PUR.L Regulatory News (PUR)

28 Feb 2007 07:02

Pure Wafer PLC28 February 2007 28 February 2007 PURE WAFER PLC ("Pure Wafer" or "the Company") Interim Results for 6 months ended 31 December 2006 Swansea based Pure Wafer plc, the provider of high quality silicon wafer reclaimservices for many of the world's leading semiconductor manufacturers as anintegral part of their cost control programmes, today reports its interimresults for the 6 months to 31 December 2006. HIGHLIGHTS Financial Highlights • Turnover £9.90m (6 months to 31 December 2005: £6.46m) up 53% • EBITDA £2.82m (2005: £1.54m) up 83% • Operating profit £1.50m (2005: £0.64m) up 134% • PBT £1.50m, 118% increase on H1 last year and 18% up on H2 last year • At constant exchange rates, PBT growth on H2 last year is 80% • Adjusted diluted EPS of 6.08p (2005: 2.64p) up 130% (see note 3) • Basic EPS of 5.67p (2005: 2.60p) up 118% (see note 3) • Net cash inflow from operating activities of £1.34m (2005: £0.98m) up 37% Operational Highlights • Continued capacity expansion at Swansea site progressing in line with management forecasts (over 60,000 300mm wafers per month installed capacity today compared to 35,000 in December 2005) • Successful production ramp of 50 nanometre offering • Acquisition announced on February 13 2007 of trade and assets of Exsil, Inc, a wafer reclaim facility based in Arizona, USA for a total consideration of US$11.2 million funded entirely through debt • 34% efficiency increase from direct labour costs compared to last interim results Giles Clarke, Chairman, Pure Wafer, commented, "Pure Wafer has delivered a satisfactory performance with the Company achievinggrowth in turnover and profit in line with management expectation. This has beenachieved, despite the continued weakness in the US Dollar which when convertedinto sterling has impacted our sales but not our cost base. "Capacity at the Swansea site is increasing in line with our expectations anddemand for our product. "We were also very pleased to have been able to report the acquisition of thetrade and assets of Exsil Inc. which is a company transforming acquisition andone which will significantly increase our capacity and ability to serve ourcustomers more efficiently. "Current trading is continuing in line with market expectations and I lookforward over the next few years to steady, sustainable, profitable growth as weconsolidate and capitalise on our strong market position in the fast growing300mm wafer reclaim sector." ENQUIRIES Pure Wafer plc (www.purewafer.com) Tel. +44 (0) 1792 311 200Keith Baker, Chief ExecutiveJames Dearing, Group Finance Director Financial Dynamics Tel. +44 (0) 207 269 7157Billy CleggEdward Westropp Chairman's Statement Introduction I am pleased to report that Pure Wafer has continued to make satisfactoryprogress during the last 6 month period, consolidating its position in theglobal market for wafer reclaim, and has continued to grow volumes, revenues andprofits in line with expectations, despite the impact of the weak US Dollar. Financial performance Turnover for the period was up 53% to £9.90 million (2005: £6.46 million)generating an EBITDA figure of £2.82 million (2005: £1.54 million) and anoperating profit up 134% to £1.50 million (2005: £0.64 million). The profitbefore tax for the period was up 118% to £1.50 million, (2005: £0.69 million)and at constant exchange rates the profit before tax growth on H2 last year was80%. The adjusted diluted EPS figure was up 130% to 6.08p (2005: 2.64p) and netcash inflow from operating activities was £1.34m, up 37%. Market conditions We continue to experience strong growth levels in our core 300mm market and thisis reflected in our ongoing capacity increases. As I indicated at the last fullyear results, we have experienced increased demand for our 200mm product andhave achieved a 39% increase in 200mm volumes on the previous six month period.The management team has successfully migrated our 50 nanometre product offeringfrom the qualification phase into the production phase, and the ramp isprogressing as we had planned. Manufacturing Investment in 300mm capacity (including our 50 nanometre technology) at theSwansea site has continued in line with our plans with total fixed assetadditions of £4.60m. Process improvements in 200mm have enabled us tosignificantly increase our production capacity for this wafer size at relativelylow cost. Acquisition of trade and assets of Exsil, Inc On 13 February 2007, we announced the acquisition of the trade and assets ofExsil, Inc, a wafer reclaim facility based in Arizona, USA from RockwoodSpecialties Group, Inc for a total consideration of US$11.2 million fundedentirely through