Solidium Oy's half-year report for January-June 2016 and annual financial statement
(Thomson Reuters ONE) -
Six month review period 1 January - 30 June 2016
* Solidium's return on equity holdings was -5.5 %
* Solidium subscribed for shares with EUR 97 million in SSAB's EUR 543 million
rights issue
* Solidium increased its shareholdings in Metso and Outotec
Financial year 1 July 2015 - 30 June 2016
* Solidium's return on equity holdings was -8.9 %
* Solidium's profit for the financial year was EUR 11 million. Profit before
impairments was EUR 312 million
* Solidium's net asset value decreased by EUR 726 million during the review
period due to the profit distribution of EUR 266 million and decrease in the
value of equity holdings, and was EUR 6,128 million at the end of the period
* After the end of the financial year the extra general meeting elected a new
board of directors of Solidium
* The annual general meeting of Solidium decided on profit distribution of EUR
278 million
Kari Järvinen, Managing Director of Solidium Oy, comments the review period:
"The return of our equity holdings during the six-month review period was -5.5
%. The stock markets were volatile during review period. For the whole financial
year the return on equity holdings was -8.9 %. The return largely reflects the
distribution of different industries in our holdings and the unsatisfactory
development in some of the companies we own. Due to the timing, the "Brexit
vote" had also an impact on the valuations in Solidium's financial statement
especially regarding our finance and cyclical holdings. After the end of the
financial year the sentiment on the stock markets improved and Solidium's return
on equity holdings in July-August 2016 was 7.3 %.
Even though the economic cycle for raw materials is at a low point, Finland is
still one of the few European countries with considerable long-term potential in
the metal and mining industries. That is why Solidium, as an anchor owner, has
been supporting the long-term development of the companies in the industry even
when the short-term outlook has been sluggish. We increased our holdings in
Metso and Outotec and participated in SSAB's rights issue of EUR 543 million by
subscribing for the company's new shares with approximately EUR 97 million. We
were influencing the structure of the rights issue and the development of the
company's financing package. The share issue strengthened SSAB's financial
position enabling the company to focus on implementing its growth strategy
within special steels.
The highlights of the financial year were the good returns from Elisa and Tieto
and the strong performance of Kemira and Valmet. However, when assessing the
return, it is important to bear in mind that Solidium is not a portfolio
investor but a long-term owner. In the long run, our expectation for the
companies is to perform better than the median of the peer companies. During the
financial year, seven out of eleven portfolio companies fulfilled our
expectations in this regard.
After the end of the financial year the extra general meeting of Solidium
elected a new board of directors as of 1 August 2016. With the new board of
directors Solidium has a good basis to continue its work within the mission and
authority determined by the owner of Solidium."
SOLIDIUM'S HOLDINGS
Development of holdings and key indicators
The total value of Solidium's holdings (equity holdings and money market
investments) was EUR 6,970 million on 30 June 2016 (EUR 7,296 million on 31
December 2015 and EUR 8,423 million on 30 June 2015). The return on Solidium's
holdings was -5.1% for the six month review period and -7.4 % for the financial
year. In addition to the decline of the value of equity holdings, the total
value of the holdings decreased due to repayment of the exchangeable bond (EUR
600 million) and the profit distribution paid (EUR 266 million). Detailed
information on the breakdown and the returns of the holdings are attached to
this report.
Equity holdings
The value of Solidium's equity holdings on 30 June 2016 was EUR 6,308 million
(EUR 6,836 million on 31 December 2015 and EUR 7,025 million on 30 June 2015).
The total return on the equity holdings was -5.5% for the review period and
-8.9% for the financial year. The best returns during the review period were
generated by Outokumpu, Outotec and Valmet while the development of Sampo, Stora
Enso and Telia Company were the weakest.
Money market investments
On 30 June 2016, Solidium's money market investments totalled EUR 662 million on
30 June 2016 (EUR 459 million on 31 December 2015 and EUR 1,398 million on 30
June 2015). The return on money market investments was 0.2% for the six-month
review period and 0.3% for the financial year.
