PUR.L Regulatory News (PUR)

10 March 2015

PURE WAFER PLC

("Pure Wafer" or "the Company")

Interim Results for the six months ended 31 December 2014

Solid trading momentum disrupted by significant fire at Swansea plant

Pure Wafer plc, the provider of high quality silicon wafer reclaim services for many of the world's leading semiconductor manufacturers, today reports its interim results for the 6 months ended 31 December 2014.

HIGHLIGHTS

Financial Highlights

· Group revenue of $16.3m (6 months to 31 December 2013: $18.2m);

· Operating profit before exceptional costs at $1.2m (6 months to 31 December 2013: $2.2m);

· Net cash inflow from operating activities of $1.2m (2013: $3.2m);

· Net cash of $1.7m at period-end (2013: Net cash $1.3m);

· Exceptional costs recognised of $15.7m related to fire at the Swansea site.

Peter Harrington, Chairman, commented,

"Prior to the fire both sites in Swansea and Prescott, Arizona were trading in line with market expectations and we were poised to take advantage of the continuing growth and confidence within the semiconductor market.

"I am pleased to report that all staff at the facility when the fire broke out were successfully evacuated and no one was injured. The Company is fully and comprehensively insured, which includes extensive 3 year business interruption cover. We are currently working closely with our insurers to ensure that production is resumed as soon as possible."

ENQUIRIES

PURE WAFER PLC

("Pure Wafer" or "the Company")

Interim Results for the six months ended 31 December 2014

Chairman's Statement

Introduction

The Company's Wafer Reclaim facility in Swansea suffered extensive damage following an electrical fire that broke out at around 9am on Sunday 21 December 2014. All staff present at the facility when the fire broke out were successfully evacuated with no reported injuries.

The fire, which started externally, was contained to the service and plant areas and prevented from entering the production areas by the installed fire prevention systems and fire wall. However, subsequent metallurgic testing has determined that elements of the building, including parts of the structural steel framework and external roofing and cladding, have been compromised by the fire and will need replacement. Additional testing throughout the building has concluded that the manufacturing areas including the clean rooms and equipment therein have been significantly contaminated by smoke and fumes from the fire.

In light of these recent findings, it has been concluded that the building will require extensive repairs, including the removal of all affected structural elements, and that the clean rooms will need to be removed and replaced together with all associated mechanical, electrical and process services. The process equipment will also need to be extensively refurbished or replaced to ensure that high levels of quality and customer satisfaction are maintained when production resumes.

Financial performance

During the period we continued to benefit from the continued strength of the global semiconductor industry, particularly in Asia. Up until the point of the fire, both sites in Swansea and Prescott, Arizona were trading in line with market expectations. Nonetheless, the fire has had a material impact on the results for the six months to 31 December 2014.

The impact of exchange rate movements has resulted in an increase in the Company's sterling denominated cost base of approximately $0.4m compared to the comparative period to 31 December 2013.

In accordance with International Accounting Standards, the Directors have been required to undertake an impairment review of all property, plant, equipment and any other assets that have been impacted by the fire at the balance sheet date. As a consequence of the impairment review, the results for the six months to 31 December 2014 include an exceptional charge of $15.7m in respect of the impairment estimated to have been incurred as a result of the fire, at 31 December 2014. Whilst these assets are comprehensively insured, and the insurers have accepted liability, any corresponding reimbursement is deemed to be a separate economic event and is therefore only recognised once the claim has been quantified and agreed by the insurance company. The recognition of the corresponding asset is not anticipated to occur until the second half of the current year ending 30 June 2015.

Financial performance indicators monitored by the Board

· Group revenue of $16.3m (6 months to 31 December 2013: $18.2m);

· Operating profit before exceptional costs at $1.2m (6 months to 31 December 2013: $2.2m);

· Net cash inflow from operating activities of $1.2m (2013: $3.1m);

· Net cash of $1.7m at period-end (2013: Net cash $1.3m);

· Exceptional costs recognised of $15.7m related to fire at the Swansea site;

· Basic loss per share of (53.1c) (2013: Earnings per share 7.6c)

Corporate

As a direct result of the fire at the Swansea facility and the subsequent disruption to trading activities the Directors are not declaring the payment of an interim dividend in respect of the results for the current year.

Outlook

The Prescott facility is currently undertaking a qualification process with a number of Swansea's customers, which will enable some of Swansea's production to be switched to Prescott. It is anticipated that this production will be transferred from May 2015 onwards.

The facility is fully and comprehensively insured, which includes extensive 3 year business interruption cover. We are currently working closely with our insurers to ensure that production is resumed as soon as possible. As was stated in the announcement dated 16 January 2015, it is anticipated that it may take up to 12 months for full scale production to recommence.

Industry analysts are forecasting continued growth in the semiconductor market through to 2018 and beyond. This confidence is fuelling continued investment by our customers in capital expenditure and additional production capacity. We continue to work closely with our customers to manage any potential disruption caused by the fire and ensure that we are in a position to swiftly reengage with them when the Swansea facility is reinstated.

Peter Harrington

Chairman

10 March 2015 

PURE WAFER PLC

Interim Results for the six months ended 31 December 2014

Consolidated Income Statement

The results stated above arose entirely from continuing activities.

There have been no recognised gains or losses for the current or prior financial periods other than as stated in the income statement and, accordingly, no separate statement of comprehensive income is presented.

