AMG reports fourth quarter and full year 2011 results

14 maart 2012 Key Highlights * Revenue was $308.6 million in the fourth quarter 2011, a 14% increase over the same period in 2010; full year revenue was $1,351.3 million, a 36% increase over 2010 * EBITDA[1] was $24.8 million in the fourth quarter 2011, a 23% increase over the same period in 2010; full year EBITDA was $110.1 million, a 30% increase over the full year 2010 * [EPS on a fully diluted basis was ($0.47) in the fourth quarter 2011; full year EPS, was $0.19; excluding non-recurring items, EPS improved to $0.26 in Q4 2011, up from $0.23 in Q4 2010; full year EPS excluding non-recurring items was $1.34] * The Advanced Materials Division generated revenue of $198.7 million and EBITDA of $6.0 million in Q4 2011; full year revenue and EBITDA were $871.9 million and $50.4 million, respectively * The Engineering Systems Division generated revenue of $72.9 million and EBITDA of $11.8 million in Q4 2011; full year revenue and EBITDA were $313.8 million and $34.0 million, respectively * Graphit Kropfmühl generated revenue of $37.0 million and EBITDA of $7.0 million in Q4 2011; full year revenue and EBITDA were $165.5 million and $25.8 million, respectively * As of 31 December 2011, cash on the balance sheet was $79.6 million, net debt was $189.1 million Amsterdam, 14 March 2012 (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported fourth quarter 2011 revenue of $308.6 million a 14% increase from $270.7 million in the fourth quarter 2010. EBITDA increased 23% to $24.8 million in the fourth quarter 2011 from $20.2 million in the fourth quarter 2010.  Net loss attributable to shareholders for the fourth quarter 2011 was $13.2 million, or ($0.47) per fully diluted share. Net income attributable to shareholders for the fourth quarter 2010 was $12.5 million, or $0.46 per fully diluted share.  Excluding AMG's non-recurring charges in the fourth quarter, AMG's net income attributable to shareholders for the fourth quarter 2011 was $7.2 million, or $0.26 per fully diluted share compared to $6.2 million or $0.23 per fully diluted share in 2010. Full year 2011 revenue increased 36% to $1,351.3 million, from $990.5 million in 2010.  EBITDA increased 30% to $110.1 million in 2011 compared with $84.9 million in 2010.  Net income attributable to shareholders for the full year 2011 was $5.2 million, or $0.19 per fully diluted share.  Excluding non- recurring charges, AMG's net income attributable to shareholders for the full year 2011 was $37.1 million, or $1.34 per fully diluted share.  Net income attributable to shareholders for continuing operations for the full year 2010, excluding non-recurring items, was $20.1 million, or $0.75 per fully diluted share. Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, commented: "The business performed well in 2011.  Despite the European economic slowdown that affected the fourth quarter, demand and pricing for the Advanced Materials division's products improved substantially over 2010, particularly in the aerospace and energy end markets.  In the Engineering Systems division, however, lower capital goods demand in 2011 caused a decline in operating results. Graphit Kropfmühl continued its strong performance, driven by improved silicon metal and natural graphite prices.  The overall growth in 2011 financial results clearly illustrated the value of AMG's portfolio of critical materials and related technologies.  The simplification of AMG's corporate structure and investments in our vertically integrated businesses in 2012 should help buffer AMG from the challenging global economy." [1] EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes nonrecurring items Key Figures In 000's US Dollar   Q4 '11 Q4 '10 Change    FY '11 FY '10 Change Revenue $308,574 $270,731 14%   $1,351,306 $990,495   36% -------------------------------------------------------------------------------- Gross profit 50,515 49,382 2%   237,976 178,558        33% Gross margin 16.4% 18.2%     17.6% 18.0% -------------------------------------------------------------------------------- Operating profit 9,778 6,323 55%   69,536 43,259 61% Operating margin 3.2% 2.3%     5.1% 4.4% Net (loss) income (13,197) 12,481 N/A   5,160 2,414 114% attributable to shareholders -------------------------------------------------------------------------------- EPS- Fully