TIDMPOWR
RNS Number : 2289H
Powerflute Oyj
16 August 2016
16 August 2016
Powerflute
Unaudited Interim Results
For the six months ended 30 June 2016
Powerflute Oyj ("Powerflute" or the "Group") today announces its
unaudited interim results for the six-month period ended 30 June
2016.
HIGHLIGHTS
Results excluding non-recurring items (1)
-- Revenues decreased to EUR176.1 million (2015: EUR179.7 million)
-- EBITDA from operating activities was EUR26.5 million (2015: EUR26.5 million)
Results including non-recurring items
-- EBITDA from operating activities was EUR26.5 million (2015: EUR24.0 million)
-- Operating profit increased to EUR21.6 million (2015: EUR21.1 million)
-- Profit before tax increased to EUR18.5 million (2015: EUR18.2 million)
-- EPS increased to 4.5 cents per share (2015: 4.3 cents)
-- Net debt of EUR42.9 million (EUR37.1 million at 31 December 2015)
-- Refinancing of EUR120 million borrowing facilities agreed in
July 2016 will result in a significant reduction in net interest
expenses
Segmental performance excluding non-recurring items (1)
-- Coreboard and Cores
- Revenues increased to EUR106.1 million (2015: EUR105.4 million)
- EBITDA from operating activities increased to EUR15.2 million (2015: EUR12.2 million)
-- Packaging Papers
- Revenues decreased to EUR69.9 million (2015: EUR74.3 million)
- EBITDA from operating activities reduced to EUR11.4 million (2015: EUR14.5 million)
(1) Non-recurring items in the period ended 30 June 2015
included restructuring costs and other costs related to the
acquisition of Corenso in December 2014 and a gain arising on the
sale of shares in Kotkamills in March 2015. There were no
non-recurring items in the period ended 30 June 2016.
Commenting on the results, Dermot Smurfit, Chairman of
Powerflute said:
"I am pleased to report that the Group has continued to perform
well during the first half of the year. The integration of the
Corenso businesses acquired in December 2014 is now substantially
complete and our Coreboard and Cores division has delivered an
increase in profits compared with the prior year as the benefits of
operational initiatives launched in 2015 are now being realised. In
Packaging Papers, a decision to implement the planned annual
maintenance shutdown during the first half of the year together
with more challenging market conditions resulted in profits below
the record performance achieved in 2015."
"Markets are expected to remain competitive throughout the
second half of the year. Despite this, we expect to make further
progress with operational improvement initiatives in both Coreboard
and Cores and Packaging Papers and expect that the Group will
continue to perform well for the remainder of the year."
For further information, please contact:
Powerflute
Dermot Smurfit (Chairman) c/o Oliver Winters
Marco Casiraghi (CEO) FTI Consulting
David Walton (CFO) +44 20 3727 1535
Numis Securities
Mark Lander (Corporate Broking)
Andrew Holloway/Jamie Lillywhite
(Nominated Advisor) +44 20 7260 1000
FTI Consulting
Oliver Winters/Georgina Goodhew/Tom
Hufton +44 20 3727 1535
About Powerflute
Powerflute is a paper and packaging group quoted on the AIM
market of the London Stock Exchange (Ticker: POWR) which seeks to
acquire businesses with strong fundamentals whose performance can
be improved through a combination of management focus and targeted
investment.
The Group has two main activities; Packaging Papers which trades
under the name Powerflute and operates a paper mill in Kuopio,
Finland producing a specialised form of Nordic semi-chemical
fluting used in the manufacture of high-performance corrugated
board; and Coreboard and Cores, which trades under the name Corenso
and is a leading international manufacturer of high performance
coreboard and cores, with coreboard mills in the United States and
Europe and a network of core producing facilities in Europe, North
America and China.
Nordic semi-chemical fluting is made from locally sourced birch,
and boxes manufactured using it demonstrate superior strength and
moisture resistance and are used for transportation of fruit and
vegetables, high-value industrial goods such as electrical
appliances and automotive components. The Kuopio mill is one of
only three suppliers of Nordic semi-chemical fluting in Europe.
Cores and coreboard are manufactured from recycled paper and are
used for applications in paper, packaging, textiles, steel,
aluminium and many other industries. Coreboard and cores produced
by Corenso demonstrate superior strength and rigidity and are
suitable for use in the most demanding applications.
For further information, please visit www.powerflute.com.
CHAIRMAN'S STATEMENT
I am pleased to report that the Group has continued to perform
well during the first half of the year, achieving revenues and
profits broadly in line with the same period of the prior year
despite encountering tougher market conditions. Further progress
has been made in the Coreboard and Cores activity and the Packaging
Papers continued to perform well despite increased competitive
pressure.
Results
Revenue for the six months ended 30 June 2016 decreased to
EUR176.1 million (2015: EUR179.7 million). EBITDA from operating
activities before non-recurring items was unchanged at EUR26.5
million (2015: EUR26.5 million). Profit before tax increased to
EUR18.5 million (2015: EUR18.2 million) and Basic EPS increased
compared with the prior year to 4.5 cents per share (2015: 4.3
cents per share).
In Coreboard and Cores, operational improvement initiatives
launched in 2015 are delivering the expected benefits and this,
together with improvements in the effectiveness of sales and
marketing activities, contributed to an increase in profits
compared with the prior year. In Packaging Papers, a decision to
take the planned annual maintenance shutdown during the first half
of the year and the impact of more challenging conditions on
pricing and volumes resulted in profits below the record
performance achieved in 2015. The integration of the Corenso
businesses acquired in December 2014 is now substantially complete
and the major IT project launched in mid-2015 is progressing in
line with our expectations with the first sites already live on the
new systems.
There were no non-recurring items to report for the six months
ended 30 June 2016. Non-recurring items in the six months ended 30
June 2015 were EUR0.4 million, including costs of EUR2.5 million
related to the integration and restructuring of Corenso, offset by
a gain of EUR2.1 million on the sale of the Group's investment in
Kotkamills Oy.
Cash flow and liquidity
The net cash outflow for the period was EUR5.8m (2015: EUR9.5
million inflow). This reflected the impact of normal seasonal
factors, which typically result in an increase in net working
capital during the first half, an increased level of taxes paid
following the higher profits earned in 2015 (2016: EUR5.8 million,
2015: EUR2.9 million), higher capital expenditure due to the timing
of the maintenance shutdown in Packaging Papers and the phasing of
investment projects in Coreboard and Cores (2016: EUR7.6 million,
2015: EUR2.1 million) and the increased level of distribution to
shareholders (2016: EUR6.5 million, 2015: EUR4.3 million).
The Group remains in a strong financial position, with net debt
of EUR42.9 million (31 December 2015: EUR37.1 million, 30 June
2015: EUR52.0 million) representing approximately 0.8 times
annualised EBITDA (based on EBITDA from operating activities during
the six months ended 30 June 2016).
On 28 July 2016, the Group entered into a new facilities
agreement with its existing lender, Nordea Bank Finland, and HSBC
Bank plc for the provision of EUR120 million of facilities with a
five-year term. The new facilities provide the Group with financial
security for the foreseeable future and are made available on
considerably more favourable terms which will result in a
significant reduction in total borrowing costs. Further details are
provided in the Finance Review below.
Summary and Outlook
The Group performed well during the first half of the year
despite encountering tougher market conditions in a number of
areas. In particular, good progress has been made in the Coreboard
and Cores activity. The integration of the Corenso businesses into
the Group is now substantially complete and operational improvement
is occurring in line with our expectations. The Packaging Papers
business continued to perform well despite increased competitive
pressure and we are confident that investments completed during the
maintenance shutdown will deliver benefits during the second
half.
Markets are expected to remain competitive throughout the second
half of the year. Despite this, we expect to make further progress
with operational improvement initiatives in both Coreboard and
Cores and Packaging Papers and expect that the Group will continue
to perform well for the remainder of the year.
Dermot Smurfit
Chairman
16 August 2016
BUSINESS REVIEW
Coreboard and Cores
2016 2015
------------------------------- --------- --------
Revenues (EURm) 106.1 105.4
EBITDA(1) (EURm) 15.2 12.2
Return on sales (%) 14.3 11.7
------------------------------- --------- --------
(1) EBITDA from operating activities excluding
non-recurring items related to separation and
integration activities
Coreboard and Cores has made a good start to the year despite
the impact of challenging economic conditions and considerable
uncertainty in markets in China and Europe. Coreboard production
and deliveries increased compared with the prior year as modest
gains in the mills in Finland and the US were offset by a decrease
in output from the French mill due to mechanical issues during the
first quarter. The core converting operations performed well and
total volumes were up by 4% on the prior year, with growth achieved
across all regions as the benefits from restructuring and
improvement initiatives launched during 2015 begin to take
effect.
EBITDA from operating activities before non-recurring items
increased by EUR3.0 million compared with the prior year. The
results continue to be burdened by the cost of dual-running of
legacy IT systems alongside the Group's new systems and
infrastructure, but the impact of this was offset by the release of
provisions made in 2015 against uncertainties. On an underlying
basis, there was clear evidence of improvement in performance in
the US and European businesses.
In North America, the coreboard mill continued to perform well
as increased focus on operating efficiencies and productivity
resulted in volumes which were up 2% on the prior year and a
further improvement in contribution margins. The core converting
operations also performed well, with improvement in both volumes
and profitability despite the impact of an operational
restructuring programme and disruption associated with the
installation of a new winder in May.