debt. The purpose-built 36,000 sq ft facility with state-of-the-art wafer reclaimequipment and cleanrooms based on a 4.1 acre leasehold site in Prescott, Arizonaemploys a workforce of 75 people and has been operational since 1997. Thebusiness currently focuses on reclaim of 200mm and smaller diameters, and isqualified with a number of important US semiconductor manufacturers. Themajority of these are new customers to Pure Wafer and therefore provide anexciting strategic opportunity for the enlarged group. The high-tech, high volume facility is currently trading profitably at an EBITDAlevel from the existing business of reclaiming smaller diameter wafers. Theplant also includes several 300mm capable assets and Pure Wafer is executing aUS$7m capital expenditure programme to complete a 20,000 wafers per month 300mmreclaim line at the site involving replication of the technology used at PureWafer's existing world class facility. The 300mm capacity within the Arizona based facility is scaleable to 80,000wafers per month with further capital expenditure over the next few years. Thisis comparable to Pure Wafer's Swansea capacity forecast for the end of thisfinancial year. Earnings from the new site are expected to form over 30% of the enlarged group'searnings within the next few years, providing the group with an importantenhancement to its rapid growth in earnings. Outlook Pure Wafer has delivered a satisfactory performance with the Company achievinggrowth in turnover and profit in line with management expectation. This has beenachieved, despite the continued weakness in the US Dollar which when convertedinto sterling has impacted our sales but not our cost base. Capacity at the Swansea site is increasing in line with our expectations anddemand for our product. We were also very pleased to have been able to report the acquisition of thetrade and assets of Exsil Inc. which is a company transforming, earningsaccretive acquisition and one which will significantly increase our capacity andability to serve our customers more efficiently. Current trading is continuing in line with market expectations and I lookforward over the next few years to steady, sustainable, profitable growth as weconsolidate and capitalise on our strong market position in the fast growing300mm wafer reclaim sector. Finally, I would like to thank the staff of Pure Wafer for their continued hardwork and commitment. Giles ClarkeChairman28 February 2007 Consolidated Profit & Loss Account 6 months ended 31 6 months ended 31 Year ended December 2006 December 2005 30 June 2006 (restated) (restated)Notes £000 £000 £000 Turnover 9,901 6,460 14,521 Cost of sales (5,713) (3,736) (8,136) Gross profit 4,188 2,724 6,385 Administrative expenses (2,693) (2,086) (4,483) 2 Operating profit 1,495 638 1,902 Net interest receivable 6 50 53 Profit on ordinary activities before 1,501 688 1,955 taxation Taxation - - 1,895 Profit for the financial period 1,501 688 3,850 3 Earnings per share Basic 5.67p 2.60p 14.53p Basic diluted 5.60p 2.59p 14.42p Adjusted 6.15p 2.65p 7.69p Adjusted diluted 6.08p 2.64p 7.63p The results stated above arose entirely from continuing activities. The group has no recognised gains or losses other than those included in theresult above and, therefore, no separate statement of total recognised gains andlosses has been presented. There is no difference between the result for the financial period stated aboveand its historical cost equivalent. Consolidated Balance Sheet 31 December 31 December 30 June 2006 2005 2006Notes £000 £000 £000 Fixed assets Intangible assets 235 - 261 Tangible assets 22,860 17,620 19,576 23,095 17,620 19,837 Current assets Stock 1,696 941 1,065 Debtors 6,211 4,502 4,700 Debtors - deferred taxation 1,895 - 1,895 Cash at bank and in hand 4,071 5,016 5,652 13,873 10,459 13,312 Creditors: amounts falling due within one year (5,776) (3,032) (4,029) Net current assets 8,097 7,427 9,283 Total assets less current liabilities 31,192 25,047 29,120 Creditors: amounts falling due after more than one (3,017) (1,437) (2,433) year Accruals and deferred income (3,020) (3,330) (3,175) Net assets 25,155 20,280 23,512 Share capital 531 530 530 Share premium 12,692 12,644 12,644 Merger reserve 30,425 30,425 30,425 Profit and loss account (18,493) (23,319) (20,087) 6 Shareholders' funds 25,155 20,280 23,512 Consolidated Cash Flow Statement 6 months ended 6 months ended Year ended 31 December 31 December 30 JuneNotes 2006 2005 2006 £000 £000 £000 4 Net cash inflow from operating activities 1,344 980 2,677 Return on investments and servicing of finance Net interest received 24 65 74 Net cash inflow from returns on investments and servicing of finance 24 