diluted  ($0.47) $0.46     $0.19 $0.09 Adjusted EPS-Fully  $0.26 $0.23     $1.34 $0.75 diluted[1] EBIT[2] 16,424 12,917 27%   80,282 59,866 34% EBITDA[3]        24,779 20,171 23%   110,142 84,875 30% EBITDA margin 8.0% 7.5%     8.2% 8.6% -------------------------------------------------------------------------------- Notes: [1] Adjusted to exclude non-recurring charges, as described in Non-Recurring Items [2] EBIT is defined as earnings before interest, tax and excludes nonrecurring items [3] EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes nonrecurring items Operational Review - Fourth Quarter 2011 Advanced Materials Division   Q4 '11 Q4 '10 Change -------------------------------------------------------- Revenue $198,714 $168,863 18% Gross profit 19,201 24,265 (21%) Operating (loss) profit (10,864) 1,432 N/A EBITDA 6,026 7,738 (22%) Capital expenditures 10,740 7,321 47% The Advanced Materials Division's fourth quarter 2011 revenue was positively impacted by the acquisition of KB Alloys LLC, improvements in titanium master alloys volumes and increases in chromium metal, tantalum and antimony prices. Revenue increased by $29.9 million or 18% to $198.7 million.  KB Alloys LLC contributed $19.5 million of revenue in the quarter while titanium master alloys, tantalum and chrome products' revenues increased 458%, 400%, and 23%, respectively. The fourth quarter 2011 gross margin of 10% declined from 14% in the fourth quarter of 2010.  Increased economies of scale were more than offset by unfavorable changes in product mix, specifically a 53% increase in low margin aluminum products revenue and higher operating and materials costs, particularly in the mine-based businesses, all of which resulted in lower gross margins. The fourth quarter 2011 EBITDA decreased by $1.7 million to 3% of revenue.  This decreased from 5% of revenue in the fourth quarter 2010.  The decrease in EBITDA was the result of the $5.1 million decrease in gross profit, slightly offset by a 13% decrease in SG&A, primarily due to a $2.1 million decrease in personnel expenses. The decrease in personnel expenses included a $0.7 million decrease in incentive based compensation expenses. Capital expenditures were $10.7 million for the quarter, 47% more than the fourth quarter 2010.  Significant growth capital investments made in the fourth quarter include $2.6 million in the tantalum mine and $1.2 million to expand the aerospace coatings and master alloy production capacity. Engineering Systems Division   Q4 '11 Q4 '10 Change --------------------------------------------------- Revenue $72,851 $67,676 8% Gross profit 21,800 20,946 4% Operating profit 6,028 7,041 (14%) EBITDA 11,772 9,963 18% Capital expenditures   6,289   4,911 28% The Engineering Systems Division's fourth quarter 2011 revenue increased by $5.2 million, or 8%, to $72.9 million.  Revenue from heat treatment furnaces for the production of lightweight automotive components increased 130% to $24.1 million, while revenue from remelting furnaces, primarily for the aerospace and specialty steel industries, increased 49% to $14.9 million.  Solar silicon DSS furnace revenue decreased 70% in the fourth quarter 2011 compared to the same period in 2010.  Solar silicon DSS furnaces accounted for 9% of revenue in the fourth quarter 2011. The order backlog decreased 8% to $158.5 million as of December 31, 2011, from $172.8 million as of September 30, 2011.  The division generated order intake of $69.5 million in the fourth quarter 2011, which represents a 35% decrease compared to the fourth quarter 2010 and a 0.95x book to bill ratio.  Order intake for heat treatment systems and induction melting and casting systems accounted for 48% and 20% of total order intake, respectively. The fourth quarter 2011 gross margin of 30% decreased slightly from 31% in the fourth quarter 2010 because of increased end market pricing pressure, slightly offset by increased economies of scale. The fourth quarter 2011 EBITDA increased by $1.8 million to 16% of revenue. This increased from 15% of revenue in the fourth quarter 2010.  The $1.8 million increase in EBITDA was the result of the $0.9 million increase in gross profit, slightly offset by a $0.2 million, or 2% increase in SG&A. The slight increase in SG&A was primarily the result of a $0.9 million increase in both professional fees and research and development expenses, slightly offset by a $1.6 million decrease in personnel costs. Capital expenditures were $6.3 million, 28% more than the fourth quarter of 2010.  