Our businesses in China continued to experience challenging
market conditions, but despite this, volumes increased by 8%
compared with the prior year. Competitive pressures adversely
impacted selling prices and both margins and profits reduced
compared with the prior year, but were in line with our
expectations. Notwithstanding the deterioration compared with the
prior year, China continues to be one of our most profitable
regions and we remain excited about the opportunities for further
profitable expansion in this region.
In Europe, performance was mixed with the benefits from progress
in the core converting operations partially offset by a higher than
normal incidence of mechanical reliability issues in both coreboard
mills. We were particularly pleased that despite headcount
reductions, withdrawal from loss-making activities and a number of
other operational changes made during 2015, the total production
and delivery volumes from the core converting operations in Europe
increased by 2% compared with the prior year demonstrating that
there has been real underlying operational improvement. The
profitability of these businesses also improved considerably as a
result of the benefits from the restructuring of operations in
Germany during the second half of 2015 and a determined focus on
productivity, waste reduction and driving operational efficiencies
throughout the region.
Packaging Papers
2016 2015
---------------------------------------- ---------- ---------
Revenues (EURm) 69.9 74.3
EBITDA(1) (EURm) 11.4 14.5
Return on sales (%) 16.3 19.4
---------------------------------------- ---------- ---------
(1) EBITDA from operating activities before non-recurring
items
Following the record performance achieved in 2015, Packaging
Papers experienced a reduction in profitability of EUR3.1 million
on delivery volumes that were 5% down on the prior year and
production volumes that were down by 10%. The volume reductions and
the related reduction in profitability were principally due to the
timing of the planned annual maintenance shutdown, which was
scheduled for the first half of the year in 2016 compared with the
second half in 2015. However, the mill also experienced an
increased frequency of minor mechanical issues compared with the
prior year and overall production efficiency was slightly below the
record level achieved in 2015.
As highlighted in previous announcements, market conditions
during the first half were more challenging than those of the prior
year and the underlying pressure on volumes and pricing intensified
as a result of weaker than expected fruit harvests in a number of
markets following adverse weather conditions, the addition of some
incremental capacity in semi-chemical fluting by a Nordic
competitor and increases in kraftliner and recycled containerboard
capacity in Europe. Despite this, the forward order book remained
at reasonable levels throughout the period and the impact of more
intense competition on average selling prices was relatively modest
and largely offset by reductions in freight and distribution costs.
Forward order books are slowly recovering at pricing levels which,
although lower than those of the first half and the prior year, are
in line with our expectations.
During the maintenance shutdown in May, a number of investments
intended to reduce wood consumption, increase yield and capacity
and improve paper performance were successfully completed. Although
much work remains to be done to optimise production following these
investments, the early signs are encouraging. Further investment
projects are planned for the second half of the year and we expect
that these will deliver improvements in quality and paper
performance in a number of key areas.
Marco Casiraghi
Chief Executive Officer
16 August 2016
FINANCE REVIEW
Financial summary
2016 2015 Increase/
EUR000 EUR000 (Decrease)
---------------------------------- -------- -------- ------------
Revenue
Packaging Papers 69.9 74.3
Coreboard and Cores 106.1 105.4
---------------------------------- -------- --------
Total Revenues 176.1 179.7 -2%
---------------------------------- -------- --------
EBITDA
Coreboard and Cores 15.2 12.2 +25%
Packaging Papers 10.9 14.3 -24%
Segment EBITDA 26.1 26.5 -1%
Unrealised gains/(losses) on
financial instruments 0.5 0.2
Share-based payment schemes (0.1) (0.2)
---------------------------------- -------- --------
EBITDA before non-recurring
items 26.5 26.5
Non-recurring items - (2.5)
---------------------------------- -------- --------
EBITDA from operating activities 26.5 24.0 +10%
Gain on disposal - 2.1
Acquisition-related expenses - -
---------------------------------- -------- --------
EBITDA 26.5 26.1 +2%
---------------------------------- -------- --------
Revenue reduced to EUR176.1 million (2015: EUR179.7 million),
due largely to a reduction in sales from Packaging Papers, where
the decision to take the planned annual maintenance stop during the
first half of the year instead of the second impacted on production
volumes and where average selling prices reduced slightly due to
competitive pressures.
Segment EBITDA is stated before non-recurring items and before
recognising unrealised gains and losses on derivative financial
instruments used to hedge currency risk in the Packaging Papers
activity and before the cost of share-based payment schemes, both
of which are non-cash items.
EBITDA from operating activities before charging non-recurring
expenses was unchanged at EUR26.5 million (2015: EUR26.5 million).
There were no non-recurring items during the six-month period ended
30 June 2016 (2015: EUR2.5 million of expenses related to the
acquisition and integration of the Coreboard and Cores
activity).
The results for the period continue to be burdened by the cost
of dual-running of legacy IT systems alongside the Group's new
systems and infrastructure and were also impacted by the timing of
the planned annual maintenance shutdown in Packaging Papers and the
release of provisions made in 2015 against uncertainties in
Coreboard and Cores.
There was a good level of improvement in the underlying
performance of Coreboard and Cores, driven largely by the
continuing strong performance of the US businesses and an
improvement in profitability in the European core converting
operations following restructuring in the German businesses and
elsewhere during the second half of 2015. Together, these factors
offset the decline in profitability experienced in the operations
in China where market conditions were much tougher.
In addition to the impact of the timing of the planned annual
maintenance shutdown on production volumes, deliveries and
operating expenses, the pressure on order books in Packaging Papers
over the last few months finally began to impact average selling
prices during the second quarter, although the effect on margins
was largely mitigated by lower selling and distribution costs.
Finance income and expenses
Net finance expenses were EUR3.1 million (2015: EUR2.9 million),
consisting of finance income of EUR0.1 million (2015: EUR0.3
million) and interest and other borrowing expenses of EUR3.2
million (EUR3.2 million). Net finance expenses continue to be
relatively high due to the structure of the Group's borrowing
arrangements and the cost of the facilities put in place at the
time of the Corenso acquisition in December 2014. The Group has
recently completed a refinancing of its debt facilities which
should result in a significant reduction in net interest costs in
the future. Further details are provided below.
Taxation
The income tax charge of EUR5.0 million (2015: EUR5.2 million)
represents an effective tax rate of 27% (2015: 28%) and has been
determined using an estimate of the weighted average annual tax
rate for the year applied to the underlying profit before taxation
after adjusting for the impact of disallowable items of income and
expenditure.
The underlying rate of tax on profits in Finland during the year
was 20% (2015: 20%). The difference between this and the estimated
rate arises principally because a significant proportion of the
Group's profits are generated in territories where higher rates of
tax apply.
Profit after taxation and Earnings Per Share
The profit for the period was EUR13.5 million (2015: EUR13.0
million). Basic earnings per share was 4.5 cents per share (2015:
4.3 cents per share) and diluted earnings per share was 4.3 cents
per share (2015: 4.1 cents per shares).
Return of capital
A return of invested non-restricted equity of 3.00 cents per
share was made in lieu of a dividend for the year ended 31 December
2015 (2015: dividend of 1.50 cents per share for the year ended 31
December 2014). The record date for the distribution was 3 June
2016 and the payment was made on 21 June 2016 at a total cost of
EUR8.7 million (2015: EUR4.3 million).
Dispute with the Finnish Tax Administration
The Group is involved in a dispute with the Finnish tax
administration over the taxation of gains arising on the disposal
in May 2011 of its interests in the Scheufelen group of companies.
The Group believes that the gains arising on the disposal should be
exempt from tax under the substantial shareholder exemptions that
apply within Finland and the EU. However, the tax assessments
issued by the Finnish tax administration for the year ended 31
December 2011 included EUR3.6 million of taxes, which the Group is
contesting.
In order to avoid the risk of interest and penalties, the Group
has paid the amounts concerned but has not yet recognised the
expense in its income statement and instead the amount of the taxes
paid is recorded as a current financial asset in the balance sheet.
In the event that the Group does not prevail in its appeal against
the tax assessments, additional taxes of EUR3.6 million would have
to be recognised within the results of discontinued operations.
There would be no impact on the net cash position of the Group.
The matter is the subject of an appeal to the Finnish Supreme
Administrative Court and there have been no material developments
during the current period. Further details of the nature and status
of the dispute are provided in the Annual Report for the year ended
31 December 2015.
Financial Position
The total assets and total equity and liabilities of the Group
reduced by EUR10.1 million to EUR275.8 million (31 December 2015:
EUR286.0 million, 30 June 2015: EUR279.9 million), while total
equity increased by EUR3.2 million to EUR105.1 million (31 December
2015: EUR101.9 million, 30 June 2015: EUR90.7 million).
The reduction in total assets and total equity and liabilities
of EUR10.1 million was due to the impact of seasonal factors on net
working capital and net debt. The increase in total equity of
EUR3.2 million was attributable to the increase in retained
earnings as a result of the profit for the period of EUR13.5
million and the decrease in the reserve for invested non-restricted
equity of EUR8.7 million following the distribution to
shareholders, with the majority of the difference relating to the
impact of the movement in exchange rates on the carrying value of
assets and liabilities of foreign operations.
