PUR.L Regulatory News (PUR)

17 Mar 2008 07:00

Pure Wafer PLC17 March 2008 17 March 2008 PURE WAFER PLC ("Pure Wafer" or "the Company") Interim Results for 6 months ended 31 December 2007 Pure Wafer plc, the provider of high quality silicon wafer reclaim services formany of the world's leading semiconductor manufacturers as an integral part oftheir cost control programmes, today reports its interim results for the 6months to 31 December 2007. HIGHLIGHTS Financial Highlights • Revenue £11.5m (6 months to 31 December 2006: £9.9m) up 16% • EBITDA £2.5m (2006: £2.6m) down 3% • Adjusted PBT £1.0m (2006: £1.7m) down 38% (see note 2) • At a constant exchange rate of $1.90, adjusted PBT up 1% • Diluted EPS of 2.47p (2006: 5.97p) • Adjusted diluted EPS of 2.71p (2006: 4.53p) (see note 3) • Net cash inflow from operating activities of £2.0m (2006: £1.3m) Operational Highlights • Increase in capacity and sales for 300mm product across UK and US operations • 200mm and smaller diameter products remained stable • New customer wins in Europe and Asia • Thorough review of operations has led to significant cost reduction and process efficiencies • Business and operations stabilised Giles Clarke, Chairman, Pure Wafer, commented, "In spite of the challenging operating environment, I am pleased to be able toreport stable results in line with management's expectations, with modest volumegrowth in the core business of 300mm wafer reclaim. "The focus for the period has been to concentrate on reducing our costs throughmanufacturing and process efficiencies, stabilisation and cash generation. "Trading since the period end has remained testing in a competitive landscape,as the industry continues to cycle downwards. However, following ourrestructuring and the US operations' ramp phase beginning, we believe thatprofits for the full year will be in line with market expectations." ENQUIRIES Pure Wafer plc (www.purewafer.com) Tel. +44 (0) 1792 311 200Peter Harrington, Chief ExecutivePaul Dolan, Group Finance Director Financial Dynamics Tel. +44 (0) 207 269 7157Billy CleggEdward Westropp Chairman's Statement Introduction The semiconductor market continues to be a challenging place in which to tradeas it continues its cyclical downturn. The industry slowdown, which commencedduring Q1 2007, together with the emergence of new competitors in Taiwan, hasresulted in continued price pressure during the period. In spite of this difficult operating environment, I am pleased to be able toreport stable results in line with management's expectations, with modest volumegrowth in the core business of 300mm wafer reclaim and the first deliveries fromthe newly installed 300mm line in our US site in Prescott, Arizona. The focus for the period has been to concentrate on reducing our costs throughmanufacturing and process efficiencies and cash generation. Financial performance • Revenue £11.5m (6 months to 31 December 2006: £9.9m) up 16% • EBITDA £2.5m (2006: £2.6m) down 3% • Adjusted PBT £1.0m (2006: £1.7m) down 38% (see note 2) • At constant exchange rates, adjusted PBT up 1% • Diluted EPS of 2.47p (2006: 5.97p) • Adjusted diluted EPS of 2.71p (2006: 4.53p) (see note 3) • Net cash inflow from operating activities of £2.0m (2006: £1.3m) International Financial Reporting Standards ("IFRS") These results have been presented for the first time in accordance with IFRS.The principal changes to accounting policies and results are explained in thenotes to the preliminary financial statements. Operations - Swansea Volumes for 300mm wafer reclaim in the period showed a modest increase over thecomparative period for 2006, up by 4% as the transition from 150mm and 200mmdiameter wafers continued. With tightening specifications being issued by ourcustomers, sub-one micron requirements are now the norm, but we are well placedtechnically to service their needs. In the face of price pressure from demanding customers and increasedcompetition, we have concentrated on reducing our cost of manufacture throughmanufacturing and process efficiencies. As part of the review process that hastaken place, we have restructured the business across all departments resultingin reduced support staff. This exercise has reduced operating costs byapproximately £0.8m per annum and restructured the teams without affectingmanufacturing output capability. Operations - Prescott, Arizona The Prescott site has remained cash positive and profitable on an operatinglevel with volumes of 200mm wafer reclaim and smaller diameters stablethroughout the period. The integration of the acquisition was concluded during the period and theinstallation of the 300mm wafer reclaim line was substantially completed,including the 300mm technology transfer from Swansea and qualification withinitial customers. We saw the first