The increase in capital investments is related primarily to additional capacity for the U.S. Heat Treatment Services facility. Graphit Kropfmühl   Q4 '11 Q4 '10 Change Revenue $37,009 $34,192 8% Gross profit 9,514   4,171 128% Operating profit (loss) 22,155 (2,150) N/A EBITDA   6,981   2,470 183% Capital expenditures 3,152 1,687 87% Graphit Kropfmühl's fourth quarter 2011 revenue increased by $2.8 million, or 8%, to $37.0 million.  Natural graphite revenue increased $1.8 million, or 16%, driven by an increase in prices, despite lower volumes.  Silicon metal revenue increased by $1.0 million or 4%, primarily because of higher silicon metal prices and increased volumes of silicon by products. The fourth quarter 2011 gross margin increased to 26% from 12% in the fourth quarter of 2010.  The increase in gross margin was primarily the result of higher sales prices for silicon metal and natural graphite products.  The increased operating profit was due to a $16.9 million reversal of a non-cash impairment of fixed assets that was originally recorded in 2008.  The reversal was due to the significant improvement in GK's operational outlook and was calculated using a value-in-use model in accordance with IFRS guidance. Fourth quarter 2011 EBITDA increased by $4.5 million to 19% of revenue. This was an increase from 7% of revenue in the fourth quarter 2010.  The EBITDA increase was attributable to the increased gross profit for silicon metal and natural graphite, slightly offset by a 16% increase in SG&A due to increased personnel costs. Capital expenditures increased to $3.2 million in the fourth quarter 2011, 87% more than the fourth quarter 2010.  The increase in capital expenditures was a result of upgrading the electrodes at the silicon metal operation and expanding the natural graphite milling capacity. Timminco On January 3, 2012, Timminco Limited announced that it had decided to seek protection from its creditors under the Canadian Companies' Creditors Arrangement Act.  AMG owned 41.9% of Timminco common stock as of December 31, 2011.  During the fourth quarter, AMG wrote off its investment in Timminco resulting in an $8.1 million noncash expense, which is included in the share of loss of associates line in the income statement.  AMG also recorded $7.5 million bad debt expense in selling, general and administrative expenses related to the book value of a convertible note and a receivable due from Timminco.  AMG has no further assets on its balance sheet related to Timminco. Operational Review - Year 2011 Advanced Materials Division   FY '11 FY '10 Change ----------------------------------------------------- Revenue $871,939 $616,267 41% Gross profit 118,931 94,749 26% Operating profit  19,639  20,678 (5%) EBITDA 50,377 39,823 27% Capital expenditures  29,064  20,484 42% Advanced Materials' 2011 revenue increased by $255.7 million, or 41%, from 2010, to $871.9 million.  This was a direct result of the acquisition of KB Alloys LLC, increases in average selling prices and volumes for many products, most notably for antimony and titanium alloys. Gross margin decreased to 14% in 2011 from to 15% in 2010 due to unfavorable changes in product mix, notably an increase in aluminum master alloy sales. 2011 gross profit increased by $24.2 million, or 26%, from 2010, to $118.9 million due to the substantial increase in revenue slightly offset by higher raw material prices, in particular for chrome metal and aluminum master alloys and powders. 2011 EBITDA increased to $50.4 million or 6% of revenue due to the increase in gross profit, slightly offset by an increase in SG&A expenses.  SG&A expenses increased 24% to $87.5 million in 2011 from $70.5 million in 2010 due to increased headcount, which resulted in higher selling and incentive compensation. Capital expenditures were $29.1 million in 2011, 42% more than 2010.  The division invested in growth capital expenditures in its ferrovanadium, antimony, tantalum and titanium master alloy operations during 2011 to in an effort to lower costs and increase security of raw material supply. Engineering Systems Division   FY '11 FY '10 Change ----------------------------------------------------- Revenue $313,830 $245,652 28% Gross profit 83,707 70,119 19% Operating profit 20,424 22,916 (11%) EBITDA 33,969 37,452 (9%) Capital expenditures  13,386  7,877 70% Engineering Systems' 2011 order intake was $292.4 million, up 4% from 2010.  