Capital expenditure increased to EUR7.6 million (2015: EUR2.1
million) and was higher than depreciation and amortisation of
EUR4.9 million (2015: EUR5.0 million). The increase in expenditure
reflects the timing of the planned annual maintenance stop in
Packaging Papers, completion of a number of projects in Coreboard
and Cores that were initiated during 2015 and continuing investment
in the Group's new IT systems and infrastructure. Excluding
expenditure on the replacement of IT systems, capital expenditure
for the full year should be broadly comparable with
depreciation.
Cash flow, borrowings and liquidity risk
The Group experienced a net cash outflow during the period of
EUR5.8 million (2015: EUR9.2 million inflow) due to a combination
of a seasonal increase in net working capital, higher taxes, higher
capital expenditure and the increased level of distribution to
shareholders.
The principal sources and uses of cash during the period were as
follows:
-- EUR12.7 million net cash inflow from operating activities (2015: EUR15.2 million inflow)
-- EUR7.6 million capital expenditure (2015: EUR2.1 million)
-- EUR6.5 million return of capital to shareholders (2015: EUR4.3 million dividend)
-- EUR2.6 million net cash interest expense (2015: EUR2.6 million)
The net cash inflow from operating activities reduced by EUR2.5
million compared with the same period of the prior year and
consisted of profits from trading activities after adjusting for
non-cash items of EUR26.3 million (2015: EUR25.9 million), an
increase in net working capital of EUR7.8 million (2015: EUR7.7
million) and payment of income taxes of EUR5.8 million (2015:
EUR2.9 million). The main reason for the lower level of net cash
inflow from operating activities was the increase in taxes payable
on the higher level of profits earned in 2015 compared with
2014.
Borrowings and liquidity risk
At 30 June 2016, the Group had balance sheet net debt of EUR42.9
million (31 December 2015: EUR37.1 million, 30 June 2015: EUR52.0
million), consisting of cash and cash equivalents of EUR47.5
million (31 December 2015: EUR59.2 million, 30 June 2015: EUR56.7
million) and interest bearing loans and borrowings, stated net of
capitalised finance expenses, of EUR90.4 million (31 December 2015:
EUR96.3 million, 30 June 2015: EUR108.7 million).
Although net debt increased during the period by EUR5.8 million,
the Group made good progress with its efforts to improve its
management of liquidity and the efficiency of its financing
structure. Gross borrowings reduced considerably and are now
EUR18.3 million lower than the same point in the prior year.
On 28 July 2016, the Group entered into a new facilities
agreement with its existing lender, Nordea Bank Finland, and HSBC
Bank plc for the provision of EUR120 million of facilities with a
five-year term. The new facilities consist of a term loan of EUR80
million and a revolving credit facility of EUR40 million, both of
which remain available to the Group throughout the period to 28
July 2021 without amortisation. The covenants and other conditions
which apply to the new facilities are substantially the same as
those which applied to the Group's previous borrowing arrangements
but the lending margins are considerably more favourable and will
result in a significant reduction in total borrowing costs.
Foreign currency risk
The functional and reporting currency of the Group is the Euro.
The Group sells and distributes its products in international
markets and has transactional exposure to a number of other
currencies and in particular, to the US Dollar. Following the
acquisition of Corenso, the Group also operates businesses in
countries which use currencies other than the Euro. In particular,
it has operations in countries using the Swedish Krone, US Dollar,
British Pound and the Chinese Renminbi.
In the six-month period ended 30 June 2016, approximately 29% of
the Group's sales by volume and value and 15% of its expenditure on
raw materials, consumables and other expenses were denominated in
US Dollars. The relative movement in the US Dollar against the Euro
during 2016 when compared to 2015 was as follows:
-- Movement in average exchange rate between six months ended 30
June 2015 and 30 June 2016 - no material change
-- Movement in exchange rate at balance sheet date between 31
December 2015 and 30 June 2016 - 2.0% favourable
It is the policy of the Group to hedge a portion of its foreign
currency exposures for a period of up to 12 months using forward
exchange contracts. Therefore, it may take some time for the effect
of movements in foreign exchange rates to be reflected in the
performance of the Group.
Where possible the Group takes advantage of natural hedges and
only considers hedging the net exposure. Decisions on the
implementation of the hedging policy are made by the senior
management of the Group and are discussed with and reported to the
Board on a regular basis. Amendment of the hedging policy itself is
a matter reserved for the Board. The Group does not designate
currency derivative contracts as hedges for the purpose of hedge
accounting and does not engage in currency speculation.
Risks and uncertainties
The principal risks and uncertainties facing the business and
the activities of the Group and the steps that are taken to
mitigate these have not changed from those presented in the 2015
Annual Report, which is available for download from the Group's
website.
Going concern
Relative to its size, the Group has considerable financial
resources and long term contracts and relationships with its key
customers and suppliers. As a consequence, the Directors consider
that the Group is well placed to manage its business risks
successfully.
After making diligent enquiries, the Directors have a reasonable
expectation that that Group has adequate resources to enable it to
continue its activities for the foreseeable future, being a period
of at least 12 months from the date of approval of the financial
statements, and accordingly, continues to adopt the going concern
basis in preparing the financial statements.
David Walton
Chief Financial Officer
16 August 2016
RESPONSIBILITY STATEMENT
The directors are responsible for preparing the interim
condensed consolidated financial statements in accordance with
applicable law and regulations.
In preparing the financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the parent
company will continue in business.
International Accounting Standard 1 requires that directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements of an IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and performance;
and
-- make an assessment of the Group's ability to continue as a going concern.
The directors confirm that to the best of their knowledge:
-- the interim condensed consolidated financial statements of
the Group for the six months ended 30 June 2016, have been prepared
in accordance with IAS 34 Interim Financial Reporting;
-- the interim management report includes a fair review of the
development and performance of the business and of the position of
the undertakings included in the consolidation, taken as a whole,
together with a description of the principal risks and
uncertainties that they face; and
-- the interim condensed consolidated financial statements and
interim management report, taken as a whole, are presented in a
fair, balanced and understandable manner.
Approved by the Board and signed on its behalf by:
Dermot F Smurfit Marco Casiraghi David Walton
Chairman Chief Executive Chief Financial Officer
16 August 2016
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
To the Board of Directors of Powerflute Oyj
Introduction
We have reviewed the accompanying condensed consolidated interim
financial information of Powerflute Oyj ("Powerflute" or "the
Company") for the six months ended 30 June 2016, consisting of the
Income Statement, Statement of Comprehensive Income, Statement of
Financial Position, Statement of Changes in Equity and Cash Flow
Statement, together with related Notes 1 to 21.
The Board of Directors and the Managing Director are responsible
for the preparation and presentation of this interim financial
information in accordance with IAS 34 - Interim Financial
Reporting. Our responsibility is to express a conclusion on the
interim financial information based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements ISRE 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity." A review of interim financial information consists of
making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated interim
financial information for the six months ended 30 June 2016 is not
prepared, in all material respects, in accordance with
International Accounting Standard 34.
Helsinki, 16 August 2016
ERNST & YOUNG OY
Accountant Firm
Erkka Talvinko
Authorised Public Accountant
Notes: A review does not provide assurance on the maintenance
and integrity of the website, including controls used to achieve
this, and in particular on whether any changes may have occurred to
the financial information since first published. These matters are
the responsibility of the directors but no control procedures can
provide absolute assurance in this area.