sales from the new 300mm line in Novemberand we have quickly ramped output to 4,000 wafers per month for these customers. We are now engaged with the majority of major North American based 300mmsemiconductor manufacturers with qualification activities underway. New products Following previous statements setting out difficulties with our 50nm productduring 2007, during the period significant technological advances were made tothe product through the joint engineering activities of Pure Wafer and its sole50nm customer. However, due to difficult trading conditions for the customer, wedo not anticipate any volume business for this product during calendar year 2008and H1 2009. The Company continues to actively look into new products and technologies thatwill be a synergistic fit to the current product portfolio, as part of itslong-term strategy. Management Following the Board changes during the period, the Company is pleased toannounce that Peter Harrington will retain his position as Group Chief Executivewith a permanent Group Finance Director to be announced in due course;meanwhile, Non-Executive Director Paul Dolan maintains his role of interim GroupFinance Director. I would like to thank all of our staff for their hard workduring the period. Outlook Following a period of review and restructuring, the business is now in aposition to continue to service its customers in line with demand and seek newopportunities. We will continue to drive efficiencies both from a cost and process perspectiveand are confident that this will put us in a good position to take advantage ofthe forecast growth in the 300mm market. The engagement of the major North American based 300mm semiconductormanufacturers by our Prescott plant is a significant achievement; however, dueto the industry slowdown we anticipate that attaining qualification and rampingvolume demand may be six months later than planned. We do not anticipate thishaving a material adverse effect on market forecasts. Trading since the period-end has remained testing in a competitive landscape, asthe industry continues to cycle downwards. However, following our restructuringand the US operations' ramp phase beginning, we believe that profits for thefull year will be in line with market expectations. Giles ClarkeChairman14 March 2008 Consolidated Income Statement 6 months ended 31 6 months ended Year ended December 2007 31 December 2006 30 June 2007Notes £000 £000 £000 Revenue 11,531 9,901 22,348 Cost of sales (7,042) (5,713) (13,431) Gross profit 4,489 4,188 8,917 Administrative expenses (3,253) (2,554) (5,456) 2 Profit from operations 1,236 1,634 3,461 Financial income 56 130 149 Financial expenses (290) (124) (427) Other losses and gains (43) 410 412 Profit before tax 959 2,050 3,595 Taxation (288) (450) (810) Profit for the period 671 1,600 2,785 3 Earnings per share Basic 2.52p 6.04p 10.50p Basic diluted 2.47p 5.97p 10.31p The results stated above arose entirely from continuing activities. Consolidated Balance Sheet Notes 31 December 2007 31 December 2006 30 June 2007 £000 £000 £000 Non-current assets Property, plant and equipment 24,265 19,092 22,136 Intangible assets 163 213 185 Goodwill 3,340 - 3,297 27,768 19,305 25,618 Current assets Inventory 3,829 1,696 2,812 Trade and other receivables 6,038 6,004 7,438 Derivative financial instruments - 425 18 Deferred taxation asset 5,046 5,694 5,334 Cash and cash equivalents 2,373 4,071 2,976 17,286 17,890 18,578 Total assets 45,054 37,195 44,196 Current liabilities Trade and other payables (5,161) (4,542) (5,605) Derivative financial instruments (148) - - Short-term borrowings (3,576) (1,234) (3,160) (8,885) (5,776) (8,765) Non-current liabilities Long-term borrowings (6,403) (3,017) (6,323) Deferred income (2,037) (2,305) (2,129) (8,440) (5,322) (8,452) Total liabilities (17,325) (11,098) (17,217) Net assets 27,729 26,097 26,979 Equity Share capital 532 531 532 Share premium 12,783 12,692 12,783 Merger reserve 30,425 30,425 30,425 Retained earnings (14,550) (16,406) (14,987) Exchange translation reserve (1,461) (1,145) (1,774) 6 Total equity attributable to equity 27,729 26,097 26,979 holders of the Company Consolidated Cash Flow Statement Notes 6 months ended 31 6 months ended Year ended December 2007 31 December 2006 30 June 2007 £000 £000 £000 4 Cash flows from operating activities 2,000 1,344 4,259 Cash flows from investing activities Net interest received 56 130 149 Purchase of property, plant and equipment (2,824) (4,234) (7,927) Purchase of businesses - - (3,846) Net cash used in investing activities (2,768) (4,104) (11,624) Cash flows from financing activities Interest paid (230) (106) (347) Proceeds from issue of shares - - 141 Increase in borrowings 368 1,349 5,087 Net cash generated from financing activities 138 