2011 revenue increased 28% to $313.8 million.  The increase in revenue was driven by the 55% increase in the Heat Treatment Services revenue and the 4% increase in order intake. Gross margin decreased from 29% in 2010 to 27% in 2011 due to unfavorable product mix and increased pricing pressure, particularly in solar silicon systems compared to 2010.  2011 gross profit increased by $13.6 million or 19%, to $83.7 million due to the significantly higher revenue compared to 2010. 2011 EBITDA decreased by 9%, to $34.0 million.  The increase in gross profit was more than offset by the increase in SG&A expenses.  EBITDA margin decreased to 11% of revenue from 15% in 2010.  SG&A expenses increased by $13.7 million, or 29%, to $60.2 million.  The SG&A increase was a result of increased research and development spending and compensation expenses due to headcount increases.  The headcount increased due to the AMG Idealcast Solar acquisition and the growing Heat Treatment Services business. Capital expenditures were $13.4 million in 2011, 70% more than 2010.  This increase is related primarily to additional capacity for the three Heat Treatment Services facilities. Graphit Kropfmühl   FY '11 FY '10 Change -------------------------------------------------------- Revenue $165,537 $128,576 29% Gross profit 35,338 13,690 158% Operating profit (loss) 37,014 (335) N/A EBITDA 25,796 7,600 239% Capital expenditures  9,472  4,612 105% GK's 2011 revenue increased by $37.0 million, or 29%, from 2010, to $165.5 million.  The increase was driven by improved silicon metal pricing and increases in natural graphite pricing and volumes. 2011 gross margin increased to 21% from 11% in 2010.  The increase in gross profit of $21.6 million, or 158%, to $35.3 million was comprised of a 304% increase in silicon metal gross profit and a 60% increase in natural graphite gross profit. The improved gross profit was generated primarily by higher silicon metal and natural graphite prices, slightly offset by an increase in raw material costs. 2011 EBITDA increased by $18.2 million, or 239%, from 2010, to $25.8 million due to the increase in gross profit, slightly offset by a $3.7 million, or 31%, increase in SG&A.  EBITDA margin increased to 16% of revenue from 6% in 2010. Capital expenditures were $9.5 million in 2011, 105% more than 2010.  GK invested in upgrading and expanding its natural graphite production capabilities and upgrading the electrodes to increase operating efficiencies in the silicon metal operation. Financial Review Taxes AMG recorded a tax expense of $18.7 million in the year ended December 31, 2011 as compared to a tax expense of $11.2 million in the year ended December 31, 2010.  Excluding share of loss of associates, for which AMG cannot recognize a tax benefit since these companies are not consolidated, AMG's effective tax rate was 19.5% in the fourth quarter 2011.  Excluding Timminco related charges, AMG's 2011 effective tax rate was 34.1%. SG&A AMG's fourth quarter 2011 SG&A expenses were $42.5 million, compared to $36.8 million in the fourth quarter 2010.  The $5.7 million increase in SG&A expenses was due to a $7.5 million noncash charge, for the write down of assets related to Timminco, and increases in bad debt, travel and professional fees, slightly offset by a $5.5 million decrease in personnel costs.  The $7.5 million noncash charge was included in AMG's consolidated SG&A, but not allocated to the Advanced Materials Division's or the Engineering Systems Division's SG&A for segment reporting purposes. For the full year 2011, AMG's SG&A expenses were $170.8 million, compared to $128.9 million in 2010, an increase of 32%.  Excluding the noncash $7.5 million charge related to the Timminco write down, the increase in SG&A was 27% over 2010. The increase was due to the acquisitions of KB Alloys and AMG Idealcast as well as an increase in compensation expenses. Non-Recurring Items AMG's 2011 operating profit of $69.5 million includes non-recurring items, which are not included in the calculation of EBITDA.  