleaching and
other production processes, procurement, environmental safety, risk management
and communications. The organisation has in the past provided critical services
to Talvivaara Sotkamo and it has continued to provide the same services to the
bankruptcy estate of Talvivaara Sotkamo as agreed between the Company and the
bankruptcy estate. The salaries and wages of Talvivaara's personnel are based on
industry-wide collective agreements.
Management changes
Chief Human Resources Officer Maija Kaski resigned from her position on 17 June
2015 to pursue her career outside the Company.
Shares and shareholders
The number of shares issued and outstanding and registered on the Euroclear
Shareholder Register as of 30 June 2015 was 2,096,782,480. This total number of
shares includes a total of 192 883 000 treasury shares.The shares, when held
in treasury by the Company, do not carry voting rights or any other shareholder
rights in the Company. Including the effect of the EUR 225 million convertible
bond of 16 December 2010, the authorized full number of shares of the Company
amounted to 2,195,400,415.
As at 30 June 2015, the only shareholders who held more than 5% of the shares
and votes of Talvivaara were Solidium Oy (15.2%) and Mr. Pekka Perä (5.9%).
Talvivaara held directly 9.2% of the shares in the Company. The shares held in
treasury by the Company do not carry any voting rights.
Events after the review period
Legal proceedings
On 4 August 2015, the main hearing commenced in the criminal case relating to
the gypsum pond leakage and discharges into water ways, where the prosecutor has
brought charges against four members of Talvivaara's management, including CEO
Pekka Perä and former CEO Harri Natunen. The Company welcomes the opportunity to
have the facts relating to the matter as well as the then-current operating
conditions of the Company discussed in an open court.
Transfer of contracts to Terrafame Oy
Talvivaara announced on 13 August 2015 that it has signed a contract with the
state-owned company Terrafame Oy (as of 14 August 2015 Terrafame Group Oy) and
its 100% subsidiary Terrafame Mining Oy (as of 14 August 2015 Terrafame Oy),
whereby Terrafame Oy assumes the rights and obligations of the bankruptcy estate
of Talvivaara Sotkamo under the agreements of 19 November 2014 on provision of
administrative and technical services and leasing of certain critical machinery
and equipment to the bankruptcy estate on the same terms as were applicable
between the Company and the bankruptcy estate. The transfer remained subject to
the completion of the mining business from the bankruptcy estate to Terrafame
Oy.
Transfer of the Sotkamo mining business
The transfer of the Sotkamo mining business from the bankruptcy estate of
Talvivaara Sotkamo to Terrafame Oy was completed on 14 August 2015. Due to the
transfer of the Company's essential contracts from the bankruptcy estate to
Terrafame Oy agreed on 13 August 2015, the completed transfer of business does
not have any immediate effects on the Company, its financial position or the
short-term outlook. The Company continues the negotiations with the state of
Finland and the Terrafame group on the terms of the Company's potential
investment in the Sotkamo mining operations.
Short-term outlook
The operational outlook for Talvivaara is greatly dependent on the successful
completion of the Company's corporate reorganisation proceedings and the success
to closing, timing and extent of the necessary financing solutions currently
under contemplation. Whilst the Administrator's final draft restructuring
programme gives the Company reasonably ample time fulfil the requirements set
forth for the entry into force of the restructuring programme, there is no
certainty that the Company can fulfil all the requirements within the given time
frame.