1,243 4,881 5 Decrease in cash and cash equivalents (630) (1,517) (2,484) Consolidated Statement of Recognised Income and Expense 6 months ended 31 6 months ended Year ended December 2007 31 December 2006 30 June 2007 £000 £000 £000 Exchange movements 313 (1,145) (1,774) Net income recognised directly in equity 313 (1,145) (1,774) Profit for the period 671 1,600 2,785 Total recognised income and expense for the 984 455 1,011 period attributable to equity holders of the Company Notes to the accounts 1. Basis of preparation The results reported under IFRS for the six months ended 31 December 2007 and 31December 2006 and for the year ended 30 June 2007 are unaudited but have beenreviewed by the Company's auditors. The statutory accounts for the year ended30 June 2007 (prepared under UK GAAP) have been delivered to the Registrar ofCompanies, upon which an unqualified audit report was given. The informationcontained within this interim report does not constitute statutory accounts asdefined in section 240 of the Companies Act 1985. These accounting policies are based on the IFRSs, IASs and IFRIC interpretationsas adopted by the EU (collectively "IFRS"). The financial statements for theyear ended 30 June 2008 will be the Group's first consolidated financialstatements prepared under IFRS, with a transition date of 1 July 2006.Consequently, the comparative figures for 2007 have been restated in accordancewith the accounting policies set out below. IFRS 1 allows certain exemptionsfrom retrospective application of IFRS in the opening balance sheet at 1 July2006. Where these have been used, they are explained in the relevant policybelow. The financial statements have been prepared in accordance with thehistorical cost convention. Basis of consolidation The consolidated accounts comprise Pure Wafer plc (the Company) and itssubsidiary undertakings, Pure Wafer International Limited and Pure Wafer, Inc. Subsidiaries are those entities controlled by the Company. Control exists whenthe Company has the power to govern the financial and operating policies of anenterprise taking into account any potential voting rights. The financialstatements of subsidiaries are included in the consolidated financial statementsfrom the date that control commences until the date that control ceases. The purchase method of accounting is used to account for the acquisition ofsubsidiaries. The cost of an acquisition is measured at the fair value of theconsideration plus costs directly attributable to the acquisition. The excess ofthe cost of the acquisition over the Group's share of the fair value of the netidentifiable assets of the subsidiary acquired is recorded as goodwill.Intragroup transactions, balances and unrealised gains on transactions betweenGroup companies are eliminated; unrealised losses are also eliminated unlesscosts cannot be recovered. Where necessary, accounting policies of subsidiarieshave been changed to ensure consistency with the policies adopted by the Group. Foreign currency Items included in the financial statements of each of the Group's entities aremeasured using the currency of the primary economic environment in which theentity operates (the functional currency). The income and cash flow statements of non-sterling denominated Group entitiesare translated to sterling (the Group's presentation currency) at average ratesof exchange in each period. Assets and liabilities of these undertakings aretranslated at rates of exchange ruling at the balance sheet date. Thedifferences between retained profits and losses translated at average andclosing rates are taken to reserves, as are differences arising on theretranslation to sterling of non-sterling denominated Group entity net assets atthe beginning of the year. Any translation differences that have arisen since 1 July 2006 are presented asa separate component of equity. As permitted by IFRS 1, any differences prior tothis date are not included in this separate component of equity. Foreign currency transactions are initially recorded at the exchange rate rulingat the date of the transaction. Foreign exchange gains and losses resulting fromthe settlement of such transactions and from the translation at exchange ratesruling at the balance sheet date of monetary assets and liabilities denominatedin foreign currencies are recognised in the income statement, except whendeferred in equity as qualifying net investment hedges. Revenue recognition Revenue, which represents the value of goods and services supplied, excludingvalue added tax and trade discounts, is recognised on despatch of goods sold. Financial instruments Financial assets and financial liabilities are recognised when the Group becomesa party to the contractual provisions of the relevant instrument. Financialassets are derecognised