These items are comprised of income and expense items, that in the view of management, do not arise in the normal course of business and items that, because of their nature and/or size, should be presented separately to enable better analysis of the results. A summary of non-recurring items affecting the 2011 and 2010 results is presented below: For the twelve months ended   December December 2011 2010 -------------------------------------------------------------------------------- Non-recurring items included in operating profit: Provisions for Timminco receivables and notes 7,541 - Restructuring expense 2,526 423 Environmental expense 5,886 6,421 Impairment of solar and AMD assets 14,992 602 (Reversal)of impairment of GK assets (16,909) 602 Bargain purchase gain on acquisition (5,361) - -------------------------------------------------------------------------------- Total non-recurring items included in operating profit 8,675 7,446 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Non-recurring losses from investment in Timminco 17,706  11,459 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Non-recurring losses (gains) from revaluation of Timminco convertible debt included in finance costs 2,624 (371) -------------------------------------------------------------------------------- In the calculation of adjusted earnings per share, applicable tax rates are applied. Currency Fluctuations AMG transacts business in many currencies other than the U.S. dollar, our reporting currency. AMG's financial statements are prepared in U.S. dollars, so fluctuations in the exchange rates between the U.S. dollar and other currencies have an effect both on the results of operations and on the reported value of assets and liabilities as measured in U.S. dollars.  The appreciation in the value of the U.S. dollar as of December 31, 2011 compared to September 30, 2011, resulted in a decrease in the assets and liabilities on the balance sheet of $29.8 million and $22.2 million, respectively.  The net result of the appreciation in the value of the U.S. dollar in the fourth quarter 2011 compared to the fourth quarter 2010, resulted in a decrease in revenue and EBITDA of $1.4 million and $0.2 million, respectively in the fourth quarter 2011. Liquidity   December 31, 2011 December 31, 2010 Change -------------------------------------------------------------------------------- Total debt $268,621 $237,089 13% Cash & short-term investments 79,571 89,311 (11%) -------------------------------------------------------------------------------- Net debt 189,050 147,778 28% AMG had a net debt position of $189.1 million as of December 31, 2011. AMG's net debt position increased $41.3 million since December 31, 2010 primarily the result of a $18.1 million increase in working capital due to increasing material costs, $51.9 million in capital investments, $34.2 million of cash tax payments, the $29.0 million acquisition of KB Alloys LLC and AMG Intellifast and $14.6 million of cash finance costs paid, reduced by EBITDA of $110.1 million. Including the $79.6 million of cash, AMG had $138.6 million of total liquidity as of December 31, 2011. During the fourth quarter, AMG exercised the incremental term and revolving facility feature of its primary credit facility and secured approximately $15 million in incremental credit from Fifth Third Bank.  The total credit facility is now approximately $315 million and it matures in April 2016. Cash Flow   For the twelve months ended   December December  2011 2010 ------------------------------------------------------------------------------ Net cash flows from (used in) operations $45,039 $(1,623) ------------------------------------------------------------------------------ Capital expenditures (51,922) (32,973) Acquisitions, net of cash (29,456) (20,154) Investment in associates   (10,765) Cash flows (used in) from other investing (1,455) 1,320 ------------------------------------------------------------------------------ Net cash flows used in investing activities (82,833) (62,572) ------------------------------------------------------------------------------ Cash flows generated from financing activities 27,935 42,352 ------------------------------------------------------------------------------ Net decrease in cash and cash equivalents (9,859) (21,843) ------------------------------------------------------------------------------ Cash flows from operations were $45.0 million in 2011 compared to cash flows used in operations of $1.6 million in 2010.  