INTERIM CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the six months ended 30 June 2016
Six months
ended Year ended
30 June 31 December
--------------------
2016 2015 2015
EUR EUR
Note 000 000 EUR 000
Continuing operations
Revenue 7 176,059 179,689 357,204
Other operating income 81 320 294
Changes in inventories
of finished goods and
work in progress (2,256) 711 3,371
Raw materials and consumables
used (57,409) (58,432) (116,678)
Employee benefits expense (33,292) (35,194) (66,175)
Other expenses (56,924) (63,195) (127,032)
Share of profit/(loss)
of a joint venture 212 133 211
Gain on disposal - 2,064 2,062
Depreciation and amortization (4,872) (4,988) (9,935)
------------------------------- ----- --------- --------- -------------
Operating profit 21,599 21,108 43,321
Finance income 115 297 444
Finance expenses (3,180) (3,196) (6,017)
------------------------------- ----- --------- --------- -------------
Profit before tax from
continuing operations 18,534 18,209 37,748
Income tax 10 (5,006) (5,197) (10,523)
------------------------------- ----- --------- --------- -------------
Profit for the period from
continuing operations 13,528 13,012 27,225
-------------------------------------- --------- --------- -------------
Profit for the period
Attributable to
- Equity holders of
the Parent 12,898 12,266 25,811
- Non-controlling interests 630 746 1,414
------------------------------- ----- --------- --------- -------------
13,528 13,012 27,225
------------------------------- ----- --------- --------- -------------
Earnings per share
(cents per share)
Basic 4.5 4.3 9.1
Diluted 4.3 4.1 8.7
The notes on pages 19 to 35 form an integral part of this
condensed consolidated interim financial information
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2016
Six months
ended Year ended
30 June 31 December
------------------
2016 2015 2015
EUR EUR
Note 000 000 EUR 000
Profit for the period 13,528 13,012 27,225
Other comprehensive
income
Other comprehensive income to be reclassified
to profit or loss in subsequent periods:
Exchange differences
on translation of foreign
operations (2,269) 6,114 5,768
Net movement on available-for-sale
financial assets - (2,046) (2,046)
Net (loss)/gain on
cash flow hedges 649 (518) (998)
Income tax effect (130) 106 211
-------------------------------------------- -------- -------- -------------
(1,750) 3,656 2,935
------------------------------------------- -------- -------- -------------
Other comprehensive income not to be reclassified
to profit or loss in subsequent periods:
Remeasurement gains
(losses) on defined
benefit plans - - 8
Income tax effect - - (2)
-------------------------------------------- -------- -------- -------------
- - 6
------------------------------------------- -------- -------- -------------
Total comprehensive
income for the period
net of tax 11,778 16,668 30,166
Attributable to
- Equity holders of
the parent 11,399 15,344 28,327
- Non-controlling interest 379 1,324 1,839
-------------------------------------------- -------- -------- -------------
11,778 16,668 30,166
------------------------------------------- -------- -------- -------------
The notes on pages 19 to 35 form an integral part of this
condensed consolidated interim financial information
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2016
30 June 31 December 30 June
2016 2015 2015
EUR EUR
Note EUR 000 000 000
ASSETS
Non-current assets
Property, plant and equipment 13 107,590 105,589 100,603
Intangible assets 8 6,564 6,911 6,992
Other non-current financial
assets 29 1,031 1,323
Investment in associate
or joint venture 3,761 3,547 3,469
Deferred tax asset 2,025 2,308 1,544
--------------------------------- ----- -------- ------------ --------
Total non-current assets 119,969 119,386 113,931
--------------------------------- ----- -------- ------------ --------
Current assets
Inventories 38,496 38,974 35,974
Trade and other receivables 66,083 67,907 72,343
Derivative financial
instruments 14 24 73 325
Current income tax receivables 3,747 419 631
Cash and short-term deposits 47,528 59,218 56,699
--------------------------------- ----- -------- ------------ --------
Total current assets 155,878 166,592 165,954
--------------------------------- ----- -------- ------------ --------
TOTAL ASSETS 275,847 285,978 279,885
--------------------------------- ----- -------- ------------ --------
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the parent
Issued share capital 88 88 88
Reserve for invested
non-restricted equity 19,702 28,422 28,422
Exchange differences
on translating foreign
operations 4,928 6,946 7,139
Treasury shares (1,735) (1,735) (1,735)
Hedging reserve (645) (1,164) (789)
Defined benefit plans
reserve (49) (49) (55)
Retained earnings 74,743 61,692 47,969
--------------------------------- ----- -------- ------------ --------
Equity attributable to
equity holders of the
parent 97,032 94,200 81,039
Non-controlling interests 8,028 7,658 9,703
Total equity 105,060 101,858 90,742
--------------------------------- ----- -------- ------------ --------
Non-current liabilities
Interest-bearing loans
and borrowings 17 86,638 92,078 104,625
Other non-current financial
liabilities 181 224 1,532
Derivative financial
instruments 14 571 519 589
Provisions 1,432 1,409 546
Deferred tax liabilities 12,211 12,544 11,770
--------------------------------- ----- -------- ------------ --------
Total non-current liabilities 101,033 106,774 119,062
--------------------------------- ----- -------- ------------ --------
Current liabilities
Trade and other payables 56,830 65,020 56,230
Interest-bearing loans
and borrowings 17 3,721 4,218 4,086
Other current financial
liabilities 3 3 468
Employee benefit liability 71 2 -
Derivative financial
instruments 14 602 1,887 925
Provisions 833 1,159 3,892
Current income tax liabilities 7,694 5,056 4,480
--------------------------------- ----- -------- ------------ --------
Total current liabilities 69,754 77,346 70,081
--------------------------------- ----- -------- ------------ --------
Total liabilities 170,787 184,120 189,143
--------------------------------- ----- -------- ------------ --------
TOTAL EQUITY AND LIABILITIES 275,847 285,978 279,885
--------------------------------- ----- -------- ------------ --------
The notes on pages 19 to 35 form an integral part of this
condensed consolidated interim financial information
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2016
Attributable to equity holders of the parent
----------------------------------------------------------------------------------------------------------------------------------
Foreign
Invested Defined currency Non-
Share non-restricted Treasury Hedging Available-for-sale benefit translation Retained controlling Total
Capital equity Shares Reserve reserve plans reserve Earnings Total interests Equity
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
--------------- ---------- --------------- ----------- ---------- --------------------- ----------- -------------- ----------- ----------- --------------- ---------
As at 1
January
2016 88 28,422 (1,735) (1,164) - (49) 6,946 61,692 94,200 7,658 101,858
Profit for the
period - - - - - - - 12,898 12,898 630 13,528
Other
comprehensive
income(loss) - - - 519 - - (2,018) - (1,499) (251) (1,750)
--------------- ---------- --------------- ----------- ---------- --------------------- ----------- -------------- ----------- ----------- --------------- -----------
Total
comprehensive
income (loss) - - - 519 - - (2,018) 12,898 11,399 379 11,778
Capital
redemption - (8,720) - - - - - - (8,720) (9) (8,729)
Share based
payments - - - - - - - 152 152 - 152
At 30 June
2016 88 19,702 (1,735) (645) - (49) 4,928 74,742 97,032 8,028 105,060
--------------- ---------- --------------- ----------- ---------- --------------------- ----------- -------------- ----------- ----------- --------------- -----------
As at 1
January
2015 88 28,422 (1,735) (377) 2,046 (55) 1,603 39,747 69,739 8,379 78,118
Profit for the
period - - - - - - - 12,266 12,266 746 13,012
Other
comprehensive
income(loss) - - - (412) (2,046) - 5,536 - 3,078 578 3,656
--------------- ---------- --------------- ----------- ---------- --------------------- ----------- -------------- ----------- ----------- --------------- -----------
Total
comprehensive
income (loss) - - - (412) (2,046) - 5,536 12,266 15,344 1,324 16,668
Dividends paid - - - - - - - (4,262) (4,262) - (4,262)
Share based
payments - - - - - - - 218 218 - 218
--------------- ---------- --------------- ----------- ---------- --------------------- ----------- -------------- ----------- ----------- --------------- -----------
At 30 June
2015 88 28,422 (1,735) (789) - (55) 7,139 47,969 81,039 9,703 90,742
--------------- ---------- --------------- ----------- ---------- --------------------- ----------- -------------- ----------- ----------- --------------- -----------
The notes on pages 19 to 35 form an integral part of this
condensed consolidated interim financial information
INTERIM CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2016
Six months
ended Year ended
30 June 31 December
-------------------
2016 2015 2015
EUR EUR EUR
Note 000 000 000
Operating activities
Profit/(loss) before
tax from continuing
operations 18,534 18,209 37,748
Profit/(loss) before
tax from discontinued
operations - - -
------------------------------------------- ----- --------- -------- -------------
Profit before tax 18,534 18,209 37,748
Non-cash:
Depreciation of property,
plant and equipment 4,563 4,701 9,249
Amortisation of intangible
assets 308 287 686
Share-based payment
expense 152 218 396
Net foreign exchange
differences 791 - (4,587)
Gain on sale of shares - (2,064) (2,062)
Change in financial
instruments (666) (473) 296
Finance income (115) (297) (444)
Finance expense 3,180 3,196 6,017
Share of (profit)/loss
in a joint venture (212) (133) (211)
Movements in provisions,
pensions and government
grants (234) 2,210 348
Working capital adjustments:
Change in trade and
other receivables and
prepayments 433 (5,647) (845)
Change in inventories 104 1,311 (1,740)
Change in trade and
other payables (8,378) (3,390) 3,862
Income tax received/(paid) (5,777) (2,927) (6,267)
------------------------------------------ ----- --------- -------- -------------
Net cash flows from
operating activities 12,683 15,201 42,445
------------------------------------------- ----- --------- -------- -------------
Investing activities
Proceeds from sale
of property and equipment - - -
Purchase of property,
plant and equipment 13 (7,602) (2,065) (11,028)
Investment in a joint
venture and associate - (28) (28)
Proceeds from sale
of financial assets - 3,726 3,724
Interest received 115 297 444
------------------------------------------ ----- --------- -------- -------------
Net cash flows from
investing activities (7,487) 1,930 (6,889)
------------------------------------------- ----- --------- -------- -------------
Financing activities
Repayment of borrowings 16 (6,553) (773) (13,881)
Payment of finance
lease liabilities (43) (116) (23)
Interest and similar
costs paid (2,564) (2,580) (4,786)
Dividends / capital
paid to equity holders
of the parent (6,513) (4,262) (4,262)
Dividends paid to non-controlling
interests (9) - (2,560)
Net cash flows from
financing activities (15,682) (7,731) (25,511)
------------------------------------------- ----- --------- -------- -------------
Net increase/(decrease)
in cash and cash equivalents (10,486) 9,400 10,045
Cash and cash equivalents
at start of period 59,218 47,469 47,469
Foreign translation
differences (1,204) (170) 1,704
------------------------------------------- ----- --------- -------- -------------
Cash and cash equivalents
at period end 47,528 56,699 59,218
------------------------------------------- ----- --------- -------- -------------
The notes on pages 19 to 35 form an integral part of this
condensed consolidated interim financial information
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1 Corporate Information
Powerflute Oyj (the "Company") is a public limited company
incorporated and domiciled in Finland. The Company's shares are
listed on the Alternative Investment Market ("AIM") of the London
Stock Exchange.
The principal activities of the Company and its subsidiaries
(collectively, the "Group") are the manufacture of paper and
packaging products and are described in more detail in Note 7.