when the rights to receive benefits have expired or beentransferred, and the Group has transferred substantially all risks and rewardsof ownership. Financial liabilities are derecognised when the obligation isextinguished. Non-derivative financial assets are classified as either receivables or cash andcash equivalents. They are stated at amortised cost using the effective interestmethod, subject to reduction for allowances for estimated irrecoverable amounts.A provision for impairment of trade receivables is established when there isobjective evidence that the Group will not be able to collect all amounts dueaccording to the original terms of those receivables. The amount of theprovision is the difference between the asset's carrying amount and the presentvalue of estimated future cash flows, and is recognised in the income statement.For interest-bearing assets, their carrying value includes accrued interestreceivable. Cash and cash equivalents include cash in hand and deposits held on call,together with other short-term highly liquid investments. Non-derivativefinancial liabilities are stated at amortised cost using the effective interestmethod. For borrowings, their carrying value includes accrued interest payable,as well as any unamortised issue costs. The Group transacts derivative financial instruments to manage the underlyingexposure to foreign exchange and interest rate risks. The Group does nottransact derivative financial instruments for trading purposes. However, as theGroup has decided not to hedge account for its derivative financial instrumentsas permitted under IAS 39, they are accounted for through the income statement.Derivative financial assets and liabilities are stated at fair value, whichincludes accrued interest receivable and payable where relevant. Changes infair values are recognised in the income statement in the period in which theyarise. Provisions A provision is recognised in the balance sheet when the Group has a legal orconstructive obligation as a result of a past event, where it is more likelythan not that an outflow of resources will be required to settle thatobligation, and a reliable estimate of the amount can be made. A provision for restructuring is recognised when the Group has approved adetailed and formal restructuring plan, and the restructuring has eithercommenced or has been publicly announced. Future operating losses are notprovided for. Where there are a number of similar obligations, the likelihood that an outflowwill be required in settlement is determined by considering the class ofobligations as a whole. A provision is recognised even if the likelihood of anoutflow with respect to any one item included in the same class of obligationsmay be small. Property, plant and equipment Property, plant and equipment are shown in the balance sheet at their historicalcost less accumulated depreciation and impairment. Historical cost includesexpenditure that is directly attributable to the acquisition of the items.Subsequent costs are included in the assets' carrying amounts or recognised as aseparate asset as appropriate only when it is probable that future economicbenefits associated with them will flow to the Group and the cost of the itemcan be measured reliably. All other repairs and maintenance are charged to theincome statement as incurred. Depreciation is provided so as to write off the initial cost of each asset totheir residual values on a straight line basis over their estimated useful livesas follows: Leasehold buildings - 15 yearsPlant and equipment - 7 - 10 yearsFixtures, fittings and equipment - 5 yearsIT equipment - 3 years The assets' residual values and useful lives are reviewed and adjusted, ifappropriate, at each balance sheet date. Where the carrying amount of an assetis greater than its estimated recoverable amount, it is written down immediatelyto its recoverable amount. Gains and losses on disposals are determined bycomparing proceeds with carrying amounts. These are included in the incomestatement. Intangible assets - goodwill Goodwill represents the excess of the cost of an acquisition over the fair valueof the net identifiable assets and liabilities acquired, both tangible andintangible. Goodwill is tested at least annually for impairment and carried at cost lessaccumulated impairment losses. Any impairment is recognised immediately in theincome statement and cannot be subsequently reversed. Goodwill is allocated togroups of cash-generating units for the purpose of impairment testing. Gains orlosses on the disposal of an entity include the carrying amount of goodwillrelating to the entity sold. Intangible assets - other These consist mainly of development costs capitalised. The assets are amortisedon a straight-line basis over the expected useful