The 2011 cash flows from operations are primarily the result of $110.1 million in EBITDA less $34.2 million in cash tax payments and an $18.1 million increase in working capital.  The substantial cash tax payments are primarily due to the difference between IFRS percentage of completion accounting as compared to completed contract methodology for tax payments in the Engineering Systems division. Cash used in investing activities was $82.8 million in 2011.  The $20.3 million increase compared to 2010 is composed of an $18.9 million increase in capital investments and a $9.3 million increase in acquisitions, slightly offset by a $10.8 million decrease in cash flows due to investment in associates.  In 2011, AMG acquired KB Alloys LLC and AMG Intellifast GmbH for $29.0 million, while in 2010 AMG acquired an antimony mine in Turkey for $17.3 million. Cash generated from financing activities was $27.9 million in 2011, a $14.4 million decrease from 2010.  This decrease was attributed to $10.8 million in payments for transaction costs related to debt issuance and a $3.3 million decrease in net draws on revolving lines of credit.  The draws on the revolving lines of credit were used to fund the acquisition of KB Alloys LLC and the related transaction costs. Outlook The global market is still challenging.  After a difficult year-end period particularly for Advanced Materials, there are signs of improvement, but growth differs amongst geographic segments and end markets. Specific markets such as aerospace are robust, while the infrastructure and energy markets continue to suffer from supply-demand imbalances.  Scarcity of resources, particularly in critical raw materials such as antimony, tantalum and natural graphite continue to be an issue.  In this environment, AMG is focused on improving existing operations to maximize profitability.  Progress is being made in the Turkey and Brazil mine based businesses, which are producing ore and performing extensive drilling programs, which are the basis for a more detailed and effective mining plan.  In February 2012, AMG initiated a Voluntary Tender offer in an attempt to take Graphit Kropfmühl private in order to simplify the AMG capital structure and increase operational efficiencies.  Despite the global uncertainties, AMG expects an increase in revenue and EBITDA and net income attributable to shareholders in 2012. AMG Advanced Metallurgical Group N.V. Condensed interim consolidated income statement For the three months ended December 31 In thousands of US Dollars 2011 2010 Unaudited Unaudited Continuing operations Revenue 308,574 270,731 Cost of sales 258,059 221,349 Gross profit 50,515 49,382 Selling, general and administrative expenses 42,457 36,765 Restructuring expense 30 417 Asset impairment (reversal) expense (1,917) 602 Environmental expense 5,504 5,658 Other income, net (5,337) (383) Operating profit 9,778 6,323 Finance expense 6,867 2,966 Finance income (1,464) (2,459) Foreign exchange gain (838) (1,535) Net finance costs 6,241 2,042 Share of (loss) income of associates and joint ventures (13,514) 7,569 (Loss) profit before income tax (9,977) 11,850 Income tax expense (benefit) 2,155 (110) (Loss) profit for the period (12,132) 11,960 Attributable to: Shareholders of the Company (13,197) 12,481 Non-controlling interests 1,065 (521) (12,132) 11,960 Earnings  per share Basic earnings per share (0.47) 0.46 Diluted earnings per share (0.47) 0.46 AMG Advanced Metallurgical Group N.V. Consolidated income statement For the year ended December 31 In thousands of US Dollars   2011 2010     Unaudited Audited Continuing operations Revenue   1,351,306 990,495 Cost of sales   1,113,330 811,937 Gross profit   237,976 178,558 Selling, general and administrative expenses   170,772 128,934 Restructuring expense   2,526 423 Asset impairment (reversal) expense   (1,917) 602 Environmental expense   5,886 6,421 Other income, net   (8,827) (1,081) Operating  profit   69,536 43,259 Loss on early extinguishment of debt   - - Finance expense   26,370 18,727 Finance income   (5,457) (5,429) Foreign exchange loss (gain)   1,366 (2,799) Net finance costs   22,279 10,499 Share of  loss of associates and joint ventures   (20,265) (19,405) Profit before income tax   26,992 13,355 