Metso publishes a demerger prospectus for Valmet Corporation
Metso Corporation's stock exchange release on September 23, 2013 at 12:40 p.m. local time
Metso Corporation will publish a demerger prospectus today that has been
prepared on behalf of Valmet Corporation in order to carry out the partial
demerger of Metso and to apply for the listing of Valmet's shares on the
official list of NASDAQ OMX Helsinki Ltd.
Metso's Board of Directors unanimously approved a demerger plan on May 31, 2013
under which all the assets, debts, and liabilities relating to Metso's Pulp,
Paper and Power businesses will transfer, without liquidation, from Metso to
Valmet. On August 15, 2013, the Board unanimously decided to propose the
approval of the partial demerger and the demerger plan to the Extraordinary
General Meeting of Metso shareholders scheduled for October 1, 2013. The
completion of the partial demerger is expected to be registered in the Finnish
Trade Register on or about December 31, 2013.
Metso's Board of Directors approved the strategy and financial targets for
Valmet Corporation on September 3, 2013.
Publication of the Demerger Prospectus
The Finnish demerger prospectus approved by the Finnish Financial Supervisory
Authority, together with an unofficial English translation, are available on
Metso's website, www.metso.com/demerger, as of today.
This release also contains certain other previously unpublished information
described in the demerger prospectus. This information includes the short-term
outlook for Valmet and the carve-out and pro forma historical financial
information for Valmet. The terms used below are explained in detail in the
demerger prospectus.
Valmet's Strategy
Valmet will focus on delivering technology and services globally to industries
that use bio-based raw materials. Valmet's vision is to become the global
champion in serving its customers, and its mission is to convert renewable
resources into sustainable results.
Valmet's main customer industries are pulp, paper, and energy. All of these are
major global industries that offer growth potential for the future. Valmet will
complement its core business by applying its technology and know-how to
industries beyond biomass, particularly in the energy sector.
Valmet's product and service portfolio consists of productivity-enhancing
services, plant upgrades and rebuilds, new cost-efficient equipment and
solutions for optimizing energy and raw material usage, and technologies for
increasing the value of its customers' end-products.
Financial Targets
Metso's Board of Directors has set the following financial targets for Valmet:
* Net sales growth to exceed market growth;
* EBITA margin before non-recurring items: 6 to 9 percent;
* Return on capital employed ("ROCE") (pre-tax): minimum of 15 percent; and
* Dividend payout of at least 40% of net profit.
Valmet's Must-Win Initiatives to Achieve its Strategic Targets
Valmet will seek to achieve its strategic goals by pursuing the following Must-
Win initiatives:
1) Customer excellence
Strengthen key account management to enhance customer growth
Drive service growth through long-term agreements and an expanded customer base
2) Leader in technology and innovation
Develop more cost-competitive and less capital-intensive products
Create new revenue from biotechnology solutions and a new offering
3) Excellence in processes
Improve health and safety
Reduce quality costs
Increase savings from procurement initiatives
4) Winning team
Strengthen high-performance culture
Continue further globalization of our capabilities to be closer to customers
Valmet Short-term Outlook
In the Pulp and Energy business line, management expects the demand for pulp
mills and rebuilds to remain satisfactory while demand for power plants based on
renewable energy sources is expected by management to remain weak. In the Paper
business line, management believes that structural changes in the paper industry
are likely to continue and expects demand for papermaking lines to remain weak.
In the Services business line, management expects demand to be satisfactory. A
global cost efficiency program is being implemented to improve Valmet's
competitiveness.
Valmet Carve-out Financial Information
The demerger prospectus includes Valmet's (i) audited carve-out financial
statements as at and for the years ended December 31, 2012, 2011, and 2010,
together with (ii) unaudited interim carve-out financial information as at and
for the six months ended June 30, 2013, including unaudited comparative interim
carve-out financial information as at and for the six months ended June
30, 2012.
The carve-out financial information for Valmet has been derived from Metso's
audited consolidated financial statements as at and for the years ended December
31, 2012, 2011, and 2010 and unaudited consolidated interim reports as at and
for the six months ended June 30, 2013 and 2012. The audited carve-out financial
statements for Valmet as at and for the years ended December 31, 2012, 2011, and
2010 have been prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union in respect of the principles
for determining which assets and liabilities, income, and expenses, as well as
cash flows, are to be assigned to Valmet as described in the notes to the carve-
out financial statements. The unaudited interim carve-out financial information
for Valmet as at and for the six months ended June 30, 2013, including unaudited
comparative interim carve-out financial information as at and for the six months
ended June 30, 2012, has been prepared in accordance with "IAS 34 - Interim
Financial Reporting" under the same considerations as described above.