economic life of five years. Internally generated intangible assets - research and development Expenditure on research activities is recognised as an expense in the period inwhich it is incurred. An internally generated intangible asset arising from the Group's development isrecognised only if all of the following conditions are met: an asset is createdthat can be separately identified; it is probable that the asset created willgenerate future economic benefits; and the development cost of the asset can bemeasured reliably. Internally generated intangible assets are amortised on a straight-line basisover their useful lives. Where no internally-generated intangible asset can berecognised, development expenditure is recognised as an expense in the period inwhich it is incurred. Impairment of assets Assets that have an indefinite life are not subject to amortisation and aretested at least annually for impairment. Assets that are subject to amortisationare reviewed for impairment whenever events or changes in circumstances indicatethat the carrying amount may not be recoverable. An impairment loss isrecognised in the income statement for the amount by which the carrying amountof the asset exceeds its recoverable amount. The recoverable amount is thehigher of the fair value less costs to sell and the value in use. For thepurpose of assessing impairment, assets are grouped at the lowest levels forwhich there are separately identifiable cash flows (cash generating units). Inventories Inventories are stated at the lower of cost and net realisable value. Cost isdetermined using the first-in, first-out (FIFO) method. The cost of finishedgoods and work in progress comprises raw materials, direct labour, other directcosts and related production overheads (based on normal operating capacity) butexcludes borrowing costs. Net realisable value is the estimated selling price inthe ordinary course of business, less the estimated costs of completion andselling expenses. Leasing Assets held under finance leases are recognised as assets of the Group at theirfair value, or, if lower, at the present value of the minimum lease payments,each determined at the inception of the lease. The corresponding liability tothe lessor is included in the balance sheet as a finance lease obligation.Lease payments are apportioned between finance charges and reduction of thelease obligation so as to achieve a constant rate of interest on the remainingliability. Finance charges are charged directly against income. Rentals payable under operating leases are charged to income on a straight-linebasis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operatinglease are also spread on a straight-line basis over the lease term. Borrowing costs Borrowing costs directly attributable to the acquisition, construction orproduction of qualifying assets, which are assets that necessarily take asubstantial period of time to get ready for their intended use or sale, areadded to the costs of those assets, until such time as the assets aresubstantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowingspending their expenditure on qualifying assets is deducted from the borrowingcosts eligible for capitalisation. All other borrowing costs are recognised in the income statement in the periodin which they are incurred. The Group has chosen to adopt the revised version of IAS23 early and has takenadvantage of the transitional provision included within that standard not tocapitalise interest on qualifying assets that arose prior to the date ofimplementation of IFRS on 1 July 2006. Taxes Income tax on the profit or loss for the year comprises current and deferredtax. Current tax is the expected tax payable on the taxable income for the year,using tax rates substantially enacted at the balance sheet date, and anyadjustments to tax payable in respect of previous years. Deferred tax is provided in full on temporary differences between the carryingamount of assets and liabilities in the financial statements, and the tax base.Deferred tax assets are recognised only to the extent that it is probable thatfuture taxable profits will be available against which the temporary differencescan be utilised. Deferred tax assets and liabilities are not discounted. Deferred tax is determined using the tax rates that have been enacted orsubstantively enacted by the balance sheet date, and are expected to apply whenthe deferred tax liability is settled or the deferred tax asset is realised. Deferred tax is provided on temporary differences arising on investments insubsidiaries and associates, except where the timing of the reversal of thetemporary difference is controlled by the Group and it is probable that thetemporary difference will not reverse in the foreseeable future. Tax is recognised