Income tax expense   18,702 11,207 Profit for the year   8,290 2,148 Attributable to:   Shareholders of the Company   5,160 2,414   Non-controlling interests   3,130 (266)       8,290 2,148 Earnings per share Basic earnings per share   0.19 0.09 Diluted earnings per share   0.19 0.09 AMG Advanced Metallurgical Group N.V. Consolidated Statement of Financial Position As at December 31 In thousands of US Dollars   2011 2010       Unaudited Audited Assets   Property, plant and equipment   263,586 228,612   Goodwill   23,535 21,704   Intangible assets   14,557 5,298   Investments in associates and joint ventures   5,085 25,186   Derivative financial instruments   1 5,199   Deferred tax assets   29,142 22,107   Restricted cash   11,074 12,528   Notes receivable   250 322   Other assets   17,866 15,372 Total non-current assets   365,096 336,328   Inventories   228,887 207,204   Trade and other receivables   188,103 175,421   Derivative financial instruments   3,956 5,731   Other assets   35,184 41,080   Cash and cash equivalents   79,571 89,311 Total current assets   535,701 518,747 Total assets   900,797 855,075 AMG Advanced Metallurgical Group N.V. Condensed interim consolidated statement of financial position (continued) In thousands of US Dollars     2011 2010 Equity   Issued capital   742 741   Share premium   381,921 381,636   Other reserves   14,157 36,158   Retained earnings (deficit)   (191,362) (196,481) Equity attributable to shareholders of the Company 205,458 222,054 Non-controlling interests   15,160 11,911 Total equity   220,618 233,965 Liabilities   Loans and borrowings   210,448 187,813   Employee benefits   90,078 88,372   Provisions   27,019 20,607   Government grants   732 642   Other liabilities   9,276 5,517   Derivative financial instruments   8,122 698   Deferred tax liabilities   26,434 25,436 Total non-current liabilities   372,109 329,085   Loans and borrowings   17,436 4,254   Short term bank debt   40,737 45,022   Government grants   34 175   Other liabilities   51,673 43,287   Trade and other payables   128,493 102,253   Derivative financial instruments   10,661 1,754   Advance payments   30,204 49,597   Current taxes payable   14,468 24,979   Provisions   14,364 20,704 Total current liabilities   308,070 292,025 Total liabilities   680,179 621,110 Total equity and liabilities   900,797 855,075 AMG Advanced Metallurgical Group N.V. Condensed interim consolidated statement of cash flows For the year ended December 31 In thousands of US Dollars   2011 2010     Unaudited Audited Cash flows from (used in) operating activities Profit for the year   8,290 2,148 Adjustments to reconcile profit to net cash flows: Non-cash:    Depreciation and amortization   29,625 25,009    Amortization of purchase accounting adjustment to inventory   235 -    Restructuring expense   2,526 423    Asset impairment (reversal) expense   (1,917) 602    Environmental expense   5,886 6,421    Net finance costs   22,279 10,499    Share of loss of associates and joint ventures   20,265 19,405    Loss on sale or disposal of property, plant and equipment   50 262    Equity-settled share-based payment transactions   3,438 6,362    Income tax expense   18,702 11,207 Working capital adjustments    Change in inventories   (19,963) (23,774)    Change in trade and other receivables   (24,749) (40,033)    Change in prepayments   8,440 (12,248)    Change in trade payables, provisions, and other liabilities   13,857 35,488    Change in government grants   (174) (17)    Other   4,490 5,900 Finance costs paid   (14,593) (15,334) Finance costs received   2,530 1,496 Income tax paid, net   (34,178) (35,439) ------------------- Net cash flows from (used) in operating activities   45,039 (1,623) Cash flows used in investing activities Proceeds from sale of property, plant and equipment   609 983 Acquisition of associates and joint ventures   - (10,765) Acquisition of subsidiaries (net of cash acquired $3,856)   (29,456) - Asset acquisitions   - (20,154) Acquisition of property, plant and equipment and intangibles   (51,922) (32,973) Related party loans   (5,002) 264 Change in restricted cash   1,369 151 Other   1,569 (78) ------------------- Net cash flows used in investing activities   (82,833) (62,572) AMG Advanced Metallurgical Group N.V. Consolidated Statement of Cash Flows (continued) For the year ended December 31 In