Profit distribution to Solidium
During the financial year, Solidium received profit distribution amounting to
EUR 282 million before taxes (EUR 275 million in 1 July 2014 - 30 June 2015).
The dividend return of Solidium's holdings was 4.5% in relation to the value of
the equity holdings in the end of June 2016.
Participation in nomination boards
A central aspect of Solidium's corporate governance model is to actively
influence the composition of the boards of directors of the portfolio companies.
During the review period, Solidium participated actively in the work of
nomination boards preparing board elections. The aim of Solidium is to form a
board composition which best serves the needs of the company in question and the
goal of shareholder value creation. During the financial year, a total of 17 new
members were elected to the boards of directors of Solidium owned companies.
Nine of the new members were women.
Managing Director Kari Järvinen served as Solidium's representative in the
shareholders' nomination boards of Elisa, Metso, Outokumpu, Outotec, Stora Enso,
Talvivaara Mining Company and Valmet as Chairman, as well as in the nomination
boards of Kemira, SSAB, Telia Company, and Tieto as a member. These nomination
boards prepared proposals for the 2016 Annual General Meetings on the election
of board members and their remuneration.
Share acquisitions and other events
During the six-month review period, Solidium's share acquisitions totalled EUR
103 million (EUR 172 million in 1 July 2015 - 30 June 2016). Solidium increased
during the review period its holding in Metso from 14.6% to 14.9% by acquiring
shares worth EUR 5 million from the market and in Outotec from 14.7% to 14.9% by
acquiring shares worth EUR 1 million from the market.
In June 2016, Solidium participated in SSAB's rights issue of EUR 543 million by
committing to subscribe for shares for EUR 93 million, and in a secondary
subscription for EUR 4 million. Similarly to SSAB's other largest shareholder
Industrivärden, Solidium supported the company by committing to subscribe for
new shares pro rata on its primary participation, which the company announced to
the market when the rights issue was made public. The price difference between
SSAB's A and B shares has been considerable and permanent for a long time.
Therefore, Solidium played a key role in influencing the structure of the rights
issue and in ensuring equal treatment of shareholders. A structure in which all
shareholders were offered B shares provided the best solution in terms of
shareholder equality. The share issue strengthened SSAB's financial position and
in conjunction SSAB refinanced a significant part of its bank financing. The
company's indebtedness decreased closer to the peer company group's level, which
will offer better opportunities to execute the growth strategy based on special
steels.
At the end of June 2016, Talvivaara Mining Company Plc and state-owned Terrafame
Oy reached an agreement on an arrangement in which Talvivaara will offset the
"Nyrstar receivable" and receive EUR 1.4 million in cash as a consideration for
asset items related to the operations of the Sotkamo mine. This arrangement will
help the Talvivaara reorganization to proceed and to assist Terrafame as it
examines the future of the Sotkamo mine. The arrangement provides Talvivaara
with funds to proceed in the reorganization process, examine its options and
complete the reorganization process. Solidium's Managing Director Kari Järvinen
resigned from Talvivaara Mining Company's Board of Directors at the Annual
General Meeting on June 15 2016.
SOLIDIUM OY DURING THE REVIEW PERIOD
Guidelines concerning Solidium
In May 2016, the Finnish government set guidelines concerning ownership
steering, based on which the government issued a resolution on State ownership
policy. The resolution outlines the principles and general objectives of
ownership policy for State ownership of companies. As before, Solidium will be
responsible for the steering of listed companies where the State has a minority
interest. Solidium will continue to hold a certain number of the current shares,
it may decrease and increase their number and buy new shares in listed
companies, as considered important for society. The governance model of Solidium
was not changed.
General Meetings of Shareholders
The Extra General Meeting of Shareholders was held in Helsinki on 29 July 2016
electing a new Board of Directors of Solidium as of 1 August 2016. It was
decided that the Board of Directors shall have six members and the Board of
Directors were elected: Chairman Harri Sailas, Vice Chairman Eija Ailasmaa, and
members Aaro Cantell, Markku Hyvärinen, Paula Lehtomäki, and Marjo Miettinen.