in the income statement, except where it relates to itemsrecognised directly in equity, in which case it is recognised in equity. Share-based payments In accordance with IFRS2, the fair value of equity-settled share-based paymentsto employees is determined at the date of grant and is expensed on astraight-line basis over the vesting period based on the Company's estimate ofshares or options that will eventually vest. In the case of options granted,fair value is measured by a Black-Scholes pricing model. Share capital Ordinary shares are classified as equity. Incremental costs directlyattributable to the issue of new shares or options are shown in equity as adeduction, net of tax, from the proceeds. Where any Group company purchases theCompany's equity share capital (treasury shares), the consideration paid,including any directly attributable incremental costs (net of income taxes), isdeducted from equity attributable to the equity holders of the Company until theshares are cancelled, reissued or disposed of. Where such shares aresubsequently sold or reissued, any consideration received, net of any directlyattributable incremental transaction costs and the related income tax effects,is included in equity attributable to the equity holders of the Company. Reconciliation of IFRS comparatives from previously published UK GAAP financialinformation In 2007, the Group prepared its consolidated financial statements under UK GAAP.With effect from 1 July 2007, the Group is required to prepare itsconsolidated financial statements in accordance with IFRS. The comparativefigures included in this report for the six months ended 31 December 2006 andthe full year ended 30 June 2007 are restated for IFRS and are unaudited. Seebelow for summary reconciliation to IFRS from reported UK GAAP comparativeinformation. (a) As at 30 June 2006 As reported Functional Adoption of Reclassification Taxation As reported under UK currency IAS39 under IFRS GAAP change of (financial subsidiary * instruments)** *** £000 £000 £000 £000 £000 £000Non-current assets 19,837 (2,847) - - - 16,990Current assets 13,312 - 22 - 4,249 17,583Current liabilities (4,029) - - - - (4,029)Non-current (5,608) 591 - - - (5,017)liabilitiesEquity 23,512 (2,256) 22 - 4,249 25,527 (b) 6 months ended 31 December 2006 As reported Functional Adoption of Reclassification Taxation As reported under UK currency IAS39 under IFRS GAAP change of (financial subsidiary instruments) * ** *** £000 £000 £000 £000 £000 £000Revenue 9,901 - - - - 9,901Profit from 1,495 220 - (81) - 1,634operationsProfit before tax 1,501 347 202 - - 2,050Profit for the 1,501 347 202 - (450) 1,600period Non-current assets 23,095 (3,790) - - - 19,305Current assets 13,873 - 218 - 3,799 17,890Current liabilities (5,776) - - - - (5,776)Non-current (6,037) 715 - - - (5,322)liabilitiesEquity 25,155 (3,075) 218 - 3,799 26,097 (c) 12 months ended 30 June 2007 As reported Functional Adoption of Reclassification Taxation As reported under UK currency IAS39 under IFRS GAAP change of (financial subsidiary instruments) * ** *** £000 £000 £000 £000 £000 £000Revenue 22,348 - - - - 22,348Profit from 2,980 513 - (32) - 3,461operationsProfit before tax 2,702 895 (2) - - 3,595Profit for the 5,562 895 (2) - (3,670) 2,785period Non-current 29,487 (3,869) - - - 25,618assetsCurrent assets 17,981 - 18 - 579 18,578Current (8,765) - - - - (8,765)liabilitiesNon-current (9,188) 736 - - - (8,452)liabilitiesEquity 29,515 (3,133) 18 - 579 26,979 * Under IFRS, each of the Directors is required to assess whichcurrency is the functional currency for each subsidiary. The Directors havedeemed that Pure Wafer plc (the holding company) remains a sterling denominatedcompany, Pure Wafer, Inc (the US subsidiary) remains a US Dollar denominatedcompany and Pure Wafer International Limited (the UK trading entity) has afunctional currency of US Dollars. ** IAS39 requires a valuation of all derivatives not subject to hedgeaccounting to be included in the balance sheet. *** Under the IFRS taxation standard, IAS12, deferred tax is calculated asthe tax effect of the difference between the tax carrying value and the bookvalue of the group's assets and liabilities. The above changes represent theimpact on deferred tax of the other IFRS transition adjustments, plus arecalculation of what the opening deferred tax asset at 1 July 2006 under IFRS.Under UK GAAP, a valuation allowance had been included against the deferred taxasset, which the directors feel would not have been required under the IFRSrules. 