The address of the Company's registered office is Sorsasalo/Box
57, FI-70101 Kuopio, Finland.
The interim condensed consolidated financial statements of the
Group for the six months ended 30 June 2016 were approved for issue
by the Company's Board of Directors on 16 August 2016.
These interim condensed consolidated financial statements have
been reviewed, not audited.
2 Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2016 have been prepared in accordance with
IAS 34 Interim Financial Reporting. The interim condensed
consolidated financial statements do not include all the
information and disclosures required in annual financial
statements, and should be read in conjunction with the Group's
annual financial statements for the year ended 31 December
2015.
3 Significant accounting policies
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2015, except for the adoption of new standards and interpretations
as of 1 January 2016. The Group has not early adopted any other
standard, interpretation or amendment that has been issued but is
not yet effective.
The nature and impact of each new standard or amendment is
described below. Although these new standards and amendments apply
for the first time in 2016, they do not have a material impact on
the annual consolidated financial statements of the Group or the
interim condensed consolidated financial statements of the
Group.
IFRS 14 Regulatory Deferral Accounts
IFRS 14 is an optional standard that allows an entity, whose
activities are subject to rate-regulation, to continue applying
most of its existing accounting policies for regulatory deferral
account balances upon its first-time adoption of IFRS. Entities
that adopt IFRS 14 must present the regulatory deferral accounts as
separate line items on the statement of financial position and
present movements in these account balances as separate line items
in the statement of profit or loss and OCI. The standard requires
disclosure of the nature of, and risks associated with, the
entity's rate-regulation and the effects of that rate-regulation on
its financial statements. IFRS 14 is effective for annual periods
beginning on or after 1 January 2016. Since the Group is an
existing IFRS preparer and is not involved in any rate-regulated
activities, this standard does not apply.
Amendments to IFRS 11: Joint Arrangements: Accounting for
Acquisitions of Interests
The amendments to IFRS 11 require that a joint operator
accounting for the acquisition of an interest in a joint operation,
in which the activity of the joint operation constitutes a
business, must apply the relevant IFRS 3 Business Combinations
principles for business combination accounting. The amendments also
clarify that a previously held interest in a joint operation is not
remeasured on the acquisition of an additional interest in the same
joint operation if joint control is retained. In addition, a scope
exclusion has been added to IFRS 11 to specify that the amendments
do not apply when the parties sharing joint control, including the
reporting entity, are under common control of the same ultimate
controlling party.
The amendments apply to both the acquisition of the initial
interest in a joint operation and the acquisition of any additional
interests in the same joint operation and are prospectively
effective for annual periods beginning on or after 1 January 2016,
with early adoption permitted. These amendments do not have any
impact on the Group as there has been no interest acquired in a
joint operation during the period.
Amendments to IAS 16 and IAS 38: Clarification of Acceptable
Methods of Depreciation and Amortisation
The amendments clarify the principle in IAS 16 Property, Plant
and Equipment and IAS 38 Intangible Assets that revenue reflects a
pattern of economic benefits that are generated from operating a
business (of which the asset is a part) rather than the economic
benefits that are consumed through use of the asset. As a result, a
revenue-based method cannot be used to depreciate property, plant
and equipment and may only be used in very limited circumstances to
amortise intangible assets. The amendments are effective
prospectively for annual periods beginning on or after 1 January
2016, with early adoption permitted. These amendments do not have
any impact to the Group given that the Group has not used a
revenue-based method to depreciate its non- current assets.
Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants
The amendments change the accounting requirements for biological
assets that meet the definition of bearer plants. Under the
amendments, biological assets that meet the definition of bearer
plants will no longer be within the scope of IAS 41 Agriculture.
Instead, IAS 16 will apply. After initial recognition, bearer
plants will be measured under IAS 16 at accumulated cost (before
maturity) and using either the cost model or revaluation model
(after maturity). The amendments also require that produce that
grows on bearer plants will remain in the scope of IAS 41 measured
at fair value less costs to sell. For government grants related to
bearer plants, IAS 20 Accounting for Government Grants and
Disclosure of Government Assistance will apply. The amendments are
retrospectively effective for annual periods beginning on or after
1 January 2016, with early adoption permitted. These amendments do
not have any impact to the Group as the Group does not have any
bearer plants.
Amendments to IAS 27: Equity Method in Separate Financial
Statements
The amendments will allow entities to use the equity method to
account for investments in subsidiaries, joint ventures and
associates in their separate financial statements. Entities already
applying IFRS and electing to change to the equity method in their
separate financial statements will have to apply that change
retrospectively. First time adopters of IFRS electing to use the
equity method in their separate financial statements will be
required to apply this method from the date of transition to IFRS.
The amendments are effective for annual periods beginning on or
after 1 January 2016, with early adoption permitted. These
amendments do not have any impact on the Group's consolidated
financial statements.
Annual Improvements 2012-2014 Cycle
These improvements are effective for annual periods beginning on
or after 1 January 2016. They include:
IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations
Assets (or disposal groups) are generally disposed of either
through sale or distribution to owners. The amendment clarifies
that changing from one of these disposal methods to the other would
not be considered a new plan of disposal, rather it is a
continuation of the original plan. There is, therefore, no
interruption of the application of the requirements in IFRS 5. This
amendment must be applied prospectively.
IFRS 7 Financial Instruments: Disclosures
(i) Servicing contracts
The amendment clarifies that a servicing contract that includes
a fee can constitute continuing involvement in a financial asset.
An entity must assess the nature of the fee and the arrangement
against the guidance for continuing involvement in IFRS 7 in order
to assess whether the disclosures are required. The assessment of
which servicing contracts constitute continuing involvement must be
done retrospectively. However, the required disclosures would not
need to be provided for any period beginning before the annual
period in which the entity first applies the amendments.
(ii) Applicability of the amendments to IFRS 7 to condensed interim financial statements
The amendment clarifies that the offsetting disclosure
requirements do not apply to condensed interim financial
statements, unless such disclosures provide a significant update to
the information reported in the most recent annual report. This
amendment must be applied retrospectively.
IAS 19 Employee Benefits
The amendment clarifies that market depth of high quality
corporate bonds is assessed based on the currency in which the
obligation is denominated, rather than the country where the
obligation is located. When there is no deep market for high
quality corporate bonds in that currency, government bond rates
must be used. This amendment must be applied prospectively.
IAS 34 Interim Financial Reporting
The amendment clarifies that the required interim disclosures
must either be in the interim financial statements or incorporated
by cross-reference between the interim financial statements and
wherever they are included within the interim financial report
(e.g., in the management commentary or risk report). The other
information within the interim financial report must be available
to users on the same terms as the interim financial statements and
at the same time. This amendment must be applied
retrospectively.
These amendments do not have any impact on the Group.
Amendments to IAS 1 Disclosure Initiative
The amendments to IAS 1 clarify, rather than significantly
change, existing IAS 1 requirements. The amendments clarify:
-- The materiality requirements in IAS 1
-- That specific line items in the statement(s) of profit or
loss and OCI and the statement of financial position may be
disaggregated
-- That entities have flexibility as to the order in which they
present the notes to financial statements
-- That the share of OCI of associates and joint ventures
accounted for using the equity method must be presented in
aggregate as a single line item, and classified between those items
that will or will not be subsequently reclassified to profit or
loss
Furthermore, the amendments clarify the requirements that apply
when additional subtotals are presented in the statement of
financial position and the statement(s) of profit or loss and OCI.
These amendments are effective for annual periods beginning on or
after 1 January 2016, with early adoption permitted. These
amendments do not have any impact on the Group.
Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities:
Applying the Consolidation Exception
The amendments address issues that have arisen in applying the
investment entities exception under IFRS 10 Consolidated Financial
Statements. The amendments to IFRS 10 clarify that the exemption
from presenting consolidated financial statements applies to a
parent entity that is a subsidiary of an investment entity, when
the investment entity measures all of its subsidiaries at fair
value.
Furthermore, the amendments to IFRS 10 clarify that only a
subsidiary of an investment entity that is not an investment entity
itself and that provides support services to the investment entity
is consolidated. All other subsidiaries of an investment entity are
measured at fair value. The amendments to IAS 28 Investments in
Associates and Joint Ventures allow the investor, when applying the
equity method, to retain the fair value measurement applied by the
investment entity associate or joint venture to its interests in
subsidiaries.
These amendments must be applied retrospectively and are
effective for annual periods beginning on or after 1 January 2016,
with early adoption permitted. These amendments do not have any
impact on the Group as the Group does not apply the consolidation
exception.
4 Significant accounting judgements, estimates and assumptions
The preparation of the interim condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of revenues, expenses, assets and liabilities,
and the disclosure of contingent liabilities, at the reporting
date. However, uncertainty about these assumptions and estimates
could result in outcomes that could require a material adjustment
to the carrying amount of the asset or liability affected in the
future.
In preparing these interim condensed consolidated financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were substantially the same as those that
applied to the consolidated financial statements for the year ended
31 December 2015.
Key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, where a different
opinion could result in a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below.
Taxation of gains arising on disposal of shares
During the year ended 31 December 2011, the Group sold a portion
of its shareholding in Harvestia and sold its entire interest in
the Graphic Papers businesses, realising a profit on both
disposals. In preparing its interim condensed consolidated
financial statements and annual financial statements for periods
since this date, the Group has assumed that the resulting gains are
exempt from corporate taxes under the substantial shareholder
exemptions available to industrial companies in Finland.