27 August 2015
Talvivaara Mining Company Plc
Board of Directors
STATEMENT OF FINANCIAL POSITION
As at As at
(All amounts in EUR) 30 Jun 15 31 Dec 14
--------------------------------
ASSETS
Non-current assets
Property, plant and equipment 4,999,546 5,010,758
Intangible assets 497,088 554,887
Other receivables 30,926 31,094
--------------------------------
5,527,559 5,596,738
Current assets
Trade receivables 63,678 284,466
Other receivables 46,599 35,336
Cash and cash equivalents 4,432,729 5,346,381
--------------------------------
4,543,006 5,666,183
TOTAL ASSETS 10,070,565 11,262,921
--------------------------------
EQUITY AND LIABILITIES
Equity attributable to the owners
Share capital 80,000 80,000
Share premium 8,085,842 8,085,842
Other reserves 771,648,199 771,648,200
Retained deficit (1,524,313,624) (1,509,757,176)
--------------------------------
(744,499,583) (729,943,134)
--------------------------------
Total equity (744,499,583) (729,943,134)
--------------------------------
Current liabilities
Provisions 203,444,456 203,444,456
Borrowings 503,955,559 500,720,066
Trade payables 2,743,335 2,759,678
Other payables 44,426,799 34,281,855
--------------------------------
754,570,148 741,206,055
--------------------------------
Total liabilities 754,570,148 741,206,055
TOTAL EQUITY AND LIABILITIES 10,070,565 11,262,921
--------------------------------
INCOME STATEMENT
Period ended Period ended
(All amounts in EUR) 30 Jun 15 30 Jun 14
--------------------------
Other operating income 3,436,664 7,125,872
Materials and services (138,698) (155,917)
Personnel expenses (2,132,041) (2,895,555)
Depreciation and amortisation (342,470) (507,038)
Other operating expenses (1,314,824) (2,233,441)
Operating profit/loss (491,368) 1,333,923
Finance income 1,620 22,013,916
Finance cost (14,488,035) (15,491,476)
--------------------------
Finance cost (net) (14,486,415) 6,522,441
Profit/Loss before income tax (14,977,783) 7,856,363
Income tax 0 0
--------------------------
PROFIT/LOSS FOR THE FINANCIAL PERIOD (14,977,782) 7,856,363
--------------------------
STATEMENT OF CHANGES IN EQUITY
Share Share Share Other Retained
EUR capital issue premium reserves deficit Total
------------------------------------------------------------------
31 Dec 14 80,000 - 8,085,842 771,648,200 (1,509,757,176) (729,943,134)
------------------------------------------------------------------
Absorption of
subsidiaries - - - - 421,334 421,334
Profit (loss)
for the year - - - - (14,977,782) (14,977,782)
------------------------------------------------------------------
30 Jun 15 80,000 - 8,085,842 771,648,200 (1,524,313,624) (744,499,583)
------------------------------------------------------------------
CASH FLOW STATEMENT
(all amounts in EUR) 2015 2014
--------------------------
Cash flows from operating activities
Profit / loss for the year (14,977,782) 7,856,363
Adjustments for
Depreciation and amortisation 342,470 507,038
Interest income (1,620) (22,013,916)
Interest expenses 14,488,035 15,491,476
--------------------------
Cash flow before change in working capital (148,898) 1,840,961
Change in working capital
Decrease(+)/increase(-) in trade and other receivables 211,314 (3,969,367)
Decrease(-)/increase(+) in trade and other payables (891,319) 594,350
--------------------------
Change in working capital (680,005) (3,375,017)
Net cash used in operating activities before
financing activities and taxes (828,903) (1,534,057)
Interest and other finance cost paid (84,749) (648,764)
Interest and other finance income 0 255,053
--------------------------
Net cash generated (used) in operating activities (913,652) (1,927,767)
Cash flows from investing activities
Purchases of intangible assets 0 (37,126)
Purchases of other shares 0 (101,775)
Investments to subsidiaries 0 (2,246,913)
--------------------------
Net cash generated (used) in investing activities 0 (2,385,813)
Cash flows from financing activities
--------------------------
Net cash generated from financing activities 0 0
Net (decrease)/increase in cash and bank overdrafts (913,652) (4,313,580)
Cash and bank overdrafts at beginning of the year 5,346,381 4,697,666
Cash and bank overdrafts at end of the period 4,432,729 384,086
NOTES
1. Basis of preparation
This interim report has been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union taking into account
the corporate reorganisation proceedings that commenced in respect of the
Company on 29 November 2013, and IAS 1.25 and IAS 1.26 requirements regarding
the disclosure under the non-going concern basis.
Talvivaara's H1 2015 interim results report has been prepared on a basis other
than going concern. The H1 2014 interim results report has not been restated to
take into account the non-going concern assumption.
The chosen reporting basis results from the existence of material uncertainty
that casts significant doubt upon the Company's ability to realise its assets
and discharge its liabilities in the normal course of business and from the lack
of visibility on the Company's operational environment twelve months beyond the
date of reporting. Therefore, the requisite adjustments resulting from the
chosen reporting basis have, where applicable, been reflected in the carrying
amounts of the Company's assets and liabilities, but no reserve has been made in
the Company's balance sheet for the costs relating to winding down of the
operations.