thousands of US Dollars   2011 2010 Cash flows from financing activities Proceeds from issuance of debt   227,511 45,546 Payment of transaction costs related to debt issuance   (10,848) - Repayment of borrowings   (188,740) (3,432) Other   12 238 ------------------- Net cash flows from financing activities   27,935 42,352 ------------------- Net decrease in cash and cash equivalents   (9,859) (21,843) Cash and cash equivalents at January 1   89,311 117,016 Effect of exchange rate fluctuations on cash held   119 (5,862) ------------------- Cash and cash equivalents at December 31   79,571 89,311 The notes are an integral part of these consolidated financial statements. About AMG AMG creates and applies innovative metallurgical solutions to the global trend of sustainable development of natural resources and CO(2) reduction.  AMG produces highly engineered specialty metal products and advanced vacuum furnace systems for the Energy, Aerospace, Infrastructure and Specialty Metals and Chemicals end markets.  AMG consists of two operating divisions, Advanced Materials and Engineering Systems, and owns an interest in publicly-listed Graphit Kropfmühl AG (Deutsche Börse: GKR.DE). The Advanced Materials Division develops and produces specialty metals, alloys and high performance materials. AMG is a significant producer of specialty metals, such as ferrovanadium, ferronickel-molybdenum, aluminum master alloys and additives, chromium metal and ferrotitanium, for Energy, Aerospace, Infrastructure and Specialty Metal and Chemicals applications.  Other key products include specialty alloys for titanium and superalloys, coating materials, tantalum and niobium oxides, vanadium chemicals and antimony trioxide. The Engineering Systems Division designs, engineers and produces advanced vacuum furnace systems and operates vacuum heat treatment facilities, primarily for the Aerospace and Energy (including solar and nuclear) industries.  Furnace systems produced by AMG include vacuum remelting, solar silicon melting and crystallization, vacuum induction melting, vacuum heat treatment and high pressure gas quenching, turbine blade coating and sintering.  AMG also provides vacuum case-hardening heat treatment services on a tolling basis. Graphit Kropfmühl AG is a majority controlled, publicly listed subsidiary of AMG.  Based on its secure raw material sources in Africa, Asia and Europe, Graphit Kropfmühl is a specialist in the production of silicon metal and the extraction, processing and refining of natural crystalline graphite for a wide range of energy saving industrial applications. With over 3,000 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, Czech Republic, United States, China, Mexico, Brazil, Turkey, Poland, India and Sri Lanka and has sales and customer service offices in Belgium, Russia and Japan (www.amg-nv.com). For further information, please contact: AMG Advanced Metallurgical Group N.V.        +1 610 975 4901 Jonathan Costello Vice President of Corporate Communications jcostello@amg-nv.com Disclaimer Certain statements in this press release are not historical facts and are "forward looking."  Forward looking statements include statements concerning AMG's plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans and intentions relating to acquisitions, AMG's competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, AMG's business strategy and the trends AMG anticipates in the industries and the political and legal environment in which it operates and other information that is not historical information.  When used in this press release, the words "expects," "believes," "anticipates," "plans," "may," "will," "should," and similar expressions, and the negatives thereof, are intended to identify forward looking statements.  By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved.  These forward looking statements speak only as of the date of this press release.  AMG expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statement contained herein to reflect any change in AMG's expectations with regard thereto or any change in events, conditions, or circumstances on which any forward looking statement is based. AMG reports fourth quarter and full year 2011 results This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: AMG Advanced Metallurgical Group N.V. via Thomson Reuters ONE [HUG#1593791]