During the year ended 31 December 2012, the Group was informed
by the Finnish Tax Administration that it is considered to be a
venture capital company and is not eligible to take advantage of
the substantial shareholder exemptions. The Tax Administration
considered that the gains arising on the share disposals should be
subject to tax and issued tax assessments for the year ended 31
December 2011 including EUR3,571,000 of taxes relating to the share
transactions.
Following a detailed review of the facts and circumstances, the
Group considered that it had strong and defensible arguments
against the decision of the Tax Administration and during the year
ended 31 December 2013 filed an appeal with the Assessment
Adjustment Board (AAB). In December 2013, the Group's appeal
against the original tax assessments was upheld by the AAB.
In March 2014, the Group received notification that the Tax
Administration had filed an appeal against the decision of the AAB
with the Administrative Court in Helsinki. In March 2015, the
Administrative Court ruled in favour of the Tax Administration and
upheld the original tax assessments. Following review of the
decision in conjunction with its advisers, the Group continues to
believe that it has strong and defensible arguments to support its
position and has requested permission to further appeal the
decision to the Supreme Court. In view of this, the financial
statements for the six months ended 30 June 2016 continue to be
prepared on the basis that the Group is an industrial company and
that the gains arising on the disposals will be exempt from
corporate taxes.
While the taxes have been paid to avoid the risk of interest and
other penalties, the taxes assessed by the Tax Administration and
paid by the Group have not been recognised in the income statement,
but have been recorded as a current financial asset in the balance
sheet. In the event that the Group does not prevail in its appeal
against the tax assessment, then additional taxes of EUR3,571,000
would have to be recognised within the results of discontinued
operations. There would be no impact on the net cash position of
the Group, or on the results from continuing operations.
5 Principal risks and uncertainties
The principal risks and uncertainties faced by the continuing
operations of the Group have not changed from those described in
the 2015 Annual Report. Changes in the macroeconomic environment,
competition, technology, people, and financial conditions all have
the potential to adversely impact on the Group's operating and
financial performance. A more detailed explanation of these risks
and uncertainties is set out on pages 12 and 13 of the Annual
Report for the year ended 31 December 2015, a copy of which is
available on the Group's website.
6 Seasonality of operations
The Group's business activities are seasonal in nature and
higher revenues, operating profits and cash generation are
generally expected in the second half of the year, although this
can be affected significantly by the timing of annual maintenance
shutdowns which reduce production availability, or changes in
market conditions which can impact demand and average pricing
levels.
7 Segmental information
For management purposes, the Group is organized into business
units based upon the products and services which it supplies. The
Group currently has two reportable operating segments:
-- Coreboard and Cores, which is involved in the manufacture of
high performance coreboard and cores, with coreboard mills in the
Europe and the United States and a network of core producing
facilities in Europe, the United States and China.
-- Packaging Papers, which is involved in the production and
sale of Nordic semi-chemical fluting for use in premium-grade
corrugated-box applications and operates a fluting mill in Kuopio,
Finland.
No operating segments have been aggregated to form the above
reportable operating segments.
The joint ventures and associated companies in which the Group
has an interest form an integral part of its principal operating
activities and the Group's share of the profits or losses of such
joint ventures and associated companies are reported within the
relevant operating segment.
Management monitors the operating results of business units
separately for the purpose of making decisions about resource
allocation and performance assessment. The principal measure used
to monitor and evaluate segmental performance is earnings before
interest, tax, depreciation and amortisation ("EBITDA"). The
measurement basis for Segment EBITDA excludes the effects of
equity-settled share-based payments and unrealised gains or losses
on financial instruments. The costs of central functions, including
the costs of corporate and other central services, are allocated to
the reportable operating segments using appropriate cost allocation
methodologies. Interest income and expenditure are not allocated to
operating segments.
Transfer prices between operating segments are on an
arm's-length basis in a manner similar to transactions with third
parties.
Adjustments
Packaging Coreboard and
Papers and Cores eliminations Total
-------------------------------
Six months ended 30
June 2016 EUR000 EUR000 EUR000 EUR000
------------------------------- ------------ ----------- -------------- --------
Revenue
Third party 69,921 106,138 - 176,059
Inter-segment 23 - (23) -
------------------------------- ------------ ----------- -------------- --------
Total revenue 69,944 106,138 (23) 176,059
------------------------------- ------------ ----------- -------------- --------
Results
Segment EBITDA profit 10,916 15,188 - 26,104
Unrealised gains/(losses)
on financial instruments 519 - - 519
Expenses of share-based
payment schemes - - (152) (152)
------------------------------- ------------ ----------- -------------- --------
EBITDA from operating
activities 11,435 15,188 (152) 26,471
Gain on sales of financial
assets - - - -
Advisory costs related
to evaluation of acquisition
opportunities - - - -
------------------------------- ------------ ----------- -------------- --------
EBITDA 11,435 15,188 (152) 26,471
Depreciation and amortisation (2,626) (2,245) - (4,872)
------------------------------- ------------ ----------- -------------- --------
Operating profit 8,809 12,943 (152) 21,599
Finance income - - 115 115
Finance expenses - - (3,180) (3,180)
------------------------------- ------------ ----------- -------------- --------
Profit/(loss) before
taxation 8,809 12,943 (3,217) 18,534
------------------------------- ------------ ----------- -------------- --------
Segment assets 87,762 133,013 55,072 275,847
Segment liabilities 28,838 50,965 90,984 170,787
Adjustments
Packaging Coreboard and
Papers and Cores eliminations Total
-------------------------------
Six months ended 30
June 2015 EUR000 EUR000 EUR000 EUR000
------------------------------- ------------ ----------- -------------- --------
Revenue
Third party 74,434 105,255 - 179,689
Inter-segment - - - -
------------------------------- ------------ ----------- -------------- --------
Total revenue 74,434 105,255 - 179,689
------------------------------- ------------ ----------- -------------- --------
Results
Segment EBITDA profit 14,282 9,786 - 24,068
Unrealised gains/(losses)
on financial instruments 182 - - 182
Expenses of share-based
payment schemes - - (218) (218)
------------------------------- ------------ ----------- -------------- --------
EBITDA from operating
activities 14,464 9,786 (218) 24,032
Gain on sale of financial
assets - - 2,064 2,064
Advisory costs related
to evaluation of acquisition
opportunities - - - -
------------------------------- ------------ ----------- -------------- --------
EBITDA 14,464 9,786 1,846 26,096
Depreciation and amortisation (2,443) (2,545) - (4,988)
------------------------------- ------------ ----------- -------------- --------
Operating profit 12,021 7,243 1,844 21,108
Finance income - - 297 297
Finance expenses - - (3,196) (3,196)
------------------------------- ------------ ----------- -------------- --------
Profit/(loss) before
taxation 12,021 7,243 (1,055) 18,209
------------------------------- ------------ ----------- -------------- --------
Segment assets 86,913 125,803 67,169 279,885
Segment liabilities 35,524 40,357 114,162 190,043
Adjustments, eliminations and unallocated items
Inter-segment revenues are eliminated on consolidation and are
shown as adjustments or eliminations. Finance income, finance
expenses, acquisition-related expenses, fair value gains and losses
on certain types of financial assets and liabilities and taxes are
not allocated to individual segments but are managed on an overall
basis and are reported within adjustments and eliminations in the
segmental analysis.
Seasonality of operations
The Packaging Papers segment is a supplier of paper and
packaging materials intended for use predominantly in fruit and
vegetable packaging. Due to the seasonal nature of this segment
higher revenues and profits are usually expected in the second half
of the year rather than in the first six months, although this can
be affected by the timing of maintenance related shutdowns. The
Group has concluded that this segment should not be considered
"highly seasonal" using the meaning set out in IAS 34 and
presentation of additional comparative information is not required.
This information is provided solely for the purposes of permitting
a better understanding of the results.
8 Impairment testing of goodwill and intangible assets
The Group reviews the valuation of its assets and tests for
impairment on an annual basis in December of each year and where
appropriate considers the requirement for impairment. Impairment
testing of goodwill and intangible assets with indefinite lives is
based on value-in-use calculations. The methodologies and key
assumptions used to determine the recoverable amount for different
cash generating units were disclosed where relevant in the annual
consolidated financial statements for the year ended 31 December
2015.
The Group considers the relationship between its market
capitalisation and the book value of its assets and liabilities,
among other factors, when reviewing for indicators of impairment.
As at 30 June 2016, the market capitalisation of the Group was
significantly higher than the book value of its equity and no
triggering events regarding the impairment of Group's assets were
identified. Therefore, the Group has not performed any impairment
testing on its assets or business units as at 30 June 2016.
9 Income tax
Income tax is recognized based upon management's best estimate
of the weighted average annual income tax rate expected for the
full financial year.