Talvivaara's ability to revise its reporting basis and to regain its status as a
going concern is dependent, among other things, on the successful completion of
the Company's corporate reorganisation proceedings, which requires that (i)
Talvivaara succeeds in completing an arrangement that will secure the necessary
cash flow for the Company to discharge all of its liabilities and the
continuance of the Company's eligible business, and (ii) the shareholders of
Talvivaara approve the financial arrangement required to discharge the remaining
restructuring debts and to cover other possible liabilities to the extent the
Company's other funds are not sufficient for such purpose. As of the date of the
Company's H1 2015 interim results 27 August 2015, there is no certainty as to
whether the Company can fulfil all the set requirements within the given time
frame.
Should the restructuring programme draft be approved as proposed by the
Administrator, following illustrative calculations on equity position can be
drawn. First calculation assumes that none of the restructuring creditors
convert their debt to equity as per the restructuring programme and latter
calculation assumes that all of the non-secured creditors convert their
restructuring debt to equity.
Illustrative calculation of the Company equity, if the
restructuring programme would be approved
(Assuming none of the restructuring creditors convert to equity)
As at 30 Jun 15
----------------
Recognised equity (744,499,583)
Debts under the restructuring programme recognised on balance
sheet (including all accrued interest) 536,259,580
----------------
Equity after full write down of recognised restructuring debts (208,240,003)
----------------
Restructuring debts remaining if programme is approved (12,586,849)
Interest on secured restructuring debts during the restructuring
proceedings (205,547)
----------------
Equity after the approval of the restructuring programme (221,032,399)
----------------
Reversal of Nyrstar provision 203,444,456
----------------
Equity excluding Nyrstar provision (17,587,943)
----------------
Illustrative calculation of the Company equity, if the
restructuring programme would be approved
(Assuming all of the non-secured restructuring creditors convert
to equity)
As at 30 Jun 15
----------------
Recognised equity (744,499,583)
Debts under the restructuring programme recognised on balance
sheet (including all accrued interest) 536,259,580
----------------
Equity after full write down of recognised restructuring debts (208,240,003)
----------------
Restructuring debts remaining if programme is approved (7,500,000)
Interest on secured restructuring debts during the restructuring
proceedings (205,547)
----------------
Equity after the approval of the restructuring programme (215,945,550)
----------------
Reversal of Nyrstar provision 203,444,456
----------------
Equity excluding Nyrstar provision (12,501,094)
----------------
2. Property, plant and equipment
Machinery Construction
and in
(All amounts in EUR) Buildings equipment progress Total
----------------------------------------------
Gross carrying amount at 1 Jan
2014 11,899,045 19,837,595 0 31,736,640
----------------------------------------------
Gross carrying amount at 31 Dec
2014 11,899,045 19,837,595 0 31,736,640
----------------------------------------------
Accumulated depreciation and
impairment losses at 1 Jan 2014 8,521,159 14,265,990 - 22,787,149
Depreciation for the year 292,173 560,847 - 853,020
Impairment losses 3,085,712 - - 3,085,712
----------------------------------------------
Accumulated depreciation and
impairment losses at 31 Dec 2014 11,899,045 14,826,837 - 26,725,882
----------------------------------------------
Carrying amoung at 1 Jan 2014 3,377,885 5,571,605 0 8,949,490
----------------------------------------------
Carrying amount at 31 Dec 2014 0 5,010,758 0 5,010,758
----------------------------------------------
Gross carrying amount at 1 Jan
2015 11,899,045 19,837,595 - 31,736,640
Additions - 266,843 - 266,843
-----------------------
Gross carrying amount at 30 Jun
2015 11,899,045 20,104,438 - 32,003,483
----------------------------------------------
Accumulated depreciation and
impairment losses at 1 Jan 2015 11,899,045 14,826,837 - 26,725,882
Depreciation for the year - 278,055 - 278,055
Accumulated depreciation and
impairment losses
at 30 Jun 2015 11,899,045 15,104,892 - 27,003,937
----------------------------------------------
Carrying amoung at 1 Jan 2015 0 5,010,758 - 5,010,758
----------------------------------------------
Carrying amount at 30 Jun 2015 0 4,999,546 - 4,999,546
