Metso publishes illustrative financial information for its continuing Flow Control operations (new Neles) for the years 2016–2018 and for the periods January–June 2019 and 2018

Metso publishes illustrative financial information for its continuing Flow Control operations (new Neles) for the years 2016–2018 and for the periods January–June 2019 and 2018

Metso Corporation, stock exchange release, October 7, 2019, at 8:35 p.m.  EEST

On July 4, 2019, Metso announced that its Board of Directors has approved a plan to combine Metso Minerals Business and Outotec to create Metso Outotec. As a result, Metso’s Flow Control business will become the continuing business of the currently listed Metso, which will be subsequently renamed Neles, an independent listed company supplying flow control products and services. The transaction will be executed through a partial demerger of Metso, in which all assets and liabilities of Metso that relate to, or primarily serve, the Metso Minerals Business will transfer without liquidation of Metso to Outotec.

The completion of the demerger is expected to be registered in the second quarter of 2020, subject to the approval of the demerger by the Extraordinary General Meetings of both Metso and Outotec, convened to be held on October 29, 2019, the statutory creditor hearing process and receipt of all required regulatory and other approvals.

Outotec has today, October 7, 2019, published a prospectus relating to the demerger and combination of Metso Minerals Business (later also “Metso Minerals”) and Outotec.

The prospectus is available at www.metso.com/news/metso-outotec-neles.


In addition to the information published in the prospectus, Metso is publishing selected unaudited illustrative financial information for its proposed continuing Flow Control business (later also “the new Neles”) for the years 2016–2018 and for the periods January–June 2019 and January–June 2018. Attached to this release is the carve-out information relating to the income statement, balance sheet and cash flow statements for 2016–2018 and for the periods January–June 2019 and the comparison period of 2018.

Illustrative financial carve-out information of the new Neles (unaudited)

EUR million	H1/2019	H1/2018	Change %	2018	2017	2016
Orders received	356	322	11	628	555	504
Orders received by services business	83	69	20	136	123	116
share of orders received, %	23	21		22	22	23
Order backlog	298	277	8	276	235	215
Sales	323	279	16	593	522	528
Sales by services business	70	60	17	128	115	114
share of sales, %	22	21		22	22	22
Adjusted EBITA	50	38	32	87	65	70
share of sales, %	15.4	13.6		14.7	12.4	13.3
Operating profit	48	37	30	83	62	68
share of sales, %	14.8	13.2		14.1	12.0	12.9
Profit for the period	32	27	19	60	32	39
Net cash flow from operating activities	40	18		70	16	63
Net working capital	-4	53		4	40	-1
Net debt	-41	-48		-74	-141	-141
Gearing, %	-17.1	-24.3		-31.6	-50.0	-54.6
Equity to assets ratio, %	35.2	39.2		37.8	47.1	37.9
Total assets	699	533	31	636	625	703
Personnel at the end of period	2,968	2,493	19	2,783	2,367	2,376

Background of the unaudited illustrative carve-out financial information

The above and the attached unaudited financial carve-out information illustrate the results of operations and financial position of the new Neles had the partial demerger taken place on January 1, 2016. The information is based on financial data derived from Metso’s audited consolidated financial statements as of and for the years ended December 31, 2018, 2017 and 2016 and from Metso’s unaudited consolidated half-year review for the six-month periods ended June 30, 2019, and 2018. The information includes the impact of Group-level income, expenses, assets and liabilities allocated for carve-out purposes. Therefore, the new Neles figures presented here include some carve-out impacts that are not included in the reported figures of Metso’s Flow Control segment.

The carve-out information as at and for the years ended December 31, 2018, December 31, 2017, and December 31, 2016, present the new Neles as a single economic entity; the information has been prepared using the same historical financial information of the relevant entities and business as part of the Metso Group and using the same accounting principles and carrying amounts as in the Metso Group. The carve-out information has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU.

This unaudited information of the new Neles is presented for illustrative purposes only. It does not necessarily reflect what the combined results of operations and financial position would have been had the new Neles existed as a separate independent legal group from January 1, 2016, and had it therefore presented stand-alone consolidated financial information during the periods presented. Further, this carve-out information may not be indicative of the new Neles’ future performance, financial position or cash flows.

Basis of preparation of the unaudited illustrative carve-out financial information

The following significant principles to historical carve-out information have been applied in the preparation of the illustrative carve-out financial information for the new Neles:

• All the revenues, expenses, assets, and liabilities relating to the Metso Minerals Business have been excluded from Metso’s reported consolidated financial information.
• Intercompany transactions and assets and liabilities between the new Neles entities included in the carve-out information have been eliminated. The carve-out information includes the new Neles entities’ transactions and balance sheet items. Intercompany transactions and balance sheet items with other Metso Group companies previously considered as intercompany transactions in Metso’s consolidated reporting have been treated as transactions with related parties.
• In connection with the partial demerger, part of Metso’s existing borrowings and related financial income and expenses are carved out to Metso Minerals according to the demerger plan. In addition, Metso will seek the needed consent and waivers from its noteholders.
• The remaining amount of the new Neles’ equity of the historical Metso Group’s equity balance in the illustrative consolidated balance sheets represents the amount of net assets attributable to Metso’s continuing Flow Control operations. The adjustments made to equity reflect the Metso Minerals Business’ contemplated equity structure and the decrease in the share capital of the continuing operations in accordance with the demerger plan.
• Metso adopted new IFRS 16 Leases standard on January 1, 2019, using the non-retrospective approach where comparative periods were not restated. Thus, the earlier periods presented here are not comparative with the period ended June 30, 2019. The Flow Control business recognized as at January 1, 2019, as right-of-use assets and lease liability of EUR 51 million in the balance sheet, which was previously reported as off-balance sheet liabilities.
• The amount of transferring borrowings is based on the assumption of the total amount of borrowings to be transferred in the partial demerger. The final amount of assets and liabilities, including borrowings, may differ from those presented in this illustrative financial information as such balances will be determined based on the carrying values of the transferring assets and liabilities on the effective date of the partial demerger. This could lead to variation in the figures presented here regarding the operations and financial position of the new Neles.

Calculation of key figures

	Adjusted EBITA	=	Operating profit (EBIT) + restructuring and acquisition-related costs + amortization
	Net working capital	=	Inventories + trade receivables + other non-interest bearing receivables + customer contract assets and liabilities, net - trade payables - advances received - other non-interest bearing liabilities
	Net debt	=	Interest bearing liabilities - non-current financial assets - loan and other interest bearing receivables (current and non-current) - liquid funds
	Gearing	=	Net debt	× 100
Total equity
	Equity to assets ratio	=	Total equity	× 100
Balance sheet total - advances received

For further information, please contact:

Juha Rouhiainen, Vice President, Investor Relations, Metso Corporation, tel. +358 20 484 5132,

                                  
Metso Corporation

Distribution:
Nasdaq Helsinki
Media
www.metso.com

Metso is a world-leading industrial company offering equipment and services for the sustainable processing and flow of natural resources in the mining, aggregates, recycling and process industries. With our unique knowledge and innovative solutions, we help our customers improve their operational efficiency, reduce risks and increase profitability. Metso is listed on the Nasdaq Helsinki in Finland and had sales of about EUR 3.2 billion in 2018. Metso employs over 14,000 people in more than 50 countries.

metso.com , twitter.com/metsogroup

Attachment

• Neles illustrative carve-out financial information attachment

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