2. Reconciliation of profit from operations for the period to EBITDA 6 months ended 31 6 months ended Year ended December 2007 31 December 2006 30 June 2007 £000 £000 £000Profit from operations 1,236 1,634 3,461Depreciation and amortisation 1,409 1,096 2,439Release of deferred income (114) (122) (239)Earnings before interest, tax, depreciation 2,531 2,608 5,661and amortisation Reconciliation to adjusted profit before tax 6 months ended 31 6 months ended Year ended December 2007 31 December 2006 30 June 2007 £000 £000 £000 Profit before tax, as reported 959 2,050 3,595Adjust for amortisation of intangible 24 25 105assetsAdjust for other gains and losses 43 (410) (412)Adjusted profit before tax 1,026 1,665 3,288 3. Earnings per share The basic earnings per share is calculated by dividing profit attributable toordinary shareholders by the weighted average number of ordinary shares in issueduring the year. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. Earnings per share have been calculated as follows: 6 months ended 31 6 months ended Year ended 30 December 2007 31 December 2006 June 2007 '000 '000 '000Weighted average number of ordinary shares: - In issue during the period 26,591 26,496 26,524 - Fully diluted 27,171 26,804 27,011Unadjusted earnings £671 £1,600 £2,785Less: amortisation of intangible fixed £24 £25 £105assetsLess: other gains and losses £43 £(410) £(412)Adjusted earnings £738 £1,215 £2,478 The Directors believe that the underlying results of the business are bestviewed after adjusting for several non-trading items as noted above. The impacton adjusted earnings per share is reflected as follows: Earnings per share 6 months ended 31 6 months ended Year ended 30 December 2007 31 December 2006 June 2007Basic 2.52p 6.04p 10.50pBasic diluted 2.47p 5.97p 10.31pAdjusted 2.78p 4.59p 9.34pAdjusted diluted 2.71p 4.53p 9.17p 4. Cash flows from operating activities 6 months ended 31 6 months ended Year ended December 2007 31 December 2006 30 June 2007 £000 £000 £000Profit for the period 671 1,600 2,785Taxation 288 450 810Finance expense 290 124 427Finance income (56) (130) (149)Other non-cash gains and losses 43 (200) (76)Depreciation and amortisation 1,295 974 2,190Operating cash flows before movements in 2,531 2,818 5,987working capitalIncrease in inventories (1,017) (1,859) (1,425)Decrease/(increase) in trade and other 778 (631) (1,933)receivables(Decrease)/increase in trade and other (292) 1,016 1,630payablesMovement in working capital (531) (1,474) (1,728)Cash flows from operating activities 2,000 1,344 4,259 5. Reconciliation and analysis of net debt and cash flows Cash Deferred Other Total net consideration borrowings debt £000 £000 £000 £000As at 1 July 2007 2,976 (1,701) (7,782) (6,507)Cash flow (630) - (368) (998)Non-cash flow and foreign exchange 27 (83) (45) (101)As at 31 December 2007 2,373 (1,784) (8,195) (7,606) 6. Changes in equity Share Share Merger Exchange Retained Total capital premium reserve translation earnings £000 £000 £000 £000 £000 £000As at 1 July 2007 532 12,783 30,425 (1,774) (14,987) 26,979FRS20 share option accounting - - - - (234) (234)Exchange movements - - - 313 - 313Profit for the period - - - - 671 671As at 31 December 2007 532 12,783 30,425 (1,461) (14,550) 27,729 7. Circulation A copy of this announcement is available from the Company Secretary, Pure Waferplc, Central Business Park, Swansea Vale, Swansea, SA7 0AB. A copy is alsoavailable on the Company's website: www.purewafer.com. INDEPENDENT REVIEW REPORT TO PURE WAFER PLC We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 31December 2007 which comprises the income statement, the balance sheet, the cashflow statement, the statement of recognised income and expense and related notes1 to 7. We have read the other information contained in the half-yearlyfinancial report and considered whether it contains any apparent misstatementsor material inconsistencies with the information in the condensed set offinancial statements. This report is made solely to the Company in accordance with InternationalStandard on Review Engagements 2410 issued by the Auditing Practices Board. Ourwork has been undertaken so that we might state to the Company those matters weare required to state to them in an independent review report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company, for our review work, for thisreport, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the AIM Rules of the London Stock Exchange. As disclosed in note 1, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport have been prepared in accordance with the accounting policies the Groupintends to use in preparing its next annual financial statements. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 31 December 2007 is not prepared, in allmaterial respects, in accordance with the AIM Rules of the London StockExchange. Deloitte & Touche LLPChartered Accountants and Registered AuditorCardiff, United Kingdom14 March 2008 This information is provided by RNS The company news service from the London Stock Exchange