----------------------------------------------
3. Intangible assets
Other capitalized Construction
Intangible long-term in
(All amounts in EUR) rights expenditure progress Total
----------------------------------------------------
Gross carrying amount at 1
Jan 14 1,201,566 295,615 156,918 1,654,099
Additions 29,680 39,729 0 69,410
----------------------------------------------------
Gross carrying amount at 30
Jun 14 1,231,246 335,345 156,918 1,723,509
----------------------------------------------------
Accumulated depreciation and
impairment losses at 1 Jan
14 805,314 132,058 0 937,372
Depreciation for the year 46,821 33,372 - 80,193
----------------------------------------------------
Accumulated depreciation and
impairment losses at 30 Jun
4 852,135 165,430 35,643 1,053,208
----------------------------------------------------
0 0 0 0
Carrying among at 1 Jan 14 396,252 163,557 156,918 716,727
----------------------------------------------------
Carrying amount at 30 Jun 14 379,111 169,915 121,275 670,301
----------------------------------------------------
Gross carrying amount at 1
Jan 15 1,240,111 307,654 88,083 1,635,848
----------------------------------------------------
Gross carrying amount at 30
Jun 15 1,240,111 307,654 94,698 1,642,464
----------------------------------------------------
Accumulated depreciation and
impairment losses at 1 Jan
15 879,751 201,210 - 1,080,961
Depreciation for the year 36,281 28,134 0 64,415
----------------------------------------------------
Accumulated depreciation and
impairment losses at 30 Jun
15 916,032 229,344 - 1,145,376
Carrying amoung at 1 Jan 15 360,359 106,444 88,083 554,886
----------------------------------------------------
Carrying amount at 30 Jun 15 324,080 78,311 94,698 497,088
----------------------------------------------------
4. Investments
As at As at
Shares in group companies 30 Jun 15 31 Dec 14
--------------------------------------------------------
At the beginning of the year 0 16,606,591
Additions 0 14
Impairment 0 (16,606,605)
------------------------
At the end of the period 0 0
------------------------
Receivables from group companies 2015 2014
--------------------------------------------------------
At the beginning of the year 0 262,260,463
Additions 0 2,350,000
Impairment 0 (264,610,463)
------------------------
At the end of the period 0 0
------------------------
Other shares 2015 2014
--------------------------------------------------------
At the beginning of the year 0 6,967,599
Additions 0 277,702
Impairment 0 (7,245,301)
------------------------
At the end of the period 0 0
------------------------
Total investments
2015 2014
------------------------
At the beginning of the year 0 285,834,653
Impairment 0 2,627,717
Additions 0 (288,462,369)
------------------------
At the end of the period 0 0
------------------------
5. Borrowings and capital loans
As at As at
EUR 30 Jun 15 31 Dec 14
------------------------
Restructuring loans
Bonds 110,000,000 110,000,000
Convertible bonds 241,241,152 249,620,846
Revolving credit facility 70,000,000 70,000,000
Absolute guarantee 50,703,476 50,703,476
Interest during proceedings 11,171,398 7,465,075
Other borrowings during procedure 20,839,533 12,930,668
------------------------
503,955,559 500,720,066
------------------------
6. Contingencies and commitments 9
Counter indemnity given as a guarantee for the guarantee insurance provided by
Atradius Credit Insurance N.V to Kainuu ELY Centre
As at As at
30 Jun 15 31 Dec 14
--------------------------------------------
EUR 2015 2014
--------------------------------------------
Counter indemnity given as a
guarantee 31,940,000 31,940,000
--------------------------------------------
31,940,000 31,940,000
--------------------------------------------
The future aggregate minimum lease
payments under non-cancellable
operating leases
As at As at
EUR 30 Jun 15 31 Dec 14
--------------------------------------------
No later than 1 year 78,178 97,637
Later than 1 year and not later than
5 years 144 4,672
78,322 102,309
--------------------------------------------
Share-related key figures
Six Six Twelve
months to months to months to
30 Jun 15 30 Jun 14 31 Dec 14
------------------------------
Earnings per share EUR (0.02) 0.01 (0.41)
Equity per share EUR (0.39) 0.04 (0.38)
Employee-r
Unternehmensinformation / Kurzprofil:
Datum: 27.08.2015 - 10:22 Uhr
Sprache: Deutsch
News-ID 416236
Anzahl Zeichen: 65656
contact information:
Town:
Espoo
Kategorie:
Business News
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"Talvivaara Mining Company Interim Report for January-June 2015"
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