The Annual General Meeting (AGM) of Solidium was held in Helsinki on 7 September
2016. The AGM adopted the company's financial statements for the financial
period of 1 July 2015 to 30 June 2016 and discharged the members of the Board of
Directors and the Managing Director from liability. The AGM resolved in
accordance with the proposal of the Board that a dividend and a capital
distribution totaling EUR 278 million will be paid for the financial period.
Harri Sailas was elected as Chairman of the Board, Eija Ailasmaa as Vice
Chairman and Aaro Cantell, Markku Hyvärinen, Paula Lehtomäki and Marjo Miettinen
as Board members. The AGM kept the remuneration of the Board unchanged
confirming that the Chairman of the Board of Directors shall receive a fee of
EUR 5,500 per month, the Vice Chairman EUR 3,000 per month and the members EUR
2,500 per month. In addition, a meeting fee of EUR 600 was confirmed for each
meeting. The firm of authorised public accountants KPMG Oy Ab, with APA Raija-
Leena Hankonen as the principal auditor, was appointed as Solidium's auditor to
serve for a term expiring at the end of the next AGM.
Key figures
Solidium's net profit for the financial year was EUR 11 million (EUR 312 million
before impairments). Solidium's operating expenses totalled EUR 3.5 million,
resulting in a management cost ratio of operations of 0.05%. Financial expenses
include a total amount of EUR 300 million relating to value impairments in
accordance with the accounting principles, of which EUR 83 million is related to
shares in Outokumpu, EUR 43 million is related to shares in Outotec and EUR 175
million is related to shares in SSAB. Solidium's net asset value decreased by
EUR 726 million during the financial year due to the profit distribution and
decrease in the value of equity, and was EUR 6,128 million at the end of the
period. The financial debt decreased by EUR 600 million as a result of the
repayment of the exchangeable bond.
+--------------------------------------+------------+------------+------------+
| |1 Jul 2015- |1 Jul 2014- |1 Jul 2013- |
| |30 June 2016|30 June 2015|30 June 2014|
+--------------------------------------+------------+------------+------------+
|Operating profit, EUR million |-3.5 |534.5 |400.3 |
+--------------------------------------+------------+------------+------------+
|Profit for the period, EUR million |11.2 |216.6 |1,449.9 |
+--------------------------------------+------------+------------+------------+
|Return on investment at fair values, %|-7.4 |4.3 |31.3 |
+--------------------------------------+------------+------------+------------+
|Management cost ratio of operations, %|0.05 |0.07 |0.07 |
+--------------------------------------+------------+------------+------------+
|Net asset value, EUR million |6,127.9 |6,853.6 |8,094.4 |
+--------------------------------------+------------+------------+------------+
|Shareholders' equity, EUR million |3,835.5 |4,090.3 |5,400.7 |
+--------------------------------------+------------+------------+------------+
|Financial debt, EUR million |350.0 |950.0 |950.0 |
+--------------------------------------+------------+------------+------------+
|Equity ratio, % |91.6 |81.1 |83.9 |
+--------------------------------------+------------+------------+------------+
|Average number of employees |12 |12 |11 |
+--------------------------------------+------------+------------+------------+
This half-year report is available at http://www.solidium.fi/en/publications-
and-media/half-year-report/. This report is unaudited.
Solidium Oy
Further information: Kari Järvinen, Managing Director, tel. +358 (0)10 830 8905
Solidium is a limited company wholly owned by the State of Finland. Its mission
is to strengthen and stabilise Finnish ownership in nationally important
companies and increase the value of its holdings in the long term. The basis and
core objective of Solidium's strategy is proper, value-enhancing asset
management of its current holdings. Through its stakes, Solidium is a minority
owner in twelve listed companies: Elisa, Kemira, Metso, Outokumpu, Outotec,
Sampo, SSAB, Stora Enso, Talvivaara Mining Company, Telia Company, Tieto and
Valmet. The market value of Solidium's equity holdings is approximately 7.1
billion euros at the date of this press release. Further information:
www.solidium.fi/en
Attachment:
Solidium's holdings as of 30 June 2016:
http://hugin.info/142364/R/2040505/761275.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Solidium Oy via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 08.09.2016 - 09:32 Uhr
Sprache: Deutsch
News-ID 493464
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