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2016-09-08

Solidium Oy: Solidium Oy's half-year report for January-June 2016 and annual financial statement

Six month review period 1 January - 30 June 2016

* Solidium's return on equity holdings was -5.5 %
* Solidium subscribed for shares with EUR 97 million in SSAB's EUR 543
million rights issue
* Solidium increased its shareholdings in Metso and Outotec

Financial year 1 July 2015 - 30 June 2016

* Solidium's return on equity holdings was -8.9 %
* Solidium's profit for the financial year was EUR 11 million. Profit before
impairments was EUR 312 million
* Solidium's net asset value decreased by EUR 726 million during the review
period due to the profit distribution of EUR 266 million and decrease in
the value of equity holdings, and was EUR 6,128 million at the end of the
period
* After the end of the financial year the extra general meeting elected a new
board of directors of Solidium
* The annual general meeting of Solidium decided on profit distribution of
EUR 278 million

Kari Järvinen, Managing Director of Solidium Oy, comments the review period:

"The return of our equity holdings during the six-month review period was
-5.5 %. The stock markets were volatile during review period. For the whole
financial year the return on equity holdings was -8.9 %. The return largely
reflects the distribution of different industries in our holdings and the
unsatisfactory development in some of the companies we own. Due to the
timing, the "Brexit vote" had also an impact on the valuations in Solidium's
financial statement especially regarding our finance and cyclical holdings.
After the end of the financial year the sentiment on the stock markets
improved and Solidium's return on equity holdings in July-August 2016 was 7.3
%.

Even though the economic cycle for raw materials is at a low point, Finland is
still one of the few European countries with considerable long-term potential
in the metal and mining industries. That is why Solidium, as an anchor owner,
has been supporting the long-term development of the companies in the
industry even when the short-term outlook has been sluggish. We increased our
holdings in Metso and Outotec and participated in SSAB's rights issue of EUR
543 million by subscribing for the company's new shares with approximately
EUR 97 million. We were influencing the structure of the rights issue and the
development of the company's financing package. The share issue strengthened
SSAB's financial position enabling the company to focus on implementing its
growth strategy within special steels.

The highlights of the financial year were the good returns from Elisa and
Tieto and the strong performance of Kemira and Valmet. However, when
assessing the return, it is important to bear in mind that Solidium is not a
portfolio investor but a long-term owner. In the long run, our expectation
for the companies is to perform better than the median of the peer companies.
During the financial year, seven out of eleven portfolio companies fulfilled
our expectations in this regard.

After the end of the financial year the extra general meeting of Solidium
elected a new board of directors as of 1 August 2016. With the new board of
directors Solidium has a good basis to continue its work within the mission
and authority determined by the owner of Solidium."

SOLIDIUM'S HOLDINGS

Development of holdings and key indicators

The total value of Solidium's holdings (equity holdings and money market
investments) was EUR 6,970 million on 30 June 2016 (EUR 7,296 million on 31
December 2015 and EUR 8,423 million on 30 June 2015). The return on
Solidium's holdings was -5.1% for the six month review period and -7.4 % for
the financial year. In addition to the decline of the value of equity
holdings, the total value of the holdings decreased due to repayment of the
exchangeable bond (EUR 600 million) and the profit distribution paid (EUR 266
million). Detailed information on the breakdown and the returns of the
holdings are attached to this report.

Equity holdings

The value of Solidium's equity holdings on 30 June 2016 was EUR 6,308 million
(EUR 6,836 million on 31 December 2015 and EUR 7,025 million on 30 June 2015).
The total return on the equity holdings was -5.5% for the review period and
-8.9% for the financial year. The best returns during the review period were
generated by Outokumpu, Outotec and Valmet while the development of Sampo,
Stora Enso and Telia Company were the weakest.

Money market investments

On 30 June 2016, Solidium's money market investments totalled EUR 662 million
on 30 June 2016 (EUR 459 million on 31 December 2015 and EUR 1,398 million on
30 June 2015). The return on money market investments was 0.2% for the
six-month review period and 0.3% for the financial year.

Profit distribution to Solidium

During the financial year, Solidium received profit distribution amounting to
EUR 282 million before taxes (EUR 275 million in 1 July 2014 - 30 June 2015).
The dividend return of Solidium's holdings was 4.5% in relation to the value
of the equity holdings in the end of June 2016.

Participation in nomination boards

A central aspect of Solidium's corporate governance model is to actively
influence the composition of the boards of directors of the portfolio
companies. During the review period, Solidium participated actively in the
work of nomination boards preparing board elections. The aim of Solidium is
to form a board composition which best serves the needs of the company in
question and the goal of shareholder value creation. During the financial
year, a total of 17 new members were elected to the boards of directors of
Solidium owned companies. Nine of the new members were women.