65 74 Taxation UK corporation tax - - - Capital expenditure and financial investment Expenditure on intangible fixed assets - - (261) Purchase of tangible fixed assets (4,234) (2,768) (4,869) Net cash outflow on capital expenditure and financial investment (4,234) (2,768) (5,130) Net cash outflow before use of liquid funds and financing (2,866) (1,723) (2,379) Financing Drawdown of finance leases 1,632 1,867 3,488 Capital repayment of finance leases (283) (89) (323) Cash inflow from financing 1,349 1,778 3,165 5 (Decrease)/increase in cash in the year (1,517) 55 786 Notes to the Financial Statements 1. Basis of preparation The group accounts of Pure Wafer plc comprise the consolidation of the accountsof the company and its subsidiary undertaking after eliminating inter-companybalances and transactions. The results for the six months ended 31 December 2006 and 31 December 2005 areunaudited, although they have been reviewed by the auditors. The figures fromthe year ended 30 June 2006 are taken from the statutory accounts of Pure Waferplc (but have been restated for the adoption of FRS20 as described below), whichhave been delivered to the Registrar of Companies and upon which an unqualifiedaudit report was given. The accounting policies are as stated in the Annual Report and Accounts for theyear ended 30 June 2006, except for the implementation of FRS20 (share-basedpayment) which has been adopted for the first time in the results for the 6months ended 31 December 2006. Share-based payment In accordance with FRS20, 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. The comparative figures have been restated to take into account the adoption ofthis standard, and are reconciled below. 6 months ended Year ended 31 December 2005 30 June 2006 £000 £000 Profit before tax, as reported 701 2,038Impact of adoption of FRS20 (13) (83)Profit before tax, restated 688 1,955 2. Reconciliation of operating profit for the year to EBITDA 6 months ended 31 6 months ended 31 Year ended December 2006 December 2005 30 June 2006 (restated) (restated) £000 £000 £000 Operating profit for the period 1,495 638 1,902Depreciation 1,323 1,043 2,255Amortisation of intangible assets 26 - -Share option charge 129 13 83Release of deferred capital grant (155) (159) (314)Earnings before interest, tax, depreciationand amortisation 2,818 1,535 3,926 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 December 2006 31 December 2005 30 June 2006 (restated) (restated) '000 '000 '000Weighted average number of ordinary shares: - In issue during the year 26,496 26,494 26,494 - Fully diluted 26,804 26,592 26,699Unadjusted earnings £1,501 £688 £3,850Add: share option charge £129 £13 £83Less: recognition of deferred tax asset - - £(1,895)Adjusted earnings £1,630 £701 £2,038 4. Cash flow from operating activities 6 months ended 31 6 months ended Year ended December 2006 31 December 2005 30 June 2006 (restated) (restated) £000 £000 £000 Operating profit 1,495 638 1,902Depreciation of tangible fixed assets 1,323 1,043 2,255Amortisation of intangible fixed assets 26 - -Share option charge 129 13 83Release of deferred income (155) (159) (314)Increase in debtors (1,859) (467) (1,369)Increase in stocks (631) (521) (645)Increase in creditors 1,016 433 765Net cash inflow from operating activities 1,344 980 2,677 5. Reconciliation of net funds/(debt) Cash Finance leases Total net funds/ (debt) £000 £000 £000As at 1 July 2006 5,652 (3,088) 2,564Cash flow (1,517) (1,349) (2,866)Non-cash flow and foreign exchange (64) 187 123As at 31 December 2006 4,071 (4,250) (179) 6. Movement in shareholders' funds Share Share Merger Profit and Total capital premium reserve loss account £000 £000 £000 £000 £000 As at 1 July 2006 530 12,644 30,425 (20,087) 23,512Issue of shares to satisfy share optionexercises 1 48 - - 49FRS20 share option accounting - - - 93 93Profit for the period - - - 1,501 1,501As at 31 December 2006 531 12,692 30,425 (18,493) 25,155 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 Introduction We have been instructed by the company to review the financial information forthe six months ended 31 December 2006 which comprises the consolidated profitand loss account, consolidated balance sheet, consolidated cash flow statementand the related notes. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out inNote 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2006. PricewaterhouseCoopers LLPChartered AccountantsSwansea, 28 February 2007 Notes: (a) The maintenance and integrity of the Pure Wafer plc web site is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions. This information is provided by RNS The company news service from the London Stock Exchange