As Valmet does not comprise a group of entities under the control of a parent as
defined by "IAS 27 - Consolidated and Separate Financial Statements", it has not
historically prepared consolidated financial information for internal or
external reporting purposes. The carve-out financial information for Valmet
included in the demerger prospectus has been prepared by combining the
statements of income, statements of comprehensive income, balance sheets, and
cash flows of the legal entities and operating units attributable to the Pulp,
Paper and Power businesses in Metso's historical consolidated financial
statements and that will be carved out from Metso to form Valmet, including
certain of Metso Corporation's and Metso's foreign holding companies' income and
expenses, assets and liabilities, and cash flows that will either be transferred
to Valmet or that have been allocated to Valmet for the purpose of the
preparation of the carve-out financial information. As a result, the carve-out
financial information for Valmet does not necessarily reflect what Valmet's
financial status or operational result would have been had Valmet operated as an
independent company and had it presented stand-alone financial information
during the periods concerned. The carve-out financial information for Valmet
also does not take into account any transactions that have been made or will be
made in connection with the demerger or otherwise, to the extent that such
transactions have been entered into after the periods covered in the carve-out
financial information. Moreover, the carve-out financial information for Valmet
may not be indicative of Valmet's future operational result, financial status,
or cash flows.
The following table details certain carve-out information for Valmet derived
from the demerger prospectus:
As at and for the six As at and for
months ended the year ended
June 30, December 31,
2013 2012 2012 2012 2011 2010
(not
(restated)((1)) (restated)((1)) restated)
(audited, unless
(unaudited) (unaudited) otherwise indicated)
(EUR in millions, unless otherwise indicated)
|
Net sales, |
total 1,345 1,453 |3,014 3,014 2,703 2,453
|
Operating |
profit 24.0 79.7 |138.3 134.7 174.2 106.5
|
Profit 14 46 |76 77 109 47
|
EBITA before |
non- |
recurring |
items((2)) |
(unaudited) 48.2 94.2 |192.0 188.4 204.5 159.3
|
percent of |
net sales 3.6 6.5 |6.4 6.3 7.6 6.5
|
Orders |
received |
(unaudited) 1,372 1,263 |n/a 2,445 3,225 2,584
|
Order |
backlog |
(unaudited) 1,883 2,663 |n/a 2,249 2,863 2,347
__________
____________
(1) Restated due to the adoption of the revised "IAS 19 - Employee Benefits"
on January 1, 2013. The restatement did not have an impact to the combined
balance sheet or the combined cash flow statement.
(2) EBITA before non-recurring items = operating profit + amortization + non-
recurring items
Valmet Pro forma Financial Information
The demerger prospectus includes unaudited pro forma financial information
illustrating the effects of the demerger and certain transactions related to the
formation of Valmet on Valmet's operational result and financial position. The
pro forma financial information has been presented as if the demerger and the
transactions related to the formation of Valmet had been executed on (i) January
1, 2012, for the pro forma statements of income and pro forma statements of
comprehensive income and (ii) June 30, 2013, for the pro forma balance sheet.
The unaudited pro forma financial information has been prepared for illustrative
purposes only, and, because of its nature, addresses a hypothetical situation.
The unaudited pro forma financial information illustrates what the hypothetical
impact would have been if the demerger and certain transactions related to the
formation of Valmet had been consummated at the dates assumed in the pro forma
financial information and, therefore, does not represent the actual results of
Valmet's operations or financial position. The unaudited pro forma financial
information is not intended to provide a projection of Valmet's operational
results or financial position for any future period or as at any future date.
The pro forma financial information has been compiled on a basis consistent with
the IFRS standards applied by Valmet in the audited carve-out financial
statements as at and for the years ended December 31, 2012, 2011, and 2010, and
the unaudited carve-out financial information as at and for the six months ended
June 30, 2013. The pro forma financial information is based on Valmet's
unaudited carve-out financial information as at and for the six months ended
June 30, 2013, and the audited carve-out financial statements as at and for the
year ended December 31, 2012, restated to take account of the effect of the
revised "IAS 19 - Employee Benefits" standard adopted on January 1, 2013.
Furthermore, certain adjustments related to the demerger and the formation of
Valmet have been made to the pro forma financial information as described in
more detail in "Pro Forma Financial Information" in the demerger prospectus. The
pro forma adjustments are based on available information and assumptions, and
their factual effects may differ from what has been presented in the demerger
prospectus. As a result, the operational results and/or financial status
presented in the unaudited pro forma financial information may differ from
Valmet's actual operational result and/or financial status. In addition, it
should be noted that the corporate headquarters costs allocated to Valmet for
the purpose of presenting the historical carve-out financial information may not
necessarily represent what these costs would have been if Valmet had operated as
an independent legal entity. Additional costs may be incurred by Valmet
following the effective date in order for it to operate as an independent listed
company, as well as from reorganizing administrative and headquarter functions.
The pro forma adjustments made to reflect the effects of the demerger and
certain transactions related to the formation of Valmet are based on Valmet's
unaudited interim carve-out financial information as at and for the six months
ended June 30, 2013 and unaudited carve-out financial information as at and for
the year ended December 31, 2012 and Management's estimate of the transactions
that have been completed or are to be completed to effect the demerger and form
Valmet in accordance with the Demerger Plan. The final amounts of assets and
liabilities transferred to Valmet in the demerger may materially differ from
those presented in the pro forma financial information, as such balances will be
determined on the effective date. This could result in a significant variation
compared to the operational results and financial status of Valmet presented in
the pro forma financial information.