Managing Director Kari Järvinen served as Solidium's representative in the
shareholders' nomination boards of Elisa, Metso, Outokumpu, Outotec, Stora
Enso, Talvivaara Mining Company and Valmet as Chairman, as well as in the
nomination boards of Kemira, SSAB, Telia Company, and Tieto as a member.
These nomination boards prepared proposals for the 2016 Annual General
Meetings on the election of board members and their remuneration.

Share acquisitions and other events

During the six-month review period, Solidium's share acquisitions totalled EUR
103 million (EUR 172 million in 1 July 2015 - 30 June 2016). Solidium
increased during the review period its holding in Metso from 14.6% to 14.9%
by acquiring shares worth EUR 5 million from the market and in Outotec from
14.7% to 14.9% by acquiring shares worth EUR 1 million from the market.

In June 2016, Solidium participated in SSAB's rights issue of EUR 543 million
by committing to subscribe for shares for EUR 93 million, and in a secondary
subscription for EUR 4 million. Similarly to SSAB's other largest shareholder
Industrivärden, Solidium supported the company by committing to subscribe for
new shares pro rata on its primary participation, which the company announced
to the market when the rights issue was made public. The price difference
between SSAB's A and B shares has been considerable and permanent for a long
time. Therefore, Solidium played a key role in influencing the structure of
the rights issue and in ensuring equal treatment of shareholders. A structure
in which all shareholders were offered B shares provided the best solution in
terms of shareholder equality. The share issue strengthened SSAB's financial
position and in conjunction SSAB refinanced a significant part of its bank
financing. The company's indebtedness decreased closer to the peer company
group's level, which will offer better opportunities to execute the growth
strategy based on special steels.

At the end of June 2016, Talvivaara Mining Company Plc and state-owned
Terrafame Oy reached an agreement on an arrangement in which Talvivaara will
offset the "Nyrstar receivable" and receive EUR 1.4 million in cash as a
consideration for asset items related to the operations of the Sotkamo mine.
This arrangement will help the Talvivaara reorganization to proceed and to
assist Terrafame as it examines the future of the Sotkamo mine. The
arrangement provides Talvivaara with funds to proceed in the reorganization
process, examine its options and complete the reorganization process.
Solidium's Managing Director Kari Järvinen resigned from Talvivaara Mining
Company's Board of Directors at the Annual General Meeting on June 15 2016.

SOLIDIUM OY DURING THE REVIEW PERIOD

Guidelines concerning Solidium

In May 2016, the Finnish government set guidelines concerning ownership
steering, based on which the government issued a resolution on State
ownership policy. The resolution outlines the principles and general
objectives of ownership policy for State ownership of companies. As before,
Solidium will be responsible for the steering of listed companies where the
State has a minority interest. Solidium will continue to hold a certain
number of the current shares, it may decrease and increase their number and
buy new shares in listed companies, as considered important for society. The
governance model of Solidium was not changed.

General Meetings of Shareholders

The Extra General Meeting of Shareholders was held in Helsinki on 29 July
2016 electing a new Board of Directors of Solidium as of 1 August 2016. It
was decided that the Board of Directors shall have six members and the Board
of Directors were elected: Chairman Harri Sailas, Vice Chairman Eija
Ailasmaa, and members Aaro Cantell, Markku Hyvärinen, Paula Lehtomäki, and
Marjo Miettinen.

The Annual General Meeting (AGM) of Solidium was held in Helsinki on 7
September 2016. The AGM adopted the company's financial statements for the
financial period of 1 July 2015 to 30 June 2016 and discharged the members of
the Board of Directors and the Managing Director from liability. The AGM
resolved in accordance with the proposal of the Board that a dividend and a
capital distribution totaling EUR 278 million will be paid for the financial
period. Harri Sailas was elected as Chairman of the Board, Eija Ailasmaa as
Vice Chairman and Aaro Cantell, Markku Hyvärinen, Paula Lehtomäki and Marjo
Miettinen as Board members. The AGM kept the remuneration of the Board
unchanged confirming that the Chairman of the Board of Directors shall
receive a fee of EUR 5,500 per month, the Vice Chairman EUR 3,000 per month
and the members EUR 2,500 per month. In addition, a meeting fee of EUR 600
was confirmed for each meeting. The firm of authorised public accountants
KPMG Oy Ab, with APA Raija-Leena Hankonen as the principal auditor, was
appointed as Solidium's auditor to serve for a term expiring at the end of
the next AGM.

Key figures

Solidium's net profit for the financial year was EUR 11 million (EUR 312
million before impairments). Solidium's operating expenses totalled EUR 3.5
million, resulting in a management cost ratio of operations of 0.05%.
Financial expenses inclu...

Författare Hugin

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