PURE WAFER PLC

Interim Results for the six months ended 31 December 2014

Consolidated Balance Sheet

PURE WAFER PLC

Interim Results for the six months ended 31 December 2014

Consolidated Cash Flow Statement

PURE WAFER PLC

Interim Results for the six months ended 31 December 2014

Notes to the Accounts

1. Basis of preparation

The consolidated interim financial statements of the Company have been prepared in accordance with the recognition and measurement criteria of IFRS and the disclosure requirements of the AIM Rules using the accounting policies set out in the Group's 30 June 2014 statutory accounts. The AIM Rules do not require compliance with the requirements of IAS 34 "Interim Financial Statements" and these consolidated interim financial statements have not been prepared in compliance with the disclosure requirements of that standard. The consolidated interim financial statements have not been audited or reviewed and do not constitute the Company's statutory accounts within the meaning of Section 435 of the Companies Act 2006.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chairman's Statement on page 2. The Directors have considered the Group's performance to date and reviewed the cashflow forecasts for the next 12 month period. The Directors believe the facilities that are in place, and the business interruption cover provided will be sufficient for the business to return to and continue trading for the foreseeable future. Accordingly, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, the interim financial statements continue to be prepared on a going concern basis.

2. Exceptional items

Items that are material either because of their size or their nature, or that are non-recurring are considered as exceptional items and are presented within the line items to which they best relate. During the year the following exceptional items have been recognised within the income statement:

On 21 December 2014, Pure Wafer's Swansea plant suffered a fire which has caused a cessation in production at that facility. In accordance with International Accounting Standards, the Directors have been required to undertake an impairment review of all property, plant, equipment and any other assets that have been impacted by the fire at the balance sheet date.

Property, plant and equipment affected by the fire have been impaired by $15.5m. Government grants received are held on the balance sheet and amortised over the life of the assets in respect of which they are received. Where Grants are held against assets which have been impaired as a consequence of the fire, these government grants have been released to the income statement, where the grants are outside of the monitoring period or are non-repayable. The total amount of government grants credited to the income statement is $2.0m.

As a consequence of the fire, other assets, including inventory and finished goods for shipment to customers, have been written off totalling $1.5m. In addition the business incurred additional fire related costs of $0.7m during the 6 month period ended 31 December 2014.

As a result of price pressure from customers during the year ended 30 June 2014, the Group restructured its cost base to bring its cost structure in line with selling prices. As a consequence the work force was restructured resulting in redundancy costs of $0.2m (2013:$nil). No provision is held at the balance sheet date (2013: $nil).

On 27 November 2013 the company undertook a 10 for 1 share consolidation. Advisor's fees incurred in relation to this exercise were $32,000 (2013: $nil).

3. Insurance proceeds

On 21 December 2014, Pure Wafer's Swansea plant suffered a fire which has caused a cessation in production at that facility. On 5th January 2015 Pure Wafer's insurer accepted liability for a claim under the insurance policy. Pure Wafer is fully insured for the replacement values of property, plant and equipment, along with 36 months business interruption cover.

Impairment of Assets

The impact of the fire and the receipt of insurance proceeds is accounted for under IAS 16 'Property, Plant & Equipment'. IAS 16 requires that the impairment of Property, Plant & Equipment and any compensation are considered separate economic events, and are accounted for separately.

In respect of the assets impacted by the fire an impairment based on the assessment of the property, plant and equipment has been made under IAS 36 'Impairment of Assets'. The Impairment is recorded in note 2 detailing exceptional costs.

Recognition of Insurance for Property, Plant & Equipment

Compensation from third parties for Property, Plant & Equipment that is impaired is included in the income statement when it becomes receivable. In accordance with IAS 37 'Provisions, Contingent Liabilities & Contingent Assets' reimbursements from third parties are recognised as a separate asset when it is virtually certain that re-imbursement will be received, until that point insurance proceeds are treated as a contingent asset.

A reimbursement asset is only recognised when it is virtually certain to be received if the entity settles that obligation. In this case Pure Wafer recognise insurance assets in the period when the settlement is agreed by the insurance company and is estimable.

The acceptance of liability for the policy occurred on the 5th of January 2015, however the total amount of compensation was not estimable at the time of the interim preparation, nor had orders or quotes been received for all replacements.

On confirmation to replace the assets and reasonable quantification of the amounts due from the insurance company, then under IAS 37 the definition of virtually certain will be met and the receivable from the insurance company will be recorded.

Business Interruption Insurance Proceeds

The purpose of this insurance is to protect the profitability and maintain that for the business over the insured 3 year period. Business Interruption Insurance is recognised when it is deemed virtually certain and is only regarded as being virtually certain when it is received in cash, and is therefore recognised within the income statement on a receipts basis.

4. Deferred Taxation

During the six months ended 31 December 2014 Pure Wafer has recognised a deferred taxation charge within the income statement of $240,000 (six months ended 31 December 2013: $Nil), in respect of capital allowances in excess of losses available for relief.

5. Cash flows from operating activities

6. Changes in equity

7. Circulation

A copy of this announcement is available from the Company Secretary, Pure Wafer plc, Central Business Park, Swansea Vale, Swansea, SA7 0AB. A copy is also available on the Company's website: www.purewafer.com.