The unaudited pro forma financial information does not include all of the
information required for financial statements under IFRS, and should be read in
conjunction with Valmet's historical carve-out financial statements and interim
carve-out financial information included in the demerger prospectus.
The following table details certain pro forma financial information for Valmet
derived from the demerger prospectus:
As at and for the six As at and for the year
months ended June 30, ended December
2013 31, 2012
(unaudited)
(EUR in millions, unless otherwise indicated)
Net sales, total 1,345 3,014
Operating profit 27 128
Income before taxes 26 124
Amortization of intangible
assets (14) (30)
Depreciation of tangible assets (28) (60)
Non-recurring items:
Capacity adjustment expenses (8) (24)
Costs related to the Demerger 0 (11)
EBITA before non-recurring
items((1)) 48 192
percent of net sales 3.6 6.4
Earnings per share,((2)) EUR 0.12 0.55
Profit 18 82
Shares
(outstanding shares in Metso as
at June 30, 2013) 149,864,206 149,864,206
Balance sheet total 2,493 n/a
Equity 847 n/a
Interest-bearing liabilities 215 n/a
Net debt (15) n/a
Gearing,((3)) percent (1.7) n/a
ROCE before taxes,((4)) percent 6.5 n/a
ROCE after taxes,((5)) percent 4.9 n/a
Equity to asset ratio,((6))
percent 37.0 n/a
(1) EBITA before non-recurring items = operating profit + amortization +
non-recurring items
Profit
(2) Earnings per share =------------------------------------
Number of outstanding shares in
Metso
Net interest-bearing liabilities
(3) Gearing =------------------------------------x 100
Total equity
Profit before taxes + interest and
Return on capital employed other financial expenses
(4) (ROCE) before taxes =------------------------------------x 100
Balance sheet total - non-
interest-bearing liabilities
Profit + interest and other
Return on capital employed financial expenses
(5) (ROCE) after taxes =------------------------------------x 100
Balance sheet total - non-
interest-bearing liabilities
Total equity
(6) Equity to asset ratio =------------------------------------x 100
Balance sheet total - advances
received
Disclaimer
This release does not constitute an offer to sell or a solicitation of an offer
to buy any securities in any jurisdiction. In particular, no securities are
being offered or sold, directly or indirectly, in or into the United States
pursuant to this release and no shares or other securities of Valmet have been,
or will be, registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), or under the securities laws of any state of the United
States and, accordingly, may not be offered or sold, directly or indirectly, in
or into the United States, unless registered under the Securities Act or
pursuant to an exemption from the registration requirements of the Securities
Act and in compliance with any applicable state securities laws of the United
States.
The distribution of this release may, in certain jurisdictions, be restricted by
law. This release may not be sent to any jurisdiction in which it would not be
permissible to do so.
This release includes forward-looking statements within the meaning of the
securities laws of certain applicable jurisdictions. These forward-looking
statements include, but are not limited to, all statements other than statements
of historical facts contained in this release, including, without limitation,
those regarding the demerger plan and its execution. By their nature, forward
looking statements involve known and unknown risks, uncertainties and other
factors because they relate to events and depend on circumstances that may or
may not occur in the future. Metso cautions you that forward-looking statements
are not guarantees of future performance and are based on numerous assumptions
and that Valmet's actual results of operations, including its financial
condition and liquidity and the development of the industries in which Valmet
and the members of its group operate, may differ materially from (and be more
negative than) those made in, or suggested by, the forward-looking statements
contained in this release.
Metso's pulp, paper and power professionals specialize in processes, machinery,
equipment, services, paper machine clothing and filter fabrics. Our offering and
experience cover the entire process life cycle, including new production lines,
rebuilds, and services.
As of January 2014, Metso's Pulp, Paper and Power business will serve its
customers with an even more focused and competitive approach as an independent,
listed company, Valmet Corporation.*
*Pending the approval of the Metso EGM to be held on October 1, 2013, and
registration of the demerger.
www.metso.com/pulpandpaper, www.metso.com/energy
www.twitter.com/metsopulppaper, www.twitter.com/metsoenergy
Metso is a global supplier of technology and services to customers in the
process industries, including mining, construction, pulp and paper, power, and
oil and gas. Our 30,000 professionals based in over 50 countries contribute to
sustainability and deliver profitability to customers worldwide. Metso's shares
are listed on the NASDAQ OMX Helsinki Ltd.
www.metso.com, www.twitter.com/metsogroup
Further information, please contact:
Pasi Laine, President and CEO, Valmet Coporation*, tel. +358 20 484 3200
Harri Nikunen, CFO, Metso Corporation, tel. +358 20 484 3010
Metso Corporation
Harri Nikunen
CFO
Juha Rouhiainen
VP, Investor Relations
Distribution:
NASDAQ OMX Helsinki Ltd
Media
www.metso.com