Major components of income tax in the interim consolidated
income statement are:
Six months
ended
30 June
--------------
2016 2015
EUR EUR
000 000
Current income tax 5,077 4,177
Deferred income tax (71) 1,020
---------------------------------------------- ------ ------
Income tax expense recognized in
statement of profit or loss 5,006 5,197
---------------------------------------------- ------ ------
Income tax recognised in other comprehensive
income (130) (106)
---------------------------------------------- ------ ------
Total income taxes from continuing
operations 4,876 5,091
10 Components of other comprehensive income
Six months
ended
30 June
--------------
2016 2015
EUR EUR
000 000
Cash flow hedges:
Gains/(losses) arising during the
period 1,255 409
Adjustments for gains included in
statement of profit or loss (736) (821)
-------------------------------------- ------ ------
519 (412)
-------------------------------------- ------ ------
Available for sale financial assets:
Gains/(losses) arising during the
period - 2,064
Adjustments for gains included in - -
statement of profit or loss
-------------------------------------- ------ ------
- 2,064
-------------------------------------- ------ ------
Deferred tax items recognised in other comprehensive income
during the period:
Six months
ended
30 June
-------------
2016 2015
EUR EUR
000 000
Cash flow hedges:
Gains/(losses) arising during the
period (277) (58)
Adjustments for gains included in
statement of profit or loss 147 164
-------------------------------------- ------ -----
(130) 106
-------------------------------------- ------ -----
Available for sale financial assets:
Gains/(losses) arising during the - -
period
Adjustments for gains included in - -
statement of profit or loss
-------------------------------------- ------ -----
- -
-------------------------------------- ------ -----
11 Dividends and repatriation of capital
Six months
ended
30 June
--------------
2016 2015
EUR EUR
000 000
Repatriation of capital declared
and paid during the period:
Repatriation of capital for the 8,720 -
year ended 31 December 2015 (3.0
cents)
Dividend on ordinary shares declared
and paid during the period:
Final dividend for the year ended
31 December 2014 (1.50 cents) - 4,262
A repatriation of capital from the reserve for invested
non-restricted equity of 3.00 cents per share was proposed by the
directors in lieu of a dividend for the year ended 31 December 2015
and was approved by shareholders at the Annual General Meeting held
on 26 May 2016. The record date for the capital redemption was 3
June 2016 and payment was made on 21 June 2016.
12 Earnings per share
Basic earnings per share is calculated by dividing the net
profit or loss for the period attributable to ordinary equity
holders of the parent by the weighted average number of ordinary
shares outstanding during the period.
Diluted earnings per share is calculated in accordance with the
requirements of IAS 33 - Earnings per share, by dividing the net
profit for the year attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of
ordinary shares that would be issued on conversion of all the
dilutive potential ordinary shares into ordinary shares.
Six months
ended
30 June
----------------------
2016 2015
EUR 000 EUR 000
Net profit attributable to ordinary
equity holders of the parent 12,898 12,266
Thousands Thousands
Weighted average number of shares
for Basic Earnings per Share 287,241 284,118
Effect of dilution:
Share options 9,916 12,569
Weighted average number of shares
adjusted for dilution 297,157 296,687
------------------------------------- ---------- ----------
Cents Cents
Basic earnings per share 4.5 4.3
Diluted earnings per share 4.3 4.1
Authority to repurchase shares
On 26 May 2016, the Annual General Meeting granted authority to
the Board of Directors to decide on the repurchase of up to
29,000,000 of the company's shares pursuant to Chapter 15, Section
5(2) of the Finnish Companies Act by using funds in the company's
unrestricted equity. The proposed amount of shares corresponded to
approximately 10.0 % of all shares and votes of the company then in
issue. The authority remains effective until 30 June 2017 unless
revoked or amended before this date by a General Meeting of
Shareholders, and replaces any previous similar authorities granted
to the Board of Directors.
Authority to issue new shares
On 26 May 2016, the Annual General Meeting granted authority to
the Board of Directors to resolve on the issuance of up to
29,000,000 shares through a share issue or granting of options or
other special rights granting entitlement to shares pursuant to
Chapter 10, Section 1 of the Finnish Companies Act. This authority
may be utilised in one or several issues. The Board of Directors
may resolve to give either new shares or shares in the company's
possession. The proposed amount of shares corresponded to
approximately 10.0 % of all shares and votes of the Company then in
issue. This authority provides the right to deviate from the
shareholders' pre-emptive subscription right. The authority remains
effective until 30 June 2017 unless revoked or amended before this
date by a General Meeting of Shareholders, and replaces any
previous similar authorities granted to the Board of Directors.
13 Property, plant and equipment
The Group acquired assets with a cost of EUR7,602,000 during the
six months ended 30 June 2016 (2015: EUR2,065,000).
No assets (other than those classed as held for sale) were
disposed of during the six months ended 30 June 2016 (2015:
EUR1,662,000l), which did not result in any net gain on disposal
(2015: EUR2,064,000).
14 Financial assets and liabilities
Set out below is a summary of the financial assets and financial
liabilities of the Group as at 30 June 2016, 31 December 2015 and
30 June 2015.
30 June 31 December 30 June
2016 2015 2015
EUR EUR 000 EUR 000
000
Financial assets:
Other non-current financial
assets 29 1,031 1,323
Trade and other receivables 66,083 67,907 72,343
Derivative financial instruments 24 73 325
Cash and short-term deposits 47,528 59,218 56,699
---------------------------------- -------- ------------ ---------
113,664 128,229 130,690
---------------------------------- -------- ------------ ---------
Total current 113,635 127,198 129,367
Total non-current 29 1,031 1,323
Financial liabilities:
Interest bearing loans
and borrowings 90,359 96,296 108,711
Other financial liabilities 184 227 2,000
Trade and other payables 56,830 65,020 56,230
Employee benefit liability 71 2 -
Derivative financial instruments 1,173 2,406 1,514
---------------------------------- -------- ------------ ---------
148,617 163,951 168,455
---------------------------------- -------- ------------ ---------
Total current 61,227 71,130 61,709
Total non-current 87,390 92,821 106,746
Available for sale investment
In February 2015, the Group entered into a conditional sale
agreement for the disposal of its 10% interest in Kotkamills for
cash consideration of EUR3,724,000. Accordingly, the fair value of
this investment was reassessed and the Group recorded a gain of
EUR2,064,000 in the statement of comprehensive income with respect
to Level 3 financial instruments as at 31 December 2014. The
transaction completed on 24 March 2015 and the realised gain was
recorded in the interim consolidated statement of profit or loss
for six months ended 30 June 2015.
Derivative financial instruments
Amounts recorded within financial assets and liabilities
relating to derivative financial instruments were as follows:
30 June 31 December 30 June
2016 2015 2015
EUR EUR 000 EUR 000
000
Financial assets:
Commodity forward contracts 18 73 32
Foreign exchange forward
contracts 6 - 293
----------------------------- -------- ------------ ---------
24 73 325
----------------------------- -------- ------------ ---------
Total current 24 73 325
Total non-current - - -
Financial liabilities:
Commodity forward contracts 921 1,641 1,039
Foreign exchange forward
contracts 252 765 475
----------------------------- -------- ------------ ---------
1,173 2,406 1,514
----------------------------- -------- ------------ ---------
Total current 602 1,887 925
Total non-current 571 519 589
Derivative financial instruments are recorded on the balance
sheet at fair value.
The Group uses foreign exchange forward contracts to manage some
of its transaction exposures. Currency forward contracts are not
designated as cash flow, fair value or net investment hedges and
are entered into for periods consistent with currency transaction
exposures up to 12 months in advance.
Hedge accounting has been applied to commodity derivatives.
Gains and losses arising on commodity derivatives are recognized in
the hedging reserve in equity and are recognized in the income
statement during the period or periods in which the hedged forecast
transaction affects the income statement. This is generally within
12 to 24 months of the balance sheet date.
Contingent consideration
Under the terms of the purchase agreement for the acquisition of
the Corenso businesses completed in December 2014, the Group agreed
to make additional payments to the previous owner contingent upon
the occurrence of certain future events. In particular:
-- In the event that the Group was able to recover deferred
consideration of EUR1,000,000 relating to an earlier sale of shares
in Mandriladora Alpesa SL, then such consideration must be paid
over in full to the previous owner.
-- In the event that the Group was able to utlise accumulated
tax losses of the North American operations to offset future
taxable profits, then an amount equivalent to the net cash tax
saving must be paid over to the previous owner up to a maximum
amount of $2,700,000.
The Group did not attach any value to the assets which are the
subject of the contingent consideration arrangements and any
liability to make payments to the former owner of Corenso will be
financed directly from realisation of the assets concerned.
During the six-month period ended 30 June 2016, the Group
recovered the full amount of the EUR1,000,000 receivable due from
Mandriladora Alpes SL and this amount was transferred to Stora
Enso.
During 2015, the assumed utilisation of tax losses by the North
American operations reduced the cash taxes payable by an estimated
EUR1,883,000 (2014: nil). As the Group derived no benefit from the
utilisation of the losses, the effective tax charge for the period
was not reduced. However, the portion of the tax charge relating to
utilisation of the losses instead of being shown as a current
income tax liability was recorded within other current liabilities.
During the six-month period ended 30 June 2016, following
finalization of the tax computations for the year ended 31 December
2015, an amount of EUR1,774,000 was paid to Stora Enso in
connection with the utilisation of tax losses during the year ended
31 December 2015.
Fair values
30 June 2016 31 December
2015
------------------- -------------------
Carrying Fair Carrying Fair
amount value amount value
EUR000 EUR000 EUR000 EUR000
----------------------------- --------- -------- --------- --------
Financial assets
Other non-current
financial assets 29 29 1,031 1,031
Trade and other receivables 66,083 66,083 67,907 67,907
Derivative financial
instruments 24 24 73 73
Cash and short-term
deposits 47,528 47,528 59,218 59,218
113,664 113,664 128,229 128,229
----------------------------- --------- -------- --------- --------
Financial liabilities
Interest bearing
loans and borrowings 90,359 91,898 96,296 98,450
Trade and other payables 184 184 65,020 65,020
Other financial liabilities 56,830 56,830 227 227
Derivative financial
instruments 71 71 2,406 2,406
Employee benefits 1,173 1,173 2 2
148,617 150,156 163,951 166,105
----------------------------- --------- -------- --------- --------
Fair value hierarchy
All financial instruments for which fair value is recognised or
disclosed are categorized within the fair value hierarchy, based on
the lowest level input that is significant to the fair value
measurement as a whole as follows:
-- Level 1 - Quoted (unadjusted) prices in active markets for identical assets or liabilities
-- Level 2 - Valuation techniques for which all inputs which
have a significant effect on the recorded fair value are
observable, either directly or indirectly
-- Level 3 - Valuation techniques which use inputs which have a
significant effect on the recorded fair value that are not based on
observable market data
For assets and liabilities that are recognised at fair value on
a recurring basis, the Group determines whether transfers have
occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each
reporting period. There were no transfers between Level 1 and Level
2 fair value measurements and no transfers into or out of Level 3
fair value measurements during the six month period ended 30 June
2016.
15 Cash and short-term deposits
For the purpose of the interim condensed statement of cash
flows, cash and cash equivalents are comprised of the
following:
Six months ended
30 June
-------------------
2016 2015
EUR 000 EUR 000
Cash at bank and in hand 47,528 56,699
16 Reversal of provisions
As at 31 December 2015, the Group had recognised provisions of
EUR907,000 against the potential non-recovery of amounts receivable
from Verso Corporation and EUR1,057,000 against the potential
non-recovery of value added taxation on expenses incurred in
connection with the acquisition of Corenso in December 2014. Verso
Corporation filed for Chapter 11 bankruptcy protection in January
2016, but under the terms of a settlement agreement made in March
2016 the Group's net loss was limited to EUR219,000. The value
added taxes attributable to acquisition expenses were successfully
recovered by Group in full in April 2016. In both cases, the unused
amounts of the provisions have been reversed during the six-month
period ended 30 June 2016 and the reversals have been included
within the line items in the statement of profit and loss where the
creation of the provisions were originally recorded.
17 Share-based payments
For the six months ended 30 June 2016, the Group has recognised
a share-based payment expense of EUR152,000 in the income statement
(30 June 2015: EUR218,408).
Grant of share options during the six-month period ended 30 June
2016
In April 2016, options over 1,400,000 shares were granted to
senior executives under the terms of the Powerflute Stock Option
Scheme 2012 ("PSOS 2012"). The grant consisted of two separate
categories of options, designated as 2012E and 2012F, with 700,000
of each option granted. The 2012E and 2012F options are subject to
different performance targets and measurement periods, but in all
other respects are identical.
Successful vesting of the options is dependent upon the
achievement of demanding performance targets, with 50% of each
award linked to the average annual increase in basic earnings per
share ("EPS") and 50% linked to the average annual total
shareholder return ("TSR") over the relevant measurement periods.
The subscription price, key performance targets and measurement
periods of the 2012E and 2012F share options are as follows:
2012E 2012F
Date of grant 4 Apr 4 Apr
2016 2016
Average annual increase in
EPS to achieve full vesting 17.5% 17.5%
Average annual TSR required
to achieve full vesting 20.0% 20.0%
Measurement date 4 Apr 4 Apr
2018 2019
Last possible exercise date 4 Apr 4 Apr
2022 2022
Subscription price per share EUR0.01 EUR0.01
Where the average annual increase in EPS or the average annual
TSR is below 10.0%, none of the relevant portion of the award will
vest, with proportional vesting applying between the minimum and
maximum thresholds. Shares acquired as a result of exercise of the
2012E and 2012F options are subject to a minimum holding period and
may not be sold during the two-year period commencing on the
measurement date. There is no cash settlement of the options.
The fair value of the shares granted was estimated at the date
of the grant using a two-stage valuation model to estimating the
amount and value of the share options. In addition to the technical
features of the options, the fair value of the options was
estimated on the date of grant using the following assumptions:
Expected share price volatility (%): 30.4
Expected EPS volatility (%): 15.2
Risk-free interest rate (%): 0.5
Expected life (years): 6
Annual required rate of return (5%) 5.0
The total number of options now granted under the PSOS 2012 and
other share option schemes is 7,237,100, equivalent to 2.5% of the
existing issued share capital of the company (excluding shares held
in treasury).
18 Borrowings and loans
30 June 31 December 30 June
2016 2015 2015
EUR 000 EUR 000 EUR 000
Non-current 86,638 92,078 104,625
Current 3,721 4,218 4,086
-------------- -------- ------------ --------
90,359 96,296 108,711
-------------- -------- ------------ --------
Movements in borrowings are analysed as follows:
EUR 000
Six months ended 30 June
2015
Opening amount as at 1
January 2015 108,945
Proceeds from borrowings -
Repayment of borrowings (773)
Change in other interest
bearing liabilities 539
---------------------------- --------
Closing amount as at 30
June 2015 108,711
---------------------------- --------
Six months ended 30 June
2016
Opening amount as at 1
January 2016 96,296
Proceeds from borrowings -
Repayment of borrowings (5,882)
Change in other interest
bearing liabilities (55)
---------------------------- --------
Closing amount as at 30
June 2016 90,359
---------------------------- --------
19 Commitments and contingencies
Mortgages
The Group has pledged the assets and shares of its principal
trading subsidiary companies as security for interest-bearing
borrowing facilities provided by Nordea and Finnvera.
Capital commitments
At 30 June 2016, the Group had capital commitments of
EUR6,860,000 (31 December 2015: EUR7,547,000) relating to
investment in plant and equipment, ERP implementation and IT
infrastructures.
20 Related Party Transactions
Certain of the Group's directors and members of its executive
management team have significant beneficial and non-beneficial
interests in the ordinary share capital of the Group. Full details
of these interests are disclosed in the annual financial statements
for the year ended 31 December 2015.
a) Transactions with related parties
Savon Sellu Oy, a subsidiary of Group, purchases a proportion of
its raw materials from Harvestia Oy. The goods are purchased on
normal market terms.
Transactions with related parties for the six months ended 30
June 2016 and 30 June 2015 were as follows:
Six months ended
30 June
-------------------
2016 2015
EUR 000 EUR 000
Sales of services to related
parties
Joint venture - Harvestia
Oy 8 21
Purchases of goods and services
from related parties
Joint venture - Harvestia
Oy 19,069 16,413
Amounts due to and from related parties as at 30 June 2016, 31
December 2015 and 30 June 2015 were as follows:
30 June 31 December 30 June
2016 2015 2015
EUR 000 EUR 000 EUR 000
Amounts due from related
parties
Joint venture - prepayments
to Harvestia Oy 3,524 2,554 2,943
Amounts due to related
parties
Joint venture - purchases
from Harvestia Oy 5,025 8,270 6,125
b) Key management compensation
Key management compensation for the six months ended 30 June
2016 amounted to EUR928,000 (2015: EUR879,000) analysed as
follows:
Six months
ended
30 June
---------------
2016 2015
EUR
EUR 000 000
Salaries, fees and other short term
benefits 776 764
Share-based payments 152 115
------------------------------------- -------- -----
928 879
------------------------------------- -------- -----
c) Directors' interest in employee share incentive plans
The share options held by executive members of the Board of
Directors providing entitlement to purchase ordinary shares have
the following expiry dates and exercise prices:
Number outstanding
------------------------------------
Issue date Expiry Exercise 30 June 31 December 30 June
date price 2016 2015 2015
Thousands Thousands Thousands
11 Jan 2010 - nil - 2,000 2,000
4 April
5 Apr 2012 2019 EUR0.01 3,937 8,469 8,469
4 April
4 Apr 2016 2022 EUR0.01 1,400 - -
On 4 April 2016, Marco Casiraghi and David Walton, both
directors of the Company, exercised their rights under share
options granted to them by the Company to subscribe for the
following shares with immediate effect:
-- Marco Casiraghi - 4,673,600 shares, of which 2,000,000 shares
had no subscription price and 2,673,600 shares had a subscription
price of EUR0.01 per share.
-- David Walton - 1,858,600 shares, with a subscription price of EUR0.01 per share.
On 4 April 2016, the Group made further awards of share options
to Marco Casiraghi and David Walton under the terms of the
Powerflute Share Option Scheme 2012 details of which are provided
in Note 17.
Further details of the share options awarded to directors of the
Company are provided in Note 17 and in the Annual Report for the
year ended 31 December 2015.
21 Events after the reporting period
On 28 July 2016, the Group entered into a new facilities
agreement with its existing lender, Nordea Bank Finland, and HSBC
Bank plc for the provision of EUR120 million of facilities with a
five-year term. The new facilities consist of a term loan of EUR80
million and a revolving credit facility of EUR40 million, both of
which remain available to the Group throughout the period to 28
July 2021 without amortisation. The covenants and other conditions
which apply to the new facilities are substantially the same as
those which applied to the Group's previous borrowing arrangements
but the lending margins are considerably more favourable and will
result in a significant reduction in total borrowing costs.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAKPSFDLKEFF
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August 16, 2